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FINRA doubled its enforcement haul in 2014 by collecting about $134 million in sanctions, leading attorneys to wonder if the trend will lead to bigger fines in the future. During the past year, the regulatory authority hit big names, including Citigroup Inc., Morgan Stanley Smith Barney LLC, and Bank of America’s Merrill Lynch unit, with multimillion-dollar fines pertaining to claims that they failed to adhere to FINRA’s rules. The indiscretions ranged from banking conflicts of interest to sales practice issues involving retail and small business customers.

According to a study by Sutherland Asbill & Brennan LLP, FINRA accrued its largest total of fines since the financial crisis with twenty-five cases collectively earning over $100 million in fines. Sutherland also calculated that the roughly $135 million was more than double the $60 million in fines it imposed on 2013. The total was also much larger than the fines ranging from $28 million to $72 million between 2008 and 2012.

FINRA’s biggest fine of 2014 was a $15 million penalty against Citigroup in November. FINRA claimed that Citigroup had been engaging in violations that lasted more than nine years, involving its failure to properly supervise its research analysts. An $8 million penalty against Brown Brothers Harriman in February was second. That case involved anti-money laundering rule violations over the firm’s failure to detect and investigate suspicious penny stock transactions. Both firms settled their cases without admitting or denying wrongdoing.

Some believe that FINRA’s 2014 is a sign of things to come. Jeff Kern, special counsel at Sheppard Mullin Richter & Hampton LLP and a former FINRA enforcement attorney, said, “I think this is the new normal. I don’t think FINRA has any intention of resting on its accomplishments or to view this as an anomaly.”

Others, however, believe that 2014 was an anomaly in that a number of high price tag cases came to fruition simultaneously. Emily Gordy, an attorney with Shulman Rogers Gandal Pordy & Ecker PC and a former senior vice president of FINRA enforcement, said, “It was definitely an alignment of the stars.”

Regardless, looking ahead to the future, attorneys believe FINRA will follow through on its promise to pay close attention to issues around the treatment of seniors, retirees and those who have suddenly come into wealth, such as through an inheritance.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

Alibaba, an e-commerce giant out of China, is looking at an increasing number of class action suits alleging that the company downplayed the sale of counterfeit goods during its $25 billion initial public offering. On September 2014, Alibaba conducted its IPO and started trading stock on the New York Stock Exchange under the symbol ‘BABA.’

Investor Clair Rand filed a lawsuit in United States District Court for the Southern District of New York alleging that Alibaba’s share price artificially inflated because of misleading statements made by company executives to the investing public before and after its listing on the NYSE in SEC filings, press releases, and conference calls pertaining to the company’s efforts in fighting the sale of illegal and counterfeit goods.

According to the suit, the executives failed to publicly disclose that in July 2014, two months before the IPO, they met with China’s State Administration of Industry and Commerce (SAIC) and received a guidance regarding “counterfeit and contraband goods sold over its platforms as well as other illegal activity, including widespread fraudulent transactions, the taking of illegal commercial bribes by Alibaba employees, and inadequate controls to prevent illegal sales and other improper activities.”

A white paper issued by the SAIC detailed a number of questionable business practices on Alibaba’s behalf calling the controversy “a rare public dispute with one of the country’s most prominent companies.” More specifically, the white paper alleged that Alibaba, “turned a blind eye to the sale of fake cigarettes, alcohol and mobile phones” and that company staffers took bribes from merchants and others seeking to boost their search rankings and gain advertising space.

According to the complaint, because of the combination of the SAIC white paper and lower than expected results for the quarter ending on December 31, 2014, Alibaba shares fell almost 9% to close at $89.81 per share on January 29, 2015. Coupled with a decline of approximately 4% of January 28, Alibaba shares were reduced more than 25% from its class period high of $120 per share reached on November 13, resulting in a loss of more than $11 billion in market capitalization.

Alibaba is headquartered in Hangzhou, China and operates as an online shopping destination through, Taobao Marketplace, and

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

This month, FINRA released to publications pertaining to cybersecurity risks at financial firms. The Report on Cybersecurity Practices presents the findings of FINRA’s 2014 investigation of cybersecurity issues at financial firms and points out risk management principles and practices to assist firms in decreasing their exposure to cyber threats. The regulatory authority also published Cybersecurity and Your Brokerage Firm, an investor alert designed to “encourage investors to understand a firm’s cybersecurity policies and take personal precautions to safeguard their brokerage accounts and personal financial information.”

FINRA’s 2014 investigation had four purposes: “to better understand the types of threats that firms face; to increase [FINRA’s] understanding of firms’ risk appetite, exposure and major areas of vulnerabilities in their information technology systems; to better understand firms’ approaches to managing these threats; and to share observations and findings with firms.” It found that the top three threats that financial firms include “hackers penetrating firm systems; insiders compromising firm or client data; and operational risks.”

The Report on Cybersecurity Practices details general principles and useful practices for identifying and managing cybersecurity risks, including “defining a governance framework to support decision making based on risk appetite; ensuring active senior management, and as appropriate to the firm, board-level engagement with cybersecurity issues; identifying frameworks and standards to address cybersecurity; using metrics and thresholds to inform governance processes; dedicating resources to achieve the desired risk posture; and performing cybersecurity risk assessments.”

FINRA’s investor alert gives guidance to individuals regarding cybersecurity risks, telling investors get accustomed with their firm’s cybersecurity practices and policies. Furthermore, the alert states that investors should proactively safeguard their own personal financial information and brokerage accounts, including installing updated firewall and anti-virus programs on personal computers and remembering to formally log out of online account sessions after each login.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

Arque Capital, Ltd. submitted a letter of acceptance, waiver, and consent in which the firm was censured and fined $50,000. Arque Capital did not admit or deny the findings but consented to the penalties and to the entry of findings that it sold about $3.53 million in an alternative investments called Renewable Secured Debentures to roughly forty investors while providing them with the company’s sales kit, which included a brochure with misleading statements. According to the findings, the firm was responsible for conducting due diligence on the company and the debentures as well as advertising pieces pertaining to the debentures. Arque Capital sent out solicitations with misleading statements, omitted material facts, and did not provide a sound basis for evaluating the securities that were being offered.

Joseph Brandon Westphal was banned from association with any member of FINRA in any capacity. The penalty was the result of findings that he did not respond to FINRA’s request for documents and information. According to the findings, FINRA had been looking into accusations from Westphal’s past member firm that he opened numerous accounts without approval, had stolen cash, and had engaged in serious ethical violations.

Steven Lee Stahler submitted an Offer of Settlement in which he was assessed a deferred fine of $15,000 and suspended from associating with any FINRA member in any capacity for six months. Stahler did not admit or deny the allegations but consented to the penalties and to the entry of findings that he made unsuitable suggestions to investors. According to the findings, Stahler unreasonably suggested that his investors put a significant amount of their portfolios and net worth in private placements and real estate investment trusts. Stahler received around $165,000 in net commissions on the investments he suggested to his clients. Stahler, according to the findings, also negligently misrepresented material facts relating to suggestions he made to three clients, telling them that their investments contained only moderate risk and that the offering documents exaggerated the risk.

WM. H. Murphy & Co., Inc. and William Herbert Murphy were named as respondents in a FINRA complaint claiming that the firm engaged in the sale of private placements that supposedly were being sold pursuant to the registration exemption provided by SEC Rule 506 of Regulation D. Accordingly, the offerings could not be sold through general solicitations or advertisements. The firm is alleged to have used radio shows and workshops to gain new clientele to whom the firm sold private placements in violating of the general solicitation prohibition. Accordingly, the private offerings did not comply with all of the conditions of the registration exemption and lost the Rule 506 exemption, causing the firm to participate in unregistered sales of $1,031,700 in securities to clients. The firm also allegedly failed to establish and maintain a supervisory system reasonably designed to ensure compliance with Section 5 of the Securities Act of 1933. The firm did not have adequate procedures to prevent the sale of unregistered and non-exempt securities.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

General Electric Inc.’s pension and investment funds lawsuit with American International Group Inc. is going to federal court in New York, resurrecting claims from a class action suit settled last year that AIG made misrepresentations to investors regarding the exposure of billions worth of mortgage-backed transactions, despite the housing market crashing.

Between 2006 and 2009, five GE trusts lost an enormous amount of money by buying AIG stock based on optimistic forecasts made by AIG’s top executives that the company was performing well, even though it knew that billions worth of credit default swaps and residential mortgage-backed securities were jeopardizing its position.

The GE funds opted out of a $960 million settlement reached with investors last year to resolve claims pertaining to the credit default swap.

GE’s complaint centers on American International Group Financial Products Corp. and its CEO Joseph Cassano, whom the complaint alleges was given nearly complete power over the CDS portfolio after AIG CEO Hank Greenberg resigned in 2005. Soon after Greenberg left, Cassano began drastically increasing AIGFP’s CDS portfolio, writing more contracts for the swaps, which were backed by securities that included mortgages, in a nine-month period than in the previous seven years, according to the complaint.

By the end of 2005, as AIGFP began to slow down on signing new CDS contracts because it was becoming increasingly clear that the housing market was at the beginning of a downward spiral, GE alleges that another AIG unit, AIG Investments, began increasing its presence in the unstable RMBS market.

GE asserts that even before AIG received an $85 billion government bailout, while it was hard pressed for funds as the crisis grew, the company was alarmingly unconcerned. Further, the new CEO Martin Sullivan went as far to state at an investor meeting that losses from the CDS portfolio were “close to zero,” even though they had recently been alerted that their valuation models were grossly inaccurate.

As news of the bailout was released, AIG’s stock plummeted from a high of $72.54 per share in June 2007 to $2.05 per share in September 2008, pulling down investors’ portfolios, like GE’s, with it.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

William Wise, a former broker from Raleigh, North Carolina, has been sentenced to over 21 years in federal prison for operating a Ponzi scheme that bilked investors out of more than $75 million. In April, a federal judge will determine how much restitution Wise will have to pay his victims.

Wise ran Millennium Bank from a west Raleigh office. It was purported to be a unit of a Swiss bank based on the Caribbean island of St. Vincent. However, Wise later stated that it was really a front for a Ponzi scheme. Millennium promised investors a 16 percent return on certificates of deposit, but Wise and co-defendant Jacqueline Hoegel used investors’ money to repay earlier investors and fund lavish lifestyles for themselves.

The Ponzi scheme ran from 1999 to late March 2009. Wise admitted that, from January 2004 to March 2009 alone, he and Hoegel sold more than $129.5 million worth of bogus CDs to more than 1,200 investors, resulting in losses of more than $75 million.

A receiver appointed by a federal court in Texas in 2009 to review Millennium’s books found that Wise gave his wife a $12,000 weekly allowance and spent $6,000 to $10,000 a month each for his girlfriends, $1 million on wine, $800,000 to build a hangar in Atlanta for a corporate jet, $450,000 for three boats and an undetermined sum for a 2008 New Year’s Eve party for 50 people on St. Vincent.

Wise was on the run for three years before surrendering to federal authorities in San Francisco in 2012. He pleaded guilty to 12 counts of mail fraud, three counts of wire fraud and one count each of money laundering, conspiracy to commit fraud and tax evasion.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

U.S. District Court Judge Josephine L. Staton sentenced Bich Quyen Nguyen of San Jose, California to 12 and a half years in prison and ordered her to pay almost $25 million in restitution for operating a Ponzi scheme that defrauded over 250 investors. A jury found Nguyen guilty of conspiring to commit wire fraud last year.

According to Nguyen’s attorney, his client received less than half of the statutory maximum sentence of thirty years due to mitigating factors, including her age of 60 and that she had been abused and had lived a tough life.

Nguyen had been in custody for over a year while she awaited her sentencing, and her attorney believes she will be released in approximately nine years.

Interestingly, the amount of money lost by investors was charged to be $9.5 million. Judge Staton, however, considered the higher total of almost $25 million during her sentencing.

According to the U.S. Attorney’s Office of the Central District of California, “The evidence presented during a six-day trial showed that Nguyen told victims that she was the chief executive officer of a Swedish credit union that offered guaranteed returns as high as 46.2 percent on one-year certificates of deposit involving at least $1 million.” Nguyen misrepresented to her investors that she made high-speed trades on trading platforms to receive high returns on investments.

Nguyen asserts that she merely acted as a middle-man and transferred investor funds to someone else she believed would invest the funds for the investors. She further claims that she too was a victim of the scheme. The man to which she was referring died before the trial began, and the jury did not believe that she had been conned.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit – FOX6 WBRC Birmingham, AL

The Frankowski Firm is currently representing 24 investors between the ages of 36 and 93 in four civil suits against Bryan Anderson of Hoover, Alabama and his former employers. In his criminal case, Anderson is expected to plead guilty at a hearing scheduled for February 25 to one count each of securities fraud, wire fraud, and money laundering.

Anderson allegedly defrauded investors out of over $3 million. According to court documents in his criminal case, “Anderson falsely told investors they would receive a guaranteed rate of return” and that “Anderson falsely assured Investors they could access their money at any time, that their principal was always protected.”

The Frankowski Firm’s Richard Frankowski stated, “These entities participated in the wrongful conduct, in part, by failing to adequately hire, train, and supervise their employees and by failing to establish and maintain controls that would have prevented the financial losses. My clients placed the utmost trust in Mr. Anderson and in the companies he worked for. Had they not believed every word he said, my clients never would have handed over their hard earned money.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

Donald Babb and Ralph Ruth, both of central Florida, were sentenced to ten years in federal prison and were ordered to pay $18.7 million in restitution by a federal judge in Orlando. The pair is alleged to have defrauded investors out of nearly $19 million, and both pleaded guilty to conspiracy to commit wire fraud last year.

Investigators claim that the two Floridians misrepresented their businesses as financial institutions that were federally insured and advertised risk-free certificates of deposit for investment opportunities. Neither of the two bought certificates of deposit for their investors but rather used the cash to pay back earlier investors or to purchase luxury items and real estate for themselves.

According to authorities, Babb and Ruth targeted primarily elderly investors, and an investigation found that 181 investors, most of whom were from Brevard County, trusted the men to make conservative investments. The victims trusted that the investments were being made to sustain their retirements and financial futures and in some cases involved the victim’s life savings.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit

Daniel Spitzer of North Barrington, Illinois, who blew almost $1 million at a casino in Las Vegas after thieving millions from investors, was sentenced to twenty-five years in prison this week. Authorities believe that Spitzer operated a Ponzi scheme for roughly six years, bilking almost 300 investors out of $34 million, including his own brother-in-law. Spitzer pleaded guilty in July to ten counts of mail fraud.

In arguing for a prolonged sentence, U.S. Attorney Madeleine Murphy stated, “It’s horrifying what happened to these people, many who are elderly people who are left with absolutely nothing.”

According to prosecutors, Spitzer acquired about $105 million in investments but used much of the money to pay off old investors to keep the scheme going. To conceal his scheme, he issued false statements to investors that inflated their profits. Spitzer promised returns of up to 184%. Yet he only invested about $30 million of the money he had raised. Simultaneously, he lived extravagantly, spending more than $900,000 in cash during fourteen trips to the Wynn Las Vegas casino from 2006 through 2009, according to the SEC.

In court, Spritzer stated, “I cannot express in words my extreme remorse for the hardships my actions have caused. I will never give up trying to make these wrongs right.”

U.S. District Judge James Zagel was not moved, stating before he imposed sentence that most Ponzi scheme defendants were “earnest” and “winning salesmen” who believed their own lies to engender trust. He added that “[p]eople who fall for something like this have to live with an emotional damage that in some respects aggravates the offense. And in this case the damage was very severe.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-390-0036 to discuss your potential legal remedies or visit