Investment Litigation Blog

Faced with proof that FINRA arbitration hearings have been secretly recorded at least three times, FINRA is making an official policy against the practice. These complaints came from the Securities Experts’ Roundtable Inc., a group of expert witnesses, who had their expert testimony leaked outside the hearing rooms. Of course we agree that recordings should…

(December 5) Two recent scientific studies may help explain why the elderly tend to fall victim to financial fraud in disproportionate numbers. In 2009 the National Institute of Justice found that almost 12 percent of Americans 60 and older had been financially exploited; for 2010 MetLife estimated the total size of elder financial fraud losses…

(December 5) Legal wrangling intensifies in the ZeekRewards case, the largest Ponzi scheme in U.S. history by the number of victims. It was closed by the SEC in August. In only eighteen months online entrepreneur (and former singing magician) Paul Burks received $600M from over a million people involved in his penny auction pyramid. In…

(December 4) The U.S. Attorney in Trenton and the Newark, New Jersey office of the FBI announced the criminal conviction of the leader of a multifaceted online stock manipulation scheme. Christopher Rad, 44, of Cedar Park Texas, was found guilty on six counts. He’ll be sentenced next year. Rad and others paid a network of…

(December 3) The Securities and Exchange Commission will be asked to approve an eight-month delay for the implementation of its massive Consolidate Audit Trail system. FINRA, along with the operators of the markets to be monitored by CAT (13 equity exchanges, 10 options markets, and more than 200 broker-dealers), will all ask to move the…

(December 3) Judith A. Wagner, the trustee who filed 161 controversial clawback complaints in the ongoing Vaughan Realtors Ponzi / bankruptcy case in Albuquerque, is fighting a legal tactic that would remove her. In February 2010 it was found that real estate executive Doug Vaughan had defrauded 600 victims out of $75M. He’s been sentenced…

(November 29) FINRA has formally proposed that broker-dealers and their employers reveal the terms of their compensation, which normally include bonuses and incentives. Industry reaction has, predictably, been loud and indignant. Regulators point out that Registered Investment Advisors are already under similar restrictions; that compensation and bonus structures for brokers can potentially lead to conflicts…

FOR IMMEDIATE RELEASE A federal law signed by President Obama earlier this year is almost certain to lead to new kinds of investment fraud. Banks Law Office issues this Investment Alert to urge individual and institutional investors to be aware of these changes, and to safeguard themselves against the risks they bring. The principle behind…

(November 26) The U.S. Supreme Court today issued an opinion in Nitro-Lift Technologies, L.L.C. v. Howard, firmly upholding the idea that if there’s a challenge to the validity of a contract which compels arbitration, an arbitrator must decide the validity of that contract (except in the special case where the arbitration clause itself is challenged).…

(November 14) A U.S. District Court Judge in Austin, Texas has ruled that the officers of a corporation may have their bonuses, stock options and stock profits “clawed back” (ordered repaid) when their corporation violated securities laws — even when those officers were not directly involved in the violation. The ruling is consistent with previous…