Valenti Hanley PLLC

Legal Issues Blog

How a securities fraud exposed a national college admissions scam

Sometimes, the most carefully organized criminal schemes can topple very suddenly. It only takes one "domino" in the line to set everything in motion.

That's basically how federal investigators stumbled into the biggest college admissions scandal to ever rock the nation. At least 50 people have been arrested -- including some well-known celebrities and executives -- and numerous students, colleges and universities are facing untold repercussions.

Questions to ask yourself before selling a business

Selling a business can be a complex and emotional process. After all, it’s likely you poured your time and energy into growing the company and helping it flourish.

If you are considering putting a business on the market, it’s important to be sure you’re ready. Ask yourself these questions before listing your company:

How do I choose my securities law attorney?

Choosing a securities law attorney should not be a difficult process, but it also should be one in which you do not glaze over. You need to make an informed choice and one that sees you interview or meet with multiple attorneys before making your decision. Your investments are important to your future. You want to choose an attorney who knows the law and will fight for your rights.

The biggest part of your decision should be how well the attorney communicates with you. Do they return your calls or emails within one business day? If they can't chat within one business day, do they schedule a call with you? Are they receptive to your questions and provide you with plenty of information in their answers?

Don't let an unethical broker or financial adviser cost you

As an investor, you want your money to work for you. It should grow in a way that benefits you. Of course, there is always a chance of loss when you make investments, but the decision to take that chance should be made by you --not your broker or adviser.

The financial adviser or broker you work with should offer guidance regarding your investments -- but always in a way that's appropriate to your goals. You shouldn't ever be pressured to do something, especially if you are uncomfortable with the risk. In addition, you should never have to wonder what your broker is doing with your money. If asked, your broker should always be able to show you exactly where your money is invested and how it has been managed.

How to prepare for a regulatory investigation

Is your company ready for a regulatory investigation?

Regulatory investigations can be very stressful. Your business is legally required to register if it operates in the securities industry. Most investigations are opened for noncompliance. If not, you will find some important preparation tips for a regulatory investigation so you don't miss anything that could prevent charges from being filed.

  1. You need to define the roles of your team as quickly as possible so that you will be able to respond to changes in the investigation. Only put trusted employees on your investigative team so you do not experience a letdown.
  2. Keep audit logs during the entire investigation. The logs should include the names of all employees involved, their duties, their rank, their roles and their objectives throughout the investigation.
  3. As you get ready for key document review you need to prepare reference documents that support this part of the investigation. This should include any copies of regulatory requests, lists of all employees and their roles and a glossary of all terms related to your company.
  4. You also need to establish a communication regime within your investigation team. There need to be reports issued to your company's board of directors, shareholders and other members of the management team. Schedule meetings for every two to four weeks during the investigation.

Know your options for your investment portfolio

As an investor, you have the right to say how your money is handled. You need to know that you can count on your advisor to do what you feel is best for your money. There are times when your advisor might provide options to you that might work better than what you had planned. It is up to you to determine whether you want to take advantage of those options or not. When you choose not to, that advisor should abide by your wishes.

There are specific laws that advisors have to comply with. One of these is that they can't put their own wishes before yours when they are dealing with your money. Even when they don't agree with your choices, they have to let you know the reasons why your plan might not be the best option, but they can't bypass what you want if you specifically instruct them.

You must be comfortable with your investment portfolio

When you decide that it is time to invest, your investment style has to be a factor in what your advisor chooses for your portfolio. Typically, they will try to determine whether you have a preference for aggressive or conservative investing. These are two very different options, but there are some benefits to having a mixed portfolio.

One of the biggest differences between these two is that aggressive investments are a greater risk than their conservative counterparts. This can mean that you are able to make more money faster; however, there is a chance that you could lose it all. It is imperative that you only invest what you can afford to lose in an aggressive portfolio.

Did a professional mismanage your investment and lose your money?

Saving and investing money, whether you intended it for retirement, a nest egg or your child's education, is a smart financial move. Investing often means taking a risk with that capital in order to earn a high rate of return. Unfortunately, the unprofessional behaviors of others can impact the value of your savings or investments.

Working with a professional trader or financial adviser is meant to help you make better decisions. When a financial professional makes mistakes that cost you a significant amount of money, you may have legal rights to hold them accountable for that failure. You may even have grounds to file a civil lawsuit and recoup your losses.

Be wary of any 'golden handcuffs' in your contracts

Are you a financial adviser who is thinking about leaving your current broker-dealer and moving on with your clients in tow? Maybe you want to go independent -- or maybe you just want to work somewhere else, under a different mantle?

Hold on. You'd better go read your current contract first because you may not be totally free to go where you want -- especially if you received a significant sign-on bonus when you were first recruited.

Protect your investments by keeping a close eye on your portfolio

Investors should be able to count on their financial advisors to do what is in their clients' best interests. While many of them do what they should, there are some who are very self-serving. Instead of advising clients about what is best for the investor, they look at things from a selfish perspective and try to do what is going to make them the most money. In some cases, they will even take money that the investor thought was being added to their portfolio.

We realize that you put a lot of trust in your advisor. It might be hard to think that they are doing things that aren't right for you. Having to take action against them might be just as difficult for you to do, but you have to protect your portfolio. We can help you learn about the options that you have and move your chosen plan forward.

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