The former president of Coastal Investment Advisors Inc., Michael Donnelly, admitted to defrauding his clients. Donnelly swindled almost $2 million from 13 clients, many of whom were over the age of 65. According to the SEC, Donnelly misappropriated money provided to him by his clients for investment and used it to pay personal expenses. Donnelly was able to perpetuate his scheme by providing false account statements and trade confirmations to the clients. Donnelley's settlement of the SEC's charges requires him to pay $1.9 million in disgorgement and interest of $365,723.
William J. Wells, an investment manager for a New Jersey firm named Promitor Capital Management LLC, has been charged by the Securities and Exchange Commission (SEC) with fraud. According to the SEC, Wells operated a Ponzi-like scheme. Wells allegedly told investors he would invest their money into specific stocks, but then actually invested their monies in different stocks, some of which were highly speculative. When the stocks did not perform well, Wells created false statements to hide the losses. Wells was able to further conceal the losses by raising money from new investors to pay the established investors. According to the SEC, Wells misappropriated about $1.1 million from all of the investors, most of which has been lost.
Christopher Yoon, a register representative from River Edge, New Jersey, was barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). FINRA made the decision to bar Yoon after a customer alleged that he had requested a signed, but otherwise blank, check from her in the amount of $55,445.85. According to FINRA, Yoon convinced the client to provide the signed, blank check in connection with a fictitious life insurance dispute. Yoon is also accused of forging signatures relating to clients' life insurance policies.
Jonathan Spencer Williams, a registered representative from Forest Hills, Maryland, was barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). FINRA barred Williams after he did not provide testimony in a proceeding regarding his U-5. Williams has had five customer disputes, three of which are ongoing.
The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) fined UBS Wealth Management for claims related to the offer and sale of the Puerto Rico bond fund. The SEC's fine totaled $15 million. The money will go into a fund for the damaged investors. The FINRA fine totaled $18.5 million, and $11 million of the fine will be paid as restitution to 165 customers.
A Minneapolis broker-dealer named Fintegra filed for bankruptcy protection after it was found liable for $1.5 million in damages by a FINRA arbitration panel. The arbitration panel made the damage award based upon its findings of unsuitable investment sales and lack of proper supervision. The investment at issue is called Miasole Investments II. Fintegra employs approximately 140 financial advisors.
A retired couple received a $2.5 million award in a UBS Puerto Rico bond case. The retired couple claimed that their funds were improperly concentrated in the proprietary closed-end Puerto Rican bond funds. In 2013, the bonds began to lose their value, which resulted in a $2.1 million loss for the couple. The retired couple's broker, Joseph Ramirez, Jr., is the subject of multiple customer complaints and exercised his Fifth Amendment right against self-incrimination when called to testify at the arbitration.
Joseph Zada, a former financial advisor, was convicted of fifteen counts of fraud after allegedly swindling millions from twenty-eight investors. One of Zada's most notable clients was former NHL Red Wing player, Sergei Fedorov. Over an 11 year period, Zada allegedly embezzled $43 million from Fedorov. In 2009, Fedorov filed suit against Zada and ended up with a $60 million award. The award was never paid back to Fedorov. Sentencing for Zada will take place on November 20, 2015 and he faces a maximum 300 year prison sentence.
FINRA has filed a complaint against a former UBS and Morgan Stanley financial advisor named John Waszolek. The basis of the complaint is FINRA's belief that Waszolek took advantage of an elderly client, with an Alzheimer's diagnosis, by having the client change her estate planning documents to include him as a beneficiary or recipient of $1.8 million. According to FINRA's complaint, Waszolek later admitted that his elderly client was not competent to change her estate planning documents.
Senator Jack Reed, D-R.I., has introduced a new bill in response to the Supreme Court's decision in Gabelli v. SEC. The bill proposes that the statute of limitations applicable to Securities and Exchange Commission (SEC) enforcement actions be lengthened from five years to ten years. In Gabelli v. SEC, the financial advisor avoided liability because the SEC did not file a case in a timely matter. Sen. Reed wants to extend the statute of limitations to help protect investors and to provide regulators, such as the SEC, with the adequate resources to fight investment fraud.