SI
SI
discoversearch

 Strategies & Market Trends | Anthony @ Equity Investigations, Dear Anthony,


Previous 10 | Next 10 
To: scion who wrote (116928)10/4/2013 1:21:31 PM
From: Glenn Petersen
   of 118624
 
Just like the good old days:

Tweeter Home shares explode on apparent Twitter mix-up

Message 29149078

Share Recommend | Keep | Reply | Mark as Last Read


From: StockDung10/4/2013 1:23:56 PM
   of 118624
 
Integrity Capital founder bilked investors, spent cash on Auburn tickets and private flights, feds charge

By Kelsey Stein | kstein@al.com The Birmingham News
Email the author | Follow on Twitter
on October 04, 2013 at 11:02 AM

ALABASTER, Alabama - A former attorney from Alabaster was indicted Friday in connection with a fraud scheme that netted more than $2.8 million in investment funds that he used to purchase a home, take private jet flights and donate to the Heisman Trophy Trust.

A federal grand jury issued the 21-count indictment against Christopher Shawn Linton, 34, in connection with a wire, mail and securities fraud scheme. The bank fraud charges arose after he submitted a fraudulent commercial application to Iberia Bank for a loan of $908,650.

According to the filing, the scheme unfolded like this:

In 2007, Linton purchased company stock and became an officer, partner and part owner of a business called Integrity Capital, Inc. The business made advance payments to lawyers who submitted vouchers for work performed for the state, then received voucher payments from the state and kept a percentage as a service fee.

Linton formed Integrity Capital LLC in 2009 and, in August of that year, began recruiting advisers to solicit investments in order to buy the assets and capital stock of Integrity Capital Inc.

Between September 2009 and December 2011, a dozen people invested more than $2.8 million in Integrity Capital LLC. The investments were mailed, wired or delivered to Linton, who deposited them in one of several bank accounts of the law firm where he worked.

Linton fraudulently converted the investor funds for personal use by writing checks to himself and using the money for non-investment expenses, including buying his home, private jet flights, vacations, recreational vehicles, furniture, Auburn football tickets and a donation to the Heisman Trophy Trust.

U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein Jr. and Alabama Securities Commission Director Joseph Borg announced the indictment, which was filed in U.S. District Court.

The FBI and Alabama Securities Commission investigated the case, which Assistant U.S. Attorney Robin Beardsley Mark is prosecuting along with Greg Biggs, associate counsel with Alabama Securities Commission.

The maximum penalty for each charge varies: wire fraud is 20 years in prison and a $250,000 fine; mail fraud charge is 20 years in prison and a $250,000 fine; money laundering is 10 years in prison and a $250,000 fin; securities fraud is 5 years in prison and a $250,000 fine; and bank fraud is 30 years in prison and a $1 million fine.

In 2008, Linton was representing an Alabama booster, along with several other attorneys, and he subpoenaed then-Tennessee head coach Phillip Fulmer during the Southeastern Conference's annual media days in Birmingham.

In 2009, he announced his candidacy for the Alabama House of Representatives seat being vacated by U.S. Rep Cam Ward, according to the Shelby County Reporter.

According to the report, he graduated from Troy University and earned his law degree from the Birmingham School of Law after working as a law enforcement officer.

Share Recommend | Keep | Reply | Mark as Last Read | Read Replies (1)


From: StockDung10/4/2013 1:27:54 PM
   of 118624
 

Greenbush man sentenced to prison for securities fraud
Written by Sheboygan Press Media
Sep. 27, 2013 |

sheboyganpress.com

A Greenbush man has been sentenced to 2½ years in prison for his role in a securities and wire fraud scheme.

James Prange was sentenced this week in U.S. District Court in Boston by Judge Nathaniel Gorton to the prison term followed by two years supervised release, according to federal court records. He was also fined $15,520.

Prange was found guilty in May following a more than week-long jury trial of three counts of conspiracy to commit securities fraud and eight counts of wire fraud.

Prange — known locally for his attempts to launch a bratwurst “Hall of Flame” in the mid-1990s — had a prior brush with securities regulators over his efforts a decade ago to launch a bratwurst restaurant chain.

His latest transgression saw him arrested in December 2011 following a nearly two-year long FBI sting operation. He was one of 13 business executives busted for agreeing to pay kickbacks in exchange for investment funds. The purported fund manager was actually an FBI agent.

The sting was built around the fund manager offering to invest in a given company in exchange for secret kickbacks equal to 50 percent of the investment. The indictment described Prange as a central figure in the fraud who introduced executives from three companies to the fund manager in exchange for a 10 percent cut of the kickback.

Prange received a total of $6,350 in kickbacks, and expected to receive hundreds of thousands of dollars more when the companies received their full funding.

The money was wired to his account by the FBI, according to an affidavit. The kickbacks were concealed through the use of sham consulting agreements.

At the time of the FBI investigation, Prange was the president of Northern Equity Inc., which was in the business of promoting microcap stocks and finding capital for emerging companies, authorities said.

Charges were filed in Massachusetts because wire transfers conducted as part of the sting were sent from a bank account maintained in Boston.

Court records indicated that Prange has no prior criminal record, though it’s not the first time he’s violated securities laws.

In 2001, Prange and several associates attempted to raise up to $600,000 by selling shares in “Wurst Brothers Franchising Systems, Inc.,” which purportedly sought to create a chain of bratwurst restaurants, according to federal court records.

As part of that effort, a letter signed by Prange was mailed to more than 100 potential shareholders predicting that the stock could be worth eight to nine times its initial value in five years.

Regulators intervened and a settlement was reached requiring Prange and his colleagues to send a second letter acknowledging that the first mailing contained misleading statements and that any prediction of the future value of a securities offering was misleading and fraudulent.

Share Recommend | Keep | Reply | Mark as Last Read


From: StockDung10/4/2013 1:30:36 PM
   of 118624
 


Hogsett: Executives indicted in massive tax and securities fraud case

U.S. Attorney Joe Hogsett announced grand jury indictments against the operators of a Henry County biofuels plant and its parent company, which federal agents claim stole more than $100 million from taxpayers, customers, and investors.

Hogsett called it the “largest instance of tax and securities fraud in state history.” Hogsett said the case marks the first indictment of an Indiana-based top executive in such a large fraud scheme. Jeffrey Wilson, the former president and CEO of Evansville-based Imperial Petroleum is named in the suit. His company aquired E-Biofuels, which is located in Middletown, Ind., in 2010.

The Department of Justice alleges E-Biofuels and Imperial Petroleum engaged in a four-year-long plot to deceive federal regulators and investors about the purity of its alternative fuels.

E-Biofuels allegedly sold an alternative fuel product called B100. The indictment charges that the company received federal incentives for creating the fuel, but instead was engaged in a scheme to sell its customers a less valuable derivative fuel known as B99.

Hogsett said from 2009 to 2012 E-Biofuels sold 35 million gallons of B99, generating $55 million in profits for the company and qualifying for $35 million in federal tax credits plus millions more in investor losses. The 88-count indictment alleges wire, tax and securities fraud, as well as money laundering, obstruction of justice and violations of the Clean Air Act.

Hogsett said the company’s biofuels plant often set idle and was merely a prop to fool investors and generate fraudulent sales. The plant didn’t generate the biodiesel, which was instead bought from third parties and then marketed as being produced at the facility from chicken fat and other feedstocks. Hogsett said the company made 95,000 fraudulent deliveries to truck stops and gas stations from Wisconsin and Indiana to Texas. The company qualified for tax credits, misled investors and drivers paid more at the pump for a less pure biofuel product, the indictment said.

Also indicted were four top executives of the company. Hogsett said the “free ride” mindset of E-Biofuels executives in perpetrating the scheme is over.

Each faces up to 20 years in prison on several counts if convicted as well as fines. They appeared in front of a federal magistrate Monday afternoon




Read more: http://fox59.com/2013/09/18/executives-indicted-in-massive-tax-and-securities-fraud-case/#ixzz2gm8lVSAC

Share Recommend | Keep | Reply | Mark as Last Read


From: StockDung10/4/2013 1:34:35 PM
   of 118624
 
More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities Many Brokers Migrate Between Firms Expelled By Regulators

By JEAN EAGLESHAMand ROB BARRY CONNECT
    Regulators expelled the first brokerage firm where Kenneth Dwyer sold securities. They did the same to his third, fourth, seventh and eighth. His 10th closed in June after regulators accused it of fraud.

    The expelled and defunct firms where Mr. Dwyer worked have left thousands of investors with alleged losses and estimated unpaid claims totaling more than $85 million, according to court documents and lawyers.

    Mr. Dwyer is one of more than 5,000 brokers who were still licensed to sell securities earlier this year after working for one or more firms that regulators expelled between 2005 and 2012, according to an analysis by The Wall Street Journal of a database of more than 550,000 stockbrokers.











    Tracking Brokers FINRA—the financial industry's self-regulator—expelled 173 firms between 2005 and 2012, according to its published reports. See more about where the brokers ended up.







    View Graphics









    The pattern of brokers moving from one problem firm to another, according to a former broker, is sometimes called "cockroaching."

    Regulators on Sept. 30 suspended Mr. Dwyer for nine months and fined him $10,000, for allegations that included excessive trading, filings show. Mr. Dwyer agreed to the sanctions without admitting or denying wrongdoing. Among customers claiming to be his victims is a Decatur, Texas, man who says he lost money he made selling his funeral-home business.

    In an interview before the disciplinary action against him, Mr. Dwyer, 37 years old, declined to comment on the regulatory matter and on claims involving him through his career. About his former employers' track records, he said: "It's just unfortunate."

    The Journal's analysis reveals some of the nationwide migratory patterns of brokers associated with firms having troubled regulatory records. These brokers often remain in the industry after working at firms expelled by regulators, in some cases after the brokers accrued numerous arbitration claims or declared multiple bankruptcies.

    Some of these brokers appear to create bonds that bring them together repeatedly at firms that regulators later expelled. Mr. Dwyer, after his first brokerage job in 1998, would cross paths at other firms with contemporaries from his first job; at least one broker from his first firm was with him at his 10th.

    The regulator overseeing securities brokers, in most cases, is Wall Street's self-policing organization: the Financial Industry Regulatory Authority, or Finra. Finra has the authority to expel firms and to suspend brokers, making it illegal under federal law for them to sell securities.

    Finra won't release its complete database of disciplinary records, although it lets anyone check a broker's disciplinary record online. Brokers are also regulated by states; by filing public-records requests with securities regulators in all 50 states, the Journal compiled a database of about 88% of the nation's registered brokers.

    To identify firms Finra has expelled, the Journal reviewed 105 monthly disciplinary reports the regulator published since 2005. Through the end of 2012, it said it had expelled 173 firms for problems ranging from a firm's failure to pay regulatory fines to fraud involving individual brokers.

    At least 5,054 brokers who worked at these defunct firms were still licensed to sell securities earlier this year, the Journal analysis shows. Of those, 610 had worked at more than one firm Finra had expelled.

    Most of the more-than-550,000 brokers in the Journal analysis didn't have arbitration claims or other issues that have to be disclosed. And the fact that a broker worked at a firm that regulators later closed doesn't imply the broker is in any way unscrupulous.

    "The problem is that the small minority of bad brokers—and brokerage firms—does a tremendous amount of damage," said Denise Voigt Crawford, former securities commissioner of the Texas State Securities Board.

    The circumstances of a broker's migration appear significant: On average, a broker who left at least two firms that were eventually expelled and who joined another firm had more than eight times as many arbitration claims and other required disclosures as the industry average, the Journal analysis shows.

    Some 58% of those brokers had at least one black mark on their records; nearly 25% had three or more. By contrast, 13% of all brokers the Journal tracked had at least one disclosure.

    Finra closely tracks brokers that scatter to new employers after a firm is expelled, said Susan Axelrod, Finra's executive vice president of regulatory operations. "We are watching broker migration with a laser focus."

    Finra and the Securities and Exchange Commission impose extra controls, such as a requirement to tape calls to customers, on all but the smallest brokerages if more than a certain proportion of their brokers come from expelled firms.

    In addition, Finra has barred 3,616 people from selling securities since 2005, a spokeswoman said.

    A spokesman for the SEC, which oversees Finra, declined to comment.

    The Journal's analysis identified Mr. Dwyer as a frequent migrator. A look at his records led to a succession of brokerage firms and brokers who moved among them as regulators expelled the firms.

    Mr. Dwyer joined his first brokerage, Seaboard Securities Inc. of Florham Park, N.J., in 1998. Finra records show the firm settled one arbitration claim involving him for $40,000 alleging poor performance on stock recommendations. The records are silent as to whether he admitted wrongdoing.

    He left in 2002. Several of his Seaboard contemporaries would work with him years later at several firms.

    Finra expelled Seaboard in 2011 for failing to pay fines incurred long after he left. Anthony DiGiovanni Sr., Seaboard's president and majority owner, declined to comment.

    Mr. Dwyer job-hopped among firms. His third employer was expelled by regulators in 2004 and his next was expelled in 2005, in both cases after he left. Finra records show an arbitration claim dating back to his time at his fourth and fifth employers was settled in 2006 for $62,000; the claim alleged excessive commissions and unsuitable investment picks.

    In 2005, Mr. Dwyer joined his seventh brokerage, the Farmingville, N.Y., branch of Itradedirect.com Corp., based in Boca Raton, Fla. Finra records show the firm settled a claim involving him for $64,500 in 2007. The claim alleged excessive commissions.

    In January 2010, John Coker of Decatur, Texas, filed a Finra claim against Mr. Dwyer and Itrade, alleging that Mr. Dwyer "churned" his account to generate excessive fees, losing money Mr. Coker made selling the funeral home. Mr. Dwyer declined to comment on the matter.

    Mr. Coker's claim went into Finra's arbitration process, which investors must use to settle disputes, instead of courts, under agreements they sign upon opening brokerage accounts.

    In April 2010, Mr. Dwyer left Itrade and joined another firm with a cadre of other Itrade brokers, records show, a month before Itrade withdrew from the industry.

    In June 2010, Mr. Dwyer filed for bankruptcy, leading the Finra arbitrators to put Mr. Coker's claim against him on indefinite hold, the arbitration documents show. Under federal bankruptcy law, arbitration claims are stayed if brokers file for bankruptcy.

    In March 2011, a Finra arbitration panel awarded Mr. Coker damages and costs totaling about $446,000 from Itrade related to Mr. Dwyers's alleged conduct.

    Mr. Coker says he hasn't received any money from Itrade. "We were never able to collect a judgment," said his lawyer, Allen Williamson. "They just folded up their tent and left."

    Finra offers no help to investors pursuing unpaid arbitration awards. It does suspend brokers and firms on a "continuing and regular" basis for not paying awards, said Finra's Ms. Axelrod. She declined to discuss specific cases.

    Finra last year suspended 15 firms and 37 individuals for this reason, she said. "While we're not getting the money back, we're ensuring that there are consequences for the failure to pay an award."

    In response to a request by the Journal, Finra said $51 million of arbitration awards granted in 2011 remain unpaid. That is 11% of the total awards that year, compared with the unpaid levels of 4% for 2010 and 2009. Finra declined to provide more-recent data.

    In July 2011, more than a year after Itrade closed, Finra expelled it, accusing it of running a "boiler room," or a high-pressure selling outfit, out of its Farmingville office.

    Brian Sanders, Itrade's chief compliance officer, said the firm didn't contest Finra's allegations, "which aren't true," because it was already defunct. "Finra portrayed how evil the firm was, how evil I was," he said. "Anybody who knows the facts knows otherwise." Mr. Sanders was among Mr. Dwyer's contemporaries at Mr. Dwyer's first firm.

    By the time Finra expelled Itrade, at least 21 of its former employees—including Mr. Dwyer and Mr. Sanders—had been working for over a year at EKN Financial Services Inc. of Melville, N.Y.

    EKN was already under regulatory scrutiny. In 2008, the SEC banned the firm's part owner, Anthony Ottimo, from supervising brokers as part of an enforcement action against the firm over alleged fraud. EKN and Mr. Ottimo settled the allegations without admitting or denying wrongdoing.

    Mr. Dwyer left EKN in September 2011, eventually landing at his 10th brokerage, John Thomas Financial of New York City.

    In 2012, some of his former Itrade colleagues at EKN were migrating again. On Oct. 18, 2012, Finra expelled EKN for what it called "brazen" rule-breaking. It suspended EKN's president and part-owner, Thomas Giugliano, for a year and fined him $150,000. Mr. Giugliano declined to comment for this story.

    Finra barred Mr. Ottimo, the other owner, from the securities industry for life for allegedly violating the ban on acting as a supervisor by continuing as EKN's chief executive officer.

    Mr. Ottimo said Finra abused its "unfettered authority" to make unfair and untrue allegations. He denied wrongdoing but said it wasn't worth the legal fees to defend himself.

    EKN's expulsion left investor Jaclyn Cedeno chasing an award of about $319,000 in damages and costs she won against the firm in Finra arbitration in early 2013. In an interview, Ms. Cedeno, of Rawson, Ohio, said the EKN broker—not Mr. Dwyer—told her investing with the firm was "as safe as putting my money under the mattress" and then "gambled away" most of her money. Mr. Ottimo declined to comment on the Cedeno case.

    "Pursuing rogue brokers is very difficult," said her lawyer, Peter Silverman. "It takes lots of time and money and then they can just close up shop and walk away."

    Finra's Ms. Axelrod said delaying the expulsion of problem brokerages while arbitration claims are resolved could harm investors. "With some of these firms that have engaged in serious misconduct, the worst thing for us to do would be to keep the firm in business," she said.

    Some EKN brokers didn't go far to stay in business. In the Long Island office suite where EKN's shingle once hung, at least 16 of its brokers, some tracing back to Itrade, joined Laidlaw & Co. (UK) Ltd., the Journal analysis shows.

    Laidlaw acquired EKN's Melville office and contracts with several of its brokers through a licensing agreement with the previous landlord and former EKN broker, Louis Ottimo, Anthony Ottimo's son, said people familiar with the agreement.

    The younger Mr. Ottimo lists 14 financial judgments and other disclosures on his regulatory filing, including a continuing Finra investigation into allegations he made misleading disclosures to investors. He left Laidlaw in September, regulatory records show. His lawyer declined to comment.

    Laidlaw contends it doesn't have legal liability for Ms. Cedeno's unpaid arbitration award against EKN because it didn't buy the firm and has different ownership and management, said people close to Laidlaw.

    Matthew Eitner, Laidlaw's CEO, said in a statement that his firm has "always been committed to a culture of honesty and transparency." Laidlaw vetted each of the "small number" of former EKN brokers it hired and none had outstanding arbitration awards, he said.

    Three years after Itrade closed, Finra is still investigating what happened there, said people close to the probe. In February, it notified at least eight former Itrade brokers—seven of whom went on to EKN, including one who later moved to Laidlaw—that it was planning enforcement action against them, regulatory filings show.

    Mr. Dwyer left John Thomas Financial in June, the month that firm closed, and hasn't been registered with Finra since then, his regulatory records show.

    Finra and the SEC each took enforcement action earlier this year against John Thomas and its CEO, Anastasios "Tommy" Belesis. Among the allegations: defrauding investors in a penny stock. Ira Sorkin, a lawyer for Mr. Belesis, said his client will fight the charges, which he said are "in many respects unfounded."

    John Thomas owed $42.9 million to more than 2,600 customers when it closed, a June regulatory filing shows. That adds to a tally of unpaid claims left by firms where Mr. Dwyer once worked that includes at least $45 million in estimated claims owed by his second and third employers, both of which filed for bankruptcy.

    The claims don't appear to be related to Mr. Dwyer's conduct at the firms.

    Another broker who received the enforcement notification from Finra was Adam Sclafani, who was among Mr. Dwyer's contemporaries at his first job and also later at Itrade, EKN and John Thomas. He said he intends to contest Finra's proposed allegations against him, including excessive and unauthorized trading and unsuitable recommendations.

    "I'm not going to sit here and tell you that stockbrokers are angels, but these clients knew everything that goes on," Mr. Sclafani said. "I never was involved in any boiler rooms."





    How the Journal Analyzed the Data Information about the nation's stockbrokers is maintained by a Wall Street self-regulatory organization known as the Financial Industry Regulatory Authority, or Finra. A database maintained by Finra contains a wide array of regulatory information, including work and disciplinary histories.

    Because Finra is a private entity, it isn't bound by public records laws and chooses not to publicly release the underlying data contained in its broker database, known as the Central Registration Depository, or CRD. Instead, it allows the public to look up individual brokers and firms on the Internet, based on the CRD data.

    However, each broker must also register with local securities regulators in the states in which they practice. These regulators are subject to public records laws and have access to records of brokers registered in their state.

    To stitch together a national picture, The Wall Street Journal filed records requests with 50 state regulators, obtaining full or partial data from 21 states. The records—gathered throughout the first half of 2013—contain information about 558,245 individuals, many of whom are registered in multiple states. As of August 2013, Finra said there were 633,622 people registered nationally.

    Finra said it doesn't keep a comprehensive list of firms it has expelled from the industry. The Journal combed through 105 monthly reports and found 173 firms the regulator said it had booted from the business between 2005 and 2012. The Journal then paired the list with stockbroker work histories and found thousands of individuals still working who had earlier worked at firms expelled by Finra.

    Write toJean Eaglesham at jean.eaglesham@wsj.com and Rob Barry at rob.barry@wsj.com

    Share Recommend | Keep | Reply | Mark as Last Read


    From: Glenn Petersen10/4/2013 1:39:20 PM
       of 118624
     
    More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities

    Many Brokers Migrate Between Firms Expelled By Regulator

    By JEAN EAGLESHAM and ROB BARRY
    Wall Street Journal
    Updated October 4, 2013, 2:02 a.m. ET

    Regulators expelled the first brokerage firm where Kenneth Dwyer sold securities. They did the same to his third, fourth, seventh and eighth. His 10th closed in June after regulators accused it of fraud.

    The expelled and defunct firms where Mr. Dwyer worked have left thousands of investors with alleged losses and estimated unpaid claims totaling more than $85 million, according to court documents and lawyers.

    Mr. Dwyer is one of more than 5,000 brokers who were still licensed to sell securities earlier this year after working for one or more firms that regulators expelled between 2005 and 2012, according to an analysis by The Wall Street Journal of a database of more than 550,000 stockbrokers.



    Regulators on Sept. 30 suspended Mr. Dwyer for nine months and fined him $10,000, for allegations that included excessive trading, filings show. Mr. Dwyer agreed to the sanctions without admitting or denying wrongdoing. Among customers claiming to be his victims is a Decatur, Texas, man who says he lost money he made selling his funeral-home business.

    In an interview before the disciplinary action against him, Mr. Dwyer, 37 years old, declined to comment on the regulatory matter and on claims involving him through his career. About his former employers' track records, he said: "It's just unfortunate."

    The Journal's analysis reveals some of the nationwide migratory patterns of brokers associated with firms having troubled regulatory records. These brokers often remain in the industry after working at firms expelled by regulators, in some cases after the brokers accrued numerous arbitration claims or declared multiple bankruptcies.

    Some of these brokers appear to create bonds that bring them together repeatedly at firms that regulators later expelled. Mr. Dwyer, after his first brokerage job in 1998, would cross paths at other firms with contemporaries from his first job; at least one broker from his first firm was with him at his 10th.

    The regulator overseeing securities brokers, in most cases, is Wall Street's self-policing organization: the Financial Industry Regulatory Authority, or Finra. Finra has the authority to expel firms and to suspend brokers, making it illegal under federal law for them to sell securities.

    Finra won't release its complete database of disciplinary records, although it lets anyone check a broker's disciplinary record online. Brokers are also regulated by states; by filing public-records requests with securities regulators in all 50 states, the Journal compiled a database of about 88% of the nation's registered brokers.

    To identify firms Finra has expelled, the Journal reviewed 105 monthly disciplinary reports the regulator published since 2005. Through the end of 2012, it said it had expelled 173 firms for problems ranging from a firm's failure to pay regulatory fines to fraud involving individual brokers.

    At least 5,054 brokers who worked at these defunct firms were still licensed to sell securities earlier this year, the Journal analysis shows. Of those, 610 had worked at more than one firm Finra had expelled.

    Most of the more-than-550,000 brokers in the Journal analysis didn't have arbitration claims or other issues that have to be disclosed. And the fact that a broker worked at a firm that regulators later closed doesn't imply the broker is in any way unscrupulous.

    "The problem is that the small minority of bad brokers—and brokerage firms—does a tremendous amount of damage," said Denise Voigt Crawford, former securities commissioner of the Texas State Securities Board.

    The circumstances of a broker's migration appear significant: On average, a broker who left at least two firms that were eventually expelled and who joined another firm had more than eight times as many arbitration claims and other required disclosures as the industry average, the Journal analysis shows.

    Some 58% of those brokers had at least one black mark on their records; nearly 25% had three or more. By contrast, 13% of all brokers the Journal tracked had at least one disclosure.

    Finra closely tracks brokers that scatter to new employers after a firm is expelled, said Susan Axelrod, Finra's executive vice president of regulatory operations. "We are watching broker migration with a laser focus."

    Finra and the Securities and Exchange Commission impose extra controls, such as a requirement to tape calls to customers, on all but the smallest brokerages if more than a certain proportion of their brokers come from expelled firms.

    In addition, Finra has barred 3,616 people from selling securities since 2005, a spokeswoman said.

    A spokesman for the SEC, which oversees Finra, declined to comment.

    The Journal's analysis identified Mr. Dwyer as a frequent migrator. A look at his records led to a succession of brokerage firms and brokers who moved among them as regulators expelled the firms.

    Mr. Dwyer joined his first brokerage, Seaboard Securities Inc. of Florham Park, N.J., in 1998. Finra records show the firm settled one arbitration claim involving him for $40,000 alleging poor performance on stock recommendations. The records are silent as to whether he admitted wrongdoing.

    He left in 2002. Several of his Seaboard contemporaries would work with him years later at several firms.

    Finra expelled Seaboard in 2011 for failing to pay fines incurred long after he left. Anthony DiGiovanni Sr., Seaboard's president and majority owner, declined to comment.

    Mr. Dwyer job-hopped among firms. His third employer was expelled by regulators in 2004 and his next was expelled in 2005, in both cases after he left. Finra records show an arbitration claim dating back to his time at his fourth and fifth employers was settled in 2006 for $62,000; the claim alleged excessive commissions and unsuitable investment picks.

    In 2005, Mr. Dwyer joined his seventh brokerage, the Farmingville, N.Y., branch of Itradedirect.com Corp., based in Boca Raton, Fla. Finra records show the firm settled a claim involving him for $64,500 in 2007. The claim alleged excessive commissions.

    In January 2010, John Coker of Decatur, Texas, filed a Finra claim against Mr. Dwyer and Itrade, alleging that Mr. Dwyer "churned" his account to generate excessive fees, losing money Mr. Coker made selling the funeral home. Mr. Dwyer declined to comment on the matter.

    Mr. Coker's claim went into Finra's arbitration process, which investors must use to settle disputes, instead of courts, under agreements they sign upon opening brokerage accounts.

    In April 2010, Mr. Dwyer left Itrade and joined another firm with a cadre of other Itrade brokers, records show, a month before Itrade withdrew from the industry.

    In June 2010, Mr. Dwyer filed for bankruptcy, leading the Finra arbitrators to put Mr. Coker's claim against him on indefinite hold, the arbitration documents show. Under federal bankruptcy law, arbitration claims are stayed if brokers file for bankruptcy.

    In March 2011, a Finra arbitration panel awarded Mr. Coker damages and costs totaling about $446,000 from Itrade related to Mr. Dwyers's alleged conduct.

    Mr. Coker says he hasn't received any money from Itrade. "We were never able to collect a judgment," said his lawyer, Allen Williamson. "They just folded up their tent and left."

    Finra offers no help to investors pursuing unpaid arbitration awards. It does suspend brokers and firms on a "continuing and regular" basis for not paying awards, said Finra's Ms. Axelrod. She declined to discuss specific cases.

    Finra last year suspended 15 firms and 37 individuals for this reason, she said. "While we're not getting the money back, we're ensuring that there are consequences for the failure to pay an award."

    In response to a request by the Journal, Finra said $51 million of arbitration awards granted in 2011 remain unpaid. That is 11% of the total awards that year, compared with the unpaid levels of 4% for 2010 and 2009. Finra declined to provide more-recent data.

    In July 2011, more than a year after Itrade closed, Finra expelled it, accusing it of running a "boiler room," or a high-pressure selling outfit, out of its Farmingville office.

    Brian Sanders, Itrade's chief compliance officer, said the firm didn't contest Finra's allegations, "which aren't true," because it was already defunct. "Finra portrayed how evil the firm was, how evil I was," he said. "Anybody who knows the facts knows otherwise." Mr. Sanders was among Mr. Dwyer's contemporaries at Mr. Dwyer's first firm.

    By the time Finra expelled Itrade, at least 21 of its former employees—including Mr. Dwyer and Mr. Sanders—had been working for over a year at EKN Financial Services Inc. of Melville, N.Y.

    EKN was already under regulatory scrutiny. In 2008, the SEC banned the firm's part owner, Anthony Ottimo, from supervising brokers as part of an enforcement action against the firm over alleged fraud. EKN and Mr. Ottimo settled the allegations without admitting or denying wrongdoing.

    Mr. Dwyer left EKN in September 2011, eventually landing at his 10th brokerage, John Thomas Financial of New York City.

    In 2012, some of his former Itrade colleagues at EKN were migrating again. On Oct. 18, 2012, Finra expelled EKN for what it called "brazen" rule-breaking. It suspended EKN's president and part-owner, Thomas Giugliano, for a year and fined him $150,000. Mr. Giugliano declined to comment for this story.

    Finra barred Mr. Ottimo, the other owner, from the securities industry for life for allegedly violating the ban on acting as a supervisor by continuing as EKN's chief executive officer.

    Mr. Ottimo said Finra abused its "unfettered authority" to make unfair and untrue allegations. He denied wrongdoing but said it wasn't worth the legal fees to defend himself.

    EKN's expulsion left investor Jaclyn Cedeno chasing an award of about $319,000 in damages and costs she won against the firm in Finra arbitration in early 2013. In an interview, Ms. Cedeno, of Rawson, Ohio, said the EKN broker—not Mr. Dwyer—told her investing with the firm was "as safe as putting my money under the mattress" and then "gambled away" most of her money. Mr. Ottimo declined to comment on the Cedeno case.

    "Pursuing rogue brokers is very difficult," said her lawyer, Peter Silverman. "It takes lots of time and money and then they can just close up shop and walk away."

    Finra's Ms. Axelrod said delaying the expulsion of problem brokerages while arbitration claims are resolved could harm investors. "With some of these firms that have engaged in serious misconduct, the worst thing for us to do would be to keep the firm in business," she said.

    Some EKN brokers didn't go far to stay in business. In the Long Island office suite where EKN's shingle once hung, at least 16 of its brokers, some tracing back to Itrade, joined Laidlaw & Co. (UK) Ltd., the Journal analysis shows.

    Laidlaw acquired EKN's Melville office and contracts with several of its brokers through a licensing agreement with the previous landlord and former EKN broker, Louis Ottimo, Anthony Ottimo's son, said people familiar with the agreement.

    The younger Mr. Ottimo lists 14 financial judgments and other disclosures on his regulatory filing, including a continuing Finra investigation into allegations he made misleading disclosures to investors. He left Laidlaw in September, regulatory records show. His lawyer declined to comment.

    Laidlaw contends it doesn't have legal liability for Ms. Cedeno's unpaid arbitration award against EKN because it didn't buy the firm and has different ownership and management, said people close to Laidlaw.

    Matthew Eitner, Laidlaw's CEO, said in a statement that his firm has "always been committed to a culture of honesty and transparency." Laidlaw vetted each of the "small number" of former EKN brokers it hired and none had outstanding arbitration awards, he said.

    Three years after Itrade closed, Finra is still investigating what happened there, said people close to the probe. In February, it notified at least eight former Itrade brokers—seven of whom went on to EKN, including one who later moved to Laidlaw—that it was planning enforcement action against them, regulatory filings show.

    Mr. Dwyer left John Thomas Financial in June, the month that firm closed, and hasn't been registered with Finra since then, his regulatory records show.

    Finra and the SEC each took enforcement action earlier this year against John Thomas and its CEO, Anastasios "Tommy" Belesis. Among the allegations: defrauding investors in a penny stock. Ira Sorkin, a lawyer for Mr. Belesis, said his client will fight the charges, which he said are "in many respects unfounded."

    John Thomas owed $42.9 million to more than 2,600 customers when it closed, a June regulatory filing shows. That adds to a tally of unpaid claims left by firms where Mr. Dwyer once worked that includes at least $45 million in estimated claims owed by his second and third employers, both of which filed for bankruptcy.

    The claims don't appear to be related to Mr. Dwyer's conduct at the firms.

    Another broker who received the enforcement notification from Finra was Adam Sclafani, who was among Mr. Dwyer's contemporaries at his first job and also later at Itrade, EKN and John Thomas. He said he intends to contest Finra's proposed allegations against him, including excessive and unauthorized trading and unsuitable recommendations.

    "I'm not going to sit here and tell you that stockbrokers are angels, but these clients knew everything that goes on," Mr. Sclafani said. "I never was involved in any boiler rooms."

    How the Journal Analyzed the Data

    Information about the nation's stockbrokers is maintained by a Wall Street self-regulatory organization known as the Financial Industry Regulatory Authority, or Finra. A database maintained by Finra contains a wide array of regulatory information, including work and disciplinary histories.

    Because Finra is a private entity, it isn't bound by public records laws and chooses not to publicly release the underlying data contained in its broker database, known as the Central Registration Depository, or CRD. Instead, it allows the public to look up individual brokers and firms on the Internet, based on the CRD data.

    However, each broker must also register with local securities regulators in the states in which they practice. These regulators are subject to public records laws and have access to records of brokers registered in their state.

    To stitch together a national picture, The Wall Street Journal filed records requests with 50 state regulators, obtaining full or partial data from 21 states. The records—gathered throughout the first half of 2013—contain information about 558,245 individuals, many of whom are registered in multiple states. As of August 2013, Finra said there were 633,622 people registered nationally.

    Finra said it doesn't keep a comprehensive list of firms it has expelled from the industry. The Journal combed through 105 monthly reports and found 173 firms the regulator said it had booted from the business between 2005 and 2012. The Journal then paired the list with stockbroker work histories and found thousands of individuals still working who had earlier worked at firms expelled by Finra.

    Write toJean Eaglesham at jean.eaglesham@wsj.com and Rob Barry at rob.barry@wsj.com

    online.wsj.com

    Share Recommend | Keep | Reply | Mark as Last Read | Read Replies (1)


    To: StockDung who wrote (116930)10/4/2013 2:30:34 PM
    From: Tommy Hicks
       of 118624
     
    That's disappointing.........a dishonest Auburn fan......

    Linton fraudulently converted the investor funds for personal use by writing checks to himself and using the money for non-investment expenses, including buying his home, private jet flights, vacations, recreational vehicles, furniture, Auburn football tickets and a donation to the Heisman Trophy Trust.

    th

    Share Recommend | Keep | Reply | Mark as Last Read


    From: StockDung10/4/2013 8:54:20 PM
       of 118624
     
    What’s in a Chicken Nugget?


    By Doris Quintanilla, Fri, October 04, 2013

    The contents of a chicken nugget have long been discussed among consumers. Some are dying to know, while others think they’re better off not knowing.

    Well, if you really want to know, Mississippi researchers have your answer.

    “This is cartilage. This is gastrointestinal tissue. There’s all kinds of random stuff in there that’s not chicken meat,” Dr. Richard deShazo, a professor of medicine and pediatrics at the University of Mississippi Medical Center said.

    deShazo, along with two other Mississippi researchers examined two nuggets from two different national fast food chains in Jackson and published the findings in the American Journal of Medicine. They selected one nugget from each box, dissected the nuggets and looked under the microscope.

    The first nugget was about half muscle, and the other half was fat, blood vessels and nerves, the researchers wrote in their study. In a closer inspection, researchers found cells that line the skin and internal organs of chickens.

    The second nugget was only 40 percent of muscle, and the remainder was fat, cartilage and pieces of bone.

    Bottom line, deShazo told Reuters Health, “what has happened is that some companies have chosen to use an artificial mixture of chicken parts rather than low-fat chicken white meat, batter it up and fry it and still call it chicken.”

    The nuggets are okay to eat occasionally deShazo reassured, but because they are cheap, taste good and are accessible at many places, he worries children eat them often.

    “Chicken nuggets are an excellent source of protein, especially for kids who might be picky eaters,” Ashley Peterson, vice president of scientific and regulatory affairs for the National Chicken Council told Reuters.

    While deShazo agrees that chicken meat is a primary source of protein, he says these nuggets are only being passed off as chicken meat.”

    But Peterson said two chicken nugget samples out of the many out there is way too small to generalize the findings to an entire category of food.

    deShazo said some chains have begun to use primarily white meat in their nuggets, just not where he visited. He also pointed out that the study was not an attack to the fast food industry, according to WFSB.

    “I don’t think they’re demons or bad people,” he said. “I think they’re trying to make money. I think they’re trying to give us what we want.”

    Of course, consumers are not actually being lied to with these contents. By law, restaurants provide a list of ingredients and nutritional facts of all their foods, just at foods in grocery stores do. Whether people actually read the nutritional facts is another question.

    “We are eating ourselves to death in Mississippi,” deShazo said. “We have the highest rates of obesity, heart attack and diabetes.”

    Now that we know what’s in a chicken nugget, the next question is where did the bone, muscle tissue and bone filled nuggets from the study come from? The researchers opted to not reveal that answer.

    Sources: Reuters, WFSB.com


    Get More: Chicken Nugget | Chicken Nugget ingredients |

    Share Recommend | Keep | Reply | Mark as Last Read


    From: StockDung10/5/2013 9:00:06 AM
       of 118624
     
    Finra to Consider Requiring Brokerages to Carry Arbitration Insurance Insurance Requirement Favored By State Regulators

    Updated October 4, 2013, 3:44 p.m. ET

    A page-one article in the Journal on Friday highlighted the problem of brokerage firms that shut down without paying awards or other legal claims owed to investors.
      "We're going to evaluate the whole area and see if there are additional steps we can take," Ms. Axelrod said in the interview. The move would be part of a look at measures that could reduce the level of unpaid awards.

      The financial cushion at some brokerage firms is so thin that just one arbitration award could put them out of business. More than 940 firms disclosed net capital of less than $50,000 in their most recent financial reports as of July 1, according to an analysis by SNL Financial for the Journal.

      Finra said $51 million of arbitration awards granted in 2011 haven't been paid, or 11% of the total awards. The percentage is up from 4% in 2009 and 2010.

      Brokers at the defunct firms often continue working in the industry, the Journal's analysis showed, while regulators offer little or no help to investors who are trying to collect.

      Some state securities regulators said Friday they support the idea of requiring brokerage firms to have arbitration insurance. "It would be helpful … [at] an appropriate amount," said Arkansas securities commissioner Heath Abshure. He also is president of the North American Securities Administrators Association.

      Mr. Abshure said the Journal's article underscores how hard it is for regulators to stamp out problems when brokers migrate from one shuttered firm to another. The practice is known in the industry as "cockroaching," according to one former broker.

      One problem: Many smaller brokerage firms operate with net capital—or assets minus liabilities—of just $5,000 and no insurance to cover arbitration awards. "It takes next to nothing to become a broker-dealer," said Leonard Steiner, a co-founder of law firm Steiner & Libo. "Regulators wait until customers get fleeced to discover the money isn't there to pay them."

      Rules set by the Securities and Exchange Commission, which oversees Finra, require smaller brokerage firms to have net capital of at least $5,000 or a level related to the firm's debts, if higher. About 2,350 brokerage firms, or more than half the industry's total, fall into what one lawyer called this "nickel broker-dealer" category, according to previously unpublished SEC estimates.

      An SEC spokesman said net capital rules ensure that brokerage firms can return investors' assets if the firm fails. "The protection works," the spokesman said.

      Still, those rules don't help many investors who lose money because of alleged broker misconduct—and then can't get their arbitration awards paid because the firm goes out of business.

      The Securities Investor Protection Corp. doesn't cover most arbitration claims. SIPC's president, Stephen Harbeck, said SIPC "would not compensate people for a decline in value of a security, even if that decline was a result of fraud."

      Finra's Ms. Axelrod said the regulator will consider whether brokerage firms should be required to have "errors and omissions" insurance, which can cover claims for negligence or misconduct by the brokers.

      The lack of such insurance affects thousands of investors who put money into Texas company Provident Royalties LLC.

      Federal authorities alleged in 2009 that the firm and its three owners operated a $485 million Ponzi scheme. Earlier this year, the executives pleaded guilty to criminal charges related to the fraud.

      Finra has taken disciplinary action against several brokerage firms and brokers for allegedly selling Provident Royalties' private placements (stakes in the company sold outside the public markets) without doing proper due diligence.

      Milo Segner, a court-appointed trustee for the company's liquidation, is pursuing arbitration and legal claims against numerous brokerage firms, alleging the firms sold the company's securities without proper due diligence. More than $150 million was sold by firms that have closed and appear to have no insurance or other means to pay investors, according to Andrew Sommerman, the lawyer representing the trustee.

      "These firms have risked tens of millions of dollars of folks' money, and yet they're required to have no insurance whatsoever," said Mr. Sommerman, a partner at law firm Sommerman and Quesada LLP. "You can't drive down the road in Texas without some minimum insurance."

      The brokerage firms being pursued by the trustee include Meadowbrook Securities LLC, formerly known as Investlinc Securities LLC, based in Jackson, Miss.

      The firm had net capital of $6,563 at the end of 2010, more than its required minimum of $5,000. The firm's assets included $3,622 in cash.

      In the Provident Royalties case, Meadowbrook faced claims from investors to whom it sold more than $2 million in securities, according to a court filing.

      Meadowbrook closed its doors in June 2011, according to a regulatory filing. Later that year, Finra fined the firm's owner and chief executive, Leroy Paris, $10,000 and barred him from acting as a principal for six months over his firm's alleged failure to do proper due diligence related to Provident Royalties.

      Mr. Paris now works from the same office suite—but for a different firm.

      A Finra arbitration panel last year ordered Meadowbrook to pay nearly $7 million, including $4.5 million in punitive damages, to the Provident Royalties trustee.

      None of the award has yet been paid, according to Mr. Sommerman.

      Mr. Paris said he and his former firm did nothing wrong. "I felt like we did a good job in due diligence," he said in an interview.

      Meadowbrook lacked sufficient assets to pay the penalties being demanded by Finra, Mr. Paris said, "so we just closed the business."

      Write toJean Eaglesham at jean.eaglesham@wsj.com and Rob Barry at rob.barry@wsj.com

      Share Recommend | Keep | Reply | Mark as Last Read


      From: StockDung10/5/2013 9:47:11 AM
         of 118624
       
      SEC launches 'RoboCop' to fight against accounting fraud The US Securities and Exchange Commission is launching a computerised tool designed to automatically trigger alerts concerning suspicious accounting at publicly traded companies.


      The new SEC system has been described as accountancy's answer to RoboCop.

      9:17AM GMT 14 Feb 2013

      The regulator says it will search a “rich vein of information” continuously supplied by companies through official filings such as annual reports, reports the Financial Times.


      The new system has been described as accountancy's answer to RoboCop.


      Craig Lewis, director of the SEC’s division of risk, strategy and financial innovation, said it would be about nine months before it was rolled out, although it could appear sooner.


      The data-mining software is partly based on a model the SEC developed to trawl through hedge fund returns for signs of Bernard Madoff-style chicanery.


      The accounting version will analyse whether a company “sticks out from the pack” in areas such as accruals, which are non-cash entries that can be manipulated by management, the Financial Times reports.

      Other factors that might raise red flags include a high proportion of off-balance-sheet transactions, frequent changes in auditor and delays to earnings announcements.

      “When firms are choosing accounting treatments that are unusual – that’s something we would like to highlight [for SEC examiners],” Mr Lewis, a former finance professor who is also the SEC’s chief economist, told the pink paper

      Share Recommend | Keep | Reply | Mark as Last Read
      Previous 10 | Next 10 

      Copyright © 1995-2014 Knight Sac Media. All rights reserved.Stock quotes are delayed at least 15 minutes - See Terms of Use.