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Mass. Securities Chief Galvin Fines BDs for Proxy Vote Fraud

June 24, 2016

The Massachusetts securities chief has fined seven broker-dealers for their role in fraudulent proxy voting, Reuters writes.

The case involves fabricated votes in an investment fund sponsored by American Realty Capital whose employees allegedly impersonated shareholders in proxy voting in the fund management’s interest, as reported previously. William Galvin, secretary for the commonwealth of Massachusetts, said his office found numerous instances of fabricated votes by Realty Capital’s employees with assistance from Voya Financial Advisors, FM Capital Corporation, Invest Financial Corporation, Newbridge Securities Corporation, Plaiter Securities, Platinum Wealth Partners and TOG Financial, according to the newswire.

Galvin has issued a cease-and-desist order on the firms and fines totaling $238,000, Reuters writes.

According to the securities chief, registered agents at the seven broker-dealers submitted fraudulent proxy votes on identical forms prepared for them by Realty Capital, InvestmentNews writes.

The state regulator is also investigating other broker-dealers in connection with the case, according to the publication. RCS folded in December following a settlement with the state regulator, InvestmentNews reports.

In a separate case, the Financial Industry Regulatory Authority has reached a $100,000 settlement with Ameriprise Financial Services over supervisory failures of closed-end fund sales, Financial Advisor magazine reports.

The regulator alleges the firm’s compliance staff failed to curb churning by one of its former brokers, Michael Halla, despite twice flagging suspicious trading in his accounts, according to the publication. Halla, who agreed to pay a $10,000 fine and $18,000 in disgorgement last year, allegedly traded newly-issued closed-end funds in 20 customer accounts, Financial Advisor magazine reports. The regulator said Ameriprise eventually spotted the suspicious trading and fired Halla in 2012, beefing up its supervisory practices over closed-end fund sales, according to the publication.


Meanwhile, a federal judge in Indianapolis has ruled that the head of the brokerage firm Veros Partners must face charges by the Securities and Exchange Commission for his role in an allegedly fraudulent farm loan scheme involving $15 million and 80 investors, Law360 reports. Matthew Haab, the company’s president, and two associates allegedly raised the funds telling investors the loans were for short-term operating costs while they were actually used to pay back farmers’ debt on previous loans, according to the SEC.

And in the world of celebrities going after their financial advisors, Oscar-winner Susan Sarandon has settled a conflict-of-interest lawsuit with Richard Francis and his company, Francis & Nachshon, Patch.com writes. According to the suit, Francis had put most of Sarandon’s investment assets into real estate partnerships where he had a stake, without informing her that he needed the money to acquire the properties, the web publication writes. Sarandon allegedly didn’t find out about the conflict of interested until they parted ways in 2013, according to Patch.com.

Meanwhile, the NFL Players Association has suspended the registration of financial advisor Ash Narayan, according to ABC News. Narayan, a former broker with RGT Capital Management, faces a $30 million lawsuit from three of his former clients, former New York Jets quarterback Mark Sanchez and major league baseball pitchers Jake Peavy and Roy Oswalt, who accuse him of losing their money in a Ponzi scheme, as reported previously.

By Alex Padalka
  • To read the ABC News article cited in this story, click here.
  • To read the Patch.com article cited in this story, click here.
  • To read the FA Magazine article cited in this story, click here.
  • To read the InvestmentNews article cited in this story, click here.
  • To read the Reuters article cited in this story, click here.
  • To read the Law360 article cited in this story, click here.