Page 11 - 2013_2014 NASAA report

NASAA Member Activity | U.S.
NASAA Activity Report 13-14.indd
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Louisiana Office of Financial Institutions, Securities Division
Based on a joint investigation conducted by the Securities Division of the Ofce of
Financial Institutions, the Federal Bureau of Investigation, the Texas State Securities
Board, and the Securities Division of the Mississippi Secretary of State, a Louisiana
hedge fund operator was indicted on 18 counts of mail fraud by a federal grand jury in
Baton Rouge. According to the indictment, the man sent account statements to investors
showing positive investment returns, when he had in fact lost 98 percent of their assets.
Te indictment further alleges that by sending the false account statements, the hedge
fund operator was able to conceal the losses in the hedge funds and defraud victims into
keeping their money in the funds, thus allowing the operator to continue receiving fees
for his personal beneft. If convicted, the operator faces a maximum sentence of 20 years
in federal prison for each count of mail fraud.
Maine Office of Securities
Te Ofce was instrumental in developing and launching Senior$afe, the frst
program in the nation to train bank tellers and credit union staf to identify and report
suspected cases of elder fnancial abuse. Te training program is a collaboration with
the Council for Elder Abuse Prevention, the Maine Ofce of Aging and Disability
Services, Maines Department of Professional and Financial Regulation, Legal Services
for the Elderly, and organizations representing the states banks and credit unions.
Maryland Division of Securities
After completing the switch of almost 100 Maryland-based frms from federal to
state investment adviser registration, the Division focused its attention on a series of
enforcement cases involving entities that violated the investment adviser provisions
of the Maryland Securities Act. Violations included acting as unregistered investment
advisers, engaging in fraud in providing investment advice and in ofering and selling
securities, and ofering and selling unregistered securities. Cases resulted in revocations
of individuals and entities registrations, bars from the investment advisory and securities
businesses, and restitution payments being made to defrauded investors.
Massachusetts Securities Division
In 2013, Secretary of the Commonwealth William F. Galvin announced settlements
with fve independent brokerage frms that improperly sold non-traded REITs. Under
the settlements, the frms will make restitution to investors of at least $8.6 million
and pay fnes totaling $975,000. Te Divisions investigation revealed signifcant and
widespread problems with the frms compliance with their own policies, practices and
procedures rules, and adherence with Massachusetts prospectus requirements, leaving
investors often trapped in illiquid and underperforming fnancial products. In 2013
Citigroup Global Markets Inc. paid a $30 million fne to Massachusetts to settle
charges a company analyst improperly shared research with large investors in advance,
giving them the chance to proft from weaker sales of iPhones. Te information was not
shared with other investors until a day later.
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