Securities Regulator Fines Citifgroup $1.2M for Charging Excessive Markup/Downs on Bond Transactions

March 20, 2012

Today FINRA ( The Financial Regulatory Authority) fined Citi International Financial Services LLC, a subsidiary of Citigroup, Inc. $600,000 and ordered restitution to 3,600 customers totaling $648,000 for charging excessive markups and markdowns
on bond transactions and other supervisory issues. Here is a link to the FINRA  press release.

Markups and markdowns are the differences between what a broker pays or sells a bond for and what he sells or buys it from you for. It is the undisclosed profit ( the “spread”) that firms make when buying and selling your bonds. For example, if the broker purchasesd bond for $99 and sells it to you for $100, the markup is $1.

The SEC doesn’t require brokers to disclose how much they make on bonds they sell to you. To protect yourself you may want to go to Investing in Bonds.com , enter the cusip number of the bond and get information about what the bond has been trading for recently. Generally 1-2% markup is ok.

In the Citi case, FINRA found that from July 2007 to September 2010, they had charged excessive markups and markdowns, ranging from 2.73-over 10%.

If you have questions about the way your brokerage account is being handled or have unexplained losses in your stock market account, call to discuss your options.

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.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

SEC Issues Investor Bulletin on Municipal Bonds

On March 19, 2012, the Securities & Exchange Commission
issued an Investor Bulletin to help educate investors on Municipal Bonds.

Municipal bonds (muni’s) are debt securities issued by
governmental agencies like cities & counties, often times to fund projects like building schools and highways.

There are two common types: General Obligation Bonds which are not secured by any specific assets, but rather are backed by the issuer (ie; state, county, etc.)

Revenue Bonds which are backed, not by the government entity but by revenues from a specific project like highway tolls.

The SEC points out that muni’s are subject to the
following risks:

  • Call Risk-the potential for the issuer to repay
    the bond before its maturity date.
  • Credit Risk-the risk that the issuer may experience
    financical problems that may it difficult or impossible to pay the promised
  • Interest Rate Risk-the risk associated with the
    fluctuation of the value of the bond in response to rising and falling interest
  • Inflation Risk-If prices move up generally,
    this can lead to rising interest rates which lower the value of bonds.
  • Liquidity Risk-the risk that investors will not
    be able to find a market for their bonds.

If you are thinking of investing in municipal bonds, you would be wise to read the entire Investor Bulletin on the SEC website.

If you have questions about the way your brokerage
account is being handled or have unexplained losses in your stock market account, please do not hesitate to contact us .

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.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Stockbroker Jailed for Selling Annuity to 83 Year Old Woman

The Wall Street Journal reports that California’s insurance commissioner had independent insurance agent Glenn Neasham arrested for selling a complex annuity to an 83 year old woman. The jury in Lake County, CA, found the lady had dementia and  convicted the broker of felony-theft and ordered him to spend 90 days in jail.

Steve Poizner,  the former insurance commissioner was quoted as saying agents “who steal from vulnerable seniors will not get away with their shameful tricks”.

We have warned investors to be wary when making annuity purchases for many years given the fact that there are often steep penalties if money is withdrawn early. Some annuities define “early” as a decade or more. In addition commissions on indexed annuities are very high, sometimes 12% or more.

In the case cited, the broker earned a $14,000 commission (8%) and the penalty to pull the money out of the annuity in the first year was 12.5%.

We are not aware of another case where the regulators have taken such a strong stance. Perhaps this will have some chilling effect on the sale of these products to the elderly, however you can’t ask too many questions about the suitability  of any annuity proposed to you by your broker.

If you have questions about the way your brokerage account is being handled or have unexplained losses in your stock market account, call to discuss your legal options

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.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

 

FINRA Issues March 2012 Disciplinary Actions

FINRA (The Financial Industry Regulatory Authority) issues disciplinary and other actions monthly against member firms and individual stock brokers for violations of FINRA rules, federal securities laws, rules and regulations and the rules of the Municipal Securities Rulemaking Board (MSRB)

Here are the actions taken for the month of March 2012 against Florida members and individuals. For a complete listing of all actions, visit the FINRA website.

Tradespot Markets (formerly Beloyan Investment Securities, Inc.) & Mark B. Beloyan- Davie, FL: Fined $13,500 and suspended for 10 days for distributing misleading information in connection with sale of stock.

Spartan Securities Group LTD, Clearwater, FL-Censured and fined $52,500 and required to revise supervisory system and procedures related to order handling, best execution, anti-intimidation, trade reporting and other areas.

Erick Enrique Isaac-Aventura, FL– Barred from association with any FINRA member for payment of commissions to unregistered individual.

Scott David Mason-Debary, FL-Suspended for 18 months for establishing a hedge fund and sold partnership interests in the hedge fund without his firm’s permission, raising over $1 million.

Richard A Neaton-Port Charlotte, FL-Barred from association with any FINRA member for failure to disclose disciplinary actions and sanctions a state bar disciplinary board imposed on him.

Sergio M. Ripamonti-Sunny Isles Beach, FL-Barred from association with any FINRA member on findings that he conducted a securities business with an unregistered person.

Richard P Sandru-Fort Myers, FL– Barred from association with any FINRA member on findings he submitted forms for financial planning clients that resulted in the payment of improper fees to Sandur of more than $292,000.

Allan Anthony Scheer-Melbourne,FL-Fined $5,000 and suspended for four months for misrepresenting material information to potential clients.

Dominick A. Zavaglia, Jr.-Miami, FL– Fined $5,000 and suspended for six months for failing to timely disclose material facts on his form U4.

Firms Cancelled for Failure to Pay

Outstanding Fees 

Allegiant Securities L.L.C. (CRD #133912)

Miami, Florida

(January 11, 2012)

 

American Classic Financial Company

(CRD #24099)

Colorado Springs, Colorado

(January 24, 2012)

 

Cohen Capital Group, LLC (CRD #43418)

New York, New York

(January 11, 2012)

 

Hanmi Asset Securities, Inc. (CRD #137893)

Los Angeles, California

(January 30, 2012)

 

Lighthouse Capital Corporation

(CRD #41812)

Monterey, California

(January 30, 2012)

 

Madison Williams and Company, LLC

(CRD #149530)

New York, New York

(January 30, 2012)

 

Securities Corporation of America

(CRD #15286)

Dallas, Texas

(January 30, 2012)

 

Windfall Securities LLC (CRD #147779)

San Francisco, California

(January 30, 2012)

 

Individuals (FL only) Barred for Failure to Provide Current Information

 

Todd Nall Farmer (CRD #4364321)

Arlene Debra Cassinelli (CRD #2970803)

Michael Frank Louis (CRD #2287160)

Individuals (FL only) Suspended for Failure to Provide Current Information

 

Vladimir Avin (CRD #2625858)

Keith Kirkpatrick Lemley (CRD #1520929)

Paul Gerard Pfeiffer (CRD #4842017)

Patricia Claire Rodriguez (CRD #1947350)

If you have questions about the way your brokerage account is being handled or have unexplained losses in your stock market account, please do not hesitate to contact us .

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.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Rex Securities Law Investigates Recovery of Puda Coal Losses

Have you or your loved ones suffered losses as a result of purchasing Puda Coal?

In late February 2012, the Securities & Exchange Commission charged
two China-based executives with defrauding investors by convincing them
that they were investing in a Chinese coal company when in fact there
was nothing but a shell company with no assets. This fraud has wiped out
hundreds of millions of dollars of shareholder value.

According to the SEC action Puda Coal’s chairman Ming Zhao conspired
with a former CEO Liping Zhu to steal and sell Puda’s only revenue
producing asset, a coal mining company name Shanxi Puda Coal Group.
Puda’s interest in Shanxi was secretly transferred to Zhao who then sold
most of it to a fund, allowing Zhao to reap all the profit at the
expense of Puda’s shareholders.

The scheme was hatched just weeks before Puda was to announce that
Shanxi had received a lucrative contract from Chinese government
authorities causing investors in the US to run the price of  the stock
up to over $16. It currently (March 2012) is trading at $.23.

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.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

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

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