Financial Industry News

How the Social Security COLA Fails Seniors

  • According to The Senior Citizens League, Social Security benefits lost 34% of their buying power between 2000 and 2018

  • "When costs climb more rapidly than benefits, retirees must spend down retirement savings more quickly than expected and those without savings or other retirement income are either going into debt, or going without" – Johnson, Social Security policy analyst

  • “For every $100 worth of groceries a retiree household could afford in 2000 they can only buy $66 worth today.” - Johnson

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Now All Investors, Pre-Retirees and Retirees, Unfortunately, Will Be Taken to the Proverbial Woodshed by So-Called Advisors

  • 5th Circuit Issues Order to Kill DOL Fiduciary Rule

  • Is your wealth safe? CLICK HERE to learn more!

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Merrill Hit With $15M SEC Penalty Over RMBS Infractions

  • Merrill Lynch agreed to pay SEC $15+ million to settle charges that employees misled customers into overpaying for securities

  • Merrill’s RMBS traders and salespeople “illegally profited from excessive, undisclosed commissions — called ‘markups’ — which in some cases were more than twice the amount the customers should have paid” – SEC

  • Merrill also failed to have compliance and surveillance procedures in place that were reasonably designed to prevent and detect the misconduct that increased the firm’s profits 

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New York Halts $5M Hedge Fund Scheme Targeting Elderly

  • Advisor, Dean S. Mustaphalli, owner and operator of Mustaphalli Capital Partners Fund LP, was charged with operating a securities fraud scheme that involved targeting investors who were elderly and at or near retirement

  • In total, Mustaphalli allegedly fraudulently solicited his former clients to invest over $12 million and lost over $11 million of their money.

  • According to the indictment,  Mustaphalli’s scheme brought in $5M+ from 22 victims between June 2014 and March 2017 and a separate civil lawsuit alleges that he fraudulently solicited an additional $7 million from prior investors between 2012 and 2014

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Treasury’s Crime Unit, Consumer Bureau Team Up on Elder Fraud Prevention

  • Elder financial exploitation, “the illegal or improper use of an older person’s funds, property or assets,” is the “most common form of elder abuse in the United States.”

  • June 7 webcast will spotlight the importance of suspicious activity reports

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Watch Out for These 4 Behaviors by Your Financial Professional

  • Asking for a Personal Loan

  • Sales of Promissory Notes

  • Using Personal Email

  • Asking You to Write a Check to a Person or Entity Other than the Firm

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FINRA fines Fifth Third Securities $4M for variable-annuity violations & must pay $2M in restitution to customers

  • The Firm "fail[ed] to appropriately consider and accurately describe the costs and benefits of variable annuity exchanges," FINRA said in a release.

  • Fifth Third Securities also recommended variable annuity exchanges without a reasonable basis to believe the exchanges were suitable & must pay $2 million

  • FINRA found that brokers and principals were inadequately trained in how to compare material features of variable annuities resulting in the firm misstating the costs and benefits of exchanges, making the exchange appear more beneficial to the customer

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Trump Promises Aggressive Campaign to Cut Drug Prices

  • Donald Trump said he would propose the most sweeping plan in U.S. history to lower drug prices
  • Drug Plan includes immediate actions & longer-term policies that aim to:
    • Increase competition
    • Lower patients' costs
    • Create incentives for drug makers to lower base prices
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The Flatter U.S. Yield Curve is Roiling Mom & Pop Investors

  • Structured debt products with initially high yields are now returning little or no income as well as capital losses

  • “They were sold as being conservative investments, which of course they are not” – Jeffrey Pederson, Denver attorney who represents investors in settlements against financial institutions

  • If the curve levels out – as it has been over the past year – buyers can be stuck with measly coupons or even no interest payments

  • “Your average person getting these things is Joe Salesman, and they end up losing a lot of money pretty quickly” if the curve flattens – Pederson

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LPL Financial Fined $26M over Unregistered Securities Sales

  • LPL offered and sold unregistered, nonexempt securities

  • LPL failed to reasonably supervise the flow of information to ensure full & proper compliance with state securities registration requirements

  • Deal between LPL & state securities regulators requires LPL to repurchase securities from investors with interest & pay up to $26M

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