Purchasers of Variable Life and Variable Universal Life Insurance Policies often don’t understand that the values of the sub-account investments determine the sustainability of the insurance coverage in the policy. The value of the sub-accounts must remain sufficient to pay the cost of insurance. If the cost of insurance increases and/or the sub-account values drop, …
Brokers and agents who sell variable insurance products are supposed to comply both with state securities or insurance regulations and with regulations issued by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). Before recommending variable insurance, the broker or insurance agent is required to obtain information enabling him or her …
FINRA has filed with the Securities and Exchange Commission a proposal to narrow the definition of a public arbitrator, precluding anyone with financial industry experience from qualifying for the category. Brokerage customer contracts contain mandatory arbitration clauses that for the most part, prevent customers from suing brokerage firms in court. The parties instead choose a …
Tom Abraham (also known as Thomas Abdallah), Kenneth Grant, their company KGTA Petroleum, Ltd., stockbrokers Jeffrey Gainer and Jerry Cicolani, and others are accused of orchestrating and/or helping to promote a Ponzi scheme related to KGTA, a petroleum company that purported to earn profits by buying and reselling crude oil and refined fuel products, according to …
As we’ve explained in the past, most lawyers in the claimants’ bar contend that brokers are subject to a fiduciary standard and owe a duty to put customers’ interests ahead of the broker’s own interest in earning commissions and fees. While a stockbroker is required by rule and regulation to only recommend investments that are …
Arbitrations are conducted under the auspices of the Financial Industry Regulatory Authority (FINRA). The case is commenced with the filing of a Statement of Claim, which is a complaint that spells out the relevant facts and the remedies sought. You will be designated the “Claimant” and the broker and brokerage firm will be referred to …
Claimants lawyers have long complained that brokerage firms should not be permitted to insist, as a condition of settling a dispute, that the customer must cooperate in having the broker’s bad acts expunged, i.e., scrubbed from the public record. Expungement essentially amounts to a declaration that the broker did nothing wrong. But a declaration that …
The Financial Industry Regulatory Authority intends to field an enforcement team tasked with focusing on brokers whose records show patterns of complaints or sales abuses. The team will review both the quality of a firm’s due diligence in the hiring process and in monitoring higher risk brokers. For instance, scrutiny will be paid to whether …
Regulators have filed yet another huge lawsuit concerning the investment banking fraud that picked investors clean and nearly collapsed our economy. This time, the bad actor is Credit Suisse, which previously was hit with a similar suit by the State of New York. The New Jersey suit filed against Credit Suisse Securities (USA) LLC and …
As we’ve explained repeatedly on this site, every recommendation made or sales strategy employed by a brokerage firm or broker on behalf of a customer must be suitable for that customer. An unsuitable recommendation or strategy can leave the firm or broker civilly liable if the customer incurs damages. FINRA recently issued Regulatory Notice 13-31 …
The UBS Puerto Rico family of funds consists of 14 closed-end funds, sold exclusively through registered representatives and brokers with UBS Financial Services Inc. of Puerto Rico. During the past decade through the end of 2012, UBS reportedly has sold roughly $10 billion worth of these funds. Now the values of the funds are in …
There’s a really good article today on the website OnWallStreet.com. Author Brad Klontz, a certified financial planner and financial psychologist, cogently explains the flaw in the traditional way brokers, investment advisors, and financial planners assess a new client’s risk tolerance. According to Klontz, the usual practice of using questionnaires or checklists to have the client …
Back in February of this year, we wrote about reverse convertible notes tied to the performance of Apple stock. We told you then that if you were one of the thousands of investors who bought these Apple-linked products, the big downturn in the price of Apple could result in a very unpleasant surprise. Why? Because …
FINRA issued a report today entitled Financial Fraud and Fraud Susceptibility in the United States (.pdf). The name is cumbersome, but the report is illuminating. Fraudsters target nearly everyone, but older Americans are most vulnerable. The FINRA Investor Education Foundation conducted a survey of 2364 individuals age 40 or older. More than 80% of respondents …
When searching for and choosing a stockbroker, many of us tend to become passive and even a bit deferential. After all, the broker is supposed to be an expert. But passivity is dangerous when you’re choosing someone who can potentially destroy your financial security. Here are five things people should ask brokers, but almost never …
