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Archive for November, 2017


SEC Seeks Order Against 235 Entities Affiliated with Woodbridge Group of Companies, LLC to Produce Documents to SEC

The Securities and Exchange Commission has filed a subpoena enforcement action against 235 limited liability companies (the “LLCs”) based in Delaware and Colorado seeking an order requiring the production of documents.

According to the SEC’s application and supporting papers, filed in federal court in Miami:

  • The SEC is investigating whether Woodbridge or others have violated, or are violating, the antifraud, broker-dealer and securities registration provisions of the federal securities laws in connection with Woodbridge’s receipt of over $1 billion of investor funds from thousands of investors nationwide.
  • The LLCs appear to have engaged in financial transactions with the Woodbridge Group of Companies, LLC, of Sherman Oaks, California, and may be owned and/or controlled by Woodbridge’s President, Robert Shapiro.
  • As part of the SEC’s ongoing investigation, on August 16 and 17, 2017, agency staff in the Miami Regional Office served each of the LLCs, through their registered agents, with subpoenas seeking the production of documents which identify corporate membership and financial account information.
  • The SEC’s application alleges that, although the LLCs were required to produce these documents by August 30 and 31, to date, they have failed to produce any documents.

The SEC’s application seeks an order from the federal district court compelling respondents to comply with the SEC’s subpoenas. This is the SEC’s second subpoena enforcement action in its continuing fact-finding investigation which, to date, has not concluded that any individual or entity has violated the federal securities laws.

Morgan Stanley Exits Broker Protocol

Morgan Stanley which saw its total advisor headcount drop slightly in the third quarter, says it will leave the Protocol for Broker Recruiting as part of its drive to make new investments in its advisors.

The protocol, created in 2004, limits litigation among member firms that sign on and agree to a set of rules regarding their advisors leaving and joining another company. In a statement released Monday, Morgan Stanley claimed the protocol had become “replete with opportunities for gamesmanship and loopholes” that undermined the rules. By exiting the agreement, the brokerage said it will be able to invest more in its advisors and drive growth.

But Morgan Stanley’s withdrawal from the agreement could mark a period of uncertainty for an industry already undergoing significant changes.

In addition to Morgan Stanley brokers, there will likely be broad implications for the industry if other Wall Street firms decide to exit as well.

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