Category Archives: FINRA Disciplinary Actions

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NOTICE TO MERRILL LYNCH CUSTOMERS – Klayman & Tokses, P.A. Announces Investigation into Merrill Lynch Loan Management Accounts in Light of FINRA Sanctions for $7 Million in Fines and Restitution Regarding US and Puerto Rico Clients

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New York, NY – December 1, 2016 — The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (“K&T”), www.nasd-law.com, announces an investigation into Merrill Lynch, a wholly owned brokerage firm of Bank of America (NYSE:BAC), for Financial Industry Regulatory Authority (FINRA) sales practice violations from its Loan Management Accounts (LMAs) following FINRA regulatory fines.  Yesterday, FINRA accepted from Merrill Lynch an Acceptance Waiver and Consent for $6.25 million in fines and approximately $780,000 in restitution to Puerto Rico customers, for inadequately supervising the use of Merrill Lynch loans for customer accounts.  According to FINRA, Merrill Lynch brokerage accounts received proceeds transferred from LMAs and purchased millions of dollars in securities, the majority being purchased on margin, within 14 days of the transfer.  FINRA concluded that these supervisory failures occurred from January 2010 to November 2014.

According to K&T founder, Lawrence L. Klayman, Esq. “The use of brokerage account assets as collateral for these loans greatly increased the risks assumed by Merrill Lynch customers.”    Mr. Klayman explains, “Our firm is investigating sales practice violations by Merrill Lynch for failure to supervise its financial advisors’ recommendations to customers concerning the use of LMA proceeds to purchase stock on margin.  Merrill Lynch’s advice to use margin loans signals a potential conflict of interest, which increased commissions for their financial advisors at the expense of customers who did not fully understand the risks associated with these loans.”

The sole purpose of this release is in furtherance of our investigation into Merrill Lynch’s sales practices related to Loan Management Accounts (LMAs) which may include violations for unsuitable recommendationsmargin abuse, breach of fiduciary dutymisrepresentations and omissions of material facts and a failure to supervise.   Current and former Merrill Lynch customers who have information about the sales practices of Bank of America and its brokerage firm, Merrill Lynch are encouraged to contact Lawrence L. Klayman, Esq. or Raymond Gentile, Esq. of Klayman & Toskes, P.A.  at (888) 997-9956, or visit our website at www.nasd-law.com.

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FINRA Fines Broker $219,000 for Private Placement Violations

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Thomas Edward Brenner Jr. (CRD #1489233, Orrville, Ohio) submitted an AWC in which he was assessed a deferred fine of $30,000, suspended from association with any FINRA member in any capacity for 16 months, and ordered to pay deferred disgorgement of commissions of $189,000, plus interest. Without admitting or denying the findings, Brenner consented to the sanctions and to the entry of findings that he engaged in two separate private placements which were rife with supervisory and substantive violations.  The findings stated that in soliciting customers to purchase a private placement offering, Brenner provided customers with a private placement memorandum (PPM) for the offering and a program summary, the latter of which provided a brief summary of the offering. Both the PPM and the program summary contained several statements that claimed or implied that the investments were secured, or suggested a level of safety in the investments or reliability in forecasting returns by investors.

The findings also stated that in soliciting investors for another offering, Brenner provided each investor with an application form, a subscription agreement, a promissory note and an executive summary generally describing the offering. At various times while Brenner was soliciting investors in this offering, a founder of the offering told Brenner that a PPM was forthcoming. But, the PPM was not completed until after FINRA’s investigation of the offering began and well after Brenner had ceased soliciting investors. Hence, the PPM

was not provided to investors. By distributing a variety of documents to investors in each offering, Brenner negligently made untrue statements of material facts or omitted to state material facts necessary to make the statements made, in the light of the circumstances under which they were made, not misleading, and made statements which were not fair and balanced, and were misleading, exaggerated and unwarranted.

The findings also included that Brenner’s member firm’s WSPs designated him as the principal responsible for ensuring compliance with all procedures relating to private placements, including the due diligence requirements. Brenner, however, was not aware that he was the designated principal under the WSPs and did not have any experience in supervising private placements. Despite the express references in the firm’s WSPs to due diligence requirements for private placements, neither Brenner nor anyone else at the firm conducted the diligence the firm’s WSPs required. Brenner assumed that another principal of the firm had conducted the due diligence of one of the offerings. However, that principal was unaware of the offering and did not conduct any due diligence. Brenner’s review of the offering was limited to talking with the offering’s founder and discussing its business plan with a few people in the medical or pharmaceutical industries for the purpose of understanding the market demand for the self-owned toxicology laboratories.

The suspension is in effect from August 15, 2016, through December 14, 2017.

(FINRA Case #2015046056403)

Source: FINRA, Financial Industry Regulatory Authority, Inc. 2016
Full Disciplinary Reports Available to the public at: www.finra.org

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Notice to Clients of Andrew Yocum and Morgan Stanley: The Securities Arbitration Law Firm of Klayman & Toskes, P.A. has Commenced an Investigation in Light of Recent Regulatory Action Barring Andrew Yocum from Acting as a Broker

By | Blog, Featured Investigations, FINRA Disciplinary Actions, Oil & Gas Investments, Securities Concentration | No Comments

New York (Globe Newswire) – August 2, 2016 – The Securities Arbitration Law Firm of Klayman & Toskes¸ P.A. (“K&T”), www.nasd-law.com, has commenced an investigation in light of recent regulatory action barring Andrew Yocum (“Yocum”) from acting as a broker or otherwise associating with firms that sell securities to the public.

The Financial Industry Regulatory Authority (“FINRA”) recently barred Yocum from the securities industry after he failed to respond to a FINRA investigation.  (FINRA No.  2015048065701).  FINRA sanctioned Yocum after he refused to appear for on-the-record testimony in connection with an investigation into whether he effected unauthorized transactions, exercised discretion without written authorization, and recommended unsuitable concentrated purchases of energy sector securities to senior investors.

Numerous customer complaints were made against Yocum while employed at Morgan Stanley.  Several of these complaints included over-concentrating customer accounts in energy, oil and gas related securities as well as recommending unsuitable investments to Morgan Stanley customers.  Investment firms are required to supervise their brokers and financial advisors to ensure that they are compliant with FINRA rules.  FINRA sales practice rules related to potential violations may include misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration, or failure to supervise its financial advisors.

The Securities Arbitration Law Firms of Klayman & Toskes, P.A. and Carlo Law Offices Announce Investigation of Santander Securities, LLC on Behalf of Puerto Rico Investors for FINRA Sales Practice Violations

By | Featured Investigations, FINRA Disciplinary Actions, FINRA Sales Practice Violations, Puerto Rico Bond Funds, Securities Concentration | No Comments

The Securities Arbitration Law Firms of Klayman & Toskes, P.A. and Carlo Law Offices Continue to  Investigate Santander Securities, LLC on Behalf of Puerto Rico Investors for FINRA Sales Practice Violations

San Juan, Puerto Rico (BUSINESSWIRE) – October 13, 2015 – The Securities Arbitration Law Firms of Klayman & Toskes, P.A., www.perdidasenbonospr/.com/en/, and Carlo Law Offices continue to investigate Santander Securities, LLC, a subsidiary of Santander BanCorp, both wholly owned by Banco Santander, S.A. (NYSE:SAN) for securities sales practice violations. Financial Industry Regulatory Authority (FINRA), announced a $6.4 million settlement with Santander Securities, LLC for sales practice violations related to UBS Puerto Rico Bond Funds and UBS affiliated bank loans.

According to the FINRA Acceptance Waiver and Consent Order (AWC), Santander Securities, LLC agreed to settle with FINRA for $6.4 million which included, “A fine of $2.0 million” and “Restitution of approximately $4.3 million” for certain solicited transactions in Puerto Rico Bonds and close-end funds. FINRA cited that, Santander Securities, LLC had “deficient supervisory system and procedure regarding concentrated securities purchases and margin use” related to solicited investments in individual Puerto Rico bonds and Puerto Rico close-end funds.

According to Steven D, Toskes, Esq., of Klayman & Toskes, P.A., “the findings in the FINRA action against Santander Securities released today is significant for investor claims of broker misconduct related to solicited investments in individual Puerto Rico Bonds, Puerto Rico closed-end funds and the use of margin loans which led to catastrophic losses.” Mr. Toskes continued, “Our investigations resulted in similar findings to those detailed in the FINRA AWC against Santander Securities that resulted in $6.4 million in fines and restitution for misrepresentations about risk, concentration in Puerto Rico Bonds and the use of margin and bank loans.”

The securities arbitration law firms of Klayman & Toskes, P.A. and Carlo Law Offices are dedicated to the rights of Puerto Rico investors. We are experienced, qualified and nationally recognized securities litigation attorneys. We are currently investigating Santander Securities, LLC for FINRA sales practice violations related to concentrated investments in individual Puerto Rico Bonds, Puerto Rico closed-end funds and the use of margin loans. Puerto Rico investors who have experience with or knowledge of Santander Securities sales practices, contact Steven D. Toskes, Esq. at 888-997-9956.

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