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Two Former KPMG Auditors Suspended by SEC for Improper Professional Conduct

March 4, 2021
The Securities and Exchange Commission recently suspended two ex-KPMG auditors from practicing before the SEC.  The suspension stems from settled charges against them for misconduct when auditing the not-for-profit College of New Rochelle, which has since closed its doors. The SEC previously charged the college’s controller with fraud relating to the college’s financial statements for 2015. As described in the SEC’s orders, former KPMG partner Christopher Stanley and former KPMG senior manager Jennifer Stewart approved or authorized an audit opinion on the college’s 2015 financial statements,
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investment ratings

SEC Charges Morningstar Credit Ratings for Violating Federal Securities Laws

February 26, 2021
The Securities and Exchange Commission recently brought a civil action claiming that Morningstar Credit Ratings LLC breached federal securities laws when rating commercial mortgage-backed securities (CMBS) by failing to make certain disclosures and maintain adequate internal controls. Market participants use credit ratings as part of their analysis when making investment decisions.
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Gary Gensler Nominated to SEC Chairman Position

January 29, 2021
Present Biden has nominated Gary Gensler to serve as Chairman of the SEC. Gensler is the former chair of the CFTC, and is seen by many as unafraid to impose tough rules on Wall Street. Investor advocates are optimistic that Gensler will protect investors in stocks, bonds, and mutual funds by strengthening regulations. Barbara Roper, director of investor protection at the Consumer Federation of America, stated: “He knows the markets as well as anyone on Wall Street.
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mutual fund

Transamerica Financial Advisors to Pay Customers for Failure To Supervise Its Stockbrokers’ Recommendations

January 21, 2021
FINRA recently announced that Transamerica Financial Advisors, Inc. (TFA) has agreed to pay $4.4 million in restitution to over 2,000 customers for failing to supervise its stockbrokers’ recommendations of variable annuities, mutual funds, and 529 plans. TFA also will pay a $4.4 million fine. According to FINRA, from May 2010 to May 2016, TFA did not properly supervise its registered representatives’ recommendations to buy variable annuities.
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British Firm Charged for Acting as Unregistered Broker-Dealer in U.S.

January 4, 2021
The Securities and Exchange Commission recently charged a British financial services firm, Global Investment Strategy UK Ltd. (GIS), with registration violations, alleging that GIS illegally cleared and settled billions of dollars of U.S. securities transactions without registering as a broker-dealer in the U.S. The SEC also charged GIS’s founder and principal, John William Gunn, with aiding and abetting the violations. According to the SEC's complaint, GIS provided clearance and settlement services from 2015 through 2019 to hundreds of U.S.
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Microcap Pump and Dump Scheme Targeted Elderly Investors

December 8, 2020
The Securities and Exchange Commission recently obtained a final consent judgment against Garrett O'Rourke, a Florida resident, for running a multi-million dollar pump-and-dump scheme targeting elderly investors. O’Rourke will be required to disgorge over $5.7 million, plus prejudgment interest. The SEC alleged that O'Rourke partnered with Maryland resident Michael Black to fraudulently sell stocks of several microcap companies to retail investors, including many elderly investors.
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Recovery of Investment Losses in Blue Crest Capital International

December 8, 2020
Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating investment losses in Blue Crest Capital International (BCI). The Securities and Exchange Commission (SEC) has proclaimed that UK-based investment adviser BlueCrest Capital Management Limited will pay $170 million to settle charges for misrepresentations and omissions relating to moving its top traders from its premier client fund of BCI to a proprietary fund, BSMA Limited. The SEC also found that BlueCrest failed to properly disclose that it had replaced those traders with an under-performing algorithm.
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volatility investments

Recovery of Losses in Volatility-linked Investments

November 25, 2020
Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating financial losses in volatility-linked investments. The SEC recently settled enforcement proceedings against five investment advisory and/or brokerage firms for selling customers unsuitable volatility products.  The firms include Securities America Advisors Inc., Summit Financial Group Inc., American Portfolios Financial Services/American Portfolios Advisors Inc., Benjamin F. Edwards & Company Inc., and Royal Alliance Associates Inc.
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