Articles Tagged with bond fraud

A Financial Industry Regulatory Authority panel has awarded five people $521,000 in compensatory damages in their Puerto Rico bond fraud case against UBS Financial Services (UBS) and UBS Financial Services Inc. of Puerto Rico (UBS-PR). The claimants had accused the financial firm of securities fraud, constructive fraud, common law fraud, negligent supervision, breach of fiduciary duty, and violating the Puerto Rico Uniform Securities Act.

UBS has been the subject of hundreds of FINRA arbitration claims brought by thousands of investors who sustained losses from Puerto Rico bonds and closed-end bonds, with many UBS-PR customers contending that they sustained massive losses because these investments were inappropriately recommended to them. To date, the financial firm has been ordered to pay or agreed to pay in settlements hundreds of millions of dollars to investors, with more claims still pending.

For over four years, our Puerto Rico bond fraud law firm has worked with investors on the island and the U.S. to help those investors recover their losses from losses in Puerto Rico securities. Contact Shepherd Smith Edwards and Kantas today to request your free, no obligation consultation.

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After Pleading Guilty, Massachusetts Money Manager Must Repay Investors
Stephen Eubanks is sentenced to 30 months behind bars for bilking investors of $437K. He also must pay restitution in that amount to his more than 20 victims.

Eubanks presented himself as a hedge fund manager at Eubiquity Capital, which he founded. He raised over $700K from investors and claimed that he was running a hedge fund that had ties with UBS (UBS), TD Ameritrade (AMTD), Fidelity, and Goldman Sachs (GS).

While Eubanks invested some of the clients’ funds for them he also spent a healthy amount of their money on his own spending. Eubanks also is accused of on occasion operating his fund as if it were a Ponzi scam.

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Matthew Katke, formerly of Royal Bank of Scotland Group Plc (RBS) and Nomura Holdings (NMR) has pleaded guilty to conspiracy to commit securities fraud for his involvement in a multi-million dollar bond scam to bilk customers. As part of his deal he will cooperate with prosecutors into its investigation of mortgage-linked bonds and collateralized debt obligations.

Katke traded securities that were backed collateralized loan obligations, which are high-yield corporate debt. The charge is related to activities he engaged in while at RBS. Prosecutors say that Katke and co-conspirators made misrepresentations to get customers to pay prices that were inflated and sellers to say yes to deflated bond prices. The scam took place from around 2008 to June 2014.

Court documents say that Katke and co-conspirators sought to profits on bond trades through the false statements they gave customers. They misrepresented the prices that RBS had paid to get a bond or what it was asking to sell it. They also misled clients about whether a bond was from RBS’s inventory or a third party. RBS is cooperating with the probe.

According to The Wall Street Journal, Standard & Poor’s Ratings Services is close to arriving at a securities settlement with regulators over the way they graded real-estate bonds. The agreement would resolve claims by the U.S. Securities and Exchange Commission, Massachusetts Attorney General Martha Coakley, and New York Attorney General Eric Schneiderman.

The proposed deal is over six commercial real estate bond ratings issued by the credit rater in 2011. In July of that year, S & P withdrew a preliminary rating on a $1.5 billion security comprised of commercial real-estate loans. The decision made debt issuers and investors very angry. (The deal was later partially overhauled and eventually went to market.)

S & P discovered discrepancies in the way its ratings methodology applied for commercial real estate deals. However, it said the incongruence was not outside what is considered an acceptable range. Still, investigators were compelled to look at the withdrawn rating and other deals from that period.

The Securities and Exchange Commission is charging United Neighborhood Organization of Chicago and UNO Charter School Network Inc. with bilking investors in a $37.5 million bond fraud offering. The SEC contends that the charter school operator made statements that were materially misleading about transactions where there was a conflict of interest.

The bond fraud offering involves school construction. According to the SEC, UNO did not disclose that it had a multi-million-dollar with a windows company that belonged to the brother of one of its senior officers. Investors also were not told that the conflict might impact the repayment of the bonds.

UNO had entered into grant agreements with the Illinois Department of Commerce and Economic Opportunity to construct three schools. Each agreement had provisions mandating that UNO certify that there were no conflicts. Breach of this provision could lead to grant payment suspension and recovery of money paid to UNO already.

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