FINRA Lawyer Blog

Celebrity endorsements add an element of trust for investors who are just entering the ICO market. But the strategy did not turn out well for Centra Tech, as a third arrest has just been made in connection with the SEC’s allegations that the company defrauded investors out of over $25 million. Earlier this year, I…

A new proposed SEC regulation vows to “enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers.” If “Regulation Best Interest” is finally implemented, broker-dealers will be required to “act in the best interest” of their retail customers whenever they recommend any securities transactions or investments. Following numerous penalties in cases where…

The SEC is effectively expanding its jurisdiction into the cryptocurrency and ICO market. Dozens of companies, possibly hundreds, are receiving SEC subpoenas, which I advise them to take very seriously. High profile companies, including giants like TechCrunch’s cryptofund, are currently dealing with these subpoenas. One of the problems is that nobody knows exactly what is…

The SEC has repeatedly warned cryptocurrency investors about the market’s vulnerability to large-scale fraud. Likewise, the agency has made it clear that cryptocurrency offerings that function as securities will be treated as such, and thus subjected to scrutiny. Since SEC officials began making emphatic statements about its jurisdiction over the cryptocurrency space, many companies have…

The SEC has filed a complaint accusing Mozido’s founder, Michael Liberty, and four of his associates of defrauding investors out of over $48 million. The mobile payments startup allegedly used funds from investor accounts to sustain its managers’ luxurious lifestyles. The company’s CEO and his co-defendants allegedly advertised lucrative investments in shell companies possessing interests…

On March 19, 2018, federal prosecutors once again reinforced the notion that cryptocurrencies can be securities, as they upheld their certainty that ICOs offered by Maksim Zaslavskiy through his companies REcoin and Diamond Reserve Club, were in fact, securities, and thus, under the SEC’s jurisdiction. As a criminal case relating to securities fraud in the…

On January 16th, a settlement was reached to create new fiduciary committees to handle a complex transition at the bankrupt Woodbridge firm, following a SEC lawsuit over a billion-dollar Ponzi scheme run by Woodbridge founder Robert Shapiro, who will now be totally excluded from the restructuring process. Upon approval of the settlement, Judge Kevin Carey…

FINRA recently sanctioned Citigroup Global Markets Inc. $11.5 million over inaccurate research rating displays. The sanction includes a $5.5 million in fines and $6 million in compensation for wronged retail customers. According to the SRO’s findings, over at least five years, Citigroup displayed inaccurate research ratings for a large number of equity securities, also incurring…

Recently, several cryptocurrency scams have come to light: dishonest individuals advertising their newly concocted crypto-coin as the next big thing, with a potential to make millions for investors willing to take the risk. FINRA recently issued an Investor Alert to warn investors about purchasing shares in companies advertising new cryptocurrencies. The document focused on recent…

Last December, FINRA made public its 2018 budget and updated Financial Guiding Principles, after approval by the SRO’s Board of Governors. In a new information release, the SRO also detailed several rule proposals for the year and planned improvements to its registration technology. As part of one of its five annual meetings, the Board also…