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May 9, 2011

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In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim, public customer Claimant Daversa (appearing pro se) alleged that Respondents Ken Cole and Merrill Lynch had failed to execute an order for the purchase of Boise, Inc. ("BZ") common stock and, thereafter, attempted to deceive him as to the circumstances of the order. Respondents generally denied the allegation, asserted various affirmative defenses, and sought an expungement of the matter from Respondent Cole's Central Registration Depository ("CRD") records. In the Matter of the FINRA Arbitration Between John J. Daversa, Claimant vs. Ken Cole and Merrill Lynch, Pierce, Fenner & Smith Inc., Respondents (FINRA Arbitration 10-02673, May 2, 2011).

The Two-Bit Order

Claimant alleged that Respondents failed to follow his order to buy 1,000 shares of BZ at $.25 or better. As a consequence of that failure, Claimant alleged that he would have sold BI at $6 a share, and requested both compensatory and punitive damages. In reply, Respondents alleged that they never failed to enter the Claimant's orders for BZ.

SIDE BAR: Given that Claimant didn't own the disputed BZ shares to sell, he presented the sole FINRA Arbitrator with quite a challenge.

  • First, if Claimant could have purchased BZ shares, what basis price should he be credited with? 

  • Second, assuming that the Arbitrator found that Respondents should have purchased BZ shares for Claimant, then at what sale price (and on what date) should Claimant be credited? 

READ FULL ARTICLE AT: Customer Says Merrill Lynch Nickel-and-Dimed a Two-Bit Order


The FINRA Arbitration and the No-Show Parties

Conference room at Mutah University 

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2010, Claimants alleged causes of action for unfair competition, breach of contract, conversion, and unjust enrichment; and sought the following:

  • permanent injunctive relief;
  • recovery of about $400,000 in damages;
  • interest;
  • punitive damages; and
  • attorneys' fees and costs.

Respondents generally denied the allegations and asserted various affirmative defenses.

Respondent Seaboard counterclaimed citing misappropriation of trade secrets, failure to supervise, and failure to disclose execution of contract. In the Matter of the Arbitration Between William Scholander LLC and William Scholander, Claimants vs. Seaboard Securities,Inc., Alex Velez, Edward Mostafa, Joseph Oleski, and Tim Robinson, Respondents (FINRA Arbitration 10-01263, April 26, 2011). 

No-Shows at the Hearing

Although the FINRA Arbitration Panel determined that Respondents Seaboard and Robinson were properly served with the Statement of Claim and had received due notice of an April 11, 2011 hearing, the two Respondents did not appear.  However, Respondents Velez, Mostafa, and Oleske made a Motion to Dismiss, to which Claimants consented and further conceded responsibility for the FINRA hearing session fees.

READ FULL ARTICLE AT: The FINRA Arbitration and the No-Show Parties


SEC Alleges Day Trader Con Man Scams Senior Citizens

my desk 

In a Securities and Exchange Commission ("SEC") Complaint filed on May 3, 2011, Robert C. Butler of Bermuda Dunes, California, is charged with violating the antifraud provisions of the federal securities laws. In addition to emergency relief, the Complaint seeks preliminary and permanent injunctions, disgorgement, prejudgment interest, and financial penalties.

The Court granted an an emergency asset freeze and ordered the halt of the alleged ongoing securities fraud. On May 11, 2011, the Court will hold a hearing on the SEC's motion for a preliminary injunction. Securities and Exchange Commission v. Robert C. Butler (United States District Court for the Central District of California, Case No. 11-03792, filed May 3, 2011); SEC Litigation Release No. 21959 /May 5, 2011

Senior Citizens

The SEC's Complaint alleges that from January 2009 to March 2011, Butler raised approximately $3.3 million from at least 17 investors who were mostly senior citizens living in or around Indio, California. It is alleged that many of Butler's leads were provided by his father-in-law, who lives in the same retirement community of the alleged victims.

READ THE FULL ARTICLE AT: SEC Alleges Day Trader Con Man Scams Senior Citizens


A Fishy Tale:Defendants Plead Guilty to Seafood Felonies.

Catfish Fishing Texas

An All-American, Good Old USA Catfish

Street Sweeper has diligently reported on the criminal trials of a number of piscatorial felons who have attempted to dupe the seafood lovin' public.  In continuing to boldly blaze this lonely crime-reporting underwater trail, Street Sweeper highlights yet another dastardly attempt to pull the old bait-and-switch on America's fish platters. 

Baiting the Hook

Karen L. Blyth, of Paradise Valley, Ariz. and David H. M. Phelps, of Scottsdale, AZ got themselves into one big fish-fry of a legal mess.  The two co-owned:  

  • Consolidated Seafood Enterprises Inc., located in Phoenix, AZ and
  • Reel Fish and Seafood, Inc., located in Pensacola, Fla.

Blyth served as the companies' President, Phelps served as Vice President.  John J. Popa managed and co-owned Reel Fish and served as Vice President.  

Ho Chi Mama?

Consolidated Seafood intended to purchase about 283,500 pounds of frozen fillets of farm-raised catfish from Vietnam that were knowingly imported into the U.S. and falsely declared as wild caught sole. This mislabeling was undertaking to avoid about $145,625  in anti-dumping duties that would be collected on the Vietnamese catfish.  Those duties have been in place since January 2003, following a Department of Commerce investigation found the foreign product was being sold below market prices and was injurying domestic catfish producers.  

READ THE FULL STORY AT: A Fishy Tale: Defendants Plead Guilty to Seafood Felonies.