UBS FA German Nino Gets 78 Months in Prison for Stealing Client Money

Broward County, Florida-based financial adviser German Nino, found guilty of stealing from three advisory clients of his then firm UBS, has been handed down a prison sentence of 78 months by U.S. Senior District Judge Donald Graham. Forfeiture of his interest in a home in Ave Marie, Florida, has also been agreed by Nino, as a part of the sentence.

According to his BrokerCheck record, Nino, a registered UBS representative between July 2012 and August 2020, joined the industry in 1995.

US Attorney’s office case

Nino is found to have stolen over $6 million from the accounts of his clients, between 2014 and 2020, through 62 transfers from their accounts, all of them unauthorized, as revealed by the U.S. Attorney’s Office for the Southern District of Florida, which also stated that a major part of the money was spent “on funding his own extramarital affairs.”

The US Attorney’s office also shared the various ruses used by Nino to facilitate the perpetration of this fraud:

• Misrepresentation of the balance, return and performance on their accounts
• Forgery of signatures of clients
• Removal of the email address of one of the clients, in order to prevent alerts about unauthorized transfers from reaching
• Preparation of bogus account statements

Securities and Exchange Commission case

The Securities and Exchange Commission (SEC) has alleged that Nino diverted $1.2 million out of the stolen funds to pay another client from whom he had stolen earlier.

The SEC has filed a civil complaint against Nino that accuses him of theft of an amount of approximately $5.8 million from a couple who were clients of UBS who he was advising, and that it was mostly spent on “gifts and travel and living expenses for women with whom he had a romantic relationship.”

How to Spot Stock Broker Fraud

To avoid becoming a victim of stock broker fraud, you should get reports from your brokers. Compare these reports with the information provided by BrokerCheck and other sources. Make note of differences in reports, especially typos. Recent scams involved doctored information in different fonts and states. You can also check whether the broker is a member of any professional associations. If you think that your broker is a scammer, you should contact the relevant state authorities and an investment fraud lawyer.

Unauthorized trading

Unauthorized trading is the practice of a stockbroker making rogue trades in the account of a client or customer without the investor’s knowledge. Generally, brokers can’t make a trade unless the client has given their express permission to do so. A broker must seek permission from the investor before making any trades, but if they fail to do so, they are committing broker misconduct and fraud.

To determine whether you’ve been the victim of stock broker fraud, check your confirmations and monthly statements. Excessive confirmations may be an indication of unauthorized trading. Make sure confirmations arrive within three days of trade and include details of the transaction. If you do receive unauthorized trades, contact your broker and demand to know why.

Churning

As investors, it is important to know how to spot a churning stock broker fraud case. The first element of churning is the client’s written authority. Most churning cases involve retail accounts that are non-discretionary. Additionally, there must be evidence that the broker has actual control over the account. This could include a client who follows the recommendations of a broker or frequently trades in a way that is counter-productive to the client’s objectives.

When a stockbroker is churning, he may not be aware of his activity until after the client has lost money. Fortunately, there are many warning signs of churning. For example, a high turnover rate and excessive buying and selling fees can indicate a problem. Your stockbroker may also recommend transactions that are unnecessary and increase your tax liability. Churning stock broker fraud should be investigated immediately.

Lack of supervision in stock broker operations

When a broker fails to properly supervise its staff, he or she may be directly liable for the actions of an employee. This is known as vicarious liability, and if the brokerage firm failed to supervise the employee, the employee’s actions may be considered negligence. If an employee fails to report suspicious activity to the brokerage firm, it may be held directly responsible. A stock broker’s failure to properly supervise its employees may be considered a form of negligent hiring.

In order to avoid liability issues, brokers should consider making team members licensed employees instead of commission-paying team members. The broker needs to educate team leaders on the issue of worker classification to avoid potential liability. Typically, teams focus on a top-producing team member, who may be the sole customer contact, and may dictate salespeople’s interactions with clients.

Compensation for investment losses caused by stock broker fraud

Many investors may not realize it, but stock broker fraud is more common than they think. While many investors understand that there are certain risks involved in investing in stocks and other securities, investment losses are rarely simply the result of bad luck. Stockbrokers and brokerage firms can be negligent or intentionally misrepresent the risks and rewards of investing, and this can lead to serious investment losses. If you or someone you know has lost money through stock broker fraud, you may be able to recover your investment losses through a securities fraud arbitration case.

Haselkorn & Thibaut represents clients nationwide in claims involving stockbroker fraud. Our attorneys have more than 50 years of combined experience representing investors in such cases. Contact us today to discuss your potential claim. We are free to review your case and do not charge unless we recover compensation for you. If you have lost money due to the actions of a stockbroker, we will fight for you and help you get the compensation you deserve.

source https://financialadvisorcomplaints.com/ubs-fa-german-nino-gets-78-months-in-prison-for-stealing-client-money/

National Securities Corporation (NSC) Fined $9 Million From FINRA For Rule 101 Violations

National Securities Corporation (NSC) has been fined $9 million by FINRA, including $4.77 million in net profits the company made for underwriting 10 public offerings in which NSC sought to manipulate the market for the securities it was selling.

For failing to provide consumers who bought private placements from GPB Capital Holdings, LLC with significant information, FINRA also ordered NSC to pay more than $625,000 in damages. For this wrongdoing in addition to many other supervisory and operational infractions, FINRA also assessed a $3.6 million punishment.

Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement, stated that investors have a right to rely on a market free from false price movement caused by underwriters. “We will keep up our vigilance in enforcing the rules designed to prevent underwriters from influencing the market for a security offered, including boosting the offering price by insinuating aftermarket demand,” the company stated.

FINRA determined that NSC violated Rule 101 of Regulation M under the Securities Exchange Act of 1934 by illegally inducing or attempting to induce certain customers to purchase stock in the aftermarket of the offerings before they were completed between June 2016 and December 2018 while acting as an underwriter for three initial public offerings and seven follow-on offerings.

Underwriters are not allowed to try to persuade someone to make an aftermarket bid or purchase security during a limited period, according to Rule 101.

FINRA discovered that NSC broke Regulation M in connection with 10 offerings by doing one or more of the following during the restricted period for each offering:

• Putting a clear restriction on allocations, known as “tie-in agreements,” requiring branch managers or representatives to purchase a predetermined number of shares for their clients on the secondary market;
• Decided to approach clients who received allocations to ask them to buy more shares in the immediate aftermarket; and
• Threatened to cut representatives’ allocations if they didn’t agree to persuade their clients to join in the aftermarket.

NSC’s actions were intended to artificially boost aftermarket demand and support the price of the supplied securities, which tended to be lightly traded. The standing of the company and its capacity to generate future investment banking fees depended on how well the underwritten offers of NSC performed in the aftermarket.

The agreement settles numerous additional complaints against NSC, including that the company:

• Negligently failed to notify investors in two offerings connected to GPB Capital between April 2018 and July 2018 about delays in the issuer’s required public filings, including audited financial statements—for which FINRA has ordered the firm to pay those customers more than $625,000 in restitution;
• Failed to acquire locates for more than 33,000 short sale transactions between January 2005 and April 2020 as required by Rule 203(b)(1) of Regulation SHO under the Exchange Act;
• Between September 2013 and May 2017, failed to properly supervise one of its representatives by ignoring numerous warning signs that he was fabricating data on customers’ assets and suitability in order to get around NSC’s concentration level restrictions that applied to his recommendations for non-traded real estate investment trusts;
• Made false claims to FINRA regarding the sales of stock warrants it acquired in conjunction with a public offering in October 2019.

Without admitting or disputing the allegations, NSC agreed to the entry of FINRA’s conclusions in the settlement of this case.

source https://financialadvisorcomplaints.com/national-securities-corporation-nsc-fined-9-million-from-finra-for-rule-101-violations/