Library - Law Offices of Robert Wayne Pearce

U.S. Supreme Court Rules on Duty to Monitor 401(k) Plans

The U.S. Supreme Court made its decision on a key 401(k) lawsuit, Tibble v. Edison. This suit was initially filed in 2007 by employees against their employers for having mutual funds with excessive fees in the 401(k) plan. Their retirement plan had a selection of 40 funds, six of which were retail share class funds and are more costly than institutional share class funds. The U.S. District Court granted the plaintiffs a judgment of $370,732 from the high fees in three of the retail share funds. The other three funds appealed to the ninth U.S. Circuit Court of appeals and eventually to the Supreme Court.

Jun 4, 2015

PFS Investments Broker Named in a FINRA Complaint for Misrepresentations Involving Customer Funds

Norma M. Skeete, an Arlington, Virginia-based registered representative formerly employed by PFS Investments Inc. (PFS Investments), was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging she made negligent misrepresentations to a PFS Investments customer in connection with a loan that customer made to a real estate venture. According to the Complaint, Norma Skeete made multiple negligent misrepresentations to her PFS Investment customer. FINRA alleged that Ms. Skeete exchanged emails with the customer, allegedly assuring the investor that the loan would be safe and would be returned. Based on what business partners told Ms. Skeete, she allegedly responded to an email from her PFS Investments customer seeking an update about his $160,000 loan. According to FINRA, Ms. Skeete allegedly told the customer “things are going according to plan,” and that the loaned funds were “not in jeopardy” and were “absolutely going to be reimbursed.” However, Ms. Skeete allegedly neglected the due diligence to actually look into the independent steps necessary to understand how the loans would be documented, where the funds would be held, and who would be holding the funds.

Jun 3, 2015

Brokerage Firm Chief Compliance Officer Charged With Fraud and Money Laundering

According to the Securities and Exchange Commission (SEC), William Quigley, a former chief compliance officer at New York-based Trident Partners Ltd., was charged with fraud and money laundering for diverting money from overseas investors to family members in the Philippines. William Michael Quigley, of Seaford New York, faces both criminal and civil charges. The SEC claims that Mr. Quigley convinced foreign investors to invest in well-known U.S companies and start-ups which were on the brink of going public. Instead of investing the customers’ funds, however, Mr. Quigley diverted the funds for his and his brother’s personal use. This scheme was allegedly perpetrated by sending investors fake account statements using a fictitious firm name for more than 10 years.

Jun 2, 2015

Country Capital Broker Barred For Converting Funds and Fabricating Account Statements

Daniel P. Glavin, a Country Capital Management Company (Country Capital) investor, from Orland Park Illinois, submitted an Acceptance Waiver and Consent (AWC), to settle, without admitting or denying the findings that he violated Financial Industry Regulatory Authority (FINRA) Rule 2010. In the AWC, FINRA found that Mr. Glavin converted customer funds and fabricated account statements. As a result, Mr. Glavin was permanently barred from any association with any FINRA member firm. According to FINRA, while Mr. Glavin was registered with Country Capital, one of his customers gave him approximately $45,000 to invest in certificates of deposit. FINRA further alleged that the purported certificates Mr. Glavin recommended his customer invest in did not actually exist. FINRA alleged that Mr. Glavin did not use his customer’s funds to purchase any certificates of deposit. Instead, FINRA claims Mr. Glavin converted the customer’s funds for his personal use and benefit. As part of his scheme, Mr. Glavin allegedly fabricated account statements to mislead the customer. According to FINRA, Mr. Glavin eventually returned the funds, but only after several demands made by the customer.

Jun 1, 2015

Merrill Lynch Broker Accused of Improper Use of Customer’s Funds

Tammy C. Petersen, a former Merrill Lynch, Pierce, Fenner and Smith Inc. (Merrill Lynch) representative, submitted an Acceptance Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) to settle the alleged Rule violations, without admitting or denying the allegations made against her for improper use of a customer’s funds. Pursuant to the settlement, Ms. Petersen was permanently banned from associating with any FINRA firm. In March 2000, Tammy C. Petersen first entered the securities industry with a National Association of Securities Dealers (NASD) member firm. In July 2000, Ms. Petersen became an investment company/ variable contracts products limited representative with American Funds Distributers until May 2003. Thereafter, she became registered with Wells Fargo Advisors. In October 2010, Ms. Petersen became registered with Merrill Lynch.

May 29, 2015

SunTrust Investment Services Broker Barred for Failure to Cooperate with FINRA’s Investigation

Kirsten Flynn Hawkins of Staunton, Virginia, submitted an Acceptance, Waiver and Consent (AWC) to, settle violations of Financial Industry Regulatory Authority (FINRA) Rule 8210 for failing to provide the documents and information requested in connection with a FINRA investigation. Ms. Hawkins voluntarily resigned from the securities industry with FINRA on November 13, 2014, and her registration with FINRA was terminated on December 10, 2014. As of now, Ms. Hawkins is not associated with a FINRA member firm, but still remains subject to FINRA’s jurisdiction pursuant.

May 28, 2015

Wells Fargo Broker Fined and Suspended by FINRA for Unsuitable Investment Recommendations

According to the Financial Industry Regulatory Authority (FINRA), Randall Layne Girton, of Orland Park Illinois, recommended that one of his Well Fargo customers purchase mutual fund shares and then, shortly thereafter, sold them to reinvest in a Wells Fargo investment advisory program, known as “Fund Source.” FINRA investigated and concluded that Mr. Girton’s recommendation that the customer sell her mutual fund share to invest in a Wells Fargo Proprietary Investment Advisory Program was an unsuitable investment recommendation, especially when he recommended several months after that the customer sell the Fund Source program and repurchase the mutual funds. FINRA Rule 2111(a) requires that registered representatives have a reasonable basis to believe that the recommended securities transactions are suitable in light of a particular customer’s investment objectives and financial condition. FINRA found that Mr. Girton’s recommendation that the Wells Fargo customer liquidate the Class A mutual fund shares that were part of a long term buy and hold investment strategy within months was unsuitable. According to FINRA, Mr. Girton had no basis to believe that the expected return on the Fund Source program would exceed the return on the mutual fund investment he previously recommended.

May 27, 2015

LPL Financial Stockbroker Barred by FINRA for Taking Prohibited Customer Loans

Raymond Daniel Schmidt, a former registered representative with the Oceanside, California branch of LPL Financial LLC (LPL Financial), consented to, but did not admit to or deny, the sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he borrowed over $2.25 million from customers, failed to disclose his outside business activity, and falsely reported, in several firm questionnaires, his involvement in this misconduct. Without admitting or denying FINRA’s findings, Raymond Schmidt, of Oceanside, California, consented to the sanctions and to the findings that he borrowed more than $2.25 million from seven LPL Financial customers, in violation of FINRA Rule 3240, which prohibits registered representatives from borrowing or lending money to customers unless permitted under the firm’s rules. Mr. Schmidt allegedly borrowed the money from the LPL customers for the purpose of constructing a vacation property in Hawaii. Further, FINRA found that Raymond Schmidt failed to notify his member firm of his involvement in this outside business activity.

May 26, 2015

UBS Ordered to Pay Investor $1M in Damages for Unsuitable UBS Puerto Rico Funds

UBS Wealth Management and UBS Puerto Rico have been ordered by the Financial Industry Regulatory Authority (FINRA) to pay $1 million in damages to a 66 year old investor. According to the arbitration panel, UBS brokers encouraged the investor to keep and hold 100% of his investment portfolio in risky Puerto Rico closed end bond funds despite the fact that the investment was extremely over-concentrated and completely unsuitable for him. According to the arbitration award, this conservative, frugal investor lost $737,000 of his nearly $1 million portfolio. When the investor approached UBS with his concerns about the decline in the value of his investment portfolio the UBS branch manager allegedly stated that “even a skinny cow could give milk.” The FINRA arbitration award went on to note that UBS provided the investor with brochures and monthly statements in English, despite the fact that he spoke very little English and had requested the documents be sent in Spanish. Unfortunately, this investor did not know that UBS brokers were allegedly under pressure to sell these risky closed-end bond funds and to encourage investors to hold the bonds even when their value collapsed in the fall of 2013.

May 22, 2015

Raymond James Stockbroker Suspended by FINRA for Taking Customer Loans

Raymond Sardina, a registered representative with the Coral Gables, Florida branch of Raymond James & Associates, Inc. (Raymond James) been suspended by the Financial Industry Regulatory Authority (FINRA) for borrowing a customer’s money in violation of firm rules. Without admitting or denying FINRA’s findings, Raymond Sardina consented to the sanctions and to the findings that he borrowed $10,000 from a Raymond James customer, in violation of FINRA Rule 3240, which prohibits registered representatives from borrowing or lending money to customers unless permitted under the firm’s rules. In this case, Mr. Sardina was required to notify his firm of the loan and obtain firm approval, both of which he allegedly failed to do, according to FINRA.

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