Recent Blog Posts

Schwab Loses Lawsuit; FINRA Enforcement Action to Proceed

Lasky & Rifkind — Wed, 16 May 2012 14:38:00 GMT

Last week, a federal judge for the Northern District of California tossed a lawsuit filed by Charles Schwab against FINRA in a dispute over new language added to Schwab's customer account agreements precluding its customers from starting or participating in class action lawsuits filed against Schwab.

In response, FINRA brought an enforcement action against Schwab, arguing that such a provision, requiring that customers waive their right to participate in a class action, is not allowed under FINRA rules. We discussed the dispute earlier, here.

In response to FINRA's enforcement action, Schwab filed a federal lawsuit in the Northern District of California, asking the court to enjoin FINRA's proceedings for various reasons, including its belief that FINRA rules do not prohibit this type of waiver. The court refused and dismissed Schwab's case.

With the judge's ruling, FINRA's enforcement action against Schwab will proceed. It is unclear whether Schwab plans to remove the provision from its customer agreements or retain them during the dispute with FINRA.

FINRA Proposes Rule Change to Raise Simplified Arbitration Cap

Lasky & Rifkind — Mon, 07 May 2012 17:11:00 GMT

FINRA has filed a proposed rule change with the SEC, proposing to amend its Customer and Industry Codes of Arbitration Procedure to raise the limit for simplified arbitration from $25,000 to $50,000.

Currently, claimants with damages of $25,000 or less can proceed with a "simplified" arbitration claim. In "simplified" cases, one chair-qualified arbitrator decides the claim and issues an award. Additionally, unless the claimant requests a hearing, the matter is decided by the arbitrator solely based on the documents filed. FINRA also expedites discovery in these cases.

The proposed rule raises the damages cap from $25,000 or less to $50,000 or less. The rule change also states that for claims with damages greater than $50,000, but less than $100,000 a one arbitrator panel would hear the case (unless the parties agree in writing a three arbitrator panel).

The SEC's formal approval of the proposed rule change can be found here.

SEC Activity

Lasky & Rifkind — Wed, 14 Mar 2012 14:54:00 GMT

Thornburg Mortgage Inc. The SEC filed charges this week against the CEO, CFO and CAO of Thornburg Mortgage for fraudulently reporting the company's income in early 2008. According to the complaint, the mortgage company was facing a liquidity crisis and was in violation of its lending agreements when it filed its Q407 annual report (in February of 2008) falsely overstating its income by roughly $400 million and, thus, falsely reporting a profit instead of an actual loss.

According to emails quoted in the complaint, the executives planned to quickly shore up the cash needed to meet the outstanding margin calls and cure the deficiency but, ultimately, were unsuccessful in doing so. They began to default and were forced to file an amended Annual Report with the SEC, disclosing the issue. The stock fell 90% and the company soon after filed for bankruptcy.

Here is the SEC's summary of the days immediately following the filing of the false Annual Report:

Thornburg’s financial condition and liquidity immediately continued to deteriorate after filing its annual report. By 6 a.m., Thornburg began to receive additional margin calls that exceeded its available liquidity by 7:30 a.m. Nevertheless, even as Thornburg’s stock price dropped in the hours and days following the annual report filing, Goldstone [CEO] and Simmons [CFO] continued to publicly project the same false financial condition they had presented in the annual report, and they encouraged the company’s investor relations group to do the same. Privately, reflecting on the company’s stock price drop, Simmons commented in an e-mail to Goldstone soon after the annual report was filed, “I guess the recent development section did not go over well. If they only knew.”

Insider Trading.The SEC has also brought a number of insider trading suits lately. One case involves an insider at Coca-Cola, who used his wife's brokerage account to purchase company stock days before an acquisition and using confidential information he learned through his role as a Vice President at the company.

A second case is pending against five individuals for trading on inside information that a corporate executive relayed to a fellow Alcoholics Anonymous member. According to the executive, he and the defendant had known each other for years, maintained a friendship outside of AA, and "routinely shared confidences about each other’s personal lives and problems impacting them professionally." In the context of this relationship, the executive told the defendant that he was "participating in the merger negotiations and under significant pressure to ensure a successful sale." The defendant shared the confidential information learned from the executive with several friends and family members, all of whom purchased stock in the company days before the merger was announced and made a combined $1.8 million. The SEC's complaint against the individuals can be found here.

FINRA Proposes BrokerCheck Expansion

Heidi VonderHeide — Mon, 05 Mar 2012 18:08:00 GMT

FINRA is seeking comments on whether it should expand the information available on its BrokerCheck system. Since 1988, FINRA's BrokerCheck system has allowed investors to retrieve basic information on their investment professional including the person's professional associations and whether the person has faced or is currently facing disciplinary proceedings (with some limitations).

Amongst the areas FINRA is seeking input:

Whether to expand the scope of information available;
Whether to make the information available for commercial use (currently, BrokerCheck is only for private, individual use); and
The design and accessibility of the BrokerCheck System.

The full notice is available here.

BrokerCheck is an excellent resource for the investing public and an important first step in selecting an investment professional. If you have a specific question regarding your broker's conduct, please contact our office to speak with one of our attorneys.

FINRA Issues Investor Alert On the Importance of Understanding Brokerage Statements

Heidi VonderHeide — Fri, 24 Feb 2012 18:02:00 GMT

FINRA issued an investor alert this week reminding investors to carefully review their brokerage statements and trade confirmations. The alert breaks the statements down by segment, carefully explaning each segment and instructing investors on what "red flags" to watch for.

The statements not only allow investors to track their trades and balances. A careful review can help detect and reduce fraud and ensure that your broker and brokerage frim are correctly managing your account. Some of the most common broker misconduct behaviors involve unauthorized trading, overcharging, or churning in the account (frequent, repetative buying and selling for the purpose of collecting broker fees on each trade).

Additionally, account statement are a great way to double check that your money is being properly invested within the risk level you are most comfortable. From the alert:

Many account statements include an investment objective that characterizes your investment strategy - for example "growth," "speculative" or "conservative." Make sure this description accurately describes your financial goals, and that the activity in your accout reflects these goals. Keep in mind that your financial objectives may change over time and should be updated accordingly.

The full Investor Alert is available here. Our firm regularly represents investors whose brokers have engaged in the type of improper conduct described in the Alert. If you feel your broker has made improper trades in connection with your brokerage account, please contact our law firm for a no obligation consultation.

Risk and REITs

Lasky & Rifkind — Sun, 19 Feb 2012 20:19:00 GMT

Check out John Wasik's article over at Forbes.com on REIT investments. He provides a great list of caveats to consider before investing.

The article can be found here. A general overview of this type of REIT investment can be found in our earlier post, here.

FINRA: Schwab's Waivers Are Against the Rules.

Heidi VonderHeide — Thu, 02 Feb 2012 04:06:00 GMT

Today, FINRA filed a disciplinary complaint against Charles Schwab & Co. for changes made to its customer account agreements. In October 2011, Schwab amended its agreements to include a Waiver of Class Action or Representative Action provision, requiring its nearly 7 million customers waive any right to participate in class actions against Schwab – whether through arbitration or in court:

Neither you nor Schwab shall be entitled to arbitrate any claims as a class action or representative action, and the arbitrator(s) shall have no authority to consolidate more than one parties' [sic] claims or to proceed on a representative or class action basis. You and Schwab agree that any actions between us and/or Related Third Parties shall be brought solely in our individual capacities. You and Schwab hereby waive any right to bring a class action, or any type of representative action against each other or any Related Third Parties in court. You and Schwab waive any right to participate as a class member or in any other capacity, in any class action or representative action brought by any other person, entity or agency against Schwab or you.

The Waiver also seeks to remove arbitrator authority to consolidate similar claims – a power specifically granted them under FINRA's Rules.

FINRA alleges that these provisions violate several Rules, including those which expressly allow for participation in class actions and forbid member firms from including any provision in a customer provision that would limit these types of claims.

In the disciplinary complaint. FINRA not only seeks to stop Schwab from continuing to violate its Rules but also is seeking that sanctions be imposed.

In response, Schwab filed a declaratory judgment action against FINRA in federal court. Schwab asked the U.S. District Court for the Northern District of California for a "determination that the class action waiver provisions of the arbitration agreement between Schwab and its customers are enforceable under recent United States Supreme Court decisions interpreting the Federal Arbitration Act and are not barred by any FINRA rule."

The recent Supreme Court decision they are reffering to AT&T Mobility v. Concepcion, 584 F. 3d 849, in which the United States Supreme Court held that California's Discover Bank Rule (a line of case law in which the state of California had refused to enforce certain class action arbitration waivers as "unconscionable") was preempted by the Federal Arbitration Act (a Federal Statute protecting arbitration agreements).

The full disciplinary complaint can be found here.

A link to Schwab's declaratory judgment is availableherehere.

FINRA: Email Hacking Endangers Brokerage Accounts.

Heidi VonderHeide — Sat, 28 Jan 2012 14:59:00 GMT

Email hacking has become increasingly common in recent years. So much so that most people either have been victims of this or know someone who has. These hackers somehow obtain and use your email address to send emails out to the contacts in your address books – usually promoting unsavory or even fraudulent links.

FINRA is now warning investors that email hacking (aka "hijacking") also poses a risk to brokerage accounts. Recently, FINRA has received "an increasing number" of reports of email hijackers gaining access to an investor's email account and then sending an email to the person's broker instructing them to transfer money out of the brokerage account. According to the FBI, email hijackers attempted to steal $23 million in 2011 alone. They succeeded in stealing $6 million - with the average illegal transfer from individuals (opposed to a business) ranging from $17,500 to $183,000!

In response FINRA issued Regulatory Notice 12-05 warning of the risks and describing some of the practices used by these fraudfeasors:

Typically, the perpetrators of these fraudulent schemes email brokerage firms from customers' personal email accounts with instructions to wire funds to an account, often overseas, controlled by the perpetrator. The instructions may be accompanied or followed by fraudulent letters of authorization also emailed from compromised email accounts. In some instances, firms have released funds after unsuccessfully attempting to verify emailed instructions by phone. In at least one case, the fraudulent email stressed the urgency of the requested transfer, pressuring the firm to release the funds before verifying the authenticity of the emailed instructions.

Most FINRA member firms are required to have "Red Flags Rules" - written programs mandated by the FTC and designed to prevent and mitigate identity theft of this type. (more information on these rules can be found here.

However, as the notice makes clear, this type of fraud continues to be successful and investors should be sure to use caution if they have been the victim of email hijacking.

The notice also urges FINRA member firms to implement certain policies and procedures designed to safeguard against this type of unauthorized transfer. Investors may want to check with their brokers and brokerage firms to determine whether they allow email requests for transfers and, if so, what security measures have been implemented in order to protect against this type of fraud. Additionally, if an investor discovers that their email has been compromised, FINRA urges the investor to contact his or her broker immediately. From the Notice:

How to Spot a Hack Job

Tell-tale signs that you've been the victim of an email account intrusion include reports of spam from people in your "contacts" folder or a slew of "bounced" email messages from people you don't know. You might find that your password or other account settings have been changed—or that your email provider has blocked you from accessing your account.

What to Do if Your Email Account Gets Hacked

If your email account gets hacked—or if for any reason you think that your personal financial information has been stolen—immediately contact your brokerage firm and other financial institutions, including credit card issuers, to notify them of the problem. You should also notify the credit bureaus to put a fraud alert on your file.

Check your brokerage account for unauthorized transactions—especially withdrawals or wire transfers to an account that is not yours—and ask the firm to investigate if you find any. It will take time to determine what happened, and the firm will likely need your help in identifying anyone who might have access to your account.

In the meantime, be sure to change your username, password and PIN for your financial accounts—and also change your password to your email account.

FINRA also provides a list of additional resources to learn more about stopping and preventing email-based frauds.

FINRA Notice:Keeping Your Account Secure: Tips for Protecting Your Financial Information.

FTC Website on Identity Theft and Data Security.

FINRA Investor Complaint Center.

FINRA's Regulatory Tip Submission.

REIT Private Placement Awards Continue to Roll In. Actual Recovery in Remains in Doubt.

Heidi VonderHeide — Mon, 23 Jan 2012 00:00:00 GMT

A FINRA arbitration panel recently awarded a group of 40 investors $9.1 million in compensatory damages and attorneys fees arising out of the sale of failed non-traded private placements. The award may be the single largest arbitration award stemming from such investments. However, the firms who sold the placements have gone under meaning it is unlikely the plaintiffs (or their lawyers) will actually recover anything.

Non-traded private placement REITs are highly complicated and very risky investments, generally reserved for very experienced, wealthy investors. The investments are exempt from federal filing requirements, meaning that investors can find it very difficult to get thorough and accurate information regarding the risks and valuation of the investments. They also are difficult to value, frequently illiquid, and generally involve high fees and high commissions.

They are not for your every-day investor.

And yet, in surprising number, that is who invested. Many investors with low to moderate risk-tolerance levels ended up in such investments and many have arbitrations, class actions, and federal investigations proceeding on their behalf.

One reason for this unsuitable pairing is that, in a market where traditional investments were making modest – if any – returns, many investors were drawn to these non-traditional investments, some of which were advertising 6-10% returns. With an increased return, of course, comes increased risk. However, there are serious questions as to whether those risks were properly disclosed, and whether brokers properly considered them when recommending them to investors.

FINRA has initiated proceedings against several of its member firms and individuals, accusing them of failing to perform proper due diligence in connection with the marketing and sale of the investments. It also has issued warnings to investors,and is seeking to impose stricter rules on such investments.

The SEC has been busy as well, filing against companies that sold the placements with insufficient, inaccurate, or incomplete disclosures. One notable and recent example is that of Securities America, a subsidiary of Ameriprise Financial, who recently settled with the SEC for $17.3 million, resolving allegations that they failed to disclose certain payments that were made in connection with the sale of REIT shares, the conflicts of interests created by such payments, and the controversial existence a series of "mislabeled invoices" to the REITS from Ameriprise which resulted in "undisclosed revenue payments." (See the SEC News Release on the settlement here )

But as this most recent arbitration award makes clear, even with a successful outcome, actual recovery can be difficult as the issuing companies continue to fail. It also underscores the importance of undertaking proper due diligence when selecting a broker or financial advisor with whom to entrust your savings.

To research a broker or brokerage firm, use FINRA's free BrokerCheck tool, available here.

If you are concerned about the propriety of investments that were recommended or sold to you, you can contact us here.

Class Action Clearinghouse: Class Action Filings Increase Slightly In 2011.

Heidi VonderHeide — Sun, 22 Jan 2012 23:56:00 GMT

The Stanford Securities Class Action Clearinghouse released its year end review this week, reporting that securities filings were slightly up in 2011. According to the report, a total of 188 federal securities class actions were filed this year - compared with 176 filed in 2010.

The 2011 filings continued 2010 trends in terms of claim allocation – litigation related to merger and acquisitions continued to constitute a large percentage of the total filings (22.9%). The second most prevalent filing involved claims alleged against Chinese issuers of reverse mortgages. However, although these claims accounted for 17.6% of all 2011 filings, since the majority of suits were filed in the first half of the year they seem to represent a fading trend and their prevalence will likely decline into 2012.

Also on the decline are filings related to the credit crises. In 2011 there were only 3 such filings – compared to 13 in 2010 and 53 in 2009.

The entire report and the news release are available on the Clearinghouse website.

Proposed FINRA Rule Change Seeks to Expressly Preclude Certain Collective Actions

Heidi VonderHeide — Sat, 14 Jan 2012 20:44:00 GMT

FINRA recently filed a proposed rule change with the SEC, proposing to amend Rule 13204 of its Industry Arbitration Code. Rule 13204, which precludes class action claims from being arbitrated before FINRA, was recently called into question when the United States District Court for the Southern District of New York held that a collective action arising under the Fair Labor Standards Act (FLSA) was not a class action, and thus was arbitrable under the code. See Hugo Gomez et al. v. Brill Securities, Inc. et al., 2010 U.S. Dist. LEXIS 118162 (S.D.N.Y. Nov. 2, 2010)

The rule change directly addresses this issue and expressly provides that collective action claims arising under the FLSA, the Age Discrimination in Employment Act (ADEA), or the Equal Pay Act of 1963 (EPA) may not be arbitrated under the FINRA Industry Arbitration Code.

The full text of the proposed rule change can be found here.

WSJ: The Risks of TIC Real Estate Investments.

Heidi VonderHeide — Thu, 05 Jan 2012 19:09:00 GMT

The Wall Street Journal online has an interesting article this week on securities often called tenancies-in-common, or "TICs," TICs are fractional-ownership type investments where several investors come together to purchase and operate a large piece of real estate – generally a residential or commercial development. This allowed people who otherwise would never have been able to own such a large property on their own to get involved - and entitled them to a portion of the profits. When the real estate market was booming, these investments generally offered an attractive return on investment which was attractive to many investors.

However, a TIC is a relatively complex investment and can involve much more risk than more common, traditional investments. As the WSJ discusses, one of the main attractions of these types of investments is their ability to escape capital gains taxes. Section 1031 of the income tax codes provides an exception to the capital gains tax, allowing one to postpone paying tax on any gain if he or she reinvests the proceeds in similar property as part of a "qualifying like-kind exchange."

Financial professionals began recommending TICs to investors who had a large amount – if not majority – of their savings tied up in real estate. Instead of selling that real estate, paying the capital gains tax, and then looking for a suitable investment for the proceeds, people could sell the property and invest it in another piece of real estate using the TIC structure. This allowed them to avoid the 15% capital gains tax on the sale.

The problem, of course, was that TICs are very complex investments and are not compatible with the risk tolerance level of many investors. Despite advertising an attractive annual return on investment, they contained risks that are not commonly found in more traditional, liquid investments.

With the downturn in the housing market, many of these real estate ventures have declined in value or ended in bankruptcy, failing to bring in any return on investment and, in many cases, leaving investors with nothing. Additionally, because the ownership interests are very hard to sell, investors with liquidity issues or persons looking to exit the investment have considerable trouble doing so. The losses can be extreme – as was the case with the couple profiled in the WSJ article who lost nearly everything when the apartment complexes they invested in went bust.

For many sophisticated investors, the risks associated with the TICs were well known. However, the boom real estate market, attractive returns, and ability to avoid the capital gains tax landed TICs on the radar of some investment professionals who saw it as an attractive option for customers with a significant amount of their worth tied up in real estate. For some investors, their real estate holdings comprised their entire net worth. And for many, it has all been lost.

The Wall Street Journal article is available here.

FINRA Board of Governors Discuss Upcoming Rule Proposals

Heidi VonderHeide — Sun, 18 Dec 2011 15:17:00 GMT

The FINRA Board of Governors has asked for industry comment on proposed rule amendments it intends to submit to the SEC. Some of the topics include:

Debt Research Conflicts of Interest: Modified approach to the distribution of debt research to retail and institutional investors.
Expungement for Persons Not Named as Parties: The amended rule would permit, inter alia, persons who are the "subject of" allegations made in arbitration claims, but who are not named as parties to the arbitration, to seek expungement.
Mediator Selection: The amended rule would empower Director of Mediator with the discretion to determine whether the parties to a mediation may select a mediator who is not on FINRA's mediator roster.
Increased Threshold for Simplified Arbitration. The Amendment would increase the threshold for a simplified arbitration from $25,000 to $50,000. In a simplified arbitration, claims may be decided on the pleadings, with no hearing ever taking place.

FINRA's release with the rule amendment proposals can be found here.

YieldPlus Fund Fallout Continues

Heidi VonderHeide — Sun, 18 Dec 2011 15:05:00 GMT

Another settlement has come out of the fracas surrounding the 2007-2008 collapse of the Charles Schwab YieldPlus Fund.

Under the terms of the most recent settlement, Randall Merc, a former president at Schwab, admitted no wrongdoing, but agreed to pay a $150,000 fine and serve a one year suspension.

This is only the latest in a string of settlements connected with the Fund. Previously, Schwab settled with the SEC for $118.9 million and settled an investor class action for $235 million. Additionally, many investors opted out of the class action lawsuit in order to pursue individual arbitrations against Schwab. Many of those arbitrations have ended in settlement as well, including those handled by our firm.

The Schwab YieldPlus Fund was an ultra-short bond fund that was marketed to investors who "seek high current income with minimal changes in share price." It was described as being only "slightly" or "marginally" more risky than a mutual fund. However, the Fund was invested heavily in mortgage backed securities.

When the real estate market began to falter in 2007-2008, the Fund began to drop in value. Other Schwab funds that were invested in the YieldPlus began to pull out, accelerating the decline. This was followed by a mass departure of investors and, thus, an even more precipitous decline in value.

The stock chart best sums up the carnage that followed:

Schwab has argued that the Fund was simply a victim of the "unforeseeable credit crisis and market collapse." The SEC and private litigation, however, allege that the Fund had misled investors as to the risks surrounding the Fund and had over invested in mortgage backed securities without the appropriate shareholder approval to do so.

Though this case has settled, more are still pending against other Schwab executives. Will we see the settlement trend continue until this matter is finally resolved? Stay tuned.

FINRA Sanctions Eight Member Firms and 10 Individuals for Selling Troubled Private Placements

Heidi VonderHeide — Sun, 04 Dec 2011 14:29:00 GMT

On November 29, 2011, FINRA announced that it had fined eight of its member firms and ten individuals for selling inappropriate private placement securities. According to the Notice, the firms and individuals involved sold interests in private placement offerings without having a reasonable basis for recommending the securities.

When dealing with private placements, the federal securities laws and FINRA rules impose a duty on broker-dealers to conduct a reasonable investigation of the security and the issuer's representations about it. Failure to undertake such an investigation may violate:

Section 17(a) of the Securities Act,
Section 10(b) of the Securities and Exchange Act, and Rule 10b-5 promulgated thereunder,
FINRA Rule 2010 ("A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.")
FINRA Rule 2020 ( "No member shall effect any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.")
NASD Rule 2310 (Recommendations to Customers: Suitability).
Other rules and duties.

As the Notice explains, FINRA imposed sanctions against eight firms and ten individuals for either failing to conduct a reasonable investigation or failing to enforce procedures with respect to the sale of certain private placements. FINRA provided the following list of violators and fines:

NEXT Financial Group, Inc. of Houston, TX, was ordered to pay $2 million in restitution to affected customers and fined $50,000; Steven Lynn Nelson, the firm's Vice President for Investment Products and Services, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements.
Investors Capital Corporation of Lynnfield, MA, was ordered to pay roughly $400,000 in restitution to affected customers in connection with the sale of two Provident Royalties private placements and was also sanctioned in connection with an additional offering issued by CIP Leveraged Fund Advisors.
Garden State Securities, Inc. of Red Bank, NJ, and Kevin John DeRosa, a co-owner of the firm, were ordered to pay $300,000 in restitution on a joint-and-several basis to affected customers in connection with the sale of a Medical Capital private placement. DeRosa was also suspended for 20 business days in any capacity and for an additional two months in any principal capacity, and fined $25,000. Vincent Michael Bruno, the firm's Chief Compliance Officer at the time, was suspended for one month in a principal capacity and fined $10,000.
Capital Financial Services of Minot, ND, was ordered to pay $200,000 in restitution to affected customers, and Brian W. Boppre, a former principal, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements and a Medical Capital private placement.
National Securities Corporation of Seattle, WA, was ordered to pay $175,000 in restitution to affected customers, and Matthew G. Portes, Director of Alternative Investments/Director of Syndications, was suspended in any principal capacity for six months and fined $10,000 in connection with the sale of three Provident Royalties private placements and a Medical Capital private placement.
Equity Services, Inc. of Montpelier, VT, was censured, fined $50,000 and ordered to pay nearly $164,000 in restitution in connection with the sale of a private placement DBSI, Inc. issued; Stephen Anthony Englese, Senior Vice President for Securities Operations, was suspended from association with any FINRA-regulated firm in any capacity for 30 business days and fined $10,000; and Anthony Paul Campagna, a registered representative, was suspended from association with any FINRA-regulated firm in any capacity for 30 business days and fined $25,000.
Securities America, Inc. of La Vista, NE, was censured and fined $250,000 in connection with the sale of two Provident Royalties private placements.
Newbridge Securities Corporation of Fort Lauderdale, FL, was fined $25,000; Robin Fran Bush, the former Chief Compliance Officer of Newbridge, was suspended in any principal capacity for six months and fined $15,000 in connection with the sale of four DBSI private placements and a Medical Capital private placement.
Leroy H. Paris II, former President and Chief Executive Officer for the now-defunct Meadowbrook Securities, LLC (fka Investlinc Securities, LLC), of Jackson, MS, was suspended for six months in any principal capacity and fined $10,000 in connection with the sale of two Provident Royalties private placements and a Medical Capital private placement.
Michael D. Shaw, formerly associated with VSR Financial Services, Inc. of Baton Rouge, LA, was barred from the industry in connection with the sale of a private placement offered by DBSI, Inc. and several additional private placements offered by other issuers. In addition, Shaw falsified customer account documents.

This is the second round of sanctions imposed this year. Back in April, FINRA fined two Member Firms and seven individuals for similar conduct.

For more information on this issue, investors can obtain FINRA's Notice here or visit FINRA's website at FINRA.org. For more information on the disciplinary history of FINRA's Member Firms and individuals involved, visit FINRA's Broker Check system.