In the Name of Love:
Shane Selewach, a registered rep at the Hyannis, Mass., branch of Ameriprise Financial Services from 1997 to April 2006, was accused in late August in a complaint by William Galvin, Secretary of the Commonwealth of Massachusetts, of stealing more than $200,000 from clients to pay for luxuries like cars and travel abroad, including “Russian bride” trips to Moscow and Kiev. Galvin also names the firm in the complaint for failure to supervise, noting that even though Selewach was on heightened supervision, he was still able to fleece his mostly elderly victims for his own gain. The complaint notes that Selewach spent thousands of dollars on hotels, flowers and restaurants in Russia, where he was looking for Russian brides he met through Anastasia International, a Web site that sells itself as “the fastest way to reach thousands of Russian ladies.” Galvin seeks to have Selewach's license revoked and to require the firm to return the stolen funds. Ameriprise is cooperating with the investigation.
NASD Busts Slick Broker:
NASD fined Securities America $2.5 million and ordered the firm to pay $13.8 million for failing to supervise one of its brokers, who allegedly convinced 32 former Exxon employees to retire early with promises of superior returns for the funds residing in their retirement accounts. The broker, David McFadden, has been charged separately with securities fraud.
“In this case, Securities America's lack of supervision resulted in Exxon employees being fraudulently induced into retiring early based upon false and misleading projections of future investment returns on their nest eggs,” said James Shorris, NASD executive vice president and head of Enforcement. “Together, these unsuspecting investors lost millions of dollars of life savings after following advice that benefited no one other than Securities America and its representative,” said Shorris.
NASD found that McFadden's seminar materials included a slide showing misleading projections of account values over a 20-year period. The slide assumed rates of return ranging from 5 percent to 18 percent for a hypothetical customer with retirement savings of $600,000. The slide indicated that the client could make annual withdrawals starting at $58,000 per year (9.67 percent of the initial balance) and increasing by $6,000 every five years. It also depicted the investment compounding steadily over time and included no discussion of the risks involved in investments offering the potential for higher rates of return. In settling with NASD, Securities America neither admitted nor denied the charges.