It's a new dawn. It's a new day and investors in Florida should be feeling good. Florida Governor Charlie Crist signed House Bill 483 into law on Monday, which adds protections for Securities investors today, designed to protect securities investors from Bernie Madoff type ponzi schemes.

The Bill's sponsor, State Representative Tom Grady (R- Naples) is quoted as saying the following in a recent interview:

“Our economy will grow stronger if investors have confidence in our financial markets. By increasing the tools available to the state to prosecute violators of our securities laws, we protect investors and foster needed trust in the system."

House Bill 483 gives additional power to the Office of Financial Regulation for prosecution of violations of the Florida Securities and Investor Protection Act. Whistleblowers will also be compensated with rewards for original information regarding money laundering investigations.

Governor Crist issued the following statement on House Bill 483:

“Investors play a critical role in the success of Florida’s economy, and this legislation helps ensure their hard-earned money is protected. I am committed to maintaining the integrity of our markets. Enhancing protection measures and oversight is the best way to crack down on fraudulent activity and increase consumer confidence.”

HB 483 - Investor Protections received overwhelming support from legislators. This Bill provides the following Investor Protections according to the House of Representatives site:

Expands jurisdiction of Office of Statewide Prosecution to investigate & prosecute specified additional offenses; revises various provisions of law relating to viatical settlements; exempts specified transactions in viatical settlement investments from specified registration requirements; revises registration requirements; excludes post judgment interest from payments from fund; expands class of persons related to or associated with applicant or registrant for which specified violations may result in adverse actions taken against registrations; requires Financial Services Commission to adopt rules relating to disciplinary guidelines & temporary disqualification; authorizes OFR to apply to court for specified orders; specifies additional investigation & enforcement authority of AG; authorizes AG to recover costs & attorney fees; authorizes OFR use of such information in prosecution actions; increases amount of specified administrative fines; authorizes OFR to bar specified persons from submitting applications or notifications for license or registration under specified circumstances; revises criteria for prohibited practices relating to commodities; authorizes FDLE to enter into agreements to pay rewards for specified information; expands subject matter jurisdiction of statewide grand jury to include specified additional offenses.

If you have original information regarding Investor fraud you may want to contact an attorney to discuss your rights. If you want to learn more on Securities litigation and your rights as a whistleblower, visit the following pages on Securities Litigation and Stockbroker fraud.

Today, I came across an interesting article from Bloomberg News on the Arbitration debate over financial investments. It was a Commentary written by Bloomberg News Columnist Susan Antilla entitled "Obama Fails to End Kangaroo Courts for Investors".

In the article, Susan highlights the following statement from President Obama:

The Securities and Exchange Commission “should study the use of mandatory arbitration clauses in investor contracts,” and then pursue legislation if appropriate,

At the end of the Commentary, she adds:

That argument is more bogus today than ever, because cases increasingly involve the mass-marketing of financial products by multiple brokerage firms.

“The concern is that the industry arbitrator could be on a panel telling others that ‘everybody does it,’” says Brian Smiley, the president of Piaba.

And in a closed justice system where nobody can come to court and watch, who would ever know?

The Arbitration Commentary gives food for thought and highlights the key issues, but it is hard to argue over, which side Susan is on in the Arbitration argument. She makes her point very clear on the issue.

It is safe to say that after losing a loved one, a widow has a lot on their plate, However, this loss does not mean that Financial Advisors can ignore them or mismanage their account. A recent study by Allianz Life found that

About 44% of widows are inclined to obtain financial advice in new ways, and that 70% of those using financial advisers considered firing their advisers in the first three years after their husbands' deaths.

This tragic loss does not give Financial Advisers the right to prey upon Widows with risky financial investments, mismanagement of funds or simply ignoring the widow altogether.

Five simple steps that a widow can use for Financial Guidance and respect from Financial Advisors include:

Step one: Deal with your emotional needs first after the death of your spouse. Having a clear mind and perspective is key before making major decisions,

Step two: Organize your finances and make a budget. Looking at your entire financial picture allows you to see what you need financially to live on.

Step three: Calculate your net worth. Take a look at all of your assets, investments, stocks, home, bank accounts, bonds, and everything that is of value. Ask your Financial Advisor to give you a report of what your portfolio is worth, present value and a comparison of what it was worth when your husband was alive. Give them a specific time frame of when you expect this data.

Step four: Identify a few key Financial Advisers and Interview them for your business. Compare the Financial Adviser that was working with your spouse to the new ones that are recommended by reliable sources. Make a checklist of things that are important to you in an adviser. Rate each Adviser with a score for each of your checklist items and come up with a ranking system for comparison. Try to be objective and compare each adviser on the same benchmarks.

Step five: Sit down with your Chosen Financial Advisor and develop a long-term financial plan for your investments. Share with the selected Financial Advisor that they were selected after a careful screening process. This will allow them to see that you are serious about service and expect excellent Customer Service. Set aside a specific timeframe for a review, that you are comfortable with, i.e., monthly, bi-monthly, quarterly, semi annually. Make sure that the Financial Advisor agrees to this timeframe to go over your portfolio and hold them to it. If they fail to service your account properly, go back to your list and replace them with someone that will treat you the way that you expect to be treated.

Read the book, On Your Own: A Widow's Passage to Emotional & Financial Well-being,by Alexandra Armstrong and Mary R. Donahue for more information on how a Widow can take charge of their life and finances without being taken advantage of by a Financial Advisor. The book retails for under $20 on Amazon and other online retailers.

If you are a Widow, please note that you are not alone, According to an article on the subject from Investment News, nearly 800,000 women become widows each year. There is much comfort in numbers. Join a support group for women that are recent widows. You may find that sharing your experiences present, past and future can help you cope with your loss.

To learn more on other ways for Widows to protect themselves against Investor fraud, view some of the following Financial Services pages on Stockbroker fraud, Securities Issues, or dispute resolutions.

A Florida Judge ordered former Pinnacle Business Management, Inc Chairman, Jeffrey G. Turrino to pay $9.95 Million and permanently banned him from Penny Stock Offerings.

The Securities and Exchange Commission announced that, Judge Elizabeth A. Kovachevich, United States District Judge for the Middle District of Florida, entered an order of civil contempt against defendant Jeffrey G. Turino.

In her ruling, Judge Kovachevich found that Turino acted in flagrant and repeated contempt of the penny stock bar back from December 2003. This was in connection with a previous Commission enforcement action stemming back from May 2002. In that action, the Commission alleged that Turino, one of his associates, and the penny stock company they operated, Pinnacle Business Management, Inc., had committed securities fraud by making materially false and misleading statements about Pinnacle’s business operations. This action was settled by Turino with a civil penalty of $60,000, consent to a permanent fraud injunction, and a penny stock bar for five years.

Allen Stanford, Chairman of Stanford Group holdings, surrendered to authorities yesterday, will be officially charged by SEC today in Court. He is accused of stealing over $8 billion from investors.

According to Bloomberg News and The Washington Post,

The SEC lawsuit indicates in its compmplaint that Stanford International Bank misled investors by touting "improbable, if not impossible" returns for investments.

The SEC alleges that the Stanford Group Co. sold $8 billion of certificates of deposit in Stanford International Bank. The financial advisors of the company misled clients to believe that their money would be placed primarily in easily sold financial instruments monitored by over 20 analysts and closely audited by Antiguan regulators.

Instead Stanford and the company's chief financial officer managed most of the portfolio and invested a substantial amount of it in real estate and private equity.

Today, marks a milestone in the life of The Law Planet Blog. This is our 100th Post our Blog covering Securities, Stock Fraud and Employment/Labor Law issues.

It is also a great day for Senior Investors. A series of Grass roots campaigns will be launched in Florida, Colorado, Vermont, North Carolina, and Washington state to protect seniors from investment fraud. The Financial Industry Regulatory Authority (FINRA) outlined new initiatives aimed at protecting and educating investors. The initiatives include a national advertising campaign and a 60-minute video, "Tricks of the Trade: Outsmarting Investment Fraud."

The video is part of the FINRA Foundation's new "fraud-fighting" education series for investors, which also includes in-person workshops and events in five states across the country this year: Colorado, Florida, North Carolina, Vermont and Washington state. These state-wide campaigns, which will be expanded to five additional states next year, are being presented in partnership with AARP, state securities regulators and other fraud-fighting organizations to help senior citizens identify and steer clear of investment fraud. A central feature of these campaigns is the presentation of an educational curriculum that has been tested and shown to reduce seniors' susceptibility to investment fraud by over 50 percent among participants.

Stay tuned for more information on Investor protections to fight against fraud for Seniors.

The SEC announced today that it, along with Alabama Securities Commission has charged Aura Financial Services with “rampant” churning of customer accounts, “widespread” supervisory failures and other securities violations. This is stunning. It is rare that an entire firm is charged with churning. Usually it is an individual broker or office. For a firm to be charged must be pretty bad.

What do you do if you’re a client of Aura and can’t figure out what happened to your account? Contact a qualified securities arbitration attorney to look at your account statements and determine the best route to follow.

This gets back to the basics of investing. If you don’t understand what’s going on, don’t do it. If your Broker is doing things you don’t like, get another Broker. When you think you’ve been mistreated, ask a professional for a second opinion.

To learn more on this Aurora Financial Fraud case, read the SEC Press Release and Investment News article "SEC charges Birmingham B-D with churning"

The truth will always come out. This is a hard lesson that Fund Manager, Matthew D. Weitzman, just recently learned. He has been charged with investment adviser fraud, securities fraud, and wire fraud. If convicted he faces up to a maximum of 15 years imprisonment and over $5 million in fines.

Mr. Weitzman was co-founder of AFW, financial planning and investment management firm. AFW managed more than $190 million in assets at the end of 2008. According to reports in the North Country Gazette,, Mr. Weitzman converted investor money for his own use.

The Golden Goose is no more for Mr. Weitzman. His misdeeds caught up with him and now he must face the music for his crimes. Hopefully, the Investors in AFW will seek legal counsel to discuss how they can get their stolen funds back.

Starbucks corp has 100 million reasons to smile. The cas in question is Chau V Starbucks Inc. (D053491 (Super. Ct. GIC836925))

The California Appeals Court recently ruled that San Diego County Superior Court Judge Patricia Cowett's decision to award baristas $86 million in restitution plus about $20 million in interest was was not based properly. The Appeals Court also felt that the shift supervisors "essentially perform the same job as baristas."

The court also stated in its opinion:

The court's ruling is unsupported. Section 351 does not contain any language prohibiting an employer from equitably dividing tips placed in a collective box among the employees who provided the service. The trial court's reliance on the "mandatory tip pooling" judicial decisions was misplaced. These decisions were premised on factual scenarios different from here and do not apply where customers leave tips in a collective tip box for service rendered by a "team" of employees.

The court's ruling is also at odds with legislative objectives. Section 351 was enacted to prevent employers and their agents from using their positions of authority to demand that employees give up their earned gratuities as a condition of employment. The undisputed evidence shows that no barista was required to give up any part of a tip left for the barista. Rather, Starbucks's policy ensured the collective tips were equitably distributed to those who earned them.

Section 351 was also enacted to prevent fraud on the tipping public. (§ 356.) The Legislature wanted to prohibit a business owner from deceiving a customer who left a tip for an employee by requiring that the employee later transfer any part of the tip to the employer or the employer's agent. It is undisputed here that the tipping public intended to collectively tip both the baristas and the shift supervisors—for their work as a "team." Requiring these collective tips to be given solely to baristas would mislead the public. Because the trial court's interpretation of section 351 was not supported by the statutory language and led to a result contrary to the fundamental purpose of the statutory scheme, it is one that the Legislature could not have intended. We reverse the judgment in its entirety.

This case stems from a 2004 lawsuit brought by a former a former employee, Jou Chau, and 100,000 current and former Starbucks employees. The angle of the suit was that Starbucks baristas were not legally entitled to share in employee tips. Have you ever seen the community tip jar on the counter when getting your Grande Frappucino?

A few Blawgs commenting on this Starbucks "tip sharing" case include:

Your Honor I Object. In this blog, the blogger brings out the following in his post: "Starbucks wins the 86 Million Tips Sharing Class Action"

What maybe should have been sued upon in the first place was the actual formula used to calculate the share of the tips rightfully earned by the shift supervisors (certainly less than a full hour per hour amount) and whether any substantial adverse impact actually befell to the baristas as a whole.

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Legal Blogger Dennis Westlind, from the law blawg "The World of Work", chimes in on the ruling in his post "Starbucks obtains reversal of $105 million "Tip Sharing" case."

Legal Blogger, Shaun Martin from the law blawg "The California Appellate Report" gives excellent commentary on the Starbucks ruling in the post "Chau v. Starbucks (Cal. Ct. App. - June 2, 2009)"

All eyes are on the legal team representing the baristas and Mr. Chau. According to an LA Times article, Attorney David Lowe is quoted as saying:

"Up to this point, every court that has addressed this issue has found that an employer cannot pay supervisors from a tip pool. This is the first case that goes in a different direction," We will be looking to the California Supreme Court to fix this error."

I guess that when I go into Starbucks later today and wish to thank my barista for the excellent customer service provided, I should hand them the tip directly and "INSIST" that they keep it. This way, I am ensured that my tip was given to the proper person, the person that served me.

Let's see if this case will go to the Supreme Court or settle for a nominal amount to make it go away. Time will tell, if this case will continue to the Supreme Court of California. Starbucks shares settled at $15.20 yesterday, according to the Investor Relations section of the company's website.

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Posted In: Labor & Employment

Countrywide executives must face the music for deception and fraud as the Securities and Exchange Commission (SEC) has brought charges against the former Chief Executive Officer (CEO) Angelo Mozilo and two executives for allegedly hiding financial difficulties which led to the company's collapse from the subprime mortgage crisis. In 2007, Countrywide Financial was the United States' largest mortgage lender. When it collapsed in 2008, the Bank of America acquired Countrywide for more than $4 billion. This case is important as the public attempts to assign blame for the subprime mortgage collapse.

Many corporate executives use a common defense against financial malfeasance, that their subordinate employees hid important information. The SEC has collected top Countrywide executive e-mails (sent while the housing market was starting to decline) that portray a rosy public picture, with negative private ruminations concerning an impending collapse. These executives described the mortgage loans as "toxic" in private conversations. Ex-CEO Mozilo used terms like "flying blind" to describe his inability to assess the viability of these subprime loans.

Actions, such as ex-CEO Mozilo's sale of $260 million worth of stock, have led to insider trading charges that these executives failed to disclose important information publicly. Evidence is growing that ex-CEO Mozilo was quite engaged in all of the intricate details of homeowner loans. The Bloomberg News Service has reported extensively on these SEC lawsuits.

Still, ex-CEO Mozilo and his co-defendants are adamant in defending themselves, denying the SEC's claims that they deceived investors. These defendants argue that "no one could have predicted the severity and force of the housing market downturn." The Countrywide executives claim that regulators "cherry-picked" quotes which have been taken out-of-context.

Continue reading "Countrywide Executives must face the music for deception and fraud " »

As we speak to Clients and give Seminars we are constantly asked "How can an investor preotect themselves against Stock Fraud?" Here are a few points that anyone can remember. Please feel free to share them with loved ones that are consistent investors. Enjoy...

1. Read your mail. Account statements are confirmations are sent for a reason. If the value of your account dropped or grew more than expected, read the prior month’s statement and try to figure it out. Ask your broker for help. If the broker won’t help, get a new broker

2. Diversify your investments. No matter how much your broker says “This is great” don’t put all your money in one place. No competent money manager does this. A private investor shouldn’t either.

3. Be proactive in dealing with your investment professional. A broker is supposed to make recommendations that are appropriate for your situation. If you’re uncomfortable and want to stay with that firm, talk to the branch manager. If you want to leave the firm, do it.

4. Remember that an investment that sounds too good to be true, isn’t true. All of the Ponzi schemes that fell apart over the last year were all succeeding because people thought they were in on a “secret” program that was always doing better than the market. It turns out there was no valid investment program. Experienced investors thought they had found the magic bullet. They should have known better. They forgot this basic principle.