Coastal Equities Cold Calls Again. Welcome Back.

A New York number rang up. It was “Clark” from Coastal Equities. Coastal Equities has called me before and I’ve asked them to not call me again.

I asked “Clark” for his last name. He told me it was “Pennington”. So “Clark Pennington,” who sounded very young on the phone, was trying to find out if he could call me in the future with their “Single Best Idea.” I’m sure that idea would have been entertaining. But, as those who read this blog know, I don’t do business with cold callers. More importantly, I don’t do business with people whose registration status I can’t determine.

When I was talking to “Clark” he started to profile me, asking me if I was an aggressive investor. That is a registered representative’s job. “Clark” does not appear to have that registration. I may be wrong.

I went to FINRA’s Brokercheck website and entered “Pennington” for the name and “Coastal Equities” for the firm name. Nothing.

So I simply entered “Pennington” (figuring how many could there be?) to see if there was even a person with the name “Clark Pennington” in the FINRA database. Nope. Not at least with “Clark” as the first name and “Pennington” as the last name. “Clark’s” pitch was that they are a boutique Wall Street investment bank. Well, their HQ is on Orange Street in Wilmington, Delaware. Maybe I didn’t understand him correctly.

So now I’m wondering if they play a game like the “porn star name” game where you take the name of the street you grew up on and some town that has some relationship to your life. That becomes your porn star name. So maybe “Clark” grew up on Clark Street, somewhere. There isn’t a Clark Street in Pennington, New Jersey. There is a Clark, New Jersey, however. So maybe this is a twist on the game. (He probably thought I was some dumb Floridian with no knowledge of New Jersey geography. I grew up near Pennington, New Jersey) So “Clark Pennington” it is. Your cold-caller name. Now all we need is the Harry Potter “sorting hat” or John Belushi from Animal House to dole out the name.

It’s a shame that some young people (This makes me old saying this) are indoctrinated into this business by being convinced that smiling and dialing, using a phony name, is the way to be successful. It’s not.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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Dobin Law Group interviewed on VOIP use.

Well, it didn’t involve lights and cameras, more like an informative email exchange. Our VOIP provider, OnSip, asked me a few questions and turned it into a blog post here.

I did receive my first web- based call yesterday. It would have been more exciting if I had been here to answer it. But I was running late and missed the call. Still, it was cool to know that someone used it.

VOIP is certainly the wave of the near future. At least until they embed phones in our hand or head. And now it’s beginning to look like my embedded fax machine joke won’t be imitated in real life. Oh well.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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SEC stops pension administrator but 22 million dollars are missing.

This makes me angry and sad at the same time.  The SEC announced that it has shut down American Pension Services, a pension administrator in Utah.

The principal of APS was investing customer money in stuff that he shouldn’t have.  These are retirement funds!  I’m mad because this guy clearly didn’t care what he was doing to people.  I’m sad because the victims will really be hurt.

I sit as the chairperson of the Police Pension Fund for the Town of Jupiter.  It is worth over $50 million dollars.  First of all, it wouldn’t be smart for anyone to steal from cops, they are armed after all (kidding).  But it is a very serious business.  I just can’t imagine someone who has been entrusted with people’s retirement funds to do this.  It’s unconscionable.  There’s a special place in hell for these kinds of people.

The problem for me is, what is the solution?  Do I tell people to only deal with large brokerage firms?  Sometimes they can be a bad choice, too.  A few years ago, a major broker-dealer entered into a settlement with a regulator because of activities in its pension advisory service.  But if you go to a small operation, you run the risk that internal controls are non-existent and your money disappears.

The cure, I think, is vigilance and skepticism.  Nothing is as good as it seems.  And if you don’t get a good explanation, leave.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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A Cold Caller Follows the Rules. News at 11.

I received a call from Steve at Coastal Equities.  It was a New York number.  I was so shocked that he was polite that I forgot to get his last name.

He started into his script about “investment-grade” and I thought “here it comes.”  Then he tried to sell me a Verizon corporate bond.  I just about fell out of my chair.

He didn’t lie to me.  He didn’t oversell the product.  But I wasn’t interested.  We parted ways without any shouting or hurt feelings.  I think.

That’s how it’s done, folks.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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My job was crappy this week. Literally.

I have had a variety of things left on my doorstep over the course of my career.  But Monday’s “present” took the cake.  (Maybe that’s a bad expression in this case).

I was minding my own business when a client texted me that “someone or something defecated outside your door.”  That’s a sentence I never considered I would receive.  I finished my workout (after all, where is that crap going to go?) and went to the office.  The smell in the hallway was unpleasant, to say the least.  It was worse in my office.

The building did its best to clean up the mess.  I took pictures (email me if you want them) and called the police in case there was a serial crapper out there.  One officer, with his trained nose, said it was “definitely human.”  Or, under the circumstances, subhuman.

The mess has been cleaned up.  I don’t have video, so we won’t know who relieved themselves on my office threshold.  So, that was the crappy start to my week.  If the culprit has suffered some ill fate, I would then have a “crap-eating grin”.  I’m pretty sure the quantity was limited to one human.

That’s the crap-filled view of one lawyer from Jupiter, Florida.  I’m Marc Dobin.

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FINRA Dispute Resolution Statistics Show No Advantage To All-Public Panel

I keep waiting to be wrong.  In fact, there are many instances where I am wrong.  But I don’t think I am in this instance.

FINRA has released its latest arbitration statistics and the hand-wringing and stat-twisting from the Claimants’ bar will likely continue unabated.

But the numbers are the numbers and here’s what we know through the end of March 2014.  The “win” percentage of all-public panels so far in 2014 was 33%.  The “win” percentage of majority-public panels was 43%.  Isn’t that a surprise?  So, again I ask – What was the purpose of this change?  It’s like the placebo portion of the test is getting healthier than the patients taking the test medication.

Worse still, the numbers have flipped.  If we include all of 2013 and the first three months of 2014, the all-public panels are at 42% and the majority-public panels are at 44%.  And the numbers are trending up, not down.

So I ask again – Why did we do this?  Will the Claimants’ bar now allege that even the all-public panels, devoid of any industry panelist influence, are still biased against claimants?  Or is it, as I have thought all along, that crappy cases go to hearing and the Claimants’ bar thinks, apparently without basis, that an all-public panel will be comfortable with wool over its eyes.

That’s the admittedly smug view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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Reflecting on Three Mile Island – 35 years later.

I was in my second semester as a freshman at Franklin & Marshall College in Lancaster, PA.  We had returned from Spring Break on Sunday.  We started hearing about environmental issues on the radio starting around Wednesday.  Then we found out there was a problem with a nuclear reactor about 30 miles to the West.

By Friday, we were told that we were being sent home for a couple days.  We were told that it was not a safety concern, but precautionary.  But the rumors flew.  One was that F&M was going to be used as an evacuation area.

I remembered that there was a girl down the hall whose family lived in Middletown, where Three Mile Island was located.  She couldn’t get through on the phones (three years before cell phones).  I tried to call home.  My first call clicked about 6 times then died.  The second time I ended up talking to an operator with a Southern accent.

I packed up and went home, five days after I had returned.  Some students thought they’d hang out and, dare I say it, abuse their bodies with alcohol and other substances (They’re lawyers and doctors now).  But the campus was going to be closed.

We were told to call on Monday to find out when to return.  The school remained closed the entire week for “Radiation Vacation” or the shorter “Nuke Break.”  I actually went to see The China Syndrome with a girl I dated off and on.  There’s a point in the movie where one of the characters says something to the effect of “If the reactor melts down, it could go all the way to China” which is how the move got its name.

This incident prompted a lot of discussion about nuclear power and energy policies in general.  Guess what?  I don’t think much has changed.  But when I was driving to Orlando this week, I got to thinking about Radiation Vacation.  I wonder how much longer we’ll be able to drive around in our personal transportation vehicles before we run out of fermenting dinosaurs and plants that power our cars.  Could Elon Musk be onto something?  Maybe I need to buy a Tesla after all.

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SEC files insider trading charges involving Post-it note eating.

OK, here’s a tip.  If you feel compelled to eat Post-it notes or napkins because you don’t want someone to know what you’re doing, your conduct is probably bad.  Apparently, the “middleman” in this insider trading scheme didn’t see anything wrong with consuming office supplies.  He sure didn’t see it as an indication of illegal activity.

The SEC charged two people, a law firm employee and a registered representative, with insider trading.  The law firm employee would allegedly disclose to the middleman the names of companies that he learned about from the firm’s files.  The middleman would then, allegedly, write the ticker symbol on a Post-it or a napkin, show it to the stockbroker, then chew up and/or swallow the piece of paper.  Ick.

The broker is then alleged to have concocted a paper trail showing the reasons for a recommendation to buy the tipped stock.  He also is alleged to have made this recommendation to a number of unsuspecting clients who just thought he was a good stock picker.  Wrong.

Oddly, the Post-it note eating middleman has not been charged.  Maybe eating Post-it notes was punishment enough.  I hope he used the small ones.

So the SEC figured out the little scheme, it claims.  FINRA got credit in the press release.  No word on whether they recovered any of the Post-it notes.

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Microcap fraudster stopped by SEC

Are people really this stupid?  Really.  Are they this stupid?  This removes my faith in humanity.

A guy holds a large position in a thinly traded penny stock.  He uses nominees offshore to do it.  He then sends an email blast to 700,000 sheep, I mean “people”, touting the stock.  He apparently found a bunch of sheep, I mean “people”, who believe everything they receive in their inbox.

So a bunch of these sheep, having received this unsolicited email, think “Here’s a great idea.  Let’s buy this piece of crap thinly-traded stock because this email says great things about it.  And while I’m at it, I’ll buy some of those all natural male “enhancement” pills, too.”

So the POS stock increases in price and volume, giving the promoter/emailer/sheep fleecer a handy profit of over $1,000,000.  But the SEC caught wind of this plot and shut it down.  You can read what they did here.  Nice work by the SEC to protect the sheep from themselves.  But really, who believes these emails?  Remember the voicemail scam from a bunch of years ago?  A woman left a voicemail saying that her boyfriend gave her a hot stock tip that she’s not supposed to share.  The key was that the voicemail was supposedly for someone else.  That’s what made the tip sound legitimate.  You can read about one SEC enforcement action on phony voicemail tips here.

Folks, investing is not as easy as buying a stock you hear about in an unsolicited email or a misdirected voicemail.  But if you’re interested in a bridge….

That’s the view of one lawyer in Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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Wells Fargo Advisors, LLC pays money in two promissory note cases.

This is a bit of “man bites dog” news.  The overwhelming majority of promissory note arbitration cases filed by brokerage firms result in awards to the firms.  This does not account for settlements, which may or may not be for the full amount of the note.  But a broker needs to understand that a promissory note case generally feels like the burden of proof has shifted, forcing the broker to prove why the money is not owed.  And panels are skeptical.

I have won a very small number of these cases, less than five I think.  And I have handled a bunch.  I have settled a bunch, the terms of which are confidential, for a favorable outcome for my client.  And I have tried a few that could have settled favorably, but my client turned down the resolution.  Anyone who tells a broker that these cases are easy and simple to win is simply not telling the truth.  They are hard and the odds are against you.

That is why these two Wells Fargo Advisors cases are so interesting.  The awards were issued one day apart.  In the first case, an arbitration panel in California denied Wells Fargo’s claim for $78,000 and awarded the broker $800,000 where the broker claimed damages for “wrongful termination in violation of public policy (retaliation): defamation; violation of California Labor Code Section 1050 – Blacklisting; intentional infliction of emotional distress; breach of written contract; and promissory estoppel.”  The broker claimed that he was defamed on his U-5.  This appeared to be related to an internal investigation into the change of some administrative information on a form.  The arbitrators clearly decided that Wells Fargo acted incorrectly and used the award to change what had happened.  The arbitrators also ordered expungement of the termination reason on the broker’s form U-5.  As it is often said, bad facts make bad law.

The second case was a different result, but an interesting finding.  It appears that the Texas-based broker felt that he was ambushed when he was let go by the firm and that he was defamed.  The arbitrators upheld the promissory note claim but awarded $30,000 on a counterclaim.  It is some of the language in the award that is most interesting.  “The Panel believes, nonetheless, that some of the methods that Wells Fargo used to effectuate the termination to its best advantage were both opportunistic and inelegant. The Panel also believes that some of Wells Fargo’s conduct following the termination was intended to impede clients’ access to Mr. Ratcliff in his new position;”  Very interesting.  Given the size of the award on the counterclaim, the broker was probably slowed down in transition, but not harmed to much financially.  Either way, it’s not often that a brokerage firm’s conduct is described in this manner.  This is not good language for Wells Fargo going forward.

In a case that I handled last year against Wells Fargo, the panel ordered my client to pay the note, but cleaned up his U-5.  This is the panel’s way of saying “you owe the money, but your career doesn’t appear to have been harmed any by the U-5.”

Frankly, to a number of brokers, the U-5 is more important than the promissory note.  The U-5 is what stays with the broker for the balance of their career.  Expungement or modification of a defamatory U-5 usually can fix that problem.  So can broker-dealers doing the right thing when completing the form.

That’s the view of one lawyer from sunny, beautiful, nearly 80 degree, Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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