BrokerDealer Fiduciary Standards and White House Leak: “I’m Shocked!” Says Frmr SEC Honcho Schapiro

Posted on February 9, 2015 by admin

BrokerDealer.com blog is not as easily shocked as former SEC Chair Mary Shapiro seems to be, but then again, Ms. Shapiro left the SEC top job a mere two years after being appointed.

This update is courtesy of BankInvestmentConsultant.com

A leaked White House memo supporting a fiduciary definition for brokers selling retirement investments proposed by the Department of Labor was “pretty shocking,” according to former SEC chairwoman Mary Schapiro.

But in a discussion of industry issues at the NICSA Strategic Leadership Forum, Schapiro said that there was no clarity as to how the regulator would handle the proposal.

“It’s a muddled mess,” Schapiro said.

The memo, which was first reported by The Hill, states that there was evidence that “the current regulatory environment creates perverse incentives that ultimately cost savers billions of dollars a year.” The memo is in support of a proposed fiduciary definition for professionals selling retirement investments to 401(k) beneficiaries under the Employee Retirement Income Security Act.

Schapiro said it is difficult to understand how the proposal will ultimately be received by the SEC, as it has its supporters and detractors within the commission. “The issue is politically difficult within SEC,” she said.

Those who do not see any benefit for the proposal note that broker-dealers are already subject to more stringent regulation and scrutiny than financial advisors, Schapiro said.

She added that if the SEC does throw its support behind the proposal, it might cause SIFMA to walk away from its support of a fiduciary standard.

SIFMA believes the DOL proposal “is an overbroad expansion of the fiduciary standard,” but it does support a uniform fiduciary standard.

Raymond James Financial CEO Paul Reilly is among the industry executives against the proposal, calling it in a recent email to employees “an example of biased and distorted research (that) impugns the integrity of the work our advisors do every day to help clients achieve their financial goals.”

Schapiro said the goal in helping investors gain a better understanding of their investment options was valid. “We have to make things easier for investors one way or another,” she said, but predicted more debate before any resolution on the fiduciary standard matter.

“It’s completely unclear where it will go, but it will continue to be a fight,” she said.

New Fraud Charges After Investment Advisor Tries Paying Old Fraud Charges

Posted on February 9, 2015February 9, 2015 by admin

Brokerdealer.com blog update is courtesy of InvestmentNews’ Mason Braswell.

Jacob Cooper, investment advisor at Total Wealth Management

Investment Advisor firm, Total Wealth Management, was ordered to pay SEC fraud fines in April. After paying the fine, the firm is now being charged with using clients’ money to pay the initial fraud fines.

Investment adviser Jacob Cooper and his firm, Total Wealth Management, face a fresh set of fraud charges after they attempted to use client funds to settle an earlier fraud case with the Securities and Exchange Commission, according to a new complaint filed Wednesday.

The Securities and Exchange Commission filed the charges against Mr. Cooper and his San Diego-based firm after, according to the complaint, they misused investor money for the original settlement and defrauded clients through unexplained “administrative” fees.

The SEC is now seeking to freeze the firm’s assets, appoint a receiver to oversee remaining funds and assess civil penalties.

Total Wealth Management, which Mr. Cooper founded in 2009 and built up through a weekly radio show on investing, allegedly borrowed $150,000 in client funds to help settle an SEC administrative action from April. In that action, the SEC accused him of fraud for pooling around 75% of clients’ $100 million assets into a private fund, which he then invested in unaffiliated funds that paid an undisclosed revenue-sharing fee back to clients.

In addition, the SEC alleged in its most recent complaint that Mr. Cooper was using investor money to pay for legal fees on a related class action brought by clients, who have not been able to withdraw their money or terminate their relationship.

He allegedly charged several Total Wealth investors between $3,500 and $7,500 per account under the guise of “administrative” fees, the agency said.

Then, in a mass email from Total Wealth Management, the firm purportedly told clients: “Many of you were aware of a class action lawsuit brought on by only a few clients causing fee increases for all.”

“The irony is that [the class action] counsel and a very small group of investors have caused a significant amount of those increased fees they have complained about,” the email added.

The SEC disagreed.

“[Mr.] Cooper has an inherent conflict of interest since he is using investor money to defend himself in a lawsuit brought against him by investors,” the complaint stated.

A lawyer for Mr. Cooper, Charles Field of Chapin Fitzgerald Knaier, declined to comment. A number listed for Total Wealth Management was not in working order.

Mr. Cooper has stated that he is in a period of “deep financial stress,” and that he has “no income” and “no job opportunities,” according to the complaint.

He has been writing fantasy novels, however, including one published last July called “Circle of Reign (The Dying Lands Chronicle Book 1).”

Total Wealth Management had about $103 million in assets under management and 773 client accounts, according to its Form ADV from December. The firm found clients through a weekly radio show Mr. Cooper hosted and through free lunches, the SEC said.

For the original article from InvestmentNews, click here

Russian Spies Sneaking Around Wall Street..Oh My..

Posted on February 6, 2015 by admin

BrokerDealer.com blog update courtesy of slow day on Wall Street, inspiring CNBC to offer coverage suggesting that Russian spies are breaking into broker-dealers in effort to gather finance industry intelligence (pardon the oxymoron)..

For those spies and others seeking information about brokerdealers throughout Western Europe, Eastern Europe, Asia and the Middle East, BrokerDealer.com offers a global database of firms in all of these regions..

Here’s the fun video clip from CNBC

SEC Officials Fight The SEC

Posted on February 6, 2015February 6, 2015 by admin

Brokerdealer.com blog update courtesy of InvestmentNews.

Yes, you read the title right, SEC officials are blasting the commission for turning a blind eye to fining brokerdealer firm Oppenheimer & Co. Inc. for further misconduct. As you may remember a brokerdealer.com blog from last week, Oppenheimer & Co. Inc. was fined $20 million for improper penny stock trades. The SEC said that the firm failed to prevent suspicious penny stock trading and pump-and-dump schemes. Officials are now claiming that further fines should be given to Oppenheimer due to continued misconduct.

Two members of the Securities and Exchange Commission blasted the agency’s decision to spare Oppenheimer Holdings Inc. from additional sanctions related to a recent settlement, saying regulators were turning a “blind eye” to the investment bank’s pattern of misconduct.

SEC Commissioners Luis Aguilar and Kara Stein, both Democrats, said they opposed a waiver of a penalty that would have barred Oppenheimer from raising money for private firms and hedge funds after the company admitted last week to improperly selling billions of shares of penny stocks.

“These violations are just the most recent chapter in a long and unfortunate history of regulatory failures, some more significant than others, but cumulatively indicative of a wholly failed compliance culture,” Mr. Aguilar and Ms. Stein wrote in a statement released Wednesday.

Their dissent is the latest example of partisan disputes at the five-member SEC over how the agency polices Wall Street. The fight over waivers stalled an earlier settlement with Bank of America Corp. and portends future difficulties for companies seeking to end enforcement cases, especially if they are repeat offenders.

Ms. Stein previously criticized a penalty waiver that benefited Royal Bank of Scotland Group Plc and fought to attach more onerous conditions to a reprieve that Bank of America obtained after settling a $16.7 billion mortgage-bond case. SEC Chair Mary Jo White, an independent, and Commissioners Daniel Gallagher and Michael Piwowar, both Republicans, voted in favor of the waiver for Oppenheimer.

The SEC has typically granted waivers to keep from punishing parts of financial companies that weren’t implicated in the wrongdoing at issue.

Oppenheimer spokesman Stefan Prelog said the firm will hire “a fully independent law firm” to review its compliance procedures. The findings and recommendations will be reported to the company’s independent directors, he said.

‘LACKS TEETH’

Mr. Aguilar and Ms. Stein said the SEC’s action “lacks teeth” because it leaves the door open to Oppenheimer hiring a law firm it already uses, which “has every incentive to be accommodating by ignoring or dismissing inadequacies in the firm’s practices.”

Oppenheimer admitted Jan. 27 that it failed to report red flags that its client Gibraltar Global Securities, a Bahamas-based firm, was selling penny-stock shares without being registered in the U.S. The firm acknowledged additional sales of penny stocks for a different customer that resulted in about $588,400 in commissions, according to the SEC. Oppenheimer agreed to pay $20 million to settle the case.

“The company is dedicated to putting these issues behind it through the adoption of a strong compliance infrastructure,” Mr. Prelog said in the statement.

U.S. representative Maxine Waters, a California Democrat, agreed with Mr. Aguilar and Ms. Stein.

“Investors and the American public are greatly disserved when our regulators throw away valuable enforcement tools and adopt a policy of ‘too-big to bar,’” Ms. Waters said in a statement, adding that said she will work with other Democratic lawmakers on legislation that “sends a strong message to the markets that wrongdoers like Oppenheimer will be sufficiently held accountable for their misdeeds.”

Oppenheimer has settled at least 30 separate cases with regulators since 2005, according to Mr. Aguilar and Ms. Stein’s statement. In 2010, the firm agreed to pay $31 million to investors to settle the New York Attorney General’s claims it misrepresented the safety of auction-rate securities. The firm agreed in 2013 to pay $675,000 to the Financial Industry Regulatory Authority Inc. to settle claims that it charged unfair prices to customers buying municipal securities.

The 2015 Wall Street Letter Award For Best BrokerDealer(s) Goes To…

Posted on February 5, 2015 by admin

Financial Industry publication Wall Street Letter held it’s 5th Annual Award Ceremony on Feb 5 and feted the top dozen brokerdealers for best-in-class products and services, as well as recognizing an assortment of the financial industry’s leading technology firms and exchanges.

In connection with above, BrokerDealer.com blog is honored to profile the award for “Best Research-BrokerDealer” , which was determined by a panel of industry judges. The winner for this category was Mischler Financial Group, the financial industry’s first and foremost Finra member firm that is owned and operated by Service-Disabled Veterans.

Feb 5, 2015 New York- Mischler Financial Group, Inc., the securities industry’s oldest investment bank/institutional brokerage owned and operated by service-disabled veterans was recognized by industry peers last night and awarded “Best Research-BrokerDealer” during the 5^th Annual Wall Street Letter Awards held at New York City’s Cipriani 42^nd Street.

This is the second year in a row that Mischler has been feted for its excellence in research content by a panel of judges representing both buy-side investment managers and sell-side broker-dealers. Runners-up in the Best Research-BrokerDealer category included two other contenders: 125-year old super regional and full-service investment brokerage Stifel Nicolaus and financial service sector investment bank Sandler O’Neill + Partners.

The 5^th Annual Wall Street Letter Award program encompassed 36 categories of excellence, including broker-dealer products and services, trading technology vendors and major exchanges. More than125 firms were nominated across the various categories, and Mischler Financial was the sole diversity firm recognized for being “best-in-class.”

Accepting the award on behalf of Mischler Financial Group was Ron Quigley, Managing Director of Fixed Income Syndicate and Primary Sales and author of “Quigley’s Corner,” the firm’s daily debt capital market commentary, which includes granular insight to corporate bond market issuance and rates trading. Quigley’s Corner is distributed to more than 1000 Fortune corporate treasurers, leading investment managers, public plan sponsors and senior executives across the sell-side’s fixed income syndicate universe. Mischler also provides bespoke global macro strategy observations, equity trading insight and consumer market sector analysis to its institutional client base.

Noted Dean Chamberlain, CEO of Mischler Financial, “It is both an honor and a privilege to be recognized by such an esteemed group of industry professionals and a further testament to our value-add capabilities, especially when compared to the most recognized and respected firms in the financial services industry.”