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Important Information You Should Know:
Banc of America Securities is a securities brokerage firm which is licensed by FINRA.
Firms licensed through the Financial Industry Regulatory Authority, formerly the National Association of Securities Dealers (NASD), must comply with securities regulations and federal and state securities laws. When these firms violate regulations or laws they can face actions by regulators or by federal or state criminal prosecutors.
Very few “securities police” have the impossible duty to attempt to govern billions of dollars
in transactions each year, handled by hundreds of thousands of salespersons nationwide at thousands of securities firms. Approximately 660,000 registered salespersons at 5,300 securities firms handle hundreds of millions of transactions annually for over 60 million investors. It is impossible for securities regulators to police this activity.
Securities regulators and officials do not often recover losses for victims of securities fraud. Just as police give tickets and motorists usually hire attorneys to recover damages, victims of securities fraud hire attorneys to recover their losses. As well, claims against brokerage firms including Banc of America Securities, can be for securities fraud, or for breach of duty, breach of contract, negligence and other claims not covered by securities regulations or statutes.
Claims against brokerage firms are almost always determined in securities arbitration.
When an account is opened at securities firms including Banc of America Securities, investors sign documents which include agreements to arbitrate any dispute. The U.S. Supreme Court decided in 1987 that securities arbitration agreements are enforceable. Arbitration is a private proceeding which takes the place of court actions. Appeals of arbitration decisions to court are very limited and usually unsuccessful.
Investors represented by an attorney in securities arbitration are much more successful. Statistics prove that investors who file claims with the assistance of an attorney recover twice as often as those not represented. Only a small percentage of lawyers have ever represented an investor in arbitration and very few law firms nationwide have extensive experience with securities arbitration cases.
To learn whether you can recover losses through a claim against Banc of America Securities
Contact Shepherd Smith Edwards & Kantas LTD LLP law firm for a free consultation with an attorney.
About Shepherd Smith Edwards & Kantas LTD LLP Law Firm:
Our law firm represents institutional and individual investors nationwide who have lost a substantial portion of their retirement or other assets. Our attorneys and staff have more than 100 years of combined experience in the securities industry and in securities law. Several of our lawyers and staff members served for years as a Vice President or Compliance Officer of major brokerage firms.
Each lawyer and staff person at our firm is devoted to assisting investors to recover losses caused by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent. We have handled thousands of cases against hundreds of large and small investment firms, including claims against firms such as Banc of America Securities.
NASD Fines and Suspends Banc of America Securities Analyst for Overstated Research Reports and Providing Advance Notice of Price Targets and Ratings
NASD Also Censures and Fines Three Other Brokerage Firms for Issuing Misleading Research Reports
Washington, DC – NASD announced today that it fined and suspended Andrew Hamerling, a former research analyst at Banc of America Securities LLC (BAS), for issuing research reports with ratings, target prices and substantive discussions that were contrary to his personal opinions. NASD found that Hamerling issued six research reports regarding four issuers - SBC Communications, Inc., Williams Communications Group, TyCom, Ltd., and Qwest Communications International Inc. that violated NASD rules.
Before issuing a September 2001 SBC report, Hamerling analyzed the company's earnings per share, concluded that the earnings did not adequately reflect the company's operating results, and prepared a draft report with that analysis. NASD found that Hamerling did not publish this negative research report because he was concerned that SBC would not attend an upcoming Banc of America Securities conference and that SBC would deny him access to information in the future. NASD found that the published September Report failed to disclose negative facts about the company as well as Hamerling's actual views in violation of NASD rules.
NASD also found that Hamerling published buy ratings for SBC with a $51 target price, while he believed the stock price would decrease and, in emails, recommended that it be shorted. For example, Hamerling responded to a hedge fund manager's inquiry, by stating:
…short SBC. May sound a bit crazy, but it [SBC] has nothing fundamentally sound going for it…"
NASD also determined that Hamerling gave advance notice of his stock ratings, price targets and substantive research to representatives of issuers that he followed. This practice furnished potentially market-sensitive information prior to public release and violated NASD's just and equitable principles rule as well as BAS' own internal policies.
NASD imposed a 9-month suspension and a $125,000 fine payable upon his reassociation with any NASD-registered firm. Details of the violations found relating to research on Williams Communications Group, TyCom, Ltd., and Qwest Communications International Inc. can be found in the Hamerling settlement document. NASD's investigation of research and supervision issues at Banc of America Securities is continuing.
NASD also announced that it took action against several other firms and individuals for violations involving misleading research reports and press releases
- NASD censured and fined Axiom Capital Management, Inc., of New York and three employees an aggregate of $85,000 for publishing misleading research reports in 2001 and 2002 on Sharp Technology, Inc., American Bio Medica, Corp. and MegaPro Tools, Inc. NASD found that these research reports contained misrepresentations and omissions of material fact, exaggerated and unwarranted statements, and opinions for which there was no reasonable basis. Axiom published research reports on Sharp and American Bio Medica and failed to disclose that independent auditors had issued "going concern" opinions about the companies. NASD censured and fined the firm $50,000. NASD also fined and suspended Jeffrey S. Goldberg and David L. Jordon for their roles in preparing the reports and fines and suspended Mark D. Martino from acting in a principal capacity for failing to reasonably supervise these activities.
- NASD censured and fined Banyan Capital Markets, LLC, of Boca Raton, Florida, its owner and President, Barry F. Goldberg, and a research analyst, Louis M. Fischler, an aggregate of $60,000 in connection with the publication of a research report on Neptune Society, Inc. NASD found that the Neptune research report, published by the firm in June 2001, was unbalanced and contained omissions of material fact. The research report projected that revenues would increase from $12 million in 2000 to more than $56 million in 2005. NASD found that the report failed to disclose the company was under a going concern qualification from its auditors and that the company had experienced a net loss in 2000 of over $8 million. The firm was censured and fined $10,000. Barry F. Goldberg was suspended and fined an additional $20,000, and Fischler, who authored the report was suspended for 45 days and fined $30,000.
- Tejas Securities Group, Inc., of Austin, Texas, was censured and fined $35,000 for publishing misleading statements on its Web Site and posting press releases and summaries of research reports that did not disclose risks associated with the securities discussed. Tejas was also ordered to pre-file with NASD's Advertising Regulation Department, for a period of six months, all revisions to the Web Site. NASD also suspended and fined Arnold Durant, the firm's Compliance Director, for failing to reasonably supervise the firm's advertising practices.
All four cases were settled, and the respondents did not admit nor deny the allegations, but consented to the entry of findings by NASD.
NASD Fines Banc of America Investment Services, Inc. $3 Million for Failing to Comply With Anti-Money Laundering Rules in Connection With High Risk Accounts Firm Failed to Heed Repeated Requests for Information from Its Own Clearing Firm
Washington, D.C. — NASD announced today that it has fined Banc of America Investment Services, Inc. (BAI) $3 million in connection with the firm's failure to obtain customer information for certain high-risk accounts and for failing to have adequate communication with its parent bank to ensure that BAI's independent suspicious activity report (SAR) filing obligations were met.
"The anti-money laundering and terrorist financing laws are designed to ensure that customer and transaction risks are assessed and that firms take appropriate steps to address high risks," said NASD Executive Vice President and Head of Enforcement James S. Shorris. "BAI fundamentally failed to meet its obligations with these high risk accounts by failing to adequately investigate and pursue red flags, especially in the face of repeated requests for additional information about the accountholders from its own clearing firm."
NASD found that BAI failed to obtain required additional customer information for high risk accounts. The 34 accounts at issue involved trust and private investment corporations domiciled in the Isle of Man and apparently affiliated with one family. The offshore entities located in the Isle of Man collectively held from $79 million to $93 million in assets and engaged in multi-million-dollar wire transfers across international boundaries. At the time the accounts were opened in August 2003, BAI had established anti-money laundering procedures designed to address certain customer account risks by requiring additional information from the accountholders, specifically, the names of the beneficial owners, before conducting substantial transactions in the accounts.
Nevertheless, from August 2003 to Oct. 22, 2004, BAI did not require the names of the beneficial owners and never restricted the activities in the accounts. BAI allowed the accounts to engage in large wire transactions, even though BAI did not have beneficial ownership information for them. In addition, throughout this time period, the firm continued to allow significant transactions to occur in the accounts despite the advice from a senior lawyer at BAI in March 2004 that BAI should obtain the names of the beneficial owners, and a determination by the BAI risk committee in May 2004 that the information must be obtained.
Further, despite repeated and ongoing requests by its clearing firm, BAI failed to obtain the names of the beneficial owners, and to provide them to its clearing firm. Over a 10-month period, BAI received from its clearing firm numerous requests for ownership information and notices pointing out circumstances that could signal money-laundering activity. Some at BAI expressed concerns that insisting upon the beneficial ownership information might cause the account holders to move the accounts to another institution. But without the names of the beneficial owners, BAI could not reasonably evaluate whether activity in the accounts, which had been brought to BAI's attention by its clearing firm, was suspicious and reportable.
In addition, NASD also found that BAI had an inadequate compliance program for reporting suspicious transactions. While BAI relied on its parent, a bank with its own independent reporting obligations, to determine whether a suspicious activity report (SAR) should be filed, BAI did not have sufficient procedures in place to ensure that there was adequate communication between BAI and its parent as to whether a SAR should be filed and whether a SAR had in fact been filed. Consequently, BAI did not make certain that its independent obligations regarding the filing of a SAR were met. BAI was also unable to reliably incorporate the information that a SAR had been filed into an ongoing risk assessment of its customers and to evaluate account activity going forward.
In concluding this settlement, BAI neither admitted nor denied the findings, but consented to their entry.