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Archive for October, 2014

SEC charges Sands Brothers Asset Management LLC, Steven Sands and Martin Sands

The Securities and Exchange Commission today announced charges against an investment advisory firm and three top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money or securities.

Advisory firms with custody of private fund assets can comply with the custody rule by distributing audited financial statements to fund investors within 120 days of the end of the fiscal year.  This provides investors with regular independent verification of their assets as a safeguard against misuse or theft.  The SEC’s Enforcement Division alleges that Sands Brothers Asset Management LLC has been repeatedly late in providing investors with audited financial statements of its private funds, and the firm’s co-founders Steven Sands and Martin Sands along with chief compliance officer and chief operating officer Christopher Kelly were responsible for the firm’s failures to comply with the custody rule.  Sands Brothers has offices in Greenwich, Conn., New York City, and Tiburon, Calif.

“The custody rule is not a technicality.  It is a critical investor protection provision designed to help ensure that investor assets are safe,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Sands Brothers and its senior-most officers have persistently disregarded their obligations under the law and left their clients waiting for months at a time to have the materials they need to verify the existence and value of fund assets.”

According to the SEC’s order instituting an administrative proceeding, Sands Brothers was at least 40 days late in distributing audited financial statements to investors in 10 private funds for fiscal year 2010.  The next year, audited financial statements for those same funds were delivered anywhere from six months to eight months late.  The same materials for fiscal year 2012 were distributed to investors approximately three months late.  According to the SEC’s order, Sands Brothers and the two co-founders were previously sanctioned by the SEC in 2010 for custody rule violations.

Houston-based Ajamie LLP Investigating Customer Losses after LPL Financial Firing of James “Jeb” Bashaw

Ajamie LLP and Aidikoff, Uhl & Bakhtiari continue to investigate and discuss with investors potential claims for recovery.

LPL Financial Holdings, Inc. branch manager James “Jeb” Bashaw was fired on September 24, 2014 for among other things allegedly engaging in private securities transactions, borrowing money from a client and engaging in activities that created conflicts of interest according to Mr. Bashaw’s report on FINRA’s CRD (Central Registration Depository).

“Private securities transactions are usually driven by high fees collected by brokers,” said Houston attorney Tom Ajamie. “It appears that Mr. Bashaw may have engaged in risky private securities transactions that were known to LPL.”

“Mr. Bashaw’s prior private transactions raise serious concerns about the level of supervision LPL chose to exercise,” added Ryan Bakhtiari.

Mr. Bashaw once managed over $3 billion in total assets and is now employed by Wunderlich Securities, Inc. in Houston, Texas.

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LPL Financial terminates Houston based broker, James “Jeb” Bashaw

Former LPL Financial branch manager James “Jeb” Bashaw was fired on September 24, 2014, for several allegations, including participating in private securities transactions without providing written disclosure to and obtaining written approval from LPL Financial, according to his report on CRD (Central Registration Depository).

Mr. Bashaw was once named Texas’ top adviser by Barron’s magazine in 2011 after amassing $3.8 billion in total assets.

Engaging in private securities transactions without broker-dealer approval is forbidden by securities industry rules and regulations.  Allegations of borrowing money from a client and engaging in a business transaction that created conflicts of interest were additional reasons given by LPL for Mr. Bashaw’s firing.

According to Finra registration, Mr. Bashaw is now employed by Wunderlich Securities, Inc. in Houston, Texas.

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