Investor Lawyers Blog

Options Trading Website Owner Faces Charges in Alleged $4M Online Binary Options Fraud

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

The US Securities and Exchange Commission has filed fraud charges against Mark Suleymanov, who owns the options trading website SpotFN. According to the regulator, Suleymanov, who is a New York resident, defrauded retail investors of about $4M in a binary options scam that took place from at least 2012 to 2016.

Binary Options

Investor.gov describes a binary option as a kind of options contract upon which payout depends on a “yes/no proposition” outcome and typically involves whether a certain asset’s price will go over or under a set figure. Upon acquisition of the option, a holder no longer has to decide about exercising said binary option because they “exercise automatically.” The holder of a binary option is not entitled to sell or purchase the asset. Upon expiration of the binary option, the holder is given either a cash amount that was previously determined or nothing at all.

FINRA Bars Broker For Selling $10.8M of Notes in $1.2B Woodbridge Ponzi Scam

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

The Financial Industry Regulatory Authority (FINRA) has barred yet another ex-broker for selling promissory notes that have since been linked to the $1.2B Woodbridge Ponzi scam. The fraud is believed to have bilked around 8,400 investors.

According to the self-regulatory authority (SRO), broker Frank Dietrich sold 58 investors $10M of promissory notes that came from the Woodbridge Group of Companies. 30 of these investors were clients of Quest Capital Strategies, Inc., which was Dietrich’s brokerage firm at the time of the sales. FINRA said that the former Quest Capital broker earned $261K in commissions from selling the Woodbridge investments.

Quest Capital Strategies reportedly did not know that Dietrich was selling the Woodbridge notes to its customers. Earlier this year, the brokerage firm allowed him to step down after finding that he had sold a product it had not approved and for failing to disclose external business activities.

Investment Fraud: Madoff Ponzi Scam Victims Receive Another $695M, Ex-Royal Alliance Associates Investment Adviser Pleads Guilty To Stealing $3M From Customers, and MoneyGram Investor Proposes Lawsuit After $125M Settlement

Published on: December 4, 2018 | by Shepherd Smith Edwards & Kantas, LLP

DOJ Distributes Another $695M to Over 27,000 Madoff Ponzi Scam Victims

A decade on the heels of Bernard Madoff’s arrest for running a multi-billion dollar Ponzi scam, the US Justice Department has distributed another $695M to over 27,000 of his victims. This is the DOJ’s third payment to investors of the fraud, bringing the total amount issued to nearly $2B.

In a statement, the DOJ said that it plans to restore more than $4B in total to those who sustained losses in the scheme that went on for decades, harming investors from all walks of life, including:

JPMorgan Chase and Citigroup Settle Euribor Investor Case for $180M

Published on: December 3, 2018 | by Shepherd Smith Edwards & Kantas, LLP

A preliminary $182M settlement has been reached in a benchmark rigging lawsuit between investors and banks Citigroup Inc. (C) and JPMorgan & Chase (JPM). Now, a federal judge must approve the deal, which would end claims accusing the two financial firms of manipulating the Euribor (Euro Interbank Offered Rate).

The benchmark interest rate is the average rate at which European banks are able to lend money to each other. It also is a key rate used for establishing certain loans.

It was just earlier this year that Euribor investors arrived at a $309M settlement over allegations that Barclays PLC (PLC), Deutsche Bank AG (DB), and HSBC Holdings Plc. (HSBC) had conspired to rig Euribor. Now, as part of this latest Euribor fraud settlement, JPMorgan and Citigroup have agreed to work with investors in their attempts to go after foreign defendant banks who were dropped from this lawsuit last year due to a lack of personal jurisdiction.

Investor Fraud: FINRA Awards Over $1M in Churning Case Against Legend Securities and Morgan Stanley Financial Adviser is Sentenced After Spending Over $950K of Clients’ Money

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

Legend Securities Ordered to Pay Client For Churning His Funds

A Financial Industry Regulatory Authority (FINRA) panel has awarded Herbert W. Voss $1.075M in his securities fraud case against Legend Securities Inc., its ex-chief compliance officer Frank Philip Fusco, and former Legend broker Danard Warthen Brown. Legend is no longer in operation and was expelled by the self-regulatory authority (SRO) in 2012.

Voss reportedly lost $375,000 while Legend was his brokerage firm. Of the more than $1M award granted to Voss, $700K is for punitive damages. His securities fraud lawyer contends that punitive damages were warranted because of how much turnover took place in Voss’s account.

FINRA Suspends Ex-UBS Broker Who is Now With Newbridge Securities

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

The Financial Industry Regulatory Authority (FINRA) has suspended David Howard Fagenson, a former UBS Financial Services (UBS) broker, for eight months. Fagenson, now registered with Newbridge Securities, is accused of unsuitable trading in the accounts of three older clients.

The allegedly excessive trades are said to have created significant losses for the UBS customers, even as Fagenson and the brokerage firm made hundreds of thousands of dollars in commissions and markups for the same transactions. The settlement between the self-regulatory authority (SRO) and the ex-UBS broker states that the trading violations took place between January 2012 and September 2016.

FINRA said that the senior investors that the ex-UBS broker harmed included a 95-year-old widow with an over $5M net worth who had numerous accounts at the firm. While her brokerage account purportedly lost $283K during the period at issue, she paid $260K in markups and commissions.

H. Beck Ordered to Pay $400K for Unsuitable Variable Annuity Sales to Customers

Published on: November 27, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority (FINRA) is ordering H. Beck to pay a $400K fine. The self-regulatory authority (SRO) contends that the independent brokerage firm sold variable annuities (VA) to clients even though they were not suitable for some of them.

According to FINRA, of the over 7,000 variable annuity contracts that H. Beck sold, making almost $34.9M in revenue between 1/2013 and 12/2014:

2,835 of those were L-share contracts with quite a number of them tied to long-term riders.

Alleged $17.5M Texas Investor Fraud Leads to Criminal Indictment

Published on: November 26, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Authorities in Texas have arrested Phillip Michael Carter for fraud. Carter, a North Texas real estate developer, is accused of raising $17.5M from investors in the state who thought their money was going toward development projects. His victims included older investors. The Texas State Securities Board announced his arrest.

Carter’s wife, Shelley Noel Carter, also faces investor fraud and money laundering charges. Another man, Richard Gregory Tilford, who was indicted earlier this month in Collins County, is charged with selling about $5M in fraudulent real estate investments from investors. He allegedly did not tell investors that he was a convicted felon who had pleaded guilty to not submitting a tax return several years ago.

Carter owns North Forty Development and Texas Cash Cow Investments. He and Tilford purportedly told investors their money would be put into residential and commercial property development. Instead, Carter allegedly used their funds for:

Investor Fraud: Investment Adviser Pleads Guilty to Retirement Fund Fraud, Stock Research Firm is Sued in Alleged Pump-and-Dump Scam That Targeted Seniors, and A Rabbi is Accused of Running a $35M Ponzi Scam

Published on: November 23, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Investment Adviser Accused of Lying to Retirement Fund Clients Pleads Guilty

Richard G. Cody, an investment adviser who ran Boston Investment Partners and is accused of lying to clients about how he handled their retirement funds, has revised his not guilty plea. Cody is now pleading guilty to both making a false declaration under oath and investment adviser fraud.

According to The U.S. Attorney’s Office for the District of Massachusetts, Cody allegedly lied to at least three investors who had relied on him to manage their retirement savings. The investment adviser is accused of fabricating documents so it would look as if their funds were still in the accounts even though hundreds of thousands of dollars had disappeared.

Ex-UBS Puerto Rico Broker Jose “Whopper” Ramirez Pleads Guilty to Bank Fraud

Published on: November 21, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Jose G. Ramirez-Arone Jr. (also known as Jose G. Ramirez, Jr.), a former UBS Financial Services of Puerto Rico (UBS-PR) broker, has pleaded guilty to criminal charges accusing him of defrauding investors while making over $1 million in improper commissions through the sale of Puerto Rico closed-end funds. Ramirez-Arone is scheduled to be sentenced next year.

The former UBS broker, known to many on the island as “Whopper,” and UBS Puerto Rico have together been the subject of dozens of Financial Industry Regulatory Authority (FINRA) arbitration complaints brought by customers claiming they sustained massive investment losses because not only did UBS and Ramirez-Arone sell the customers Puerto Rico bonds while misrepresenting the risks, but also, the finer broker recommended that they borrow money to purchase even more of these securities when they could not afford them.

Ramirez-Arone was one of the top-selling brokers at UBS Puerto Rico. In his guilty plea, Ramirez-Arone admitted that he was involved in a scam to help his UBS customers fraudulently obtain non-purpose credit lines, which was a violation of the firm’s policy. The credit lines came from UBS Bank USA, which is a UBS Financial Services subsidiary based in Utah. According to the U.S. Department of Justice, Ramirez-Arone took advantage of the low interest rates at UBS bank to convince his customers to buy additional shares of UBS’s Puerto Rico closed-end funds (CEFs). The former UBS broker acknowledged being a part of a scheme that involved recommending to different clients that they take money from the UBS Bank credit lines to invest to in the UBS Puerto Rico closed-end bond funds. Since using a “non-purpose” loan to buy additional securities is not allowed, Ramirez-Arone admitted advising customers to misrepresent on their credit line application what they intended to use the credit line and having the clients take the borrowed money to their retail bank and then bring the money back to UBS to buy more securities.