June 26, 2012

FINRA'S NEW RULES REQUIRE BROKER CHANGES AND NEW STRATEGIES

A recent Reuters.com article explains the complex details of the new two FINRA rules coming into effect on July 2, 2012. FINRA's Know Your Customer Rule and Suitability Rule require firms to use due diligence when dealing with customers. According to the article, the new rules will also now require customers to provide detailed information about their investment needs and themselves.

The Know Your Customer Rule requires diligence on the part of brokers to have all the documents necessary to fully understand the wants and needs of their customers. It also places a responsibility on the customer to provide such documents. The Suitability Rule demands a level of diligence on both parties and requires a customer to provide what is necessary for a broker to decide what is suitable.  The Rule requires brokers to base all recommendations off a complete customer investment profile. FINRA also establishes three factors for consideration when determining if a communication is a recommendation and thus would fall under this rule.

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June 26, 2012

FINRA TO LAUNCH NEW ARBITRATION PROGRAM

According to a recent Reuters.com article, July 2, 2012 will be the launch date for a new FINRA program that will allow more flexibility in large arbitration cases. The new program will be for claims $10 million dollars or more and allow them to shape their cases and bypass some of the FINRA arbitration rules, the article explains.

While the majority of FINRA arbitrations are not dealing with disputes at the $10 million dollar mark, those roughly 6,500 cases are very time consuming and expensive going through the traditional FINRA process. If the program is a success, FINRA plans on asking the SEC to formalize it.

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June 26, 2012

SEC CHARGES ASTROLOGER IN PONZI SCHEME

According to a Business Standard.com article, former broker Gurudeo Persaud based investments off the lunar cycle.  Persaud used an internet site that made market predictions based off gravitational pull and the lunar cycle to decide how to invest for his clients.  The article also reported that of the approximately $1.1 million dollars he received from investors, Persaud used around $415,000 for his own personal use. Persaud used money he received from one investor to pay off another in a Ponzi scheme to try and hide his misuse of his investors funds.

Of the money he collected from family and friends, he used around $415,000 for his personal expenses and then lost anthoer $400,000 by following the internet service that correlated gravity and the moon to the market.

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June 25, 2012

GOLDMAN SACHS DISCLOSURE FRAUD CASE TO CONTINUE

A Federal District Court Judge in Manhattan refused to dismiss the investor lawsuit alleging that Goldman Sachs made misleading statements regarding its ethical standards, the New York Times' Dealbook reported. The alleged misleading statements and disclosures were about conflict of interests between Goldman Sachs and other companies.

The article discussed one such example, a deal called Abacus, where Goldman Sachs was partnered with Paulson & Company, though this was not disclosed to investors. Paulson & Company eventually settled their SEC case by paying a $500 million penalty and admitting to making a mistake with its disclosure.

The next step in the Goldman Sachs case in the Federal Court is the discovery stage. In discovery, corporate documents will be requested, as well as depositions with the three executives also named in this case.

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June 22, 2012

ARBITRATORS ORDER MORGAN KEEGAN TO REPAY OVER $470,000 TO INVESTORS

Morgan Keegan must repay over $470,000 in financial losses of a group of RMK Fund investors, according to the June 13, 2012 Order of an arbitration panel of the Financial Industry Regulatory Authority (FINRA). The three person arbitration panel heard the case in Birmingham, AL.

The Claimants are among thousands of investors who lost money as a result of Morgan Keegan's fraudulent conduct in connection with the RMK (Regions Morgan Keegan) family of bond funds.  The claimants alleged that the funds were unsuitable investments for them and were misrepresented by Morgan Keegan as being much safer than they actually were.  The claimants were represented by attorneys Howard Prossnitz of Chicago, IL and Richard S. Frankowski and Robert E. Norton of The Frankowski Firm, LLC in Birmingham, AL.

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June 4, 2012

THE FRANKOWSKI FIRM INVESTIGATES ALPHA NATURAL RESOURCES

The Frankowski Firm, LLC announces the commencement of an investigation into Alpha Natural Resources, Inc. ("ANR" or the "Company") (NYSE: ANR) to determine whether it has violated securities laws by allegedly issuing false and misleading statements with respect to ANR's June 1, 2011 Merger with the former Massey Energy Co. ("Massey").  After the Merger was completed, ANR gradually disclosed very serious problems that the Company was experiencing at its Emerald mine in southwestern Pennsylvania, one of the Company's most important coal mines.  During 2011, the Emerald mine shipped almost one million fewer tons of coal than the Company had estimated pre-Merger.  The price of ANR common stock has fallen approximately 72% since the Merger was completed.

Prior to the Merger, the Company indicated that any problems at its Emerald mine would be resolved by the end of June 2011.  Instead, and as made publicly known in the months following the Merger, ANR's problems at its Emerald mine were far more severe and potentially long-lasting than the Company had previously disclosed.

As the true severity of the problems at the Emerald mine was revealed, and as the Emerald mine shipped significantly less coal than the Company had previously estimated, ANR's costs of coal production rose dramatically.  We are investigating whether the Company properly disclosed the problems at Emerald mine in the Registration Statement and other relevant documents it issued in connection with its June 1, 2011 Merger involving Massey Energy Co.

What You Can Do

If you were a Massey shareholder and you acquired shares of ANR in the June 1, 2011 Merger, you may have legal claims under the securities laws.  If you wish to discuss this investigation, or have questions about this notice or your legal rights, please contact attorney Richard Frankowski at The Frankowski Firm, LLC via email at rfrankowski@bhflegal.com or via toll-free telephone at (888) 930-9091.  There is no cost to you.

About Our Firm

The Frankowski Firm, LLC, is a Birmingham, Alabama law firm that among other things dedicates its practice to representation of shareholders and investors in litigation, including shareholder class action, derivative litigation and FINRA arbitration.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

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June 4, 2012

SEC AND FINRA INTRODUCE ADJUSTMENTS TO US TRADING CURBS

The SEC approved two proposals to alter trading curbs meant to curtail volatility in the U.S. stock market, according to a Bloomberg.com article.

A  limit-up/limit-down system that prevents trades at prices outside a specified band has been approved. The article stated that also the SEC has supported changes to broaden circuit breakers instituted after the 1987 market crash. Both programs will be implemented for a one year pilot period, to start next on February 4, 2013.

FINRA oversees more than 4,400 brokers and introduced the curbs for individual stocks in May 2010 and later asked for and received permission to test the limit-up/limit-down system.

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June 1, 2012

11TH CIRCUIT REINSTATES SEC'S FRAUD CLAIM AGAINST MORGAN KEEGAN

The United States Court of Appeals for the Eleventh Circuit reinstated the SEC's civil securities fraud action against Morgan Keegan & Co. Inc., according to a Reuters.com article. This reversed the district court's dismissal of the SEC's action arising from Morgan Keegan's sales of Auction Rate Securities (ARS).

The Eleventh Circuit found that the alleged oral misstatements of the brokers at Morgan Keegan could have been material, according to the article. These oral misstatements could have negated the accurate written disclosures.

The decision in Morgan Keegan follows The United States Supreme Court decision in Matrixx Initiatives Inc. v. Siracusano, which  reaffirmed that it is a fact-specific inquiry when determining if an alleged misstatement or omission is indeed material.

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May 31, 2012

THE VOLCKER RULE AND RESTRICTING BANKS

The Volcker Rule restricts the ability of federally insured banks to trade for their own benefit, according to this article in the New York Times.

The article states that with the large losses by banks in the trading of financial securities, especially mortgage-backed assets, there has been a push for more federal regulations. The Volcker Rule is one of the regulations pushed by the Obama Administration after the credit crisis.

The measure's main purpose is to keep federally insured deposits of average banking customers out of risk. To do so, one major part of the bars banks from making proprietary trades. Those are when the bank uses their money to place bets on the market that are unrelated to serving their customers.  The rule would also bar banks from investing in hedge funds or in private equities.

The article states that the measure has been fiercely opposed by banks and large Wall Street firms.

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May 30, 2012

SEC OPENS INVESTIGATION INTO JP MORGAN'S 2 BILLION DOLLAR LOSS

The SEC has opened a preliminary investigation into the accounting practices of JP Morgan as well as into the company's public disclosures about their trading, according to an article in the New York Times.

According to the article, JP Morgan's revised value-at-risk measure could be a focus of the investigation. The company disclosed earlier this year that it changed the way it calculates the metric. A JP Morgan representative stated on May 10th that they had gone back to using the old way of measuring value-at-risk. However, their updated metric could have been responsible for masking or covering some of the risk within their trades.

JP Morgan has not been accused of any wrongdoing at this point as the investigation is still in a very early stage.

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May 22, 2012

MORGAN STANLEY FACING INVESTIGATION OVER DOWNGRADE OF FACEBOOK

According to a recent Atlantic Wire article, Morgan Stanley, JP Morgan and Goldman Sachs, the three banks that underwrote the Facebook IPO, all downgraded their IPO forecasts.

Even more troubling is that the banks appear to have passed that information along to only a handful of institutional investors, without sharing it on a wider basis. If true, that could possibly be a direct violation of securities law amounting to insider trading.

The article reported that the chairman of the FINRA said at the allegations are very serious and will be reviewed by FINRA and possibly by the SEC. The underwriting banks are accused of knowing negative information about the company but chose to keep it a secret from all but a very few investors. There is the possibly, according to the article, that the actions of the underwriting banks could be considered insider trading.

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May 15, 2012

MORGAN KEEGAN REP BARRED FOR LIFE

A Morgan Keegan broker has been barred from the industry by FINRA, according to an article on onwallstreet.com. Michael Venable, of Tyler, Texas, was barred for life from the financial industry after he jeopardized 10 of his clients. The article discussed Venable putting people into investments that were not suitable for them, sometimes without their knowledge at all, and engaging in excessive trades to garner large commissions for himself (also called "churning").

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May 2, 2012

FINRA SANCTIONS FOUR FIRMS $9.1 MILLION OVER ETF SALES

According to a FINRA press release Morgan Stanley, UBS, Wells Fargo and Citigroup have all been fined by the financial regulatory authority.

For a year and a half, the firms did not have adequate systems in place to supervise the sale of leveraged and inverse ETFs.  FINRA also found that the firms did not conduct adequate due diligence in determining the risks and features of the ETFs.  The press release further stated that the firms kept investors in ETF holdings for much longer than they should have been in, especially with the volatile market during the relevant time period.

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April 19, 2012

THE FRANKOWSKI FIRM INVESTIGATES DEMAND MEDIA

The Frankowski Firm, LLC announces the commencement of an investigation into Demand Media, Inc. ("DMD" or the "Company") (NYSE: DMD) to determine whether it has violated securities laws by issuing false and misleading statements to its shareholders in light of the disclosures made about Google's changes to its search engine methodologies that have dramatically reduced the number of references to the Company's websites.  The Company relies heavily on Google for references to the Company's websites.  These references are a substantial source of revenue for DMD.

Before January 26, 2011, Google announced that it had already begun to implement, and would continue to implement, changes to its search engine methodology that would reduce the number of references to "content farm" websites like those operated by DMD.  The Company generates revenue when a user clicks on one of its highly ranked bits of media from an internet search engine, most often Google, which serves as the Company's largest source of references.

As Google has altered its search engine methodologies, visits to the Company's websites have declined, as have DMD's revenues.  We are investigating whether the Company properly disclosed business risks and other potential problems in the registration statements and prospectus it issued in connection with the Company's January 26, 2011 Initial Public Offering of DMD common stock.

What You Can Do

If you are a DMD shareholder and you purchased shares of DMD in the January 26, 2011 Initial Public Offering, you may have legal claims under the securities laws.  If you wish to discuss this investigation, or have questions about this notice or your legal rights, please contact attorney Richard Frankowski via toll-free telephone at 888-390-0036.  There is no cost to you.

The Frankowski Firm, LLC, is a Birmingham, Alabama law firm that among other things dedicates its practice to representation of shareholders and investors in litigation, including shareholder class action, derivative litigation and FINRA arbitration.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

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April 5, 2012

RAYMOND JAMES DISMISSES 200 IN MORGAN KEEGAN PURCHASE

According to this article from Bloomberg News, Raymond James dismissed 200 employees as a result of its purchase of Morgan Keegan & Co., Inc. earlier this year.  Two thirds of those who were cut were Morgan Keegan employees in the fixed income and equity capital markets whose jobs overlapped with Raymond James employees', according to the article.  Regions Financial Corporation sold Morgan Keegan to Raymond James after Morgan Keegan was sanctioned by regulators, including FINRA and the SEC, for fraudulent sales of the RMK family of bond funds.

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