FINRA Levies $770K Fine-Failure to Deliver Prospectus

The Financial Industry Regulatory Authority (FINRA) recently assessed fines of $770,000 to the following five firms for failing to deliver prospectuses to purchasers of securities:

  • LPL Financial LLC – $400,000
  • State Farm VP Management Corp. -$155,000
  • Deutsche Bank Securities Inc. – $125,000
  • Scottrade Inc. – $50,000
  • T. Rowe Price Services, Inc. -$40,000

FINRA’s review covered from January 2009 through June 2011. In the settlement agreements, FINRA made the following observations:

LPL Financial relied on brokers to deliver the prospectuses but had no procedure in place to determine if they were delivered in a timely manner. LPL was required to deliver over 3 million of these disclosure documents during the review period.

State Farm, who should have delivered over 150,000 during the review period was found to have inadequate supervisory procedures in place.

Scottrade, Deutsche Bank Securities and T. Rowe Price were found to have failed to make delivery of the documents in fewer instances, with inadequate procedures in place.

A prospectus is a disclosure document that describes a security to potential buyers. Sometimes referred to as containing “the hundred and one reasons not to invest” in the particular security, it contains detailed information about the the company’s business and competition and more importantly contains downside risks generally not mentioned by the selling broker.

For the obvious reason, the law generally requires that the document be made available to the purchaser prior to making the purchase.

If you have questions about losses in your brokerage account, please contact us for a no charge consultation. We have been helping investors recover stock market losses due to fraud and negligence for 25 years.

Nationwide representation.

Rex Securities Law

561 391 1900

Former Dawson James Broker Jason Knapp Arrested for Ponzi Scheme

The reported on December 20, 2012, that Jason T. Knapp, age 29,  of Corinth, New York, has been arrested in connection with a nationwide Ponzi scheme, which at the present time appears to have involved hundreds of thousands of dollars. According to  reports there are currently investigations related to Knapp’s actions in Florida, Arizona, Rochester, New York City and Maryland.

According to the PostStar, Knapp had previously worked for Dawson James Securities, Inc. of Boca Raton, FL, and had raised investment capital in connection with a company call SteepleChase Group, claiming returns on investment would be over 18%. It is alleged that he used new investor’s money to pay prior investors and spent a portion of the money earmarked for investment on personal travel including trips to casinos.

Knapp is charged with second-degree larceny for allegedly stealing $60,000 from a New York investor. The article reports that several victims are from Boca Raton, FL.

State Police report that Knapp fled when he learned of the investigation, but was located and arrested in Maryland, arraigned in Lake Town Court and jailed in Hamilton County for lack of bail.

Rex Securities Law has been helping investors recover investment losses from stock brokers, investment advisors and brokerage firms for 25 years. We represent investors nationwide and beyond and there is no charge for the initial consultation.

Please contact us at 561 391 1900 if you have information related to this matter or questions about losses in your investment accounts.

Rex Securities Law

Broker Makes Trades for Deceased Client-Fined & Suspended

FINRA maintains  a  website  where the public can gain access to the employment, regulatory, licensing and disciplinary history of all registered stock brokers. We suggest that you review the information (CRD) for any broker you anticipate entrusting with your hard earned dollars. See this page for more information on the FINRA BrokerCheck website. 

Here is a recent event contained in a broker’s CRD that you may find interesting.

In November 2012,  a broker from Portland Maine, Peter C. Bishop, settled a rules violation allegation by the Financial Industry Regulatory Authority (FINRA) by submitting an “AWC” and agreeing to a one month suspension and a $10,000 fine. An AWC is a Letter of Acceptance, Waiver and Consent and is a fairly common method whereby FINRA, who is the regulatory agency charged with licensing and disciplining brokers, resolves disputes with stock brokers and brokerage firms.

Bishop, according to FINRA records, formerly worked for RBC Capital Markets and Ameriprise Financial, was discharged by RBC for “violating company policy by entering trades in account of deceased individual”. According to the FINRA records, Bishop place four trades in a deceased client’s account after having been notified by the family of the death.

I think we can all agree that this is a good rule for brokerage firms to have and enforce.

Maine’s security regulator imposed an additional fine of $5,000 and imposed other conditions and restrictions for a two year period.

Reviewing the CRD of any broker you contemplate doing business with is a prudent move.

If you have questions about the way your brokerage account has been handled or if you have losses that seem out of line with the risk you agreed to take, contact us for a no charge consultation. We have been helping investor recover stock market losses across the nation for nearly 25 years.

Visit our website for more information about our firm and investment loss recovery.

Rex Securities Law
561 391 1900

TIMBER! Wells Timberland REIT Value Plummets

Following in the footsteps of many other non traded real estate investment trusts, on December 14, 2012, the board of directors of Wells Timberland REIT lowered the estimated value
to $6.65. This represents a substantial reduction from the original
offering price of $10 per share, however, investors will be further
shocked to learn that the real value (vs. the company’s estimated value) is even less. As we have previously reported (here and here)
, since Wells Timberland is a non traded REIT the only market is likely
to be one of the privately operated secondary markets where it may
trade for a discount of 25-35% from  the company’s estimated value.
Investors who paid $10 on the offering may find that actual value is
less than half of that now.

You may recall that last year, in
November 2011, FINRA fined Wells Investment Securities, Inc. $300,000
for using misleading marketing materials in the sale of Wells Timberland
REIT, Inc.Trust. Here is a link to FINRA’s press release.

Wells Securities was the wholesaler for the public offering of Well
Timberland REIT, which invested in timber producing real estate. FINRA
found that from May 2007 to September 2009, Wells distributed over 100
advertising and marketing materials that contained misleading,
unwarranted or exaggerated statements. In addition the Wells ads did not
make it clear that the investment did not yet qualify as a REIT for tax
treatment, one of the selling points highlighted to potential

investors were sold Wells Timberland and other non exchange traded
REITs with the promise of steady and dependable distributions of income
and with no warning that liquidity may be an issue. If you made your
investment based upon misrepresentations from the selling broker, you
may be able to recover all or part of your losses through FINRA

Robert H. Rex, Esq. been helping investors recover investment losses for
over twenty years. We represent clients nationwide. Consultation is

Rex Securities Law
561 391 1900

FINRA Hits J.J.B. Hilliard, W.L. Lyons, LLC with $184K Award

An arbitration panel in Columbus, Ohio, of the Financial Regulatory Authority (FINRA) ruled in November 2012, that J.J.B. Hilliard, W.L. Lyons LLC (Hilliard) must pay an investor over $184,000 in losses and attorneys fees & costs. In addition, the panel ruled that Hilliard was also liable for FINRA hearing session fees of $9,000.

The customer in this case claimed that the investment strategy employed by Hilliard was unsuitable and out of line for her investment objectives.
Stock brokers have a duty to make suitable recommendations to investors, after taking into account the age, health, level of financial sophistication and liquid net worth of the individual.
If you have suffered losses in your brokerage account you may be able to recover some or all of those losses through FINRA arbitration, a process that is much more expeditious and less costly than court litigation.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 


Nationwide representation of victims of stockbroker fraud and the malpractice of investment professionals.

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