SEC Charges Investment Advisory Firm With Defrauding Retirees

Investor Alerts Attorney Jared Levy December 30, 2019

The SEC recently charged Springer Investment Management, Inc. dba Springer Financial Advisors (SFA) and its owner, Keith Springer, with defrauding hundreds of clients, including many retirees.

SFA is an investment advisory firm based in California. The SEC alleges that SFA recommended certain investment products to its clients, for which it received millions of dollars in secret compensation. According to the SEC, not only did SFA fail to disclose its conflict of interest, but it falsely claimed it had none.

The SEC also alleges that SFA took substantial measures to try to hide prior securities-related misconduct committed by SFA’s owner, Keith Springer – including prior SEC charges against him. According to the SEC, SFA went so far as to retain internet search-suppression companies and direct employees not to disclose Springer’s past to potential clients.

The SEC alleges that many retail clients initially learned of SFA through “Smart Money with Keith Springer,” a radio show with SFA’s owner. Springer allegedly misled listeners (i.e., potential clients) that he was picked to host the show due to his industry expertise. According to the SEC, SFA paid to host the show.

Erin E. Schneider, director of the SEC’s San Francisco Regional Office, stated: “Our complaint alleges that Springer actively targeted vulnerable retirees by misleading them about his prominence in the industry and promising to act in their best interests. Investment advisers must be truthful about their background and fully disclose all conflicts of interest.”

The SEC filed its complaint against SFA and Mr. Springer in federal court in California. The SEC has charged SFA and Springer with violating federal securities antifraud provisions and SEC rules regarding advertisements, compliance, and disclosures, among others. The SEC seeks injunctions, disgorgement, and civil penalties.

The Business Trial Group Fights For Investors

Please contact one of our Business Trial Group attorneys at 800-816-1031 if you believe you have a claim relating to the alleged fraud committed by Springer Financial Advisors.

The Business Trial Group at Morgan & Morgan is part of the largest contingency law firm in the nation, with more than 500 lawyers and 50 offices. We help investors recover their financial losses on a contingency basis – meaning we are only paid if we successfully recover money for you. We regularly battle against brokerage firms, investment advisory firms, and banks, and have helped investors recover tens of millions of dollars of investment losses.

How Investors Can Recover Harvest Volatility Management Losses

Investor Alerts Attorney Jared Levy December 24, 2019

Several brokerage firms have been selling customers a supposedly conservative investment strategy offered through Harvest Volatility Management that apparently wasn’t so conservative after all. In fact, Harvest engaged in speculative options trading pursuant to a Collateral Yield Enhancement Strategy that resulted in significant losses.

Multiple brokerage firms – including Morgan Stanley, Fidelity, J.P. Morgan, and Merrill Lynch – sold Harvest as a safe, income-generating strategy. But in reality, Harvest was trading options aggressively.

The firms that sold Harvest, of course, had an obligation to accurately represent the products and strategies sold to their clients. They also had an obligation to recommend only suitable investments. In this case, the brokerage firms that sold Harvest may have breached these obligations.

If you suffered losses in the Collateral Yield Enhancement Strategy offered through Harvest, please contact Morgan & Morgan’s Business Trial Group at 800-816-1031.

As part of the largest contingency law firm in the nation, the Business Trial Group at Morgan & Morgan helps investors recover their monetary losses on a contingency basis. If we don’t successfully recover money for you, you won’t owe us anything.

Our attorneys regularly fight for justice against brokerage firms, investment advisory firms, and banks. We have helped investors recover tens of millions of dollars of investment losses.

5 Noteworthy Investment Fraud Charges of 2019

Investor Alerts Emily Zulz December 23, 2019

Below is a roundup of some of the most noteworthy enforcement actions the SEC and FINRA brought in 2019. The SEC brought 862 enforcement actions in Fiscal Year 2019, according to a report by the SEC’s Division of Enforcement. FINRA hasn’t released its 2019 data yet.

If you have been a victim to misconduct similar to any of the actions described below, please contact the Business Trial Group at Morgan & Morgan today at 800-816-1031.

Our attorneys regularly fight against brokerage firms, investment advisory firms, and banks to help investors recover their financial losses. We have helped investors recover tens of millions of dollars of investment losses.

Merrill Lynch & Raymond James Firms to Pay $12M for Supervisory Failures Involving 529 Plan Share Classes

In November, FINRA ordered Merrill Lynch, Pierce, Fenner & Smith Incorporated, Raymond James & Associates, Inc., and Raymond James Financial Services, Inc. to pay approximately $12 million total in restitution for charging excessive fees on client investments in 529 savings plans. 529 plans, which are tax-advantaged municipal securities, are designed to encourage saving for the future educational expenses of a designated beneficiary. According to FINRA, Merrill Lynch and Raymond James failed to reasonably supervise 529 plan recommendations.

Two BMO Advisors to Pay $37M For Failing to Disclose Conflicts of Interest

According to the SEC, BMO Harris Financial Advisors Inc. (BMO Harris) and BMO Asset Management Corp. (BMO Asset Mgmt) preferred mutual funds managed by BMO Asset Mgmt when they were selecting investments in their retail investment advisory program, known as the Managed Asset Allocation Program (MAAP).

The two advisors invested approximately 50% of MAAP client assets in the BMO Asset Mgmt proprietary funds. This practice resulted in payment of additional management fees to BMO Asset Mgmt. But the SEC’s order found that neither BMO adviser disclosed this practice or the conflicts of interest to clients.

Blockchain Company to Pay $24 Million Penalty for Unregistered ICO

In September, the SEC ordered blockchain technology company Block.one to pay a $24 million penalty for conducting an unregistered initial coin offering (ICO) of digital tokens that raised the equivalent of several billion dollars over one year.

According to the SEC’s order, Block.one conducted an ICO between June 2017 and June 2018. However, Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements.

Ami Forte and Charles Lawrence Barred for Roles in Churning Accounts of Elderly Client with Dementia

In October, FINRA barred Ami Forte and Charles Lawrence of Florida for their respective roles in churning accounts belonging to a 79-year-old customer who suffered from severe cognitive impairment.

Forte first met the customer in the late 1990s, at which time the two developed a romantic and business relationship. Forte, who maintained near daily contact with the client, used her position of trust and confidence to exploit the client and generate excessive commissions.

According to FINRA, the Forte Group – which Forte established in 2001 and Lawrence joined at its inception – effected more than 2,800 trades in the customer’s accounts from September 2011 through June 2012, generating approximately $9 million in commissions. FINRA alleged that over half of these transactions involved short-term trading in long-maturity bonds, which usually are intended for customers with long-term investment horizons.

Court Ordered $1 Billion Judgment Against Operators of Woodbridge Ponzi Scheme

At the start of this year, a federal court in Florida ordered Woodbridge Group of Companies LLC and its former owner to pay $1 billion in penalties and disgorgement for operating a Ponzi scheme that targeted retail investors.

In December 2017, the SEC filed an emergency action charging the company and other defendants with operating a massive $1.2 billion Ponzi scheme that allegedly defrauded 8,400 retail investors nationwide, many of them seniors who had invested retirement funds. The SEC’s complaint alleged that former owner and CEO Robert H. Shapiro made Ponzi payments to investors and used a web of shell companies to conceal the scheme.

Investors Have Little Knowledge of Investing Principles: FINRA

Investor Alerts Attorney Jared Levy December 17, 2019

The FINRA Investor Education Foundation recently released a new research study, finding that investors have low knowledge of important investing principles. The FINRA Foundation further found that many investors are perplexed or unsure about the fees charged in their investment accounts. Approximately one-third of investors believe they do not pay any fees for their accounts or don’t know the amount they pay.

Approximately 2,000 people with investment accounts responded to the survey. The study contains the following findings, among others:

Investors have low knowledge about investment principles and practices. For example, 46% of the survey respondents believe an investment’s past performance is a reliable indicator of future results. And only 30% understand that index funds charge lower fees than actively managed funds.
Younger investors and small portfolio holders are more likely to invest in cryptocurrency. For example, investors between the ages of 18 and 34 and investors whose portfolios are valued under $50,000 are more likely to invest in cryptocurrency.
17% of respondents are using social media for investment information. Although we don’t think it’s a good idea for anyone to make investment decisions based solely on information contained in social media, 17% of the investors surveyed said they use social media to obtain investment information.
Investor tools like BrokerCheck or Investor.gov are being used by less than 10% of investors. The study found that investors are not very concerned about investment fraud and that investors are confident that regulators can prevent fraud. Unfortunately, regulators have limited resources and it’s impossible for them to catch every fraud. We urge all investors to use investor tools like BrokerCheck to view the background and disciplinary history of their stockbroker.
Investors are more likely to overestimate than underestimate their portfolio’s performance. While only 4% believe their portfolio will underperform the market, 29% believe their portfolio will outperform the market.

Gerri Walsh, president of the FINRA Foundation and FINRA’s Senior Vice President for Investor Education stated, “These research findings underscore the need for researchers, policymakers, advocates and industry stakeholders to continue to develop innovative investor tools and resources to better educate investors and to help protect them from fraud.”

To access the full study, datasets, survey instrument and methodology, visit USFinancialCapability.org. The study is entitled “Investors in the United States: A Report of the National Financial Capability Study.”

The Business Trial Group helps investors recover their investment losses on a contingency basis. This means that you won’t owe us anything if we don’t successfully recover money for you. We regularly battle against brokerage firms, investment advisory firms, and banks, and have helped investors recover tens of millions of dollars of investment losses. If you have suffered investment losses, you may have a viable legal claim. Please contact us at 800-816-1031 for a free consultation.