Miami Beach Condo Leads to Russian Lawmaker’s Resignation

/in /by

Vladimir Pekhtin, a prominent member of the United Russia party, resigned from the Russian Parliament unexpectedly after anti-Kremlin blogger Alexei Navalnyi disclosed news of the lawmaker’s Miami Beach property holdings.

Miami Beach Condo at 1500 Ocean DriveAccording to a Wall Street Journal story titled “Russia Lawmaker Exits Amid Condo Storm,” Mr. Pekhtin’s son Aleksey purchased a waterfront Miami condo in 2007 for $540,900. Father and son also bought a Miami Beach condo at 1500 Ocean Drive for $1.275 million in April 2012.

Owning foreign real estate is not illegal for a member of Russia’s parliament, but it must be disclosed in required financial statements. Mr. Pekhtin, who had served as the Ethics Committee Chair for the lower house, failed to make any public disclosure.

Foreign property ownership of Russian leaders is coming under scrutiny as a red flag for potential corruption, as well as luxury lifestyles hidden from the public.

South Florida Condominium and Real Estate Attorney

Contact South Florida condominium attorney Marcy Resnik to discuss your need for legal services with a condominium purchase, sale, or business dispute. You can contact Ms. Resnik online or call her at 954-321-0176.

Florida is Top State for Mortgage Foreclosure Activity

/in /by

The Miami, Fort Lauderdale, Pompano Beach metropolitan area ranked #2 in the nation in foreclosure activity in January, with one in 228 homes receiving some type of foreclosure filing during the month, according to a recent Miami Herald article titled “Florida leads nation in foreclosure activity.” The Ocala, Florida area held the unfortunate distinction of being ranked #1.

California dropped out of its first place position as the state with the largest number of foreclosures for the first time since January 2007, according to survey sponsor RealtyTrac.

Several factors contribute to Florida’s unwelcome number of January foreclosures, including:

  • Florida requires that all foreclosures are subject to court review, as opposed to less time-consuming administrative proceedings. Courts in Miami, according to the article, are becoming more aggressive in pushing larger numbers of foreclosures through the court system in order to work through the backlog.
  • Lenders are processing foreclosures more quickly in the wake of the recent regulatory settlement with five major banks and mortgage lenders. (See our earlier blog post titled, “Mortgage Foreclosure Settlement for Florida Homeowners.”)

Florida foreclosure filings tracked include default notices, scheduled auctions and bank repossessions.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

ING Firms Fined $1.2 Million by FINRA for Account Violations

/in /by

Failure to retain or review millions of emails for periods ranging from two months to more than six years resulted in $1.2 million of FINRA fines for the following five indirect subsidiaries of ING Groep N.V.:

  • Directed Services, LLC
  • ING America Equities, Inc.
  • ING Financial Advisers, LLC
  • ING Financial Partners, Inc.
  • ING Investment Advisors, LLC

Brad Bennett, Executive Vice President and Chief of Enforcement, said, “As a result of broad systemic failures, these firms failed to capture and retain emails from hundreds of representatives and other associated persons, and failed to take adequate steps to ensure that their principals were fulfilling their responsibilities to review emails. Email retention and review continues to be an important regulatory responsibility and an issue of concern for FINRA.”

FINRA found that the firms failed to properly configure hundreds of employee email accounts to ensure that the emails sent to and from those accounts were retained and reviewed at various times between 2004 and 2012. In addition, four of the firms failed to set up systems to retain certain types of emails, such as emails using alternative email addresses, emails sent to distribution lists, emails received as blind carbon copies, encrypted emails and “cloud” email (emails sent through third-party systems). As a result of these failures, emails sent to and from hundreds of employees and associated persons were not retained; and because the emails were not retained, they were not subject to supervisory review.

In addition, four of the firms failed to review millions of emails that the firms’ email review software had flagged for supervisory review. At various times between January 2005 and May 2011, nearly six million emails flagged for review went unreviewed by supervisory principals because the email review software was not properly configured.

In concluding the settlement, the firms neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. FINRA found that the firms violated the recordkeeping provisions of the federal securities laws and FINRA rules, and supervisory requirements under FINRA rules.

FINRA also ordered the firms to conduct a comprehensive review of their systems for the capture, retention and review of email, and to subsequently certify that they have established procedures reasonably designed to address and correct the violations.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

SEC Freezes Swiss Assets in H.J. Heinz Questionable Trades

/in /by

The SEC obtained an emergency court order to freeze assets in a Zurich, Switzerland trading account that was used to reap more than $1.7 million from trading in advance of last week’s public announcement about the acquisition of H.J. Heinz Company.

The SEC’s immediate action ensures that potentially illegal profits cannot be siphoned out of this account while the agency’s investigation of the suspicious trading continues.

In a complaint filed in federal court in Manhattan, the SEC alleges that prior to any public awareness that Berkshire Hathaway and 3G Capital had agreed to acquire H.J. Heinz Company in a deal valued at $28 billion, unknown traders took risky bets that Heinz’s stock price would increase.

The traders purchased call options the very day before the public announcement. After the announcement, Heinz’s stock rose nearly 20 percent and trading volume increased more than 1,700 percent from the prior day, placing these traders in a position to profit substantially.

“Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information,” said Daniel M. Hawke, Chief of the Division of Enforcement’s Market Abuse Unit.

Sanjay Wadhwa, Senior Associate Director of the SEC’s New York Regional Office, added, “Despite the obvious logistical challenges of investigating trades involving offshore accounts, we moved swiftly to locate and freeze the assets of these suspicious traders, who now have to make an appearance in court to explain their trading if they want their assets unfrozen.”

The SEC alleges that the unknown traders were in possession of material nonpublic information about the impending acquisition when they purchased out-of-the-money Heinz call options the day before the announcement. The timing and size of the trades were highly suspicious because the account through which the traders purchased the options had no history of trading Heinz securities in the last six months. Overall trading activity in Heinz call options several days before the announcement had been minimal.

The emergency court order obtained by the SEC freezes the traders’ assets and prohibits them from destroying any evidence. The SEC’s complaint charges the unknown traders with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the emergency relief, the SEC is seeking a final judgment ordering the traders to disgorge their ill-gotten gains with interest, pay financial penalties, and be permanently barred from future violations.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

FINRA Warns Bond Investors on Price Fluctuation Risk

/in /by

Bonds with a low interest rate and high duration may experience significant price drops if interest rates rise, according to a new FINRA Investor Alert called Duration—What an Interest Rate Hike Could Do to Your Bond Portfolio.

FINRA issued the Alert to help investors understand the importance of duration risk. Although stated in years, duration is not simply a measure of time. The duration of a bond or a bond fund also signals how much the price of a bond investment is likely to fluctuate when interest rates move up or down.

As explained in FINRA’s Alert, a bond fund with a 10-year duration will decrease in value by 10 percent if interest rates rise 1 percent. In contrast, if a fund’s duration is two years, then a similar 1-percent rise in interest rates will result in only a 2-percent decline in the bond fund’s value.

To find your bond fund’s duration, investors should look on the fund’s fact sheet. Investors holding individual bonds should start by asking their investment professional or the bond’s issuer.

Investors should also keep in mind that just because a bond or bond fund’s duration is low, it does not mean the investment is risk-free. In addition to duration risks, bonds and bond funds are subject to inflation, call, default and other risk factors.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Breach of Contract Lawsuits Give Business Owners a Legal Remedy

/in /by

If you, or your business, have entered into a contract and believe the other side has breached that contract, you may be entitled to file a breach of contract lawsuit. Alternatively, if you are the party believed to have breached, you may have a business litigation lawsuit on your hands. It is important to note that enlisting the help of a litigation attorney for your business litigation needs is highly recommended.

Once you hire a litigation lawyer, the first thing he or she will need to do is determine if there was a valid contract in place. Generally, a contract is defined as simply an oral or written agreement, enforceable by law, to do or not do a certain thing in exchange for some sort of consideration. Moreover, a contract is valid if it is not illegal, does not restrain trade, and does not otherwise inhibit public policy.

Next, it must be proven that this contract was in effect at the time in question. Your business litigation attorney will be able to tell you exactly the steps to take to determine if you had a valid contract in place and whether that contract was in fact breached.

Once it is determined that a contract does exist, the next step the litigation lawyer will need to take is to determine whether the other side knew or should have known that the contract existed. If the other side had knowledge of certain facts and circumstances surrounding the formation of the contract which would lead a reasonable business person to know that a contract exists, that is enough to prove that the other side should have had knowledge of the contract.

Fort Lauderdale Business Litigation Attorney

Contact Fort Lauderdale business litigation attorney Howard N. Kahn, Esq. if you or someone you know has a breach of contract or business litigation dispute. He is an experienced business litigation attorney, and is available to assist business owners, board members, and corporate investors in business litigation matters. You can reach him at 954-321-0176 or online.

Merrill Lynch Fined by FINRA Over Retention Bonuses

/in /by

Merrill Lynch failed to arbitrate retention bonus disputes with employees, according to recent charges by the Financial Industry Regulatory Authority (FINRA) that resulted in a $1 million fine.

According to a January 25, 2012 release:

“Registered representatives who participated in the bonus program had to sign a promissory note that prevented them from arbitrating disagreements relating to the note, forcing the registered representatives to resolve disputes in New York state courts.

FINRA found that Merrill Lynch, after merging with Bank of America in January 2009, implemented a bonus program to retain certain high-producing registered representatives and purposely structured it to circumvent the requirement to institute arbitration proceedings with employees when it sought to collect unpaid amounts from any of the registered representatives who later left the firm. FINRA rules require that disputes between firms and associated persons be arbitrated if they arise out of the business activities of the firm or associated person.”

Over 5,000 Merrill Lynch registered reprentatives received retention bonuses as part of the Bank of America acquisition, according to the release.

Contact Fort Lauderdale securities attorney Howard N. Kahn, Esq., if you or someone you know was a Merrill Lynch registered rep who received a retention bonus. Mr. Kahn serves as a  FINRA arbitrator.

Read the full FINRA-Merrill Lynch press release.

South Florida Farnell Brothers Sentenced for Tax Evasion

/in /by

Michael Farnell and James Farnell, residents of Boca Raton, Fla., were sentenced to prison terms last week for income tax evasion following an April indictment, according to the Justice Department and Internal Revenue Service (IRS). Judge William P. Dimitrouleas sentenced Michael Farnell to a term of 18 months in prison. His brother James Farnell was sentenced to a term of 42 months.

Michael and James Farnell sold stock in a privately held Florida-based technology company between 2004 and 2006 and failed to report the capital gains or pay taxes on the capital gains from those stock sales. In 2004, the U.S. Securities and Exchange Commission (SEC) filed suit against the Farnell brothers for securities violations at another company that they operated the year 2000. A majority of the stock sales at issue in this case violated the injunction from the SEC’s lawsuit.

According to public documents and statements made in court, the Farnell brothers held their stock in this Florida-based technology company in the name of nominee trusts. The proceeds of the stock sales were deposited into bank accounts titled in the name of these nominee trusts. Neither brother filed tax returns in 2004 and 2005. James Farnell also failed to file a 2006 tax return. As part of the sentencing, Michael Farnell and James Farnell both agreed that they failed to report additional income paid to them by this Florida-based technology in 2001 through 2003.

Michael Farnell was ordered to pay restitution of $448,128 and James Farnell was ordered to pay restitution of $434,115, both to the IRS.

Farnell Brothers Subject of 2006 SEC Litigation

Details of earlier SEC actions are outlined in SEC Litigation Release No. 19604, dated March 9, 2006, involving Securities and Exchange Commission v. Vector Medical Technologies, Inc., Michael H. Salit, James P. Farnell, Michael J. Farnell, David A. Zimmerman, and Stanley Wasser, Case No. 03-80858-CIV-HURLEY/LYNCH (S.D. Fla.).

The Securities and Exchange Commission announced that on February 1, 2006, the Honorable Daniel T.K. Hurley, United States District Court for the Southern District of Florida, adopted the Magistrate’s Report and Recommendation in full and entered Final Judgment of disgorgement and civil penalties against Vector Medical Technologies, Inc., Michael Salit, James Farnell and Michael Farnell.

On December 20, 2005, Magistrate Judge Frank J. Lynch, Jr., conducted an evidentiary hearing, and thereafter filed his Report and Recommendation. By adopting the Magistrate’s Report and Recommendation in full, the District Court entered a Final Judgment that ordered Vector Medical to pay $14,208,718 in disgorgement and prejudgment interest; Salit to pay a $486,000 civil penalty; James Farnell to pay $1,127,796 in disgorgement and prejudgment interest and a $100,000 civil penalty; and Michael Farnell to pay $715,320 in disgorgement and prejudgment interest, and a $100,000 civil penalty.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

SEC Charges First Resource Group with Stock Fraud

/in /by

The Securities and Exchange Commission (SEC) recently charged Fort Lauderdale-based First Resource Group LLC and its principal David H. Stern with conducting a fraudulent boiler room scheme. The company allegedly hyped stock in TrinityCare Senior Living Inc. and Cytta Corporation, both thinly-traded penny stock companies, while simultaneously selling the same stock themselves for illegal profits.

According to an SEC news release:
“The SEC alleges that First Resource Group LLC and its principal David H. Stern employed telemarketers who fraudulently solicited brokers to purchase stock in TrinityCare Senior Living Inc. and Cytta Corporation. While recommending the securities in these two microcap companies, Stern sold First Resource’s shares of TrinityCare and Cytta stock unbeknownst to investors who were purchasing them – a practice known as scalping. As Stern was selling the stocks, he also purchased small amounts in order to create the false appearance of legitimate trading activity and induce investors to purchase shares in both companies.”

Read the full SEC charges against First Resource Group LLC and its principal David H. Stern. Read the court complaint from the U.S. District Court in the Southern District of Florida.

If you bought stock from First Resource Group LLC of Fort Lauderdale, FL or David H. Stern, contact Fort Lauderdale securities attorney Howard Kahn to discuss your legal options.

Mortgage Foreclosure Settlement for Florida Homeowners

/in /by

The State of Florida today entered into a $25 billion joint federal-state agreement with the nation’s five largest mortgage servicers over foreclosure abuses and unacceptable nationwide mortgage servicing practices, according to a news release issued by Florida Attorney General Pam Bondi.

The  five banks covered in the agreement are Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Wells Fargo & Co. Together, the five firms handle payments on 55% of all home loans outstanding, or about 27 million mortgages, according to Inside Mortgage Finance.

Florida’s share of the total monetary benefits under the settlement is approximately $8.4 billion, according to Attorney General Bondi. Highlights include:

  • Florida borrowers will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, and other direct relief.
  • Approximately $170 million will be available for cash payments to Florida borrowers who lost their home to foreclosure from January 1, 2008 through December 31, 2011 and suffered servicing abuse.
  • The value of refinanced loans to Florida’s underwater borrowers would be an estimated $ 309 million.
  • The state will receive a direct payment of $ 350 million.

In addition to the terms of the national settlement agreement, Attorney General Bondi separately negotiated an agreement with the nation’s three largest mortgage servicers to ensure that a guaranteed portion of the overall settlement funds goes to Florida borrowers.

The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five mortgage servicers.

Fort Lauderdale mortgage foreclosure defense attorneys Marcy Resnik and Howard Kahn are available to answer your questions about what this landmark agreement means to you. If your home is underwater or you are in foreclosure on your mortgage, call us at 954-321-0176 or Contact Us online.

Read the full release titled: Florida Enters $25 Billion Joint State-Federal Mortgage Servicing Settlement.