The Financial Industry Regulatory Authority (“FINRA”) has filed a complaint through its Department of Market Regulation and Department of Enforcement against Los Angeles-Based brokerage firm, Wedbush Securities (“Wedbush”). The complaint charges Wedbush with systemic supervisory and anti-money laundering (“AML”) violations from 2008 to 2013. The violations are related to Wedbush’s market access activities for broker-dealers and non-registered market access participants.

A Boston, Massachusetts Federal Court Jury has rendered a verdict against registered investment adviser Sage Advisory Group, LLC (“Sage”) and its principal Benjamin Lee Grant (“Grant”) in a civil fraud case filed by the Securities and Exchange Commission (“SEC”). The complaint alleged that Grant devised a scheme to convince his former clients to transfer their assets to Sage using statements the SEC contended were materially false and misleading.

In 2005, Grant left his employer broker-dealer Wedbush Morgan Securities (“Wedbush”) to launch his own advisory firm, Sage. Grant’s customer accounts at Wedbush totaled approximately $100 million in assets, and were being managed by investment adviser First Wilshire Securities Management (“First Wilshire”) based out of Pasadena, California.

The Financial Industry Regulatory Authority (“FINRA”) has formed a 13-member Arbitration Task Force in an effort to “improve the transparency, impartiality and efficiency” of the arbitration process. Arbitration is a formal dispute resolution process for disputes and complaints arising out of investors business dealings with any FINRA brokerage firm.

Peter A. Jenson (“Jenson”), the former Chief Operations Officer of Harbinger Capital Partners, LLC (“Harbinger”), has agreed to settle fraud charges with the Securities and Exchange Commission (“SEC”) for aiding Harbinger’s owner, Phillip A. Falcone (“Falcone”), in the misappropriation of client funds. This settlement helps resolve charges originally brought forth in a 2012 enforcement action by the SEC against Jenson, Falcone and Harbinger.

This July marks the fourth year since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). With the anniversary comes much debate surrounding the effects of the legislation and whether increased regulatory oversight is necessary. A recent poll conducted by Lake Research Partners on behalf of Americans for Financial Reform and the Center for Responsible Lending indicates that most voters support tougher reforms aimed at Wall Street.

The Securities and Exchange Commission (“SEC”) has brought its first case against a private equity firm for pay-to-play violations involving political campaign contributions to the governor of Pennsylvania and the candidate for Mayor of Philadelphia. The SEC also found that the firm, TL Ventures Inc. (“TL Ventures”) and an affiliated advisor, Penn Mezzanine Partners Management, LP, acted improperly as unregistered investment advisers. TL Ventures neither admitted nor denied the charges but has agreed to pay almost $300,000 to settle the charges.

Patricia S. Miller (“Miller”), a former representative of Investors Capital Corp. (“ICC”) and Janney Montgomery Scott (“Janney”), was indicted on charges of orchestrating a $2.5 million fraud of 20 clients beginning in 2002. According to the Criminal Complaint issued by the United States District Court for the District of Massachusetts, Miller perpetuated the fraud by promising clients high yields from participating in investment clubs. Miller then misappropriated the funds and allegedly used the funds to gamble, write checks to herself, buy groceries, pay utility bills and make loan payments.

The Securities and Exchange Commission (“SEC”) has filed fraud charges in the U.S. District Court for the Northern District of Illinoisagainst the City of Harvey, Illinois and its comptroller, Joseph Letke (“Letke”). The City of Harvey has been accused of defrauding investors through the misuse of portions of municipal bond fund proceeds, including $1.7 million of over $14 million bonds sold in all from 2008 to 2010. The funds were intended for developing a Holiday Inn hotel and conference venue for the city but years after the bonds were sold, the Holiday Inn building remains in shambles after the developer moved overseas. Meanwhile the bond money has been tied to paying payroll and operational charges, as well as Letke, $269,000 “in undisclosed payments while advising the developer” on the Holiday Inn project.

A landmark case of whistleblower anti-retaliation enforcement has recently been settled between the Securities and Exchange Commission (“SEC”) and the advisory firm Paradigm Capital Management (“Paradigm”) and Candace King Weir (“Weir” the majority owner of paradigm) in the first case of its kind under the SEC’s "new authority to protect whistleblowers against retaliation by employers." After a trader exposed evidence to the SEC of Weir’s involvement in causing Paradigm to engage in principal transactions to reduce tax liability on behalf of its hedge fund investors without effective disclosures or consent, Paradigm targeted the trader for retaliation. The SEC pressed anti-retaliation charges, amongst others, resulting in a settlement of $2.2 million paid out by Paradigm without the admission of wrongdoing.

Jacko Law Group, PC (“JLG”) each month publishes a Legal Tip, written by one of its professional staff on a relevant topic specific to the securities industry. In late May 2014, JLG’s Attorney, Robert Boeche, wrote and released a Legal Tip that highlights California’s recent adoption of revisions to the investment adviser custody rule (California Code of Regulations, Title 10, Section 260.237) (the “Rule”) by the California Department of Business Oversight (“DBO”), and how these revisions and additions to the custody Rule impact California investment advisers.