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Monday, July 21, 2014

Legal Options for Victims of Matt Bell and Craig Josephberg

The Securities Arbitration Law Firm of Stoltmann Law announced today that it is investigating potential FINRA arbitration claims arising out of an elaborate pump-and-dump scheme involving shares of four companies: CodeSmart (ticker: ITEN), Cubed, Inc. (ticker: CRPT), The Staffing Group Ltd. (ticker: TSGL), and StarStream Entertainment Inc. (ticker: SSET). The scheme was allegedly carried out by a group including financial advisors Matthew A. Bell and Craig L. Josephberg. Bell was associated Securities America, Inc. and WFG Investments, Inc. in San Antonio, Texas. Josephberg was associated with Halcyon Cabot Partners and Meyers Associates, L.P. in New York, NY. A pump-and-dump scheme is a scheme that fraudulently creates the appearance that a microcap or penny stock is "hot". The schemers artificially pump up the price of a stock by matching buy and sell orders to create the appearance of increasing demand and artificially increase the price.  As the price rises, brokers purchase the stock for their customers' accounts. Once the price is high enough, the schemers dump the remaining shares they own and the price of the stock, for which there is no real demand, falls precipitously. From late 2012 to the present, Bell and Josephberg allegedly used their control over their customers' accounts to drive up the price of shares in these companies. Bell and Josephberg allegedly purchased shares of stock in CodeSmart, Cubed, StarStream, and The Staffing Group for their customers' accounts even while they were selling all of the shares in their own accounts. Bell and Josephberg allegedly each received more than $500,000 for their involvement in the scheme. The U.S. Securities & Exchange Commission has filed a civil action against Bell and Josephberg and others. Bell and Josephberg have also been indicted by the U.S. Attorneys' Office for the Eastern District of New York. Brokerage firms like Securities America, Inc., WFG Investments, Inc., Halcyon Cabot Partners, and Meyers Associates have a duty to reasonably supervise the activities of their financial advisors. Firms must perform due diligence on investments recommended to clients. Failure to do so can make the brokerage firm liable for their customers' losses. To learn about how you might be able to recover losses from this scheme through FINRA arbitration on a contingency fee basis, please call our securities fraud law firm for a free evaluation.

In The New York Times, I Discuss FINRA Arbitration...

and issues related to the arbitration process.  Since investors are forced into having their securities fraud cases decided in FINRA arbitration instead of through court house litigation, the fairness of the process is absolutely crucial.  The entire article can be viewed at the link below.

Celiza (Lisa) Braganca Joins Stoltmann Law Offices

Celiza (Lisa) Braganca has joined Stoltmann Law Offices. She will be handling FINRA arbitration actions, securities lawsuits and whistle blower claims for our clients. As a former SEC Branch Chief, she brings over 20 years of experience as a litigator, primarily in the area of financial and securities litigation. Her entire biography can be viewed below.

Celiza (Lisa) Braganca has over 20 years of experience as a litigator, primarily in the area of financial and securities litigation. Lisa's expertise in this area was honed when she served as a Branch Chief in the Division of Enforcement of the Securities & Exchange Commission, where she handled investigations of financial fraud, offering fraud, insider trading, churning, unsuitability, and Foreign Corrupt Practices Act violations. More recently, she has represented investors in recovering substantial losses before FINRA arbitrators as well as represented directors and officers in SEC investigations, class actions, and related matters. Prior to attending law and business school, Lisa was a consultant with the division of Arthur Andersen & Company that later became Accenture. She is a member of the Trial Bar for the United States District Court for the Northern District of Illinois.


J.D. with honors (Order of the Coif) and M.B.A., University of Chicago, 1992

B.A. in Economics, with honors, University of Chicago, 1984

Representative Matters

Securities Litigation and Investigations While at the SEC, Lisa investigated major accounting firms, subprime lenders, telecommunications companies, broker-dealers, and other financial entities. She investigated significant financial fraud at Mercury Finance Company, which led to civil and criminal fraud charges being brought against the company's former Chairman and CEO, former treasurer, and former accounting manager. She participated in the investigation of Foreign Corrupt Practices Act violations arising out of the bribery of Haitian customs officials by officers of American Rice, Inc. She coordinated that FCPA investigation with the Department of Justice's Fraud Division. Those investigations resulted in criminal convictions of American Rice's former CEO and former vice president of operations. (In the Matter of American Rice, Inc., et al., Exchange Act Release No. 47286, SEC Admin. Proceeding File No. 3-11024 (Jan. 30, 2003)). Lisa has valuable perspective to offer when representing directors, officers, and others in connection with SEC and related investigations. Her securities law experience also carries over to other matters, including recovering investors losses resulting from fraud or other misconduct.

Securities matters that Lisa has handled include: Securities & Exchange Commission v. Terry Dowdell, et al., 175 F. Supp. 2d 850 (W.D. Va. Dec. 7, 2001), 2002 WL 236687 (Feb. 15, 2002), 2002 WL 424595 (Mar. 14, 2002) (obtained injunction against promoters of international Ponzi scheme); In the Matter of Laurie Canady, SEC Admin. Proceeding File No. 3-8531-D (Nov. 26, 2001) (sanction of Merrill Lynch registered representative for churning and unsuitable investments); and SEC v. Stanley Awdisho, et al., Civ. No. 04-C-6125 (N.D. Ill., filed Sept. 21, 2004) (targeted manipulation of stock option markets via "small order lot baiting" or "spoofing").

Directors and Officers Lisa has represented directors and officers before the SEC and in financial and securities litigation, including SEC investigations and litigation, securities class actions, fiduciary duty actions, and related bankruptcy actions.

Other Litigation Prior to joining the SEC, Lisa concentrated on complex commercial litigation. While at Jenner & Block, she represented Case Corporation in a federal court trial in which the jury awarded Case the entire $4.2 million sought for breach of contract against its insurer, plus an additional $10 million in punitive damages against the insurer for bad faith denial of claims. Lisa has also served as class counsel in statewide class actions that are changing the way the State of Illinois provides long-term supports and services to low-income people with disabilities.

Phone: 312.332.4200

Thursday, July 17, 2014

Update for Glen Galemmo Victims: One Year Anniversary

In an article entitled One year later, Galemmo Ponzi scheme still haunting investors, the Cincinnati Business Courier details the financial impact of victims of disgraced financial advisor Glen Galemmo who is awaiting sentencing for running a massive ponzi scheme.  The entire article can be viewed at the link below.

The SEC's 2015 Enforcement Priorities Taking Shape

The Securities and Exchange Commissions 2015 priorities are beginning to take shape. According to Reuters, the SEC continues to try to crack down on variable annuity abuses.  Specifically, the SEC is looking into the sales of pricey "L" shares.  According to the article, "One issue of concern was brokerages that sell pricey share classes of mutual funds and variable annuities. Cited was 'an explosion' of so-called 'L-shares,' a type of mutual fund shares held in variable annuities that have short surrender periods, but higher upfront costs."  Regulators have long targeted unsuitable variable annuities, especially in sales to seniors.  Variable annuities each year lead to dozens of FIRNA arbitration claims against the brokers and brokerage firms who sell them.  While the rising market has hidden many of these problems, when the inevitable crash hits, many of the fraudulent sales of variable annuities will be exposed.

SEC Continues Its Crackdown on Pump and Dumps...

and microcap frauds.  Today the SEC charged individuals in a classic pump-and-dump scheme involving shares of a medical education company in Pennsylvania and two other microcap stocks. This is the latest in a long line of crackdowns by the SEC on pump and dumps.  The entire release can be viewed at the link below.    

Another UBS Lie Exposed: "Everything Will Be OK"

Many investors victimized by sales of Puerto Rico bond funds by their Merrill Lynch and UBS brokers still haven't come forward to sue.  Unfortunately, investors were told by their brokers that the value of the Puerto Rico bond funds would come back in value in the near to intermediate future and investors should simply be patient and wait.  Some brokers pointed to the rebound in the net asset value (NAV) of Puerto Rican bonds in the last 12 months as "proof" that things were improving and not to sue.  Unfortunately, the surge was only short lived. Investors received a major shock when the Commonwealth passed a law recently that gave its government-controlled corporations the ability to restructure their debt. Until that point, some investors assumed that the government of the U.S. territory would stand fully behind the bonds, although there was never a promise to do so. The impact on investors who continue to hold the UBS and Merrill Lynch recommended bonds has been substantial. The benchmark Barclays High Yield Municipal Bond Index, which had been up more than 9.5 percent for the year as of mid-June - when it looked like it was going to have its best year since record-beating returns in 2009 - is now up only 5.9 percent.  The drop is expected to continue. We encourage burned clients in Puerto Rican mutual funds recommended by UBS and Merrill Lynch brokers to contact us before the statute of limitations expires for a free analysis as to whether those losses can be recovered on a contingency fee basis.

Wednesday, July 16, 2014

Update for Dean Mustaphalli Victims

This week in Investment News, I provided an update to victims of Dean Mustaphalli.  The former Sterne Agee Financial Services Inc. broker was charged by FINRA for actions related to running his $6 million hedge fund on the side. FINRA charged him for founding and receiving commissions from his fund, Mustaphalli Capital Partners, in 2011 without informing Sterne Agee.  He pitched at least 25 investors over six months during 2011, according to the complaint filed by Finra's department of enforcement.  His fund has lost over 90% of its value.  The entire article, with my comments, can be viewed at the link below.  We believe Sterne Agee Financial Services can be sued for supervisory lapses related to Dean Mustaphalli's management of the fund.  Clients who wish to sue must do so through the FINRA arbitration forum and we are representing investors on a contingency fee basis.  To learn more details, please call our securities fraud law firm in Chicago, Illinois at 312.332.4200.

FINRA Examining Broker Dealer Routing Practices

FINRA recently disclosed it is looking hard and examining broker-dealer order routing and execution practices. FINRA recently issued a targeted examination letter to about ten broker-dealers requesting information on how they route customer orders.  FINRA Rule 5310 (the "best execution rule") requires broker-dealers to route customer orders so that customers receive the best possible prices in the market. There has been a growing concern among market watchers that certain broker-dealers may not be executing customer orders in the best interests of their customers.  While this investigation is just beginning, our prediction is that major enforcement actions will be brought about firms in the next 18-24 months for violations of Rule 5310.

Investment Losses with Steven W. Link?

If you sustained investment losses with current Ameriprise Financial broker Steven W. Link, those losses might be recoverable through the FINRA arbitration claims process.  Link, formerly with Berthel Fisher & Company, has multiple other customer complaints on this CRD.  To learn about all legal options, please call our law firm at 312.332.4200.