Investor Lawyers Blog

US Government Sues UBS for Residential Mortgage-Backed Securities Fraud

Published on: November 15, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The US government has filed a civil lawsuit against UBS AG and a number of its UBS-based affiliates accusing them of defrauding investors who purchased residential mortgage-backed securities (RMBS) from the firm in the two years prior to the 2008 economic crisis. UBS purportedly securitized over $41B of mortgage loans in deals that ended up becoming “catastrophic failures.”

According to a news release by the US Attorney’s Office for the Northern District of Georgia, which was published by the US Department of Justice, the federal government is alleging that UBS:

• Misled investors about the quality of billions of dollars worth of Alt-A and subprime mortgage loans that were backing 40 RMBS deals.

FINRA Bars Ex-Texas Based Brokers from Merrill Lynch and RBC Capital Markets

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

The Financial Industry Regulatory Authority has barred three more former brokers in the wake of fraud allegations against them. Two of them were based in Texas. They are:

Former Merrill Lynch broker Terrance Hood
Ex-RBC Capital Markets broker Jonathan Freehill

Former Next Financial Investment Adviser and Broker Pleads Guilty to Multimillion-Dollar Investor Fraud Charges

Published on: November 9, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Douglas P. Simanski, a former Next Financial investment adviser and broker, has pleaded guilty to a $4.5M investor fraud for the criminal charges of wire fraud, securities fraud, and submitting false income tax returns. He is accused of bilking over 30 clients over a 14-year period.

According to the US Attorney’s Office for the Western District of Pennsylvania, between February 2002 and May 2016, Simanski “fraudulently obtained” about $4.5M from investors. He “fabricated” contracts for “Tax Free Investments” and “fake CDs” that came with a list of guaranteed return rates and payouts. The bogus documents were used to solicit investors.

Simanski went on to use some of the investors’ funds to issue returns to other investors to make it seem as if the “investments were legitimate.” He also used some of their money for personal spending and in his own E*Trade account. The former Next financial broker is accused of turning in income tax returns that were “false.”

Puerto Rico UBS Closed-End Mutual Fund Fraud Lawsuit Goes to Arbitration

Published on: November 8, 2018 | by Shepherd Smith Edwards & Kantas, LLP

UBS Financial Services, Inc. (UBS) and two investors will now arbitrate a Puerto Rico closed-end bond fraud lawsuit accusing the investment arm of the Swiss bank of improperly structuring investments. The plaintiffs, Augusto Schreiner and Nora Fernandez, contend that UBS, its Puerto Rican subsidiaries, firm executives, and Banco Popular de Puerto Rico failed to suitably examine nearly two dozen closed-end mutual funds that held the beleaguered island’s government bonds.

Schreiner and Fernandez were initially part of an attempt to file a class action lawsuit against UBS and its subsidiaries. However, last month, US District Court Judge Sidney H. Stein refused to grant the case class certification status.

The Court found that because all of the plaintiffs had different investment objectives, they would not be able to demonstrate that the mutual funds were unsuitable in general. Judge Stein ruled that it was up to each investor to prove individually, according to their respective needs, objectives, and ability to handle risk, that UBS had neglected to properly analyze the risks that came with the funds.

Ex-LPL Financial Broker Gets 20 Years in Prison for Securities Fraud

Published on: November 6, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Sonya Camarco, an target=”_blank” rel=”noopener noreferrer”>ex-LPL Financial (LPLA) broker, has been sentenced to 20 years in prison after she admitted to stealing $1.8M from clients. Camarco, who worked for the brokerage firm in Colorado, was indicted by a grand jury last year on multiple counts of securities fraud. She pleaded guilty to one count of each.

According to the broker fraud case against her, between 2013 and 2017, Camaro stole over $1.8M from clients for her own use. In August 2017, LPL Financial fired her. That same month, the US Securities and Exchange Commission was able to get an emergency court order and asset freeze against Camarco. The SEC’s complaint said that the theft took place over 13 years and the ex-LPL broker lied to clients about the money she was taking from their accounts.

The SEC also accused Camarco of forging client signatures on checks and liquidating securities in their accounts so she could make unauthorized payments. When clients asked about the checks written to an entity named “C Investments”, Camarco lied by claiming that the entity was an outside investment she had made for them. The former broker also allegedly lied when LPL Financial confronted her about the fraud. All the while, she used client money to pay her mortgage and credit card bills.

UBS Ordered to Pay Investor $693K in Puerto Rico Bond Fraud Case

Published on: November 1, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority (FINRA) arbitration panel is ordering UBS Financial Services (UBS) and UBS Financial Services of Puerto Rico (UBS-PR) to pay investor Jose F. Pastrana $693K, including at least $564,559 in damages, legal fees, and other costs in its Puerto Rico bond fraud case. UBS also must buy back from Pastrana some of the illiquid closed-end funds that he purchased from the firm at what their market price was at the end of July. AdvisorHub says that this amount will total $128K.

Pastrana had accused the broker-dealer of:

Negligence

FINRA Bars Another Ex-Morgan Stanley Broker

Published on: October 31, 2018 | by Shepherd Smith Edwards & Kantas, LLP

For the third time this month, The Financial Industry Regulatory Authority has announced that it has barred yet another Morgan Stanley (MS) broker. The brokerage firm had fired financial adviser Bruce Plyer in late 2016 in the wake of allegations that he executed trades in a client’s account without authorization. Now, the self-regulatory organization is barring Plyer after he failed to appear and give testimony into FINRA’s probe into the matter.

Plyer has accepted and consented to FINRA’s findings, but he is not admitting to or denying any of them.

After being let go from Morgan Stanley, he was registered for a short time with International Assets Advisory until he left the industry early last year.

Texas Couple Indicted for Allegedly Embezzling $14.5M from Retirement Funds

Published on: October 30, 2018 | by Shepherd Smith Edwards & Kantas, LLP

In Texas, a federal grand jury has indicted a couple accused of embezzling $14.5M dollars from the retirement plans that they oversaw. Wendy Richie and Jeffrey Richie co-own Vantage Benefits Administrator, which acted as a third party administrator for many retirement funds, including 401(K) plans. According to the US Attorney’s Office for the Northern District of Texas, the couple misappropriated money from “at least 1,000 plan participants in at least 20 employer retirement plans.”

The indictment against the couple alleges that Wendy Richie:

• Posed as a number of different beneficiaries.

Investor Fraud: Boston Hedge Fund Manager Pleads Guilty in Ponzi Scam Case, Ex-State Street Executive is Sentenced to 18 Months, and Willow Creek Fund Manger Must Forfeit $13M

Published on: October 29, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Man Who Ran RMA Strategic Opportunity Fund Ponzi Scam Pleads Guilty

Raymond K. Montoya, a Boston hedge fund manager, has pleaded guilty to operating a multi-billion dollar Ponzi scam involving the RMA Strategic Opportunity Fund, LLC. Montoya pleaded guilty to multiple counts of mail fraud, wire fraud, and conducting an unlawful monetary transaction.

Montoya was charged and arrested last year. His victims included relatives, friends, and people he knew. They invested millions of dollar, including their savings and retirement funds.

UBS to Pay $19.8M in Puerto Rico Bond Fraud Case

Published on: October 25, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A Financial Industry Regulatory Authority panel is ordering UBS Financial Services Inc. (UBS) to pay restitution of almost $19.8M in an arbitration case involving Puerto Rico bonds and closed-end funds that were sold to investors. This is the largest amount that UBS has paid to date to claimants in a Puerto Rico bond fraud case.

The arbitration ruling involved not only the sale of the Puerto Rico bonds but also how credit lines were used as part of the investing strategies involving the investor accounts. Of the $19.8M: $14.9M is for compensatory damages, $745K is interest, $3.9M is legal fees, and $215K is for other costs.

This is just one of several Puerto Rico bond and closed-end bond fraud awards that UBS and its affiliated financial firm, UBS Financial Services of Puerto Rico (UBS-PR), have been ordered to pay in the last few years. In December 2016, A FINRA arbitration panel ordered UBS to pay $18.6M to two UBS clients who had alleged breach of contract, breach of fiduciary duty, and other violations over their Puerto Rico securities losses.