As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Vladimir Khosid of San Francisco, California was named as a respondent in a FINRA complaint alleging that while an assistant branch manager at a banking affiliate of his member firm, Khosid, without permission or authority, wrongfully processed bank wire transfers where funds totaling $98,847 were transferred from a deceased bank customer’s account to Khosid’s co-conspirator’s account. The complaint alleges that Khosid’s co-conspirator compensated him $25,000 for his role in the wrongful conversion of the customer’s funds.

Continue reading...

As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Jason Matthew Pennington of Bel Aire, Kansas was named as a respondent in a FINRA complaint alleging that he served as the successor trustee for a trust for which the trustee purchased a life insurance policy from Pennington to increase the amount to $1,325,000, and paid a total of $741,215.03 in premiums for the policy. The complaint alleges that Pennington told the beneficiaries of the estate after the trustee died that the bulk of the estate was to be donated to charities but refused to disclose the names of the charities and the amounts to be donated.

Continue reading...

On March 09, 2012 U.S. Securities and Exchange Commission (SEC) published that the Honorable Rudolph T. Randa, U.S. District Judge for the Eastern District of Wisconsin, on February 22, 2012 approved the settlement of the Securities and Exchange Commission’s Complaint against Koss Corporation, located in Milwaukee, Wisconsin, and Michael J. Koss, its CEO and former CFO. The case is based on Koss Corporation’s preparation of materially inaccurate financial statements, book and records, and lack of adequate internal controls from fiscal years 2005 through 2009. The S.E.C. responded to a letter dated December 20, 2011, in which the District Judge Randa requested that the S.E.C. address concerns about the proposed settlement. Based on the S.E.C.’s response, District Judge Randa stated the Court was “satisfied that the injunctions are sufficiently specific… [and] that the proposed final judgments are fair, reasonable, adequate, and in the public interest.

Continue reading...

On March 07, 2012 U.S. Securities and Exchange Commission (SEC) published that the commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 against Jason Pflaum. In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, Respondent admits the Commission’s jurisdiction over him and the subject matter of these proceedings and consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions, as set forth below.

Continue reading...

On March 07, 2012 U.S. Securities and Exchange Commission (SEC) published that the commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 against Brian S. Cherry. After an investigation, the Division of Enforcement alleges that: From about September 2006 to January 2009, Cherry worked as a salesperson for Progressive Energy Partners, LLC. Cherry holds no securities licenses and has never been registered with the Commission in any capacity. Cherry, 43 years old, is a resident of Newport Beach, California.

Continue reading...

On March 08, 2012 Financial Services Authority (FSA) has fined former Finance Director at Royal Liver Assurance Limited, George McGregor, £109,000 for entering into contracts on behalf of RLA without authorisation and which benefitted a former RLA employee. The FSA determined that McGregor’s behaviour merited a fine of £1,000,000 but reduced the amount because this level of fine would cause serious financial hardship. McGregor is also prohibited from performing any function in relation to any regulated activity in the financial services industry.

Continue reading...

On March 07, 2012 U.S. Commodity Futures Trading Commission (CFTC) announced that it filed an enforcement action in the U.S. District Court for the Middle District of Alabama charging John David Stroud and his companies, Stroud Capital Management, LLC, TS Capital Partners, LLC, and TS Capital Management, LLC, all of Auburn, Ala., with fraud and misappropriation in operating two commodity pools. On March 7, 2012, U.S. District Court Judge Myron H. Thompson entered an emergency restraining order freezing defendants’ assets. The order also prohibits the defendants from destroying books and records and denying CFTC staff access to such records. The judge set a hearing date for March 16, 2012.

Continue reading...

As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Charles Eugene Bishop Jr. of Pompano Beach, Florida was named as a respondent in a FINRA complaint alleging that he wrongfully attempted to misappropriate and use for his own benefit, funds from a member firm customer in the amount of approximately $3 million. The complaint alleges that Bishop deceived the customer into believing that the money in her account would be transferred after her death to a company that she created to care for her prized show dogs. Bishop created a company whose business entity name was virtually identical to a company that the customer owned, but which Bishop had recently created and owned entirely.

Continue reading...

As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Eric Anthony Foster of Suffern, New York was named as a respondent in a FINRA complaint alleging that he effected unauthorized transactions in the account of a deceased customer at his member firm. The complaint alleges that Foster had no authorization for the transactions from either the customer or from the customer’s estate representative.

Continue reading...

As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Gardnyr Michael Capital, Inc. of Mobile, Alabama and Anthony Arthur Grey of Winter Park, Florida were named as respondents in a FINRA complaint alleging that the firm, through Grey, intentionally or recklessly charged unfair, unreasonable, excessive and fraudulently excessive markups on municipal bond transactions with retail customers and knew, or should have known, that they charged unfair, unreasonable, excessive and fraudulently excessive markups on the trades. The complaint alleges that the firm and Grey did not disclose to their customers that an account Grey maintained and controlled was interposed or otherwise involved in the transactions or that the charges were unfair, unreasonable, excessive and fraudulently excessive.

Continue reading...

On March 06, 2012 U.S. Securities and Exchange Commission (SEC) published that the commission filed charges against a New York investment adviser on March 5, 2012, for defrauding investors in five offshore funds and using some of their money to buy himself a multi-million dollar beach resort property on Long Island. Brian Raymond Callahan, of Old Westbury, New York, raised more than $74 million from at least two dozen investors since 2005, promising them their money would be invested in liquid assets, the SEC alleged in a complaint filed in federal court in Islip, New York. Instead, Callahan diverted investors’ money to his brother-in-law’s beach resort and residences project, which was facing foreclosure, and in return received unsecured, illiquid promissory notes, according to the complaint. Callahan also used investors’ funds to pay other investors and to make a down payment on the $3.35 million unit he purchased at his brother-in-law’s real estate project, the SEC alleged.

Continue reading...

On March 06, 2012 U.S. Securities and Exchange Commission (SEC) published that a jury in Omaha, Nebraska returned a verdict on March 1, 2012, of liability on all claims against former chief financial officers Rajnish K. Das and Stormy L. Dean. Das and Dean were former executives of infoUSA, Inc., a database marketing company headquartered in Omaha, Nebraska. The trial was presided over by U.S. District Judge Laurie Smith Camp. In its complaint, the Commission charged Das and Dean with violations of Sections 10(b), 13(b)(5), and 14(a) of the Securities Exchange Act of 1934; Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-3, and 14a-9 thereunder; and aiding and abetting violations of Exchange Act Sections 13(a) and 13(b)(2), and Rules 12b-20, 13a-1, and 13a-13 thereunder.

Continue reading...

On March 06, 2012 U.S. Securities and Exchange Commission (SEC) published that commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 against James Clements (“Clements” or “Respondent”). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission’s jurisdiction over him and the subject matter of these proceedings, and the findings contained in Section III.2 below, which are admitted, Respondent consents to the entry of this Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions, as set forth below.

Continue reading...

On March 06, 2012 U.S. Securities and Exchange Commission (SEC) published that a federal judge ordered the former CEO of Brookstreet Securities Corp. on March 1, 2012, to pay a maximum $10 million penalty in a securities fraud case related to the financial crisis. In December of 2009, the U.S. Securities and Exchange Commission filed a civil injunctive action against Brookstreet Securities Corp. and Stanley C. Brooks, charging them with fraud for systematically selling risky mortgage-backed securities to customers with conservative investment goals. Brookstreet and Brooks developed a program through which the firm’s registered representatives sold particularly risky and illiquid types of Collateralized Mortgage Obligations (CMOs) to more than 1,000 seniors, retirees, and others for whom the securities were unsuitable. Brookstreet and Brooks continued to promote and sell the risky CMOs even after Brooks received numerous warnings that these were dangerous investments that could become worthless overnight. The fraud resulted in severe investor losses and eventually caused the firm to collapse.

Continue reading...

As published in the Financial Industry Regulatory Authority (FINRA) disciplinary actions report for February 2012, Francesca Tsapora Wolfsohn of Port Washington, New York has submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Wolfsohn consented to the described sanction and to the entry of findings that she participated in private securities transactions without providing prior written notice to, or receiving prior approval from, her member firm.

Continue reading...