Articles Tagged with Securities Fraud

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Bradley Birkenfeld, a former banker and employee of UBS, received a monetary award in the amount of $104 million from the Internal Revenue Service (“IRS”) for revealing information relating to UBS’s practice of advising and assisting its clients on how to shield their assets from the IRS – a clear violation of the Internal Revenue Code. Birkenfeld’s disclosure to the IRS ultimately led to a $780 million settlement between UBS and the federal government, as well as the enrollment of more than 35,000 American taxpayers in IRS amnesty programs, which will allow the repatriation of their offshore accounts. The IRS has stated that it expects to recover an estimated $5 billion as a result of Birkenfeld’s disclosure. According to a website maintained by the IRS’s Whistleblower Office, which was established as a result of the enactment of the Dodd-Frank Act in 2010, monetary awards will be provided to whistleblowers that provide specific and credible information about violations of the Internal Revenue Code. Anti-retaliation protections are also afforded to those who choose to disclaim such information. In a statement confirming the award, the IRS emphasized the importance of the whistleblower statue and acknowledged it as a “valuable tool to combat tax non-compliance.” At Lax & Neville LLP, we represent individuals, securities industry employees and securities industry companies seeking representation in employment matters and securities-related and commercial litigation. Please contact our team of attorneys for a consultation at (212) 696-1999.

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WJB Capital Group Inc. (“WJB Capital”), a privately-held broker-dealer, stopped trading in its New York, Boston, Denver and San Francisco offices when it ceased operations in January 2012. Recently, WJB Capital, and two of its executives, settled allegations raised by the Financial Industry Regulatory Authority, Inc. (“FINRA”) that the firm traded securities without adequate capital and hid its financial problems for the two years prior to its collapse. FINRA alleged that WJB Capital, as well as its Chief Executive Officer, Craig Rothfield, and Chief Financial Officer, Gregory Maleski, misrepresented the firm’s balance sheet, net-capital calculations and other records. Brad Bennett, FINRA’S chief of enforcement stated, “Both WJB’s CEO and CFO hid the precarious financial condition of the firm, misstating the FOCUS reports and net-capital calculations by as much as $4.4 million per month over a two-year period . . . The firm’s supervision and accounting were seriously flawed.” Specifically, WJB Capital misclassified items as allowable for net-capital purposes, including $1.6 million in funds from providing “non-deal roadshows” and third-party research, and a $1.5 million loan the firm received from its clearing firm. Moreover, WJB Capital improperly treated approximately $10 million in compensation that was to be paid to 28 employees as “forgivable loans.” The FINRA settlement expelled WJB Capital from membership, barred Mr. Rothfield from the securities industry and barred Mr. Maleski from acting in a principal capacity. Lax & Neville LLP can effectively assist investors, on both a regional and national level, that may have suffered losses as a result of their financial advisor’s misrepresentations and/or disregard for their investment interests. Please contact our team of securities fraud attorneys for a consultation at (212) 696-1999.

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