Merrill Lynch

Shepherd Smith Edwards & Kantas Investigates Merrill Lynch and Gordon Harper over Collateral Yield Enhancement Strategy (CYES) Damages

Published on: January 9, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Collateral Yield Enhancement Strategy (CYES) Damages: SSEK Investigating Merrill Lynch Financial Advisor

Shepherd Smith Edwards & Kantas (SSEK), a law firm specializing in representing wronged investors is looking into allegations against Gordon Harper, a financial advisor with Merrill Lynch out of Upper Montclair, New Jersey. Prior to that, he worked at Banc of America and Edward Jones.

According to allegations in a recent Financial Industry Regulatory Authority Inc. (FINRA) claim, Gordon Harper recommended something called Harvest Volatility Management CYES (also known as collateral yield enhancement strategy). Harvest is a money manager which, as the name implies, attempts to manage volatility.

Shepherd Smith Edwards and Kantas Continues to Investigate Claims Involving Merrill Lynch Strategic Return Notes

Published on: December 18, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Merrill Lynch Sold Strategic Return Notes To Retail Investors

If you are an investor who lost money from Strategic Return Notes (SRNs) that were sold by Bank of America’s (BAC) Merrill Lynch, please contact our investment fraud lawyers at Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) today.

The investment raised about $150M from their sales and caused substantial losses from many. SSEK Law Firm is committed to helping Strategic Return Notes investors to recoup their losses.

Securities Fraud Allegations Against Former Merrill Lynch/RBC Financial Adviser Could Lead to More Unauthorized Trading and Failure to Supervise Claims

Published on: August 14, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Earlier this year, the US Securities and Exchange Commission barred ex-RBC broker Thomas Buck from the industry. The action came less than four months after the regulator filed a civil case accusing Buck of investor fraud. He allegedly made material misrepresentations and omissions to investment advisory clients and certain customers while he was a Merrill Lynch financial adviser in order to get get paid excess fees and commissions.

As a result, more than 50 customers and clients under Buck ended up paying over $2.5M unnecessarily.

Buck also allegedly did not tell clients that they could have saved money if only they’d opted for a fee-based payment structure instead of the commission model. Meantime, he’d told Merrill Lynch compliance staff on several occasions that the clients knew about the less costly options.

Strategic Return Notes

Published on: March 16, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The attorneys at Shepherd Smith Edward & Kantas are investigating the claims of investors who purchased Strategic Return Notes (“SRNs”). Bank of America and Merrill Lynch created Strategic Return Notes, which are an unsecured promissory note issued by Bank of America. Bank of America has no obligation to and will not make any interest payments throughout the duration of the notes, which go through 2016 if held until maturity. Investors also have no guarantee of getting back the original purchase price of the note at maturity. Instead, investors are paid back a variable amount based upon the performance of an underlying index, the Investable Volatility Index (“VOL”).

The VOL is a complicated index which measures the volatility of the S&P 500, essentially attempting to calculate how volatile the stock market as a whole is and predict how volatile it will be in the coming months. If the computation indicates that the market will be less volatile, or that the market will fluctuate less in the time period, then the index falls. Conversely, if the computation indicates that the market will be more volatile in the coming months, then the index rises. The result is that investors in these SRNs achieve returns or losses based not upon how high the market rises or how low it falls, but rather on how wildly the market was swinging on the way there.

These products are very complicated, and are only suitable for certain types of investors. It is believed that many investors who were sold these products were not told the risks that were involved, or were promised that this product could be used as a hedge to reduce overall portfolio risk when that was not true. Many investors have suffered substantial losses in these products.

Securities News: Wells Fargo’s Wealth Management Division is Reportedly Under Investigation, Merrill Lynch is Accused of Gatekeeping Failures Involving Unregistered Securities Sales, and NYSE Must Pay $14M Over Regulatory Failures

Published on: March 7, 2018 | by Shepherd Smith Edwards & Kantas, LLP

SEC Reportedly Investigating Wells Fargo Over Possible Inappropriate Investment Sales to Wealth Management Clients

According to news reports, the US Securities and Exchange Commission is investigating Wells Fargo’s (WFC) Wealth Management unit to see whether its clients were inappropriately sold certain in-house investment services even though these were not in their best interests. A source told Bloomberg that the regulator’s role in the probe has not been publicly disclosed.

However, in a regulatory filing, Wells Fargo revealed that it is looking into whether inappropriate recommendations were made related to 401(k) plan rollovers, alternative investments, and brokerage customer referrals to the firm’s “investment and fiduciary-services business.” The bank noted that it was assessing these matters in its wealth management business in the wake of inquiries made by federal agencies.

Bloomberg notes that it was in 2015 that JPMorgan Chase & Co. (JPM) consented to pay $267M over allegations that its customers were not told that it had profited by placing their funds in certain hedge funds and mutual funds that charged particular fees.

FINRA Cases: Ex-Morgan Stanley Broker and Former Western International Securities Broker Are Barred, Questar Capital Ordered to Pay $797K Restitution Over Mutual Fund Sales, and Morgan Stanley Smith Barney is Accused of Not Sending Millions of Margin Disclosures

Published on: January 16, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Two Brokers Barred After Not Appearing at FINRA Hearings

Guillermo Valladolid, an ex-Morgan Stanley (MS) broker, has been barred by the Financial Industry Regulatory Authority. According to the regulator, Valladolid did not show up at a hearing into whether, according to InvestmentNews, he “sold investments away from his employer” and neglected to disclose certain outside business activities.

Morgan Stanley terminated Vallodolid’s employment. Previous to that he worked with Merrill Lynch.

In a different FINRA case, the regulator barred another broker, Bradley C. Mascho, also after he did not appear at his hearing. Some of Mascho’s activities while at Western International Securities had come under question. The firm fired him last month, which is also when the US Securities and Exchange Commission filed fraud charges against Mascho and Dawn Bennett of the Bennett Group Financial and DJP Holdings. Mascho was CFO of the latter.

Regulators Fine Merrill Lynch $26M and J.P. Morgan Securities $2.8M, Respectively

Published on: December 26, 2017 | by Shepherd Smith Edwards & Kantas, LLP

According to Reuters, Bank of America Merrill Lynch (BAC) must pay FINRA and the SEC $13M in penalties each — $26M in total — because its anti-money-laundering procedures and policies were purportedly inaccurate. According to the regulators, from ’11 to ’15, these policies and procedures were “not reasonably designed” enough to account for the additional risks involved in certain services offered by some of its retail brokerage accounts.

The SEC’s cease-and-desist order states that Merrill Lynch did not do an adequate enough job of monitoring, identifying, and reporting certain suspect activity involving transaction patterns in customer accounts. Among the allegations is that when the firm provided traditional banking services, the software that was supposed to identify possibly suspect transactions did not screen for such activities.

The $26M fine comes just two months after the Financial Conduct Authority in the UK fined Merrill Lynch $45.5M for not reporting 68.5 million exchange-traded derivative transactions between ’14 and ’16. Because the firm’s wealth management division cooperated with the FCA’s probe, the original fine of $64.9M was reduced by 30%.

FINRA Cases: Ex-LPL Broker is Barred for Not Disclosing Role in Private Securities Transactions, Merrill Lynch is Fined $1.4M For Extended Settlement Transactions, and Noble Capital Markets Agrees to Pay $225K for Failing to Disclose Conflicts to Investors

Published on: December 19, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Former LPL Broker is Barred For Not Disclosing Private Securities Sales

The Financial Industry Regulatory Authority announced a bar against Leslie Koonce, an ex-LPL(LPLA) broker. According to the self-regulatory organization, Koonce lied when he failed to disclose that he had engaged in private securities sales. Koonce allegedly pitched a private company’s convertible promissory notes to at least 30 potential investors.

The FINRA case contends that not only did Koonce help facilitate the transfer of $175K to at least three LPL customers so they could invest in the private securities, but also, he invested $50K of his own funds. All the while, said the SRO, Koonce failed to notify LPL in writing of his involvement in these transactions. When he filed out compliance questionnaires twice in 2012, Koonce denied any involvement in these types of transactions.

LPL fired Koonce in 2015. He later went to work with Cetera and then EK Riley Investments. The ex-broker no longer works in the securities industry.

Criminal Securities Fraud: Ex-ARCP CFO Sentenced to 18 Months for REIT Scam, Former Merrill Lynch Broker Pleads Guilty Over Excessive Commissions, and Businessman Convicted For Defrauding Washington Mutual Bank

Published on: November 9, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ex-American Reality CFO to Go to Prison for 18 Months

In Manhattan, a US District Court Judge has sentenced Brian Block to 18 months behind bars. Block, who was the CFO of American Reality Capital Properties, was found guilty of fraud when he inflated the financial statements of the real estate investment trust.

Prosecutors accused Block of inputting bogus figures when preparing the REIT’s financial reporting. He allegedly did this to hide a calculation mistake that occurred in an earlier financial report.

Criminal Securities Fraud: Ex-ARCP CFO Sentenced to 18 Months for REIT Scam, Former Merrill Lynch Broker Pleads Guilty Over Excessive Commissions, and Businessman Convicted For Defrauding Washington Mutual Bank

Published on: November 9, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ex-American Reality CFO to Go to Prison for 18 Months

In Manhattan, a US District Court Judge has sentenced Brian Block to 18 months behind bars. Block, who was the CFO of American Realty Capital Properties, was found guilty of fraud when he inflated the financial statements of the real estate investment trust.

Prosecutors accused Block of inputting bogus figures when preparing the REIT’s financial reporting. He allegedly did this to hide a calculation mistake that occurred in an earlier financial report.

Following the disclosure of the accounting misstatements, American Realty’s share price plunged, taking with it over $3B of the REIT’s market worth. It was in late 2014 that the REIT announced that employees had purposely hidden accounting errors.

The REIT’s ex-chief accounting officer, Lisa McAlister, has also pleaded guilty to charges over this matter.