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January 2014 Archives

Missing Broker Resurfaces After Missing for More Than a Year

Aubrey Lee Price, a Georgia investment advisor who allegedly of caused $40 million in damages to his clients, resurfaced. According to an Investment News article, Mr. Price was last seen in June 2012. In 2012, a Georgia court made a finding that Mr. Price was deceased. Now that Price is back and alive, he is facing criminal charges for bank fraud. Price allegedly raised $40 million from his clients through a private-placement fund which promised "positive total returns with low volatility." Price was arrested on New Year's Eve after a traffic stop. He is now facing up to thirty years in prison and a million dollar fine.

Merrill Lynch Advisor Sentenced to 33 Months in Federal Prison

Massachusetts regulators fined Merrill Lynch $500,000 for failing to supervise a broker who defrauded clients. The broker, Jane O'Brien, allegedly borrowed about $2 million from her clients. According to state regulators, O'Brien was one of the top producers in her Boston Merrill Lynch office. State regulators alleged that O'Brien's status as a top producer contributed to Merrill Lynch's faulty supervision. Merrill Lynch did not review her conduct until almost a week after O'Brien was indicted by the U.S. Justice Department. Since then, O'Brien resigned, was barred from the securities industry, and pled guilty to the fraud charges which resulted in a sentence of thirty-three months in federal prison and ordered to pay restitution in the amount of $240,000.

FINRA's New "Tone From the Top" Approach to Help Decrease Conflicts of Interest

The Financial Industry Regulatory Authority Inc. (FINRA) has issued a new report about conflicts of interest within its broker-dealer members. As a result of a study of fourteen member firms, FINRA formulated a policy known as "tone from the top" approach to help decrease these conflicts. This approach analyzes the policies and procedures governing the firm's top management officers and studies how those policies and procedures impact the entire organization. Many think that the report suggests that FINRA is beginning to inch closer and closer to a more fiduciary oriented standard for the disclosure of conflicts. FINRA is hoping that this report will help begin and continue to improve the manner in which conflicts of interest are handled.

LPL Broker Barred for Nontraded REIT Sales

Gary Chackman, a long time LPL broker, was barred from the financial industry by the Financial Industry Regulatory Authority, Inc. (FINRA) for abusive sales practices involving nontraded real estate investment trusts (REITs). According to FINRA, Chackman falsified documents to effectuate the improper REIT sales. By falsifying the documents, Chackman enjoyed the benefit of the typically high (7%) commission paid on nontraded REITS.

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