Morgan Stanley Hit With $20mil Whistleblower Suit

Posted on August 28, 2015August 28, 2015 by admin

Two ex-brokers hit brokerdealer Morgan Stanley with a $20 million lawsuit this week, alleging that they were fired in retaliation for complaining about improper practices and violations of securities law at the wirehouse, according to news from BankInvestmentConsultant.com.

In a news story filed Aug 27, Jamie Feldman-Boland and her husband, John Boland, say that they witnessed trainees and interns entering in trades on behalf of advisors, and presumably doing so with brokers’ access codes in violation of the broker-dealer firm’s policy.

Other misconduct they say witnessed: an advisor trying to improperly get an insurance commission; cancelling a business deal worth $200 million to punish Feldman; and harassment of Feldman by another advisor and her branch manager.

Morgan denies the allegations.

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“These former financial advisor trainees have filed numerous unsubstantiated claims since their terminations in 2011. To date, none have been found to have any merit. We believe this latest claim is equally without merit and will be dismissed,” a Morgan spokeswoman said.

Alice Keeney Jump, an attorney at law firm Reavis Parent Lehrer who is representing the Feldman and Boland, rebutted Morgan’s argument, saying that the couple’s allegations are straightforward.

“I disagree any arbitration panel has settled these claims,” Jump says.

She adds, “My clients are fully confident in the truth of their allegations and have decided to pursue their rights.”

COLD CALLS

Feldman, 38, joined Morgan in 2008 after four years at Merrill Lynch, according to Finra’s BrokerCheck. Boland followed her to the firm in 2010 while the two were engaged, according to the complaint, which also stated that Morgan knew of their relationship.

When she joined the firm at its Midtown office in New York, she was part of a joint production agreement with two other advisors, according to the complaint. Her partner for high-net-worth clients, Michael Silverstein, had more than thirty years of industry experience, according to FINRA records.

According to the complaint, Silverstein did not devote time to meeting with or serving prospective clients that Feldman brought in, which in turn hurt her production numbers at the firm. Feldman alleges that by January 2011 she had presented clients with more than $100 million in assets to Silverstein, but he failed to prepare any investment portfolios.

In their complaint, Feldman and Boland also allege that trainees and interns cold-called Pfizer and Verizon employees close to retirement to urge them to roll-over their 401(k)s to Morgan Stanley, guaranteeing them a 15% return, according to the complaint.

The investments were in fact in closed-end mutual funds which experienced sharp fluctuations in net value, according to the complaint.

In April 2011, Feldman went to her branch manager to complain about these and other violations she had witnessed. The manager, David Turetzky, told her to leave his office, and later asked for a list of her clients, according to the complaint.

The following month, Turetzky called Feldman into his office to tell her that the firm would not pursue “at this time” a $200 million commodities deal that one of her clients wanted, according to the complaint.

Feldman alleges this was retaliation for her earlier complaints as well as a confrontation with Silverstein, who tried to claim that he was in fact the introducing broker and therefore entitled to the fees and commissions.

For the full story: click here

Citigroup Bagged By SEC For Defrauding Muni Investors

Posted on August 18, 2015 by admin

BrokerDealer.com picks up where Bondbuyer.com leaves off in reporting an outsized fined against big bank broker-dealer Citigroup…

WASHINGTON – Two Citigroup companies on Monday agreed to pay $180 million to settle charges they defrauded investors by misrepresenting that investments in two now-defunct muni-related hedge funds were safe, low-risk and suitable for traditional bond investors.

New York-based Citigroup Global Markets and Citigroup Alternative Investments raised almost $3 billion in capital from about 4,000 investors between 2002 and 2007 through the two funds — ASTA/MAT and Falcon – before they collapsed in 2008 during the financial crisis, resulting in billions of dollars of losses, according to the SEC.

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Without admitting or denying the SEC’s findings, CAI, the investment manager for the two hedge funds, and CGMI, which employed the financial advisors that recommended the funds to investors, agreed to disgorge more than $139. 95 million of ill-gotten gains and pay prejudgment interest of more than $39.61 million to the SEC under the settlement.

Danielle Romero, managing director of global public affairs for Citigroup, said the company is “pleased to have resolved this matter.”

The SEC found the two Citigroup affiliates continued accepting additional investments and assuring investors of the funds’ safety even as they started to decline in late 2007. The “misleading representations” the Citigroup companies made were “at odds with disclosures made in marketing documents and written material provided to investors,” the SEC said in a release.

To continue reading the entire coverage from BondBuyer, please click here

Hong Kong IPO For China Railway: $2bil

Posted on July 20, 2015 by admin

China Railway Signal Prepares for $2 Billion Hong Kong IPO
State-owned China Railway Signal & Communication, which makes the signal systems used by China’s train network, plans to start taking orders for an up to $2 billion Hong Kong initial public offering next week in the biggest float by a mainland company since the Chinese markets’ rout.

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CitiGroup Hired As Puerto Rico’s Broker-Dealer

Posted on July 10, 2015 by admin

Puerto Rico has hired CitiGroup as a broker-dealer as the island seeks to restructure its debt, an industry source said on Wednesday.

The bank will host a meeting with creditors in New York on Monday, Melba Acosta, head of the island’s Government Development Bank, said. That will be the first meeting with creditors since Governor Alejandro Garcia Padilla said a week ago that he wants to restructure its $72 billion debt.

The gathering will focus on a report released last week by three former International Monetary Fund officials that said Puerto Rico is in a dire position because of high debt, unstable finances and a stagnant economy. Governor Alejandro Garcia Padilla on June 29 said he would seek to delay some debt payments for “a number of years.”

His administration has yet to say which securities would be affected or how such a restructuring would work. Some bonds are protected by the commonwealth’s constitution or backed by revenue such as sales-tax collections. Garcia Padilla said the government would draw up a proposed restructuring plan by the end of August.

The meeting comes after the Puerto Rico Electric Power Authority paid all principal and interest due to bondholders last week, buying the publicly owned utility time as it works to reach a deal with creditors. The authority, known as Prepa, said it had agreed with creditors, which include bondholders, banks and bond insurers, to extend restructuring talks to September.

A bondholders’ group said in a news release that they would continue to work with Prepa to reach a long-term plan. In addition to negotiations about Prepa’s $9 billion in debt, the talks involve plans to modernize the utility’s operations.

Investors and analysts had feared a default by Prepa could be the first of many from the commonwealth. Now, there’s hope among some investors that the utility will work out an agreement that could be a model for restructuring other Puerto Rico agencies.

To get the full story, read this article by reuters.com.

Cetera Financial Institutions To Provide Broker-Dealer Services

Posted on July 8, 2015 by admin

Cetera Financial Institutions, a firm within Cetera Financial Group, the retail advice platform of RCS Capital Corporation, that provides customized investment solutions to nearly 500 financial institutions nationwide, announced today that it will provide broker-dealer services and solutions to the wealth management programs of Valley National Bank, one of the largest commercial banks headquartered in New Jersey.

Cetera will white-label Broadridge Financial Solutions’ recently launched mobile app geared toward enabling easy access to client data from anywhere in the world.

On the platform, advisers will be able to view their clients’ portfolios and account information and work within the app from their smartphone or tablet. Broadridge Mobile also provides real-time market information.

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The app for the self-clearing broker-dealer division of Cetera Financial Group, which is RCS Capital Corp.’s retail investment advice platform, will include trading functionality for funds, equities and options as well, according to Broadridge. Other features include document sharing between advisers and clients, client searches and reporting, account inquiry, and book-of-business analysis.

The app is very new itself, having only come onto the market a few weeks ago. The next step for the company’s mobile app is creating an investor-centric mobile experience, where clients and advisers can communicate in a collaborative environment, as well as integrating more components of the platform with other software, based on brokerages’ suggestions.

To read the full report from MarketWatch, click here.