ABOUT BROKER FRAUD BLOG

Raymond James Must Buy Back Auction Rate Securities

A Texas couple got some great news last week from the FINRA arbitration panel that ruled on their claim.

The panel ruled that the Raymond James Financial Inc. and broker Larry Milton must buy back some $925,000 worth of auction rate securities from a the couple.

Rex and Sherese Glendenning alleged breach of fiduciary duty, misrepresentation and civil fraud, among other allegations. According to their attorney the couple opened a Raymond James account to consolidate fund that were held in numerous CODs in an effort to make their finances easier to manage. That is not what they ended up getting.

The suit claimed that the Glendenning's broker, Mr. Milton, purchased auction rate securities on behalf of the couple although they had never discussed these purchases and expressed their desire to invest in CDs.

The couple found themselves at the heart of the auction rate securities debacle when the market froze in February of 2008 leaving them with no way to access their investments.

It has been a rough couple of months for Raymond James. This is the second time in as many months that the company has been ordered to buy back auction rate securities from investors. In July they were ordered to buy back $2.5 million from a client who was acting as a trustee for a revocable trust.

Texas Billionaire Brothers Respond to SEC

Last month two billion brothers from Texas were hit with a securities fraud lawsuit by the SEC alleging that the brothers attempted to hide $550 million in trading profits.

The Wylys brothers were accused by the SEC of using sham trusts and subsidiaries in the Isle of Man and the Cayman Islands to conceal sales of stocks of public companies they were directors of. The SEC has been investigating the inner workings of the alleged fraud for some six years and recently decided that they had enough evidence to file suit.

 The brothers have always vehemently denied the charges through their lawyer, but have never publicly addressed the issue themselves, until now that is.

Months of settlement talks between the Wylys brothers and the SEC have made little progress toward a resolution and now the brothers are speaking out about the suit in this New York Times article.

“They gonna lose,” said Sam Wyly. They gonna get nothing.”

The brothers claim the goal of the trusts was estate planning and tax deferral. They claim that if there were mistakes in establishing the trusts or disclosing revenue it was the fault of experts hired by the brothers to manage the trusts.

The SEC looks at the accusations a little differently, saying that the Wylys brothers knew or should have known, that they were violating the law.

It will be very interesting to see how this one unfolds in the coming months.

BP Securities Lawsuits Heading to Houston

By now I am sure that everyone knows about the thousands of claims BP is facing over property damage and loss of income resulting from the massive oil spill that released millions of gallons oil into the Gulf of Mexico, but my guess is that far fewer are aware of another large group of lawsuits BP is facing over losses suffered by investors and employees who took big hits their portfolios as BP stock prices plummeted following the spill.

The lawsuits allege that BP knew the rig was unsafe and made attempts to downplay the spill so that shares would be purchased at an inflated price.

This host of suits has been consolidated to Houston under U.S. district Judge Keith P. Ellison. Ellison will heart civil securities fraud claims, shareholder derivative actions, and claims from BP employees who have taken loses to their retirement plans. All cases falling outside of the securities realm will be transferred to New Orleans.

Some experts believe securities lawsuits may actually end costing BP more than economic loss claims when all is said and done.

BP has reportedly aside $32.2 billion to for spill costs and to pay legal claims, in addition to the $20 billion in the claim fund, but many believe cost will easily exceed this $52.2 billion threshold.

Barclay’s Agrees to Pay $298 Million for Evading U.S. Sanctions

The London-based Barclays Bank has agreed to pay $298 million to settle criminal charges for helping banks in Iran, Cuba, Libya, Mayanmar, and Sudan evade U.S. economic sanctions. See the WSJ article here.

According to prosecutors, bank employees deleted and changed payment messages referencing the banned countries, routed some payments through an internal account so they would look like they were coming from England, and sent others back to the senders with a fax coversheet reading, “Payments to U.S.A. must NOT contain the word listed below.”

Prosecutors say that Barclay’s even developed internal instruction manuals to process payments from foreign banks into the U.S. and avoid detection by authorities.

An internal Barclay’s review found $500 million in payments were processed from countries that had been sanction by the U.S.

If Barclay’s fulfills all of its obligations in the deal the charges will be dismissed.

6 Ways to Avoid Mortgage and Insurance Broker Fraud

You can’t start and finish the home-buying process overnight. Rushing through the steps isn’t recommended either, since buying a home is one of the biggest investments of your life. One of the keys to buying a home is financing it. You also don’t want to rush through buying insurance, since good insurance can make or break it for you in a tight spot. But to get the mortgage or insurance you want, you’ll need a trustworthy broker. To avoid getting scammed or employing the services of an unethical broker, take a few precautions.

• Make sure your broker is properly bonded. To legally operate, mortgage and insurance brokers must buy a bond. Brokers who purchase surety bonds guarantee that you cannot lose money in case they mismanage your money or fail to do their job. Confirm that the broker is licensed in your state. If your broker is in New York, they should hold a surety bond in New York.
• Search thoroughly for a reputable broker. The general Internet search isn’t always enough. Though if you limit your search with specifics such as “mortgage broker surety bond New York,” then you might yield better results. Contact organizations (National Association of Mortgage Brokers, Mortgage Bankers Association, National Association of Professional Insurance Agents) for help. Family, friends and future neighbors can usually suggest an honest broker.
• Do a background check. If the broker refuses to give you references or gives you phony ones, that’s a deal breaker. It takes one phone call to your local Better Business Bureau to find out if customers have filed complaints against the broker. However, to be a part of the BBB a company simply pays the bureau. So contact your state insurance department to investigate the conspicuous broker.
• Look out for false claims. If a broker offers coverage with huge discounts (30 to 50 percent), think twice before signing anything. Find out what the real range is on coverage. Beware of super-low interest rates and insurance premiums. Some brokers dangle these as part of a bait and switch. Other brokers can identify bait-and-switch offers for you.
• Pay wisely. Checks and money orders are the reliable ways to pay your premiums—never cash. Make copies of your payments, insist on getting a receipt and pay the insurance company instead of the broker.
• Read before you sign. It might be tedious, but reading everything before you buy coverage could save you. Don’t sign blank forms and photocopy all of the forms you do sign. Once your broker willingly covers the details and all forms are signed, then buy your coverage.

Guest Post by Matthew Bruns