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VA Free Lunch Seminars and Online Account Hijacking

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Mar 22, 2010 11:53 am

An irreverent Wall Street Blog
by Bill Singer 




On Monday, March 15, 2010, the United Securities and Exchange Commission (the SEC) filed an emergency action (which was granted pending a preliminary hearing) in the United States District Court for the Southern District of New York to freeze the assets Defendants, located in Russia, responsible for a hi-tech market manipulation scheme. Securities and Exchange Commission v. BroCo Investments and Valery Malstev, Civil Action No. 10-CIV-2217 (S.D.N.Y.)  The SEC complaint alleges that BroCo Investments, Inc., its president Valery Maltsev, and/or individuals acting in concert with them hijacked the online brokerage accounts of unwitting investors using stolen usernames and passwords and subsequently placed unauthorized trades through the compromised accounts to manipulate the markets of at least thirty-eight issuers.






On June 30, 2009, the SEC instituted administrative proceedings against Prime Capital Services, Inc. (“PCS”) and Gilman Ciocia, Inc. (“G&C”), among others.  PCS and G&C (collectively, the “Entity Respondents”) submitted an Offer of Settlement (the “Offer”), which the SEC accepted. From approximately November 1999 through February 2007 (the “relevant period”), four representatives associated with Respondent PCS who were employed by Respondent G&C (the “registered representatives”) offered and sold variable annuities to senior citizen customers in Delray Beach, Boynton Beach, Melbourne and Boca Raton. Most of the registered representatives’ customers had attended G&C’s free-lunch seminars in south Florida communities, during which the four representatives touted PCS’s financial services in general and, during most of the relevant period, variable annuities in particular.


Some customers who wanted full access to their money were unlikely to outlive the period during which they would pay surrender fees on their variable annuities, and other customers were induced to invest more than seventy-five percent of their liquid assets in variable annuities with limitations and/or fees on withdrawals. Compared to other investment products, which generally paid less than three percent in sales commissions, the variable annuities sold by the registered representatives generally paid approximately a six percent gross sales commission



============================================================================================ New FINRA Cases Analyzed by Bill Singer

Regulatory lawyer Bill Singer has analyzed and posted the latest crop of FINRA disciplinary cases.  Frankly, it's not a pretty sight. 

How simple is it to steal a quarter of a million in insurance premiums?  How about you just submit a change of address form. CLICK HERE TO READ CASE Why accuse a broker of "forgery," when you can engage in prosaic pyrotechnics along the lines of "Davis falsified the customer’s signature on the application and submitted it to his member firm as authentic, causing the firm’s books and records to be false and inaccurate." CLICK HERE TO READ CASE The elderly have become attractive victims for many securities scams -- now we have a case where a supervisor is nailed for failing to properly supervise a miscreant who was ripping off the aged.  CLICK HERE TO READ CASE You tell me.  Was a six-month suspension enough given FINRA's recitation of the facts?  CLICK HERE TO READ CASE And when you're done with that -- read this one.  CLICK HERE TO READ CASE



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