SEC Charges Seattle Firm in Religous Based Scam

According to the SEC's complaint, Min associated himself with a tight-knit religious and philanthropic community in the Pacific Northwest, creating a not-for-profit entity to attract charitable investors who believed that their investments would support certain Third Word aid groups, such as a charity supporting Bolivian widows and orphans. Min lured other investors by telling them that his trading expertise allowed him to make annual returns as high as 800 percent, and by touting Dime as a safe, low-risk investment for retirees' savings. The SEC alleges that Min and Dime deceived more than 60 investors since 2005 into buying interests in Dime's purportedly prosperous investment program.

According to the SEC's complaint, filed in federal court in Seattle, Min told investors that he would use their money to trade in the foreign currency exchange (Forex) market. The SEC alleges that Min instead misappropriated about $1.4 million of investors' funds to finance a lavish lifestyle that included a $70,000 Mercedes, expensive vacations, and private school tuition for his children. Min also illicitly used investor funds to bankroll a failed film venture about evangelical churches, and to pay expenses relating to the operation of the fraud. When Min did actually invest the funds, his trading record was abysmal. He lost more than $5 million on the Forex market, according to the SEC's complaint.

To conceal the fraud, Min sent investors false account statements reporting high returns, while he was actually depleting the entire investment pool through theft and trading losses. Min lied about his and Dime's credentials by, among other things, falsely telling investors that Dime was supervised by an "Advisory Board" populated by accomplished individuals.

Chicago Area Investment Advisor Assets Frozen By SEC

The SEC charged The Nutmeg Group LLC, owner and managing member Randall Goulding, and chief compliance officer David Goulding for misappropriating client assets, making misrepresentations to their clients, failing to comply with Nutmeg's custodial obligations, and failing to keep required books and records. The Honorable Judge William J. Hibbler of the U.S. District Court for the Northern District of Illinois temporarily enjoined the defendants from violating antifraud, custodial, and recordkeeping provisions of the federal securities laws and imposed a freeze of Nutmeg's assets.

According to the SEC's complaint, Northbrook, Ill.-based Nutmeg serves as the general partner or investment adviser to 15 unregistered investment pools and claims to have assets under management of more than $32 million. Nutmeg and the Gouldings misappropriated more than $4 million in client assets by transferring them to third parties, and did not fully document the funds' investments. The SEC alleges that they improperly commingled fund assets and cannot value the funds' holdings, and as a result, net asset and other investment values have been incorrectly reported to investors. Nutmeg also has failed to keep required books and records or keep assets with qualified custodians, which has further put client funds at risk.

WSJ FINRA Update - March 24, 2009

The Financial Industry Regulatory Authority fined Wachovia Securities LLC and First Clearing LLC $1.1 million for failing to provide more than 800,000 required notifications to customers during a five-year period.

Separately, the market regulator awarded damages of $8.9 million against Associated Securities and a broker for investing 16 households in a hedge fund that was allegedly misidentified to the investors.

Finra said the troubles at Wachovia Securities and First Clearing were the result of computer programming and operational problems undetected by the firms' internal controls procedures and supervisors. The notices included notifications of changes in investment objectives and changes of address.

"These notices are an important form of investor protection -- they help protect against changes that are erroneous, unauthorized, or, in the worst case, indicative of an effort to conceal misconduct involving a customer's account," said Finra enforcement chief Susan L. Merrill.

Wachovia was acquired at year's end by Wells Fargo & Co. Wachovia Securities and First Clearing were units of Wachovia at the time of the activity in question.

In the second case, a Finra arbitration panel awarded claimants 100% of the money they invested in the Apex Hedge fund after Associated Securities broker Jeffrey Forrest said it provided safety, security and liquidity of investor principal. In fact, Apex was a highly speculative hedge fund that engaged in risky options trading and was wiped out in 2007.

The panel found that Mr. Forrest's representations to his clients constituted fraud or deceit according to California law. Associated Securities also was found liable because of its failure to properly supervise Mr. Forrest.

FINRA Arbitration Panel Finds Associated Securities and Jeffrey Forrest Liable and Awards More Than $8.8 Million to Investors

A FINRA arbitration panel awarded damages of $8,858,596 against Associated Securities and it’s broker Jeffrey Forrest in connection with the sale of the Apex Hedge fund to 16 households, who lived primarily in San Luis Obispo county in California.

The investors were represented by Philip M. Aidikoff and Robert A. Uhl of Aidikoff, Uhl & Bakhtiari, a Beverly Hills, California law firm (www.securitiesarbitration.com) that represents investors in disputes with the securities industry.

In 2005 and 2006 Associated Securities broker Jeffrey Forrest solicited his customers to purchase the Apex Hedge fund. The customers were told that Apex was an investment that provided safety, security and liquidity of investor principal. In truth, Apex was a highly speculative hedge fund that engaged in risky options trading and was wiped out in 2007.

The FINRA arbitration panel found that Forrest’s representations to his clients, including the Claimants, about the “safety and liquidity of their investments in Apex, in light of what Forrest knew and understood from the written offering documents constitutes fraud or deceit within the meaning of California law,” stated Mr. Aidikoff.

According to Mr. Uhl, “The panel found Associated Securities jointly and severally liable for Forrest’s fraudulent conduct in connection with the sale of APEX to the Claimants.” Mr. Uhl added, “The panel found Associated Securities independently liable for the APEX losses Claimants suffered because of its failure to diligently and properly supervise Forrest’s activities.”

“The award represents 100% of the money our clients invested in the APEX hedge fund,” according to Mr. Aidikoff.

If you have any questions concerning this notice, please contact:

Philip M. Aidikoff, paidi@aol.com
Robert A. Uhl, robertauhl@aol.com

Aidikoff, Uhl & Bakhtiari
9454 Wilshire Boulevard, Suite 303
Beverly Hills, California 90212
(310) 274-0666 or Toll Free (800) 382-7969 (national)

www.securitiesarbitration.com

Morgan Keegan Found Liable to Indiana Investor

An Indianapolis, Indiana, FINRA arbitration panel has awarded $18,000 to Jo L. Wright, a church secretary from Whitestown, Indiana, for losses suffered in Morgan Keegan & Co. bond funds.

"This is the first Indiana case to go to an arbitration hearing relating to Morgan Keegan bond funds," said Wright's attorney, Mark E. Maddox of Maddox Hargett & Caruso, P.C. in Indianapolis. Since her total losses were $11,000, we're gratified that the Arbitrator awarded her $18,000," said Maddox.

"Wright's arbitration award once again affirms our view that Morgan Keegan engaged in an outright scheme to defraud investors in the sale of its bond funds," adds Maddox.

Morgan Keegan is a division of Regions Financial Corp (RF), a regional brokerage firm with offices located throughout the United States.

Wright initially was referred to Memphis-based Morgan Keegan by her local Indiana Regions bank branch manager. At the time of the referral, Wright's money had been in a certificate of deposit and a savings account. According to the arbitration claim, she transferred her funds into the Morgan Keegan Select Intermediate Bond Fund based on the bank manager's and Morgan Keegan's recommendation that the fund was a safe, conservative investment.

Wright, who had little prior investing experience, says she never knew that the Morgan Keegan bond fund was heavily invested in volatile asset-backed securities, nor had she been given a prospectus on the fund. Ironically, her Morgan Keegan investment had the exact return as her federally-insured CD for the prior year, despite its concentration in speculative securities.

In the Summer of 2007, the Morgan Keegan Select Intermediate Bond Fund began to plummet in value, while losses for investors skyrocketed. Some of the RMK funds lost more than 80% in value, with investors losing $2 billion from March 31, 2007 to March 31, 2008. By comparison, similar bond funds posted positive returns or only modest losses during the same time period.

In March 2008, Wright filed an arbitration claim against Morgan Keegan, citing that the Morgan Keegan Select Intermediate Bond Fund was an unsuitable investment recommendation and that Morgan Keegan management breached their fiduciary duties.

``At the end of the day, the evidence is catching up with Morgan Keegan,'' says Maddox. ``Investors in the Morgan Keegan funds have collectively lost billions of dollars because Morgan Keegan management did not make them aware of the fact that the funds were tied to risky asset-backed and subprime mortgage-related assets.''

The Morgan Keegan bond funds at the center of hundreds of investor arbitrations include the following:


-- Regions Morgan Keegan Select High Income-A, (Sym: MKHIX)
-- Regions Morgan Keegan Select High Income-C, (Sym: RHICX)
-- Regions Morgan Keegan Select High Income-I, (Sym: RHIIX)
-- RMK High Income Fund, (Sym: RMH)
-- RMK Strategic Income Fund, (Sym: RSF)
-- Regions Morgan Keegan Select Intermediate Bond Fund-A,
(Sym: MKIBX)
-- Regions Morgan Keegan Select Intermediate Bond Fund-C,
(Sym: RIBCX)
-- Regions Morgan Keegan Select Intermediate Bond Fund-I,
(Sym: RIBIX)
-- RMK Multi-Sector High Income, (Sym: RHY)
-- RMK Advantage Income, (Sym: RMA)

SEC Charges Two California Residents in $40 Million Ponzi Scheme

The SEC's complaint, filed in federal court in Sacramento, alleges that Vassallo told investors that their money was being invested in securities pursuant to a proprietary trading strategy that promised high returns with minimal risk. From September 2007 through approximately November 2008, Kenitzer, who participated in EIMT's day-to-day operations, posted false trading results on the company's Web site and distributed phony investment reports to investors that led them to believe EIMT was achieving consistent, positive returns. According to the SEC's complaint, EIMT actually had not conducted any stock trades since at least September 2007, when its brokerage firm terminated Vassallo's trading privileges. The SEC alleges that Vassallo and Kenitzer kept the scheme going by using money raised from new investors to pay earlier investors, a classic hallmark of a Ponzi scheme.

The SEC's complaint charges Vassallo, Kenitzer and EIMT with violations of the anti-fraud provisions of the federal securities laws. In addition to an emergency order freezing EIMT's assets, the SEC seeks injunctive relief, disgorgement of defendants' ill-gotten gains, and financial penalties.

Morgan Keegan Found Liable to Birmingham, Alabama Investor In FINRA Arbitration

A Birmingham, Alabama FINRA arbitration panel awarded $187,000 to a retired cattle farmer from York, Alabama for losses suffered in Morgan Keegan bond funds. "This is believed to be the largest arbitration award against Regions Financial Corp.'s NYSE:RF) Morgan Keegan division for its sale of bond funds that cost investors over 2Billion Dollars," said attorney Mark E. Maddox of Maddox Hargett & Caruso, P.C. in Indianapolis, IN, who represented the investor Philip Willingham. "It is also the first make-whole award in favor of a Morgan Keegan bond fund investor."

"This arbitration award affirms our view that Morgan Keegan engaged in a massive scheme to defraud many investors, including Philip Willingham, in the sale of its bond funds," says Maddox.

"It is becoming apparent that the evidence that investors are now able to present about the scope of Morgan Keegan's misconduct and the significant investigations that are being conducted by the Securities and Exchange Commission and state securities regulators are catching up with Morgan Keegan, and allowing arbitrators to better understand the scope of its misconduct," added Maddox.

Citipgroup CEO Issues Words of Encouragement for Employees

Vikram Pandit, CEO for Citigroup, dismissed record low stock performances of just above $1 in a memo to employees, telling them that the bank’s earning power would ultimately prevail. Pandit’s memo was reproduced in on March 9, 2009 in a Wall Street Journal article..

In the letter, Pandit acknowledged his disappointment with Citigroup’s stock price and what he called broad-based misperceptions about the company and its financial position. “I don’t believe it reflects the strengths of Citi; our newly strengthened capital base, our unique global franchise and most importantly, the quality of our people. These are unprecedented times in the markets, but over time, the markets will recognize the many strengths of Citi.”

The memo went on to cite Citigroup’s best quarter-to-date performance since the third quarter of 2007 - the last time it made a quarterly net profit. Revenues, excluding externally disclosed marks, were $19 billion in January and February of 2009. Pandit said the bank was confident about its capital strength after undertaking stress tests and using assumptions that were more pessimistic than those of the Federal Reserve. He failed to reveal, however, details about the so-called stress tests that Citigroup reportedly went through.

Pandit’s assessments of Citigroup’s future viability may come as a surprise to employees and investors alike. Since October 2008, the company has received two federal bailouts: $45 billion from the Treasury Department’s Troubled Asset Relief Program (TARP) and an agreement for the government to cap losses on $300 billion of toxic assets.

Sen. Richard Shelby, a lawmaker opposed to the bailing out of troubled banks with taxpayer money and member of the Senate Banking Committee, in March of 2009 referred to Citigroup as a “problem child. Well according to Pandit the problem child is reforming itself and only time will tell if investors are impressed with the results.