Sleeping dog

I’ve got a bad feeling about FINRA

September 29, 2017

FINRA Is Doing A Whole Lot Less FINRAing These Days Even before this year, FINRA’s FINRAing was not effective. I have seen FINRA Enforcement do nothing in egregious cases where a firm’s Financial Advisor lied to an investor or created firm documentation that was a false — like documenting annual meetings with a customer that could not have happened. I have seen FINRA do nothing about blatant misconduct of FINRA members in arbitration proceedings. When FINRA does get involved, FINRA’s FINRAing can impede investors efforts to recover losses.

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mother rhino and baby

Insider traders who must love their mothers

September 27, 2017

Must be embarrassing for Zacks Investment Research to learn that not one, not two, but three of its employees were trading on illegal inside information for years! According to the SEC’s complaint — see link below — the three are Jason Napodano, Bilal Basrai, and Bryce Stirton. Two of the three were managers of Zacks divisions.

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Do as I say, not as I do – the new SEC motto?

September 22, 2017

According to the SEC, “Issuers and other market participants must take their periodic and current disclosure obligations regarding cybersecurity risks seriously, and failure to do so may result in an enforcement action.” So, brokers, mutual funds, public companies are required to make timely disclosures of material cybersecurity risk information or face an SEC enforcement action. OK SEC, show us how it is done.

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Man holding tablet

Noncompete? We don’t need those stinking clauses

September 12, 2017

According to University of Chicago Law School Professor Omri Ben-Shahar, at least 20 percent of U.S. workers are bound by noncompete agreements. He argues that expanding the current ban that Illinois has on noncompete clauses for low-income workers could make Chicago more attractive for Amazon’s second headquarters.

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Enron logo

Financial reporting controls should be verified or why bother?

September 11, 2017

The president of NYSE Group (Tom Farley) is leading the chorus of industry folks complaining about having to ensure that public companies have adequate controls in place to make their financial statements meaningful.

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Wells Fargo logo

Terminated Wells Fargo managers fire back with retaliation lawsuit

September 9, 2017

Two former regional presidents who oversaw Wells Fargo branches across Southern California, Reza Razzaghipour and Marla Razzaghipour, on Thursday filed a lawsuit in Los Angeles against Wells Fargo, according to the Los Angeles Times. The Razzaghipours, who were terminated in March, are suing Wells Fargo for wrongful termination, retaliation and defamation. They’re seeking damages of at least $50 million for among other things, loss of job prospects, emotional distress, depression and anxiety.

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Shine a little light on FINRA say industry and investor advocates

September 9, 2017

With members and investors unhappy with FINRA, it would appear to be time for the SEC to step in. Investor advocates have been complaining about FINRA for a long time. FINRA has made some modest changes but largely resisted changing anything.

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empty courtroom

SEC administrative law judges – constitutional or not?

September 7, 2017

The US Supreme Court may step in to resolve an issue that has been simmering for many years — does the SEC have the authority to bring enforcement actions before administrative law judges that it has appointed and who work for the agency. Opponents of SEC ALJs contend they are “inferior officers” whose appointment violates the “Appointments Clause” of the US Constitution. This argument has been rejected by SEC Commissioners, who are appointed by the president and who hear appeals of ALJ decisions. Federal appeals courts, however, are not in agreemen — some courts concluding the ALJs are properly appointed, others not. There is little evidence that SEC ALJs are in the pocket of the Division of Enforcement. Far from rubber stamping actions brought by the Division of Enforcement,  ALJs have ruled against the SEC Division of Enforcement in significant cases. The SEC’s success in administrative proceedings is similar to its success in federal court actions. The SEC doesn’t lose often because it has the ability to conduct investigations before bringing enforcement actions. As a result, by the time a case is filed, the SEC has a great deal of evidence supporting its charges. Requiring the SEC to file all cases in federal court might be a boon to investors. Investors can learn more about a case filed in federal court than an administrative action. SEC administrative proceedings are “public” in name only. Just try to attend an administrative proceeding and you will see how “public” they are. Not only do the ALJs often bar you from the hearing room, but the SEC makes it exceedingly difficult to obtain even some of the exhibits or transcripts of testimony in these so-called public proceedings. How is that public?

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Gold bullion

Monex Atlas precious metals investment scheme shut down by CFTC

September 7, 2017

The U.S. Commodity Futures Trading Commission (CFTC) filed an enforcement action in Illinois federal court against three Newport Beach, California companies — Monex Deposit Company, Monex Credit Company, and Newport Services Corporation — and their principals Louis Carabini and Michael Carabini. The CFTC Complaint charges the Defendants with defrauding thousands of retail customers nationwide out of hundreds of millions of dollars. This is one of the largest precious metals fraud cases in the history of the CFTC. The CFTC alleges that Monex misrepresented the “Atlas” program as a safe, secure and profitable way to invest in precious metals, even though nearly everyone who invested in Atlas over a period of six years lost money. According to the CFTC, over 12,000 trading accounts were used to place leveraged precious metals trades resulting in more than $290 million in customer losses between July 2011 and March 2017. According to the CFTC, Monex employed high-pressure sales tactics, systematically downplayed the risks associated with the Atlas program, and falsely promised customers that Monex would act as the customers’ fiduciary and would always act in those customers’ best interests.The Complaint also alleges that Monex failed to register as a Futures Commission Merchant (FCM) as required by the Commodity Exchange Act. The CFTC is seeking preliminary injunctive relief to enjoin Monex from continuing to market the Atlas program to retail customers, and appointment of a monitor over Monex for the Atlas trading accounts.

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old fashioned radio

Another radio show host arrested for fraud

September 6, 2017

This time the arrestee was sports radio host Craig Carton. According to, Carton was arrested in New York City. He was charged with using millions of dollars he raised for an alleged fake concert-ticket scam to pay off his gambling debts. Carton has hosted the WFAN radio show with former NFL quarterback Boomer Esiason since 2007. Esiason isn’t accused of wrongdoing, but he must be thrilled to be associated with Carton. Just because someone has a radio or television show, that does not mean you should trust them with your money. Here is an earlier blog post on another radio host arrested for fraud:  

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