On September 8, 2015 the SEC announced it had filed fraud charges against three traders accused of repeatedly lying to customers who were relying on them for honest and accurate pricing information about residential mortgage-backed securities (RMBS).
The SEC alleges that Ross Shapiro defrauded customers to illicitly generate millions of dollars in additional revenue for Nomura Securities International. They complaint alleges that Ross Shapiro, Gramins and Peters misrepresented the bids and offers being provided to Nomura for RMBS, as well as the prices at which Nomura bought and sold the RMBS. They also trained, coached, and directed junior traders at the firm to engage in the same misconduct.
According to the SEC’s complaint filed in federal court in Manhattan, the lies and omissions to customers generated at least $7,000,000 in additional revenue for Nomura. Customers relied on market price information quoted by these traders because the market for this type of RMBS is not transparent, and accurate price information is difficult for a customer to determine. Therefore it was particularly important for the traders to provide honest and accurate information.
The above allegations contained in the SEC’s complaint have not been proven, and the issuance of a complaint represents the SEC’s initiation of a formal proceeding in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.
Ross Shapiro’s’ registration and disciplinary history
In order to lawfully sell investments to the public, one must either be registered or exempt from registration. Ross Shapiro was registered with:
NOMURA SECURITIES INTERNATIONAL, INC.
According to FINRA’s CRD disclosure report, Ross Shapiro has been the subject of one civil and one criminal complaint.
The Law Office of David Liebrader practices exclusively in the field of investment loss recovery. For the past 23 years, we have dedicated our law practice to assisting investors who have been victims of investment fraud via fraudulent and unsuitable investment transactions. During that time we have recovered money for over one thousand individuals, pension plans, trusts and companies. The recoveries we have obtained via judgments, awards and settlements on behalf of our clients exceed $40,000,000.
When investors contact our firm they can expect prompt attention, and a detailed analysis of their issues. Typical claims that we are asked to review involve “unsuitability (where a financial advisor makes investment recommendations that are inconsistent with a customer’s investment objectives), claims for “churning” (where a broker enters into an excessive number of trades for the purpose of generating commissions), claims involving illiquid investments such as private placements (I.e., real estate investment trusts, limited partnerships, equipment leasing and oil and gas drilling programs) as well as claims for violations of state securities laws, which often provide investors remedies like attorney’s fees and interest, if they are successful on the claim.
Since a Supreme Court ruling in the 1980s, most investment related disputes between brokerage firms and their customers have been filed in an arbitration forum hosted by FINRA Dispute Resolution. FINRA, along with the SEC, serves as a securities industry “watchdog” and regulator. Most brokerage firms require their clients to sign binding arbitration agreements, mandating that any disputes between them be arbitrated at FINRA.
Investors pursuing claims at FINRA typically advance claims related to suitability. FINRA rules require that all registered representatives make suitable investment recommendations to their clients. Other claims are based on negligence or breach of fiduciary duty, while another category includes claims based on misrepresentations and fraud. Most claims filed with FINRA are resolved within 15 months, and oftentimes, the cases are resolved via settlement or mediation in under a year.
FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).
If you suspect that you have been the victim of investment fraud, or had a financial advisor recommend unsuitable investments to you, call us today for a free, confidential consultation at (702) 380-3131.