The Law Planet Blog

First Allied Securities, Inc, a San Diego-based broker-dealer, was charged with failing to reasonably supervise one of its registered representatives. The Broker engaged in unauthorized fraudulent trading in the accounts of two Florida municipalities. The Securities Exchange Commission (SEC) reports that First Allied has agreed to settle the charges for nearly $2 Million.

The SEC alleges that Harold H. Jaschke, former First Allied Broker, churned the accounts of two Florida municipalities and misrepresented his trading practices on their behalf. The two Florida Municipalities involved, were the City of Kissimmee and the Tohopekaliga Water Authority. In late 2009, Harold Jashke was charged with fraud for making over $4 million in commissions while his customers lost money due to his fraudulent behavior.

The SEC found that this fraud occurred from May 2006 and March 2008. This matter could have been avoided if First Allied identified the "red flags" and adequately supervised Jaschke, according to SEC reports.

The supervision of broker-dealers is taken seriously by the SEC. Rosalind Tyson, Director of the SEC’s Los Angeles Office stated the following:

"By failing to establish reasonable systems to prevent Jaschke’s misconduct, Fist Allied did not fulfill its obligation to reasonably supervise its registered representative.”

In addition to the settlement, First Allied agreed to censorship by the SEC. They will cease and desist from “committing or causing any future violations of certain books and records provisions,” and will hire an independent consultant to review First Allied's company’s policies and procedures.

Investor Tip: Be aware of your Broker’s method of managing your portfolio. A common fraudulent practice by brokers is the use of excessive trading to generate commissions and other revenue without regard for the customer's investment objectives, this practice is known as churning.

We encourage Investors to read monthly statements carefully. Ask questions about your Broker's investment strategy for your portfolio. If you suspect find that a Broker is engaging in unethical behavior with your investments, speak up and do so quickly. This can help save many headaches if the fraud is caught early on.

Cllick on the following link to read more on First Allied Securities, Inc being charged with failing to Supervise.

Click on the following link to learn more about Churning and Securites Fraud.

I am pleased to announce that yesterday our Investment Fraud Seminar in West Palm Beach was a huge success. It was held in the beautiful Phillips Point Club. The beautiful intracoastal was a great backdrop for this well attended Seminar.

The 4 hour seminar, Investing in a Post Madoff Environment: Financial Fraud: How it's accomplished, how to detect it, and how to recover from it was attended by over 100 people from South Florida. The attendees included, CPAs, Attorneys, Bankers, Financial Representatives and a host of other professionals. The Seminar was sponsored by the Financial Services Divsion of LaBovick & LaBovick, P.A.

Attorney Marc Dobin, Director of the Financial Services Division, led the discussions on how industry professionals can help prevent investment fraud.

Speakers at the Seminar included:

William Nortman, Esq., Akerman Senterfitt

Richard A. White, Turris Consulting, LLC

Moderator: Jeffrey S. Grubman, Esq, Jeffrey S. Grubman, P.A.

Topics coverd at the Seminar included areas such as: Investment fraud, Ponzi schemes, FINRA, Churning, Florida Investor Protection Act, Churning, and much more.

We look forward to sharing more information on our next educational seminar on investment and financial fraud.

If you would like to have a transcript of the seminar or more information on investment fraud, let us know.

Our vendor partner for this program, the Daily Business Review, will be publishing a printed version of the transcript in 3 - 4 weeks in their paper as a supplement.

Stay tuned...

The SEC announced today that it, along with Alabama Securities Commission has charged Aura Financial Services with “rampant” churning of customer accounts, “widespread” supervisory failures and other securities violations. This is stunning. It is rare that an entire firm is charged with churning. Usually it is an individual broker or office. For a firm to be charged must be pretty bad.

What do you do if you’re a client of Aura and can’t figure out what happened to your account? Contact a qualified securities arbitration attorney to look at your account statements and determine the best route to follow.

This gets back to the basics of investing. If you don’t understand what’s going on, don’t do it. If your Broker is doing things you don’t like, get another Broker. When you think you’ve been mistreated, ask a professional for a second opinion.

To learn more on this Aurora Financial Fraud case, read the SEC Press Release and Investment News article "SEC charges Birmingham B-D with churning"