Consumer Reports Researchers Uncover Questionable Sales Practices at Top Brokerages

by Wall Street Fraud on January 26, 2012

Tax HelpWhile Consumer Reports’ online readers report that they are “very satisfied” with nearly all of the nation’s 13 major brokerages, that might not mean they are actually doing a good job. In fact, undercover researchers found questionable sales practices at several leading firms.

As part of its investigation of financial-services companies, Consumer Reports sent staff members into brokerage offices in New York and Washington state to see how clients seeking advice were served.

Below are a few concerning practices the investigation revealed:

  • One “empty nester” was recommended a balanced, managed set of funds after his first visit to a JP Morgan Chase office. No other investment options were reviewed or compared.
  • Another staff member, a woman in her mid-50s, was directed towards an annuity product even though the Citibank adviser knew little about her.
  • One staff member was shown a chart on a portfolio’s performance that omitted the significant impact of fees.

Consumer Reports also asked major financial-services companies to prepare investment plans based on the profiles of five of those staff members. Two independent financial planners and their teams evaluated the appropriateness of the advice in the companies’ plans.

According to the organization, the financial advice judges found inappropriate advice in several plans. They also found most of the documents to be filled with boilerplate language and lacking real, actionable advice.

The complete investigative report, and the full broker satisfaction ratings chart are available at www.ConsumerReports.org.

If your broker or adviser has misrepresented the risks associated with an investment product or recommended an unsuitable security, we may be able to help you recover your losses. Contact us today at 215-839-3953 for a free consultation.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

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SEC to Require Admission of Wrongdoing in Some Securities Fraud Cases

by Wall Street Fraud on January 25, 2012

Tax HelpThe Securities and Exchange Commission will no longer allow companies settle civil cases without admitting or denying the charges if they have already admitted wrongdoing in corresponding criminal cases. According to the SEC, it is “unnecessary” for the SEC to include a “neither admit nor deny” provision if a defendant had already been criminally convicted of the same conduct.

As noted by Reuters, the inconsistency of the prior policy was particularly apparent in the Bernard Madoff case. He pleaded guilty for his role in a multi-billion dollar Ponzi scheme in 2009, but neither admitted nor denied the allegations in a settlement with the SEC.

The change also follows criticism that the agency allows banks and other companies to get off too easy, particularly when many are “repeat offenders.” It also comes just over a month after a federal judge rejected a proposed $285 million settlement between the SEC and Citigroup, in part because the bank had not admitted to any wrongdoing.

At Wall Street Fraud, we are dedicated to offering assistance to those who have been hurt by improper corporate or investment practices.

If you have been the victim of stock brokerage fraud, securities fraud, mutual fund fraud, stockbroker fraud, annuities fraud, or any other type of investment fraud, please contact us today for a free case evaluation. Our talented and aggressive legal and professional staff is eager to help you recover your losses.

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New York Broker Accused of Defrauding Elderly Nuns

January 24, 2012

Tax HelpA Long Island broker has agreed to settle charges against him for defrauding a congregation of mostly elderly nuns in the Bronx, according to the Securities and Exchange Commission. The SEC found that he churned accounts owned by the Sisters of Charity, including one account with money for care of nuns in assisted-living facilities and a second account to support the nuns’ charitable endeavors.

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Beware of Newsletters that Tout Stocks and Investment Products

January 24, 2012

Tax HelpLast week, we talked about the investment risks associated with social media. But what about those newsletters that end up in your email inbox? As with any sales or marketing materials that tout stocks or investment products, it is important to do your research and not take the claims made in the newsletter at face value.

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Fiduciary Rule for Advisers and Brokers On Hold

January 23, 2012

Tax HelpThe U.S. Securities and Exchange Commission has announced that further research is needed before finalizing a proposal that would impose a uniform fiduciary standard for investment advisers and brokers. The process is expected to take an additional six months.

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