Bad Broker Blog

Boosted by what experts believed were better-than-expected home sales from last month, the Dow Industrial Average rose Monday to over 11,000 Monday, an 18-month high. But don't be deceived by this. Hopefully, a surge in the Dow will improve the economy at large, but during a market up-swing too many investors ignore warning signs that they themselves are victims of broker fraud.

The Security and Exchange Commission, the Financial Industry Regulatory Authority and four states have filed administrative action against Morgan Keegan & Co. Thursday, accusing the firm of defrauding investors of more than $2 billion.

Last month's U.S. Supreme Court decision gives investors more power to sue mutual fund managers for charging unreasonably high fees. This also signals the government's intent to regulate fund fees itself, rather than leaving such powers to Wall Street.

Rhonda Breard, a well-known securities broker operating out of the Seattle area, is expected to plead guilty to charges stemming from an alleged $9.4 million Ponzi scheme. This comes on the heels of FINRA's decision last Wednesday to permanently bar Breard from the securities industry.

Beverly Hills stockbroker Bambi Holzer has fielded a mind-boggling 42 customer disputes in her 25-year career, according to her disciplinary record from the Financial Industry Regulatory Authority. And yet, despite receiving sanctions from federal regulators, and settlements with former clients totaling at least $11.4 million, Holzer is currently a registered representative for Wedbush Morgan Securities.

Massachusetts Secretary of State William Galvin believes sales of private placements in recent years are "going to become a very significant issue" for 2010.

It took Anton Valukas, a court-appointed examiner, over a year to complete his report on whether Lehman Brothers acted improperly leading to their 2008 bankruptcy-the largest in American history. The highly-anticipated report discusses accounting gimmicks, which were "eerily reminiscent of how Enron tried to prop up its balance sheet back in 2001 before it collapsed," said Peter Henning, a writer for the New York Times and editor emeritus of White Collar Crime Prof Blog.

The Financial Industry Regulatory Authority (FINRA) yesterday expelled Provident Asset Management from the securities industry, nine months after the Securities Exchange Commission filed suit against the company and its founders in connection with $485 million worth of private placements sold to at least 7,700 investors.

First Allied Securities was warned as early as 2006 that their broker, Harold H. Jaschke, appeared to be churning his customer's accounts, according to the San Diego Union-Tribune. On March 5 the firm agreed to pay $2 million to the SEC, settling charges that it failed to properly supervise Jaschke during the length of his employment.

The Huffington Post profiled two elderly victims from the Medical Capital Holdings scam. In July 2009 the SEC halted the fraudulent $77 million offering of Medical Capital private holdings, because the firm had already defaulted on $992.5 of investors' Medical Capital Notes since 2003.

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