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The Frankowski Firm is one of the few law firms in the country whose practice is dedicated to representing consumers against stock brokers and brokerage firms. Our attorneys are passionate about helping investors who have been taken advantage of by their financial advisors. While we are based in... More
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The Practitioner's Guide to Securities Arbitration
  • SEC Charges Atlanta Firm With Fraud Over Public Pension Funds

    The SEC filed fraud charges against an Atlanta-based investment firm and two of its executives for their handling of the city's pension funds for police, firefighters, transit workers, and other employees.

    According to the SEC, Gray Financial Group Inc. placed public pension funds into an investment that did not adhere to state law and collected over $1.7 as a result.

    The group, its and founder and president, Laurence Gray, and co-Chief Executive Officer Robert Hubbard IV allegedly breached their fiduciary duties by soliciting investments in an alternative fund called GrayCo Alternative Partners II LP.

    The group's attorney responded by stating that the "claims and arguments in the SEC's filing today are without merit."

    The SEC claims that the investments violate Georgia law because they did not have at least four other investors and did not have a minimum of $100 million in assets.

    Also, a Georgia public pension fund's investment is limited to no more than twenty percent of the capital in an alternative fund, but two of the pension funds' investments allegedly exceeded the limit.

    The firm is accused of making misrepresentations when asked if the investments complied with the law and about the number and identity of prior investors.

    "The SEC is once again bringing its charges in an unconstitutional and home-cooked administrative proceeding rather than trying a case before an impartial U.S. district court and a jury of one's peers," the group's attorney said on Thursday. Gray will "vigorously defend itself" in both proceedings, he added.

    May 22 3:01 PM | Link | Comment!
  • Nationwide Insurance To Pay $8M Penalty

    Nationwide Life Insurance Company will pay $8 million to settle charges filed by the SEC alleging that the insurance giant consistently violated pricing rules when processing orders of many of its insurance products. A statement by the SEC claims that Nationwide knowingly waited to deliver mail in order to avoid using current-day prices.

    "For more than a 15-year period, Nationwide intentionally delayed the delivery of untracked mail containing orders from customers and processed them at the next day's prices in violation of the law," said Sharon Binger, director of the SEC's Philadelphia regional office.

    According to a report by the Wall Street Journal, Nationwide requested that the post office separate mail directed to its variable contract business from mail directed to boxes for other lines of business. The company also asked the mail delivery service to travel to the post office at 3 A.M., 5 A.M., and 7 A.M. each business day to retrieve mail for other lines of business. The post office was asked not to collect variable contract mail at those times, however.

    If contracts arrived in Nationwide's parking lot before 4 P.M., the company allegedly told delivery people to wait until 4:01 P.M. to enter the building. According to the SEC, this led "some couriers to intentionally delay their arrival time at Nationwide by stopping to purchase meals or fuel."

    By doing this, Nationwide was able to charge higher prices for mutual fund shares, as rules require an investment company to compute the value of its shares at least once daily at a specific time determined by the board of directors.

    Nationwide spokesman Ryan Ankrom told the Journal that "there were no allegations that Nationwide benefited from its PO box mail processing practices or the process benefited certain groups of investors over others." He also stated that Nationwide chose to settle in order to focus on the needs of its members.

    May 21 12:03 PM | Link | Comment!
  • UBS Loses Arbitration, Forced To Pay $200k

    UBS lost an arbitration case this week pertaining to the offer and sale of a number of Puerto Rico Fixed Income and Bond funds.

    The Claimant in the arbitration asserted causes of action for violation of the Puerto Rico Uniform Securities Act, securities fraud, constructive fraud, breach of contract, negligence, negligent supervision, failure to supervise, breach of fiduciary duty, misrepresentation, omission of facts, manipulation, unsuitability, common law fraud, constructive fraud, and respondeat superior.

    The Claimant's allegations related to the her purchase of shares of Puerto Rico Fixed Income Funds I, II, and III and Puerto Rico Investors Bond Fund.

    In her statement of claim, the Claimant requested rescission of the closed end funds sold to her and $357,000 to $625,000 in compensatory damages, as well as interest, costs, attorneys' fees, and punitive damages. In her pre-hearing brief, the Claimant requested compensatory damages between $339,297 and $702,003. UBS requested dismissal of the claims and expungement of the action.

    After considering the pleadings, testimony, and evidence, the arbitration panel found UBS liable in the amount of $200,000 and denied UBS's request for expungement.

    May 14 5:50 PM | Link | Comment!
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