The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
May 20, 2021
The Vanguard Customer Didn't Ask, Didn't Listen, But The Firm's Voicemail Sucks (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5859/finra-arbitration-vanguard/
In a recent FINRA expungement case, we come across a dispute in which a Vanguard Marketing Corporation customer insists that he sustained losses after he had asked for a portfolio reallocation that wasn't performed. Except three independent arbitrators found otherwise. They said the customer hadn't asked, and, even if he did, those alleged losses weren't even losses. That's as dramatic a rebuke as you could imagine. But what the hell is with the firm's telephone system?
https://www.sec.gov/news/press-release/2021-87
In a Complaint filed in the United States District Court for the District of New Jersey
https://www.sec.gov/litigation/complaints/2021/comp-pr2021-87.pdf, the SEC charged Premier Healthcare Solutions LLC and its founder, Josiah David with violating the antifraud provisions of the federal securities law; and further names Relief Defendants Denis Joachim and Provision Corporation LLC. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2021/comp-pr2021-87.pdf, the SEC charged Premier Healthcare Solutions LLC and its founder, Josiah David with violating the antifraud provisions of the federal securities law; and further names Relief Defendants Denis Joachim and Provision Corporation LLC. As alleged in part in the SEC Release:
[S]ince July 2017, Premier Healthcare Solution LLC and its founder, Josiah David (formerly known as Dennis Lee), an individual with felony convictions and an extensive history of regulatory violations, have been raising money from investors by selling them membership interests in Premier, a company that purported to offer employers a supplemental medical reimbursement plan. The SEC alleges that the plan consists of a tax exempt healthcare-related contribution from the employee to Premier, a loan from a lender to repay the employee's contribution, and an insurance policy obtained by Premier payable at the employee's death to repay the loan. The SEC's complaint alleges that Premier and David defrauded investors by making misrepresentations about Premier having secured a bank loan necessary for its business plan to succeed, when, in fact, it had not done so and also making misrepresentations that the concept underlying Premier's business model was either patent-pending or patented, when, in fact, the U.S. Patent and Trademark Office had repeatedly denied Premier's applications. The complaint further alleges that David deceived investors by failing to disclose and lying about his prior criminal and regulatory history when he was known as Dennis Lee.
In an Order Determining Whistleblower Award Claims ('34 Act Rel. No. 91933; Whistleblower Award Proceeding File No. 2021-50)
https://www.sec.gov/rules/other/2021/34-91933.pdf
The SEC Claims Review Staff ("CRS") issued a Preliminary Determination recommending that Claimant receive an award of $28 million, which covers sanctions collected by both the SEC and in a "related action" based on the same tips.; and that Claimant 3 be denied an award. As asserted in part in the Order:
[W]e considered that: (1) Claimant's information prompted staff at the Commission and the Other Agency to begin investigating the Covered Action company's conduct in a certain country, (2) the record supports that the Covered Action company reported similar improprieties in a different geographical region because of the ongoing Commission and Other Agency investigations, and (3) the Covered Action's and the Related Action's charges involved misconduct in geographical regions that were not the subject of the Claimant's information. . . .
https://www.finra.org/sites/default/files/aao_documents/20-02776.pdf
In a FINRA Arbitration Statement of Claim filed in August 2020 and as amended, associated person Claimant Wollman sought the expungement of customer dispute information from his Central Registration Depository records ("CRD"). Respondent Raymond James did not oppose Claimant's requested expungement. The FINRA Award notes that the customer was deceased but that his surviving spouse had been served with notice of the expungement hearing, and she did not participate at the hearing. The complaint did not result in a settlement. In accordance with FINRA Rule 2080, the FINRA Arbitrator found that the customer's claim, allegation, or information was factually impossible or clearly erroneous, and false; and, further, that Claimant Wollman was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation, or conversion of funds. In recommending expungement, the sole FINRA Arbitrator offered this rationale:
Bill Singer's CommentThe Customer never became a customer of Claimant because the Customer and his spouse decided to stay with their original advisor. The Customer signed a new account form with Respondent but left out the date when signing the form. Claimant's assistant noticed the missing date and filled it in, but did not tell Claimant that it had been missing or that she filled it in. Claimant's assistant had no authority to fill in the date on the form and she did not ask Claimant for permission to do so. An internal investigation by Respondent cleared Claimant of any wrongdoing. FINRA also conducted an investigation, and Claimant was informed by FINRA staff that the matter was being closed with no action taken against Claimant.
Which begs the question as to why someone at Raymond James marked-up Wollman's industry record with a "customer" complaint when, in fact, the individual "never became a customer" of Wollman's. Of course, being the idiot that I am, I wonder why FINRA couldn't have simply agreed to remove this disclosure upon being presented with proof that the so-called "complaint" did not emanate from a "customer," but, being the cynic that I am, maybe FINRA prefers to generate arbitration fees.
FINRA Publishes Helpful Notice About Online Account Takeover (ATO) (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5856/finra-ato/
As readers of the BrokeAndBroker.com Blog know, our publisher Bill Singer is a frequent critic of many FINRA Regulatory Notices, which unwisely divert the focus of industry compliance staff from serious tasks and this stress has been exacerbated by the COVID pandemic. Perhaps in response to some of Bill's recent complaints, FINRA just published the truly helpful "Cybersecurity / FINRA Shares Practices Firms Use to Protect Customers From Online Account Takeover Attempts" (FINRA Regulatory Notice 21-18 / May 12, 2021).