Securities Industry Commentator by Bill Singer Esq
May 23, 2018
https://www.justice.gov/usao-ma/pr/biotech-company-ceo-and-associate-indicted-securities-fraud-charges
https://www.sec.gov/news/speech/redfearn-remarks-finra-annual-conference-052218 READ the FULL TEXT SPEECH.
To exercise such reasonable diligence, care, skill, and prudence the broker-dealer would be required to do three things when it recommends a securities transaction or investment strategy to a retail customer.
- First, the broker-dealer would need to understand the risks and rewards associated with the security or investment strategy, and have a reasonable basis to believe that it could be in the best interest of at least some retail customers.
- Second, the broker-dealer would be required to match this understanding of the security or strategy to the particular retail customer to form a reasonable belief that the security or strategy is in the retail customer's best interest. The customer's investment profile would be developed using the extensive investment profile information that broker-dealers are required to attempt to gather today pursuant to FINRA rules. We thought that the investment profile information that is currently required has worked well, so we did not propose to change it.
- Finally, the broker-dealer would be required to have a reasonable basis to believe that a series of recommended transactions is not excessive and is in the retail customer's best interest when taken together in light of the customer's investment profile.
Grand Blanc Man and Flint Woman Indicted For Involvement in Fraudulent Investment Scheme (DOJ Press Release)
https://www.justice.gov/usao-edmi/pr/grand-blanc-man-and-flint-woman-indicted-involvement-fraudulent-investment-scheme
Larry A. Holley, 61 and Patricia Enright a.k.a. Patricia Gray were indicted in the United States District Court for the Eastern District of Michigan on conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and money laundering. The Indictment alleges that Holley, who is a pastor at Abundant Life Ministries in Flint, and Enright operated Treasure Enterprise, LLC, which fraudulently purported to provide financial planning and asset management services to investors. Holley and Enright allegedly solicited many of their investors at financial seminars held at churches. As set forth in part in the DOJ Press Release:
The indictment alleges that in order to lure the potential investors, many of whom took their money out of legitimate investments-such as individual retirement accounts (IRAs) and 401Ks-Holley and Enright promised high, guaranteed returns, and the safe return of an investor's entire principal at the end of the investment period. The money, however, was not invested and did not earn the profits to pay the guaranteed interest payments. Instead, Holley and Enright, and others directed by them, simply deposited the victim investor funds into Treasure's bank accounts and then used the money for their personal benefit, for the benefit of Abundant Life Ministries, to make interest and principal payments to earlier investors, and to pay other Treasure employees.