April 13, 2015

Plaintiffs Appeal Federal Court’s Ruling Dismissing Their 401(K) Lawsuit Against Fidelity

A notice of appeal was submitted with the 1st U.S. Circuit Court of Appeals by plaintiffs seeking to overturn a ruling by a federal district court dismissing their 401(K) case against Fidelity Investments. The case is In Re Fidelity ERISA Float Litigation.

According to the plaintiffs, who are participants in a number of defined contribution plans, as record keeper for several of the plan, the financial firm breached its fiduciary duty when managing the plans’ float income. This is the money made from interest-bearing accounts that 401k) plans use temporarily before plan assets are disbursed and participants move their funds among different investment choices.

The plan participants believe that Fidelity used the float income to cover administrative and record-keeping costs, which was not part of their agreement with the firm in terms of the fees they were supposed to pay it. However, U.S. District Judge Denise Casper dismissed their complaint last month, finding that the plaintiffs did not plausibly allege that “float income is a plan asset.” Casper noted that she did not consider Fidelity an ERISA fiduciary in relation to float. Now, however, the plaintiffs’ lawyers are disagreeing with Casper’s ruling.

The ERISA case consolidated four lawsuits filed against Fidelity by 401(k) plan participants. Bank of America (BAC) is one of the plaintiffs.

The appeal comes just weeks after Ameriprise Financial ag (AMP) consented to pay $27.5M to resolve a 401(k) lawsuit accusing it of breaking its fiduciary duty to 24,000 ex- and current employees who participate in the company’s retirement savings plans.

The plaintiffs accused that firm of failing to make sure the administrative services fees charged were reasonable. They questioned the way Ameriprise used investment options that were managed by a subsidiary. The firm denies the allegations.

However it did consent to place the record-keeping functions of its plan out for bidding and to pay a per-participant or flat fee for these services. It also consented to specific fee disclosures and agreed to find the lowest-priced investment choices moving forward.

Plaintiffs appeal decision in Fidelity case on 401(k) float income, InvestmentNews, April 13, 2015

Fidelity float income lawsuit dismissed, Pensions and Investments, April 6, 2015

Another suit on 401k fees is dismissed
, The Wall Street Journal, March 26, 2015

http://www.gpo.gov/fdsys/pkg/USCOURTS-mad-1_13-cv-10222/pdf/USCOURTS-mad-1_13-cv-10222-0.pdf

More Blog Posts:
FINRA Fines Fidelity $350K for Overcharging More than 20,000 Clients $2.4M, Stockbroker Fraud Blog, January 20, 2015

Investor Files Securities Case Against Fidelity Over Float Income Investments Involving 401(K)s, Institutional Investor Securities Blog, May 6, 2013

Fidelity Investments Settles Class Action Lawsuits Over 401(K) Plan for $12 million, Stockbroker Fraud Blog, September 5, 2014

April 10, 2015

Deutsche Bank Settlement Over Libor Rigging Likely to Exceed $1.5B

According to media reports, Deutsche Bank AG (DB) could settle allegations over Libor manipulation with U.S. and British regulators as early as this month. A source reports that the settlement is likely to be larger than $1.5 billion and unit Deutsche Bank Group Services may even plead guilty.

Regulators expected to be involved in any settlement are the U.S. Department of Justice, the Department of Financial Services in New York, the Commodity Futures Trading Commission, and U.K.’s Financial Conduct Authority. Deutsche Bank is one of several banks probed over accusations of London interbank offered rate manipulation.

Libor is the key interest rate linked to mortgages, credit cards, student loans, and other instruments. The bank is accused of giving false data to a British Banker’s Association daily survey, which impacted Libor’s daily rate in numerous currencies, such as the U.S. dollar, the Euro, and the yen.

Already, UBS Group AG (UBS), Barclays (BARC), Rabobank Groep of the Netherlands, Royal Bank of Scotland Plc (RBS), and Lloyds Banking Group Plc have arrived at settlements over similar allegations. Also, last year, six global banks paid $4.3 billion to resolve civil claims that they manipulated foreign exchange rates. Those cases were settled with the FCA and the CFTC. A number of banks have yet to resolve the DOJ’s criminal probes against them for FX rigging.

A more than $1.5 billion settlement with Deutsche Bank would be the largest one involving a bank over Libor manipulation allegations to date. Already, the German lender was fined $773 million by the European Union for euro interbank offered rate and yen Libor manipulation. The bank is also under scrutiny by Bafin, which is the financial market regulator in Germany.

In other Libor rigging-related news, a federal judge in New York ruled last week that a securities lawsuit against Citigroup (C), Credit Suisse Group AG (CS), Barclays Bank PLC, and dozens of other banks failed due to lack of personal jurisdiction and because the plaintiff, Sheldon Solow brought his claims too late.

The judge said that his court did not have jurisdiction over the foreign banks accused of involvement in the alleged scam that puportedly cost the real estate mogul $100 million.

Solow contended that he would have never paid out that much money if he’d known that the banks were colluding with one another and that this would cost him. He and 7 West 57th Street Realty Co. LLC argued that the foreign banks should have made their jurisdictional arguments in a previous motion to dismiss.

U.S. District Court Judge Paul G. Gardephe, however, said that in light of the U.S. Supreme Court’s ruling last year in Daimler AG v. Bauman, which made tougher the rules regarding bringing American cases against foreign banks that have a New York presence, Solow lost his case.

Deutsche Bank Settlement Over Libor Rigging Likely to Exceed $1.5B, Bloomberg, April 9, 2015

Deutsche Bank comes close to reaching Libor settlement, Financial Times, April 10, 2015

Banks Escape Real Estate Mogul’s $100M Libor-Rigging Suit, Law 360, April 1, 2015

More Blog Posts:
Ex-Rabobank Trader Banned from Financial Services Industry in Britain for Libor Manipulation, Another Pleads Not Guilty in the US, Institutional Investor Securities Blog, March 29, 2015

Libor Manipulation Cases Get the Green Light from U.S. Courts, Libor Manipulation Cases Get the Green Light from U.S. Courts, Institutional Investor Securities Blog, January 30, 2015

Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations, Stockbroker Fraud Blog, March 6, 2015

April 9, 2015

U.S.'s $1B Mortgage Bond Trial Against Nomura Holdings Comes to a Close

Closing arguments took place this week in the Federal Housing Finance Agency’s mortgage-backed securities lawsuit against Nomura Holdings Inc. (NMR). The U.S. regulator claims that the bank made false statements when selling some $2 billion in MBSs to Freddie Mac (FMCC) and Fannie Mae (FNMA).

A lawyer for the bank said that FHFA’s claimed losses were not the fault of Nomura or that of Royal Bank of Scotland (RBS), which the government is also pursuing over the securities. Instead, contended the attorney, market conditions during the 2008 economic crisis were to blame.

The is the first of 18 MBS fraud cases over about $200 million in securities that different banks sold to mortgage finance giants to go to trial. Already, FHFA has gotten $17.9 billion in settlements with the other financial firms, including JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), and Deutsche Bank AG (DB). There was just this case and the one against Royal Bank of Scotland remaining.

At issue is whether Freddie and Fannie knew that there were problems with the securities they were buying and of the alleged damages that were due to misrepresentations or because of the housing crisis at the time. FHFA is accusing Nomura, which was the sponsor of the securities, of misstating key details about the mortgages that were backing the securities. RBS was the underwriter.

Nomura’s legal team, however, argued during the trial that that the agency did not provide much testimony to support its claims, depending instead on paid expert witnesses using allegedly questionable methodologies to examine the mortgages backing the securities.

FHFA said that 68% of the loans underlying the securities purchased from Nomura by Freddie and Fannie had underwriting defects, while close to a third of them purportedly having false loan-to-value ratios.

Freddie and Fannie buy loans from landers, package them into securities, while giving investors a guarantee that they will make them whole should the loans default. During the housing boom, the two entities were among largest investors in triple-A rated private-label securities, purchasing them partially because they helped fulfill government affordable housing mandates and because shareholders profited from them. When the economic crisis happened, however, the securities lost billions of dollars.

At Shepherd Smith Edwards and Kantas, LTD, our securities fraud lawyers have spent the last several years helping investors who have sustained mortgaged-backed securities fraud-related losses to recoup their investments. Many of these losses didn’t have to happen but were very much a result of misrepresentations, omissions, and bad advice given to them by financial firms and their representatives. Our MBS fraud lawyers are available for a free case consultation to help you explore your legal options.

Nomura Set to Square Off Against FHFA in Crisis-Era Securities Case, The Wall Street Journal, March 16, 2015

Nomura blasts U.S. agency's case as $1 bln mortgage bond trial closes, Reuters, April 9, 2015


More Blog Posts:
Texas-Based Broker-Dealer Faces SEC Charges Over Supervisory and Customer Protection Violations, Stockbroker Fraud Blog, March 6, 2015

SIFMA Says White House Isn’t Entirely Right About The Cost of Abusive Trading to Investors, Stockbroker Fraud Blog, March 30, 2015

April 8, 2015

SEC Files First Enforcement Action Protecting Whistleblower Confidentiality Agreements

The SEC has brought its first case for whistleblower protection violations involving Rule 21F-17. The Commission claims that KBR Inc. used language in confidentiality agreements that were improperly restrictive and could potentially impede the whistleblower process.

According to the regulator, KBR required that witnesses involved in certain internal investigative interviews sign confidentiality statements that contained language warning about potentially disciplinary action, including termination, if the matters involved were discussed with an external party without the legal department’s approval. Such probes typically involved claims of possible securities law violations. Because of this, the agency said the terms violated the rule, which bars companies from getting in the way of whistleblowers being able to report securities law violations to the Commission.

To settle, KBR will pay a $130,000 penalty. The company, however, is not denying or admitting to the charges. It did voluntarily consented to modify its confidentiality statement to include language that lets employees know they can report possible violations to federal agencies without the company’s approval or fear of reprisal. KBR also agreed to cease and desist from future Rule 21F-17 violations.

The SEC said there doesn’t appear to be any instances when KBR specifically stopped an employee from notifying the SEC about possible securities law violations. Still, any kind of blanket prohibition could have a chilling effect that might prevent a potential whistleblower from stepping forward.

SSEK Partners Group is a securities law firm. We represent high net worth individual investors and institutional investors.

Read the Order (PDF)


More Blog Posts:
SEC News: Regulator Grants $30M Whistleblower Award and Charges Washington Investment Advisory Firm $600K for Undisclosed Principal Transaction, False Advertising, Stockbroker Fraud Blog, September 23, 2014

Barclays Must Pay Former Trader $9M, Ex-Raymond James Broker Gets Back $650K Award, Institutional Investor Securities Blog, April 6, 2015

Two Firms Charged in Texas With Running Fraudulent Commodity Pool Must Pay Over $7.5M, Stockbroker Fraud Blog, April 6, 2015

April 6, 2015

Barclays Must Pay Former Trader $9M, Ex-Raymond James Broker Gets Back $650K Award

Financial Industry Regulatory Authority arbitrators have awarded Mayank Chamadia $3.7 million in compensation in his case against Barclays Plc. (BARC) Chamadia was placed on leave from the June 2013 to prepare testimony for a possible interest-rate manipulation case. He resigned in October 2013 to go work for another firm.

Although Chamadia wasn’t accused of any violations, he said that the leave time while at Barclays hurt not just his reputation but also is bonus earning power. Now, Barclays must pay Chamadia millions of dollars in deferred pay along with the compensation. The arbitrators found that the firm had “no basis” to reduce or keep payouts that had not yet vested. Chamadia’s lawyer says that this releases some $9 million in back pay that had vested, including interest, to his client.

In another financial representative case against a firm, Robert Fenyk, an ex-Raymond James Financial Services Inc. (RJF) adviser, recently saw his $650,000 award reinstated by the U.S. Court of Appeals for the First Circuit. The ruling comes after a five-year legal battle.

Fenyk was part of the independent adviser network of Raymond James before he was fired in 2009. He took the firm to arbitration two years later alleging employment discrimination and retaliation after a supervisor found out about his sexual orientation and that he was a recovering alcoholic.

An arbitration panel awarded him $650K in back pay and legal costs in 2013. The firm, claiming that the arbitration panel misapplied Florida law and that Fenyk’s claims exceeded the one-year statute of limitations for civil rights cases, appealed in district court. The court vacated the award.

Fenyk appealed and the appellate panel affirmed the original arbitration award. Depending on whether Raymond James appeals this latest ruling, the case could end up before the U.S. Supreme Court.

The SSEK Partners Group is an institutional investor fraud law firm.

Former Barclays Swaps Trader Wins Millions in Back Pay, The Wall Street Journal, April 3, 2015

Barclays Ordered to Pay Ex-Trader About $9 Million, Lawyer Says, Bloomberg, April 6, 2015

Ex-Raymond James broker wins back $650,000 award, Investment News, March 13, 2015


More Blog Posts:
CNL Lifestyle Properties REIT Dips in Value, May Sell Ski Resorts, Institutional Investor Securities Blog, March 16, 2015

Broker and Adviser News: Morgan Stanley Sues Ameriprise Broker, Former UBS Broker Alleges Investor Risk Levels Were Mischaracterized, and Ex-Bank of America Merrill Lynch Trainees Seek Overtime, Institutional Investor Securities Blog, March 5, 2015

Financier Lynn Tilton Sues the SEC After She is Charged with Securities Fraud, Institutional Investor Securities Blog, March 31, 2015

March 31, 2015

Financier Lynn Tilton Sues the SEC After She is Charged with Securities Fraud

Lynn Tilton, the owner of the financial firm Patriarch Partners LLC, is suing the U.S. Securities and Exchange Commission. She wants the regulator to stop going after her for alleged financial fraud. Tilton claims that the agency did not abide by the U.S. Constitution when it chose to pursue its case against her via its own administrative proceeding rather than federal court.

The SEC is charging Tilton and her firm with securities fraud. The Commission contends that she concealed the poor performance of the assets that were underlying three CLO (collateralized loan obligation) funds, known as the Zohar Funds. The agency has been probing the Zohar I, II, and III funds for years. They contain securities put together by Patriarch and are made up mostly of loans to companies that the financial firm controlled.

Tilton and Patriarch had raised over $2.5 billion for the funds. The regulator said that because they concealed the low performances, the firm and Tilton were able to collect close to $200 million of fees they shouldn’t have received. The SEC said that “major conflict of interest” was a factor.

The regulator contends that Tilton and Patriarch Partners reported that the underlying loans’ value hadn’t changed even though a lot of the companies made only partial or no interest payments at all for years to the funds where clients had put their money. Following the charges, Patriarch issued a letter to investors disputing the agency’s claims.


Now, Tilton is claiming that the SEC’s administrative proceedings are a constitutional violation, because even though administrative law judges are considered executive branch officers they garner job protections that do not allow the president to take them out of office. Critics of these proceedings have expressed concern that claimants may be at a disadvantage because of the limited discovery, depositions aren’t allowed, and there are no juries. The judges are paid by the SEC.

Tilton’s Patriarch invests in beleaguered companies at prices that are low. She has helped turned around companies because of these investments. Bloomberg says that she owns all the underlying companies borrowing funds from her investors. This is not typical, because usually multiple firms deal with the different aspects of these types of deals, whether it’s putting together the bonds, selling them, and underwriting. Patriarch is the owner of over 70 companies.

Tilton has been under close examination since 2011 when Moody’s Investors Services (MCO) reduced the credit rating on a deal of hers due to an increasing amount of defaults. The credit rating agency, along with fellow credit rater Standard & Poor’s, have since withdrawn a number of their ratings from the Zohar deals because Tilton didn’t get them enough information about the underlying businesses.

Financier Lynn Tilton sues SEC after it charges her with fraud, Reuters, April 1, 2015

Diva of Distressed’ Tilton Accused of Defrauding Investors, Bloomberg, March 30, 2015


More Blog Posts:

FINRA Fines J.P. Turner, LaSalle St. Securities, and H. Beck For Report Supervision Lapses, Institutional Investor Securities Blog, March 30, 2015

SIFMA Says White House Isn’t Entirely Right About The Cost of Abusive Trading to Investors, Stockbroker Fraud Blog, March 30, 2015

Ex-Rabobank Trader Banned from Financial Services Industry in Britain for Libor Manipulation, Another Pleads Not Guilty in the US, Institutional Investor Securities Blog, March 29, 2015

March 30, 2015

FINRA Fines J.P. Turner, LaSalle St. Securities, and H. Beck For Report Supervision Lapses

The Financial Industry Regulatory Authority Inc. is fining J.P. Turner & Co., LaSalle St. Securities, and H. Beck Inc. $100K, $175K, and $425K, respectively, for lapses in supervising reports sent to clients. The reports provided asset summaries, and the self-regulatory organization is concerned that they had the potential to hide fraudulent activities.

A consolidated report typically contains information regarding most if not all of a customer’s financial holdings, wherever they are held. FINRA requires that these reports are accurate and clear. Failure to supervise these documents can cause regulatory issues, such as the possibility of inaccurate communication, data that is misleading or confusing, supervisory control lapses, and the use of consolidated reports for unethical or fraudulent reasons. The SRO’s regulatory notice 10-19 states that if a firm cannot properly supervise these reports then it should not distribute them and must make sure that registered representatives abide by this restriction.

During routine exams, FINRA found that representatives from the three firms prepared and issued consolidated reports to customers even if the documents hadn’t been properly reviewed beforehand. LaSalle St Securities, which had written procedures pertaining to consolidated reports, failed to enforce these and did not properly trained representatives on how to use the reports. The disciplinary action against the broke-dealers was related to private placement-involved matters.

J.P. Turner and H. Beck lacked the written procedures tackling consolidated reports and their supervision and use, said FINRA. The action against H. Beck also dealt with violations linked to unit investment trust sales. FIRNA said that all three firms had representatives who used consolidated report systems that let them submit customized values for investments or accounts that were held away from the firm. However, the firms’ procedures lacked the safeguard to confirm their accuracy. By settling, the three firms are not denying or admitting to the self-regulatory organization’s findings.

The SSEK Partners Group is a securities law firm.

FINRA Sanctions Three Firms for Inadequate Supervision of Consolidated Reports, FINRA, March 30, 2015


More Blog Posts:
FINRA Orders J.P. Turner to Pay $707,559 in Exchange-Traded Fund Restitution to 84 Clients, Stockbroker Fraud Blog, December 10, 2013

Ex-Rabobank Trader Banned from Financial Services Industry in Britain for Libor Manipulation, Another Pleads Not Guilty in the US, Institutional Investor Securities Blog, March 29, 2015

Ex-Nomura, RBS Trader Enters Guilty Plea to Bond Fraud, Institutional Investor Securities Blog, March 11, 2015

March 29, 2015

Ex-Rabobank Trader Banned from Financial Services Industry in Britain for Libor Manipulation, Another Pleads Not Guilty in the US

The Financial Conduct Authority has banned Paul Robson, an ex-Rabobank Groep (RABO) trader, from the financial services industry in the United Kingdom. Robson pleaded guilty to U.S. fraud charges and was convicted for his involvement in a conspiracy to rig the London interbank offered rate (Libor). This is the FCA’s first public action against an individual for Libor manipulation.

Robson was the main submitter of yen Libor at the bank. FCA’s acting enforcement and market oversight director Georgina Philippou said that there was no way Robson could argue that he didn’t know what he was doing. The criminal charges submitted by the Southern District of New York last year said that while at Rabobank Robson was responsible for its yen Libor submission from January 2006 through at least November 2008. He then went to another brokerage firm before going to work at Bank of Tokyo-Mitsubishi UFJ, also in the U.K. The FCA said that Robson kept manipulating Libor through at least the beginning of 2011.

He is accused of colluding with co-workers and employees of other firms of manipulating the rate to their benefit. In May, trials are set to start for individuals charged with Libor rigging.

Two years ago, Rabobank consented to pay $1.1 billion to resolve probes in the U.K., the U.S. and the Netherlands over its involvement in Libor rigging as well as the manipulation of related benchmark interest rates. So far, regulators globally have imposed some $6.5 billion in fines against firms for their involvement in manipulating Libor.

In other related, Anthony Allen, another ex-Rabobank trader, has pleaded not guilty to charges related to his alleged involvement in manipulating Libor. The banks’ former liquidity and finance global head waived extradition and made his plea in U.S. federal court.

Allen was indicted last year. He is one of several Rabobank traders charged by the U.S. Justice Department for their alleged involvement in the rigging scandal. The DOJ is accusing Allen of setting up a system that allowed fellow bank employees to trade in derivative products tied to US dollar and Japanese yen Libor rates. These employees were able to convey their trading positions to Libor submitters. Others at the bank were then asked to turn in Libor contributions that were in line with the financial interests of the bank or traders to benefit their trading positions.

Some 18 financial institutions in 11 countries have been tied to the Libor rigging scandal. According to media reports, Deutsche Bank (DB) is under investigation by the state of New York as well as by the DOJ. Already the bank has consented to pay the European Union $351 million for its purported involvement. In 2007, Mark Wong, a Deutsche Bank trader was caught trying to manipulate the rate to his advantage. Last month, Deutsche Bank was one of the two banks that failed the US Federal Reserve’s ‘stress test,’ which is designed to see whether the institutions could handle a financial crisis like the one of 2008. The bank will not be allowed to buy back stock or raise dividends until it passes the test.

Contact our securities law firm if you suspect you were the victim of financial fraud.

Rabobank Trader Pleads Not Guilty to Libor-Fixing Charges, The Wall Street Journal, March 20, 2015

Ex-Rabobank Trader Banned From U.K. Finance for Rigging Libor
, Bloomberg, March 17, 2015


More Blog Posts:
Puerto Rico’s Debt Gets Downgraded to "B" by Fitch Ratings, Stockbroker Fraud Blog, March 28, 2015

Ameriprise Financial Settles 401(k) Fiduciary Breach Case for $27.5M, Institutional Investor Securities Blog, March 26, 2015

First New York Securities to Pay $916K to FINRA for Illegal Short Selling
, Institutional Investor Securities Blog, March 25, 2015

March 26, 2015

Ameriprise Financial Settles 401(k) Fiduciary Breach Case for $27.5M

Ameriprise Financial Inc. (AMP) will pay $27.5 million to settle a fiduciary breach case filed by its retirement plan participants. The plaintiffs contend that the financial firm cost them millions of dollars in excessive fees. The agreement was reached just weeks before the 401k lawsuits were set to go to trial. Even though Ameriprise is settling, the firm is not denying or admitting to the alleged breaches.

The plan participants filed their case in 2011 against the firm and the committes tasked with supervising Ameriprise's employee benefits administration and 401(k) investments. The plaintiffs said that the investments in the 401(k) plan included money from the firm’s RiverSource Investments subsidiary and that both companies were paid fee revenues from the plan dollars of employees.

Under the deal, Ameriprise will not have to modify its plan but it will perform a request-for-proposal bidding process for investment consulting services and recordkeeping services, as well as other modifications. Aside from direct expense reimbursements from the plan, the firm cannot get paid for the administrative services it provides to the plan. Ameriprise also must continue to pay a recordkeeper, offer participants the required plan fee disclosures, and consider using separately managed accounts and collective investment trusts.

Recently, experts at the National Association of Plan Advisors 401(k) Summit gathered to talk about the developing legal risks that are starting to impact advisers and retirement plans. Among the areas ripe for 401(k) cases are the failure to swiftly abide by fee disclosure regulations and deals involving plan providers having discretion over employee stock ownership plans and fund menus. The number of 401K lawsuits has been growing over the last few years.

Aside from the Ameriprise case, Lockheed Martin Corp. recently settled a 401(k) lawsuit for $62 million to resolve employee allegations that it mismanaged its retirement plan. Over 108,000 participants were represented in the case, which alleged excessive fees that were imposed and concealed, hurting investment returns.

Underperformance of its “stable value” fund option was blamed on portfolio managers who were too conservative with their investment choices. The defense contractor, however, maintains that it did nothing wrong.

In 2013, International Paper Co. paid $30 million to settle current and ex-employees claims alleging that its 401(k) plans violated the Employee Retirement Income Security Act. The plaintiffs alleged that International Paper kept up its own publicly traded stock as an investment choice, paid excessive investment management and recordkeeping fees, and fraudulently reported performance histories for the funds of the plans. It too denied the allegations.

And there are other cases, including Tibble v. Edison. That class action case has participants in the Edison International-sponsored plan contending that they also were charged excessive fees.

While the lower courts sided with the plaintiffs, finding that the company failed to act in participants’ best interests when selecting mutual fund retail-class shares (rather than the less expensive institutional class ones), a district court and an appeals court sided with the defendant.

Edison said that because of the statute of limitations under ERISA, participants are only allowed to sue based on funds that had been in the plan for six years or less. Because of this, argued the company, it isn’t possible to hold it liable for all of the funds under dispute. Now, it’s up the U.S. Supreme Court to issue a ruling.

Ameriprise to pay $27.5 million settlement in 401(k) fiduciary breach suit, Investment News, March 26, 2015

Lockheed Martin to pay $62 mln to settle 401(k) lawsuit, Reuters, February 20, 2015

International Paper Pays $30 Million Over 401(k) Claims
, The Wall Street Journal, October 1, 2013

Tibble V. Edison


More Blog Posts:
Ex-Ameriprise Adviser Pleads Guilty To Nearly $1M Fraud, Stockbroker Fraud Blog, October 16, 2014

Fidelity Investments Settles Class Action Lawsuits Over 401(K) Plan for $12 million
, Stockbroker Fraud Blog, September 5, 2014

Investor Files Securities Case Against Fidelity Over Float Income Investments Involving 401(K)s, Institutional Investor Securities Blog, May 6, 2013

March 25, 2015

First New York Securities to Pay $916K to FINRA for Illegal Short Selling

The Financial Industry Regulatory Authority has sanctioned First New York Securities LLC for short selling prior to participating in 14 public securities offerings. To settle, the firm, which is not denying or admitting to the charges, will pay a $400,000 fine, disgorgement of $516,000 plus interest, and is barred for six months taking part in secondary or follow-on offerings. It also has consented to an entry of the self-regulatory organization’s findings and will modify its supervisory system to make sure it is in compliance.

According to FINRA, from 9/10 through 4/13, First New York sold securities short within the five days going into the pricing of the public offerings in the securities. It would then buy securities in the offerings—purchasing over 670,000 shares after short selling 187,060 securities shares during those five days. The short sales artificially dropped share prices, which let First New York purchase the stocks at a lower cost. The firm bet against shares of companies that included Kinder Morgan Inc. and BlackRock Inc. (BLK).

Under the Securities Exchange Act of 1934’s Rule 105 of Regulation M, brokers are not allowed to buy securities in secondary offerings when during the restricted period prior to the pricing of the secondary offering the buyer sold short the security that is the offering’s subject. Please contact our securities lawyers to request your free case consultation. SSEK Partners Group represents high net worth individual investors and institutional investors who wish to get their securities fraud losses back.

First New York Fined Again by Finra Over Illegal Short Sales, Bloomberg, March 25, 2015

FINRA Sanctions First New York Securities L.L.C. $916,000 for Illegal Short Selling in Advance of 14 Public Offerings, FINRA, March 25, 2015


More Blog Posts:

CBOE Will Pay $6M Penalty Over SEC Charges Alleging Failure to Enforce Trading Rules, Institutional Investor Securities Blog, June 12, 2013

Ponzi Scams: Madoff Victims to Get $93M, Fraud Lawsuits Name Insurance Brokerage Head in $10M Scheme, Stockbroker Fraud Blog, March 24, 2015

Bank of America’s Merrill Lynch to Pay $2.5M to Massachusetts Over Compliance Rule Relapse, Institutional Investor Securities Blog, March 23, 2015

March 23, 2015

Bank of America’s Merrill Lynch to Pay $2.5M to Massachusetts Over Compliance Rule Relapse

Merrill, Lynch, Pierce, Fenner & Smith, a Bank of America unit (BAC), will pay the state of Massachusetts $2.5 million to resolve charges that it did not abide by its own compliance rules. According to Secretary of the Commonwealth William Galvin, the firm did not properly supervise employees in January 2013 over two presentations that were made to financial advisers in Boston.

The presentations, which allegedly were not properly vetted by compliance staff, were geared toward helping advisers grow their business and oversee the services that they offer clients. Part of the presentations provided training on how to double production via the transfer of customer assets from brokerage accounts that were commission-based to ones with fiduciary fee-based options. Disclaimers about client suitability or advisers’ fiduciary duties were not provided.

According to Merrill Lynch’s own procedures and policies, its compliance team must approve these types of presentations beforehand. A Bank of America spokesperson, however, maintains that no clients were harmed. The firm has since reemphasized to its employees the importance of making sure that internal presentations are properly approved first.

Getting bilked is just one of the reasons why an investor might want to pursue a securities claim to recover losses. Broker misconduct can also include making unsuitable investments to a client, misrepresenting or omitting material facts to an investor about an investment, failure to diversify a client’s portfolio—also known as overconcentration—excessive trading in a client’s account—known as churning—failure to make orders, inadequate supervision or training of a broker, breach of contract, margin account abuse, unauthorized trading, registration violations, and other wrongdoing.

Contact our to discuss your securities case today. Your first consultation with us is free.

Read the Consent Order (PDF)


More Blog Posts:
FINRA Orders Merrill Lynch to Pay $2.4M in Fine, Restitution for Hundreds of Securities Transactions That Violated Fair Price Guidelines, Stockbroker Fraud Blog, December 16, 2014

Citigroup, Credit Suisse, Deutsche Bank, Merrill Lynch, & Other Firms Ordered by FINRA to Pay $43.5M Over Activities Related to Toys “R” Us IPO, Institutional Investor Securities Blog, December 11, 2014

Bank of America Used Subsidiary to Finance Trades, Helped Hedge Funds, Others, Avoid Taxes, Institutional Investor Securities Blog, February 11, 2015

March 21, 2015

US Prosecutors May Revoke Currency Rigging Settlements

According to Bloomberg.com, U.S. prosecutors are thinking about revoking settlements in currency manipulation settlements that were agreed upon years ago and going after banks for manipulating interest rates. The Department of Justice is looking at whether banks violated the earlier deals that resolved those investigations, which stipulated that they would not break the law. If the government finds that banks did in fact commit crimes after the earlier settlements were reached it would be able to revoke those deals.

It has been a common practice for the DOJ to offer deferred prosecution and non-prosecution settlements in probes involving a number of matters, including market manipulation and violations of sanctions. Banks admit responsibility while cooperating with the investigation.

To rescind such a deal would be unprecedented. Among the banks that have settled probes over London interbank offered rate, also known as Libor, are Royal Bank of Scotland Group Plc (RBS), Barclays Plc (BARC), and UBS Group AG (UBS).

The DOJ has continued to look into alleged currency benchmark manipulation and may be seeking guilty pleas from some banks, in addition to imposing penalties. Some guilty pleas would be related to traders from the different banks that worked together to fix currency benchmarks. There is also the probe into whether banks deceived clients about currency transaction prices, a source told Bloomberg. The government is currently working on arriving at deals with Barclays, JPMorgan Chase & Co. (JPM), Citigroup (C), UBS, and RBS.

According to The Wall Street Journal, Barclays and Citigroup are expected to soon settle a currency-rigging lawsuit by institutional investors who contend that the banks manipulated forex-rates. Sources tell the newspaper that they could pay up to $800 million total. Among the plaintiffs are investment funds and pension funds.

J.P. Morgan and UBS have already settled their part in the same case. UBS resolved the allegations for $135 million, while JPMorgan settled for $99.5 million. The two banks consented to cooperate and promised to give the investors’ securities lawyers any information they needed to go after the other banks.

U.S. May Revoke Settlement Agreements in Currency-Rigging Probes, Bloomberg, March 17, 2015

Citigroup, Barclays Close to Settling Forex Lawsuit With Private Investors, The Wall Street Journal, March 17, 2015

Swiss Bank UBS Settles Currency-Rigging Claims for $135M, ABC News, Mrach 13, 2015


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