State of Florida Insurance Fraud, Regulation, Misrepresentation, and Negligence Litigation and Arbitration Attorney:
In the Matter of Johan Mary-Lyn Akal, Case No.: 140353-13-AG:
On September 20, 2013, the Florida Department of Financial Services (“Department”) issued a Consent Order against Johan Mary-Lyn Akal, which, in part, required the Respondent to surrender to the Department of Insurance all licenses issued to the Respondent pursuant to the Florida Insurance Code.
Recnetly, the Commission announced that the United States District Court for the Central District of California entered a final, settled judgment against defendants Nicholas Louis Geranio, The Good One, Inc., and Kaleidoscope Real Estate, Inc. for their roles in a $35 million scheme to manipulate the market and to profit from the issuance and sale of certain U.S. companies’ stock through offshore boiler rooms.
Common Stocks, Preferred Stocks, Corporate Bonds, Municipal Bonds, Promissory Notes, Exchange-Traded Funds (ETF’s), and Mutual Funds – South Florida Securities and Investment Fraud, Negligence and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney:
The elements of a breach of fiduciary duty action are (1) the existence of a fiduciary duty and (2) the breach of that duty that was the proximate cause of the plaintiff’s damages. A fiduciary relationship exists when confidence is reposed by one party and trust accepted by the other. Such a relationship exists where confidence is reposed on one side and there is resulting superiority and influence on the other. When a fiduciary relationship has not been created by an express agreement, the question of whether the relationship exists generally depends upon the specific facts and circumstances surrounding the relationship of the parties in a transaction in which they are involved.
The law is clear that a broker owes a fiduciary duty of care and loyalty to a securities investor. The type and extent of this duty is fact specific. In other words, your relationship with, in the case, your broker/dealer and/or account executive will be determinative of the type of duty that you are owed. However, please keep in mind that the extent of this duty is organic. It is constantly changing. It is for this reason that your specific circumstances need to be reviewed by a qualified professional.
The Securities and Exchange Commission (SEC) recently announced that the United States District Court for the District of Columbia granted the SEC’s motion for summary judgment against all primary defendants and certain relief defendants in a civil action arising from a prime bank investment scheme that defrauded at least 13 investors out of more than $2 million from August 2010 to November 2011. Pursuant to the court’s ruling and judgment issued on August 26, 2013, the court permanently enjoined Washington D.C. attorney Brynee K. Baylor, her law firm Baylor & Jackson, P.L.L.C., and their former “client” The Milan Group, Inc. from violations of the antifraud and other securities law provisions, and from engaging in similar investment schemes. The court also required these defendants to pay disgorgement and penalties, required the Estate of Frank L. Pavlico to pay disgorgement, and barred Baylor from acting as an officer or director of any public company. The court required relief defendants Patrick T. Lewis and The Julian Estate to disgorge illegally obtained investor funds. The court granted in part or denied summary judgment against two other relief defendants, but declined in September 2013 to reconsider that ruling.
The SEC’s complaint, filed on November 30, 2011, alleged that Pavlico and Baylor operated a prime bank scheme, offering investors risk-free returns of up to 20 times the original investment within as few as 45 days through the purported “lease” and “trading” of foreign bank instruments, including “standby letters of credit” and “bank guarantees,” in highly complex transactions with unidentified parties and secretive international “trading platforms.” However, the bank instruments and trading programs were entirely fictitious. As the complaint alleged, Pavlico and Baylor provided investors with phony contracts and legal documents, digitally-created computer screen shots, and copies of fictitious foreign bank instruments as purported proof of the ongoing success of the transactions. Baylor and her law firm acted as “counsel” for Pavlico’s company Milan, vouching for Pavlico and acting as an escrow agent that in reality was merely receiving and diverting the majority of investor funds.
The Securities and Exchange Commission recently announced an emergency asset freeze to halt a Ponzi scheme involving U.S. and New Zealand-based companies peddling sham investment opportunities ranging from a bank trading program to kidney dialysis clinics.
The SEC alleges that Christopher A.T. Pedras, who has residences in Turlock, Calif., and New Zealand, misled his initial investors into believing they were investing in a profitable trading platform in which his company served as an intermediary between global banks. When Pedras and his companies encountered difficulty paying the promised 4 to 8 percent monthly returns, they began steering investors to a different investment program to purportedly increase the value of their investment by 80 percent by funding kidney dialysis clinics in New Zealand. Pedras’s business partner Sylvester M. Gray II and lead sales representative Alicia Bryan helped him solicit investors for both programs, and the money was never invested as promised. Earlier investors were paid supposed returns with funds received from newer investors, and Pedras stole more than $2 million and spent another $1.2 million on sales agents.
According to the SEC’s complaint unsealed late Friday in U.S. District Court for the Central District of California, Pedras raised more than $5.6 million from at least 50 investors in the U.S. since July 2010 by selling securities in two phases. Pedras, Gray, and Bryan first solicited investors for their Maxum Gold Small Cap Trade Program in which Pedras’s company Maxum Gold purportedly serves as the intermediary between banks that can’t legally trade with each other directly, so they use Maxum Gold’s trade platform to do so indirectly. Maxum Gold purports to share portions of the trading profits with investors.
Variable Annuity Misrepresentation – Florida Litigation and Arbitration Attorney:
In the Matter of: Matthew Watson Shaw, Administrative Case No: 139968-13-AG:
On September 4, 2013, the Florida Department of Financial Services entered a Consent Order against Matthew Watson Shaw, which was based upon a Settlement Agreement for Consent Order dated August 9, 2013. In the Consent Order, the Respondent’s licensure and eligibility for licensure as an insurance agent within the State of Florida was surrendered to the Department.
The Florida Department of Insurance:
The mandate of the Florida Department of Insurance is to ensure that insurance companies licensed to do business in Florida are financially viable, operating within the laws and regulations governing the insurance industry; and offering insurance policy products at fair and adequate rates which do not unfairly discriminate against the buying public.
As part of its responsibility, the Florida Department of Insurance may elect to bring an enforcement action against those companies and licensed agents who it believes may be operating in violation of the laws and regulations governing the insurance industry.
The Commission issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 as to OX Trading, LLC and optionsXpress, Inc. (OX Order). The OX Order finds that OX Trading, LLC (OX Trading) willfully violated Sections 15(a) and 15(b)(8) of the Securities Exchange Act of 1934 by operating as an unregistered dealer from October 2009 to November 2010 and transacting in securities while not a member of a national securities association or a national exchange from March 2009 to November 2010, respectively. The OX Order also finds that optionsXpress, Inc. caused OX Trading’s violations. The OX Order ordered OX Trading and optionsXpress to cease and desist and ordered OX Trading to pay $2,750,000 in disgorgement, prejudgment interest of $253,094.39, and a civil money penalty of $750,000. (Rel. 34-70739).
The Commission also issued an Order Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and Section 9(b) of the Investment Company Act of 1940 as to Thomas E. Stern (Stern Order). The Stern Order finds that Thomas E. Stern (Stern), OX Trading’s Chief Financial Officer and Chief Compliance Officer during the relevant time period, willfully aided and abetted and caused OX Trading’s violations of Sections 15(a) and 15(b)(8) of the Exchange Act. The Stern Order ordered Stern to cease and desist and to pay a civil money penalty of $50,000. (Rel. 34-70740) Respondents consented to the issuance of the Orders. These proceedings were instituted on April 19, 2012. (Rel. 34-66831).
Crowdfunding:
The Securities and Exchange Commission recently voted unanimously to propose rules under the JOBS Act to permit companies to offer and sell securities through crowdfunding.
Crowdfunding describes an evolving method of raising capital that has been used outside of the securities arena to raise funds through the Internet for a variety of projects ranging from innovative product ideas to artistic endeavors like movies or music. Title III of the JOBS Act created an exemption under the securities laws so that this type of funding method can be easily used to offer and sell securities as well. The JOBS Act also established the foundation for a regulatory structure for this funding method.
The Securities and Exchange Commission’s Office of Investor Education and Advocay recently issued an Investor Alert: Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs. Excerpts from this release follow:
Have you ever been tempted by an advertisement or offer to make “easy money” or “online income” out of your own home? Multi-level marketing (“MLM”) programs are promoted through Internet advertising, company websites, social media, presentations, group meetings, conference calls, and brochures. In an MLM program, you typically get paid for products or services that you and the distributors in your “downline” (i.e., participants you recruit and their recruits) sell to others. However, some MLM programs are actually pyramid schemes — a type of fraud in which participants profit almost exclusively through recruiting other people to participate in the program.
Pyramid schemes masquerading as MLM programs often violate the federal securities laws, such as laws prohibiting fraud and requiring the registration of securities offerings and broker-dealers. In a pyramid scheme, money from new participants is used to pay recruiting commissions (that may take any form, including the form of securities) to earlier participants just like how, in classic Ponzi schemes, money from new investors is used to pay fake “profits” to earlier investors. Recently, the SEC has sued the alleged operators of large-scale pyramid schemes for violating the federal securities laws through the guise of MLM programs.
South Florida Arbitration & Litigation Lawyer Blog