Numerous securities brokers around the country have been selling Future Income Payments (FIP) to investors. This is a fraudulent investment. Investment firms have the duty to supervise their representatives to prevent the sale of such unapproved and fraudulent investments. Call 303-300-5022 for a free and confidential consultation.
Kari M. Bracy, formerly of NY Life, recently lost her securities license rather than cooperate in an investigation into her sale of unapproved investments in future income payment streams. These investments are alleged to be part of an elaborate Ponzi scheme. Our firm represents individuals in such suits and other Ponzi-type frauds.
On December 30, 2019, in connection with an investigation by the regulator FINRA, the Financial Industry Regulatory Authority, of Bracy’s sale of a Future Income Payments, LLC’s (“FIP”) structured cash flow investment comprised of pension streams, FINRA staff sent a request to Bracy directing her to appear for on-the-record testimony on January 16, 2020 pursuant to FINRA Rules. On December 31, 2019, Bracy acknowledged during a telephone call with FINRA staff that she received request letter and did not intend to appear for testimony.
There are very few reasons for a broker to sell unapproved securities other than for his own personal gain. Unapproved securities puts an investor at great risk because there is insufficient research to verify the financials of the company or determine whether the investment is even legitimate. Firms have a duty to monitor its brokers to confirm that the brokers are not selling unapproved investments.
Another broker selling inappropriate FIP is David Todd Phillips formerly of Moloney Securities and ProEquities. Between May 2017 and April 2018, Phillips solicited eight investors to purchase $876,636 in FIP. Respondent received a total of $33,184 in commissions in connection with his sales of FIP securities. FINRA gave Phillips a nine month suspension.
FINRA is the regulator that is charged by the Securities and Exchange Commission with the oversight of all securities brokers in the United States. The failure to cooperate led FINRA to bar Bracy from the securities industry.
FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational, which is the definition of a Ponzi scheme. When FIP ceased doing business in early 2018, investors were owed approximately $300 million.
This is not the first time Bracy has faced legal issues concerning these FIP investments. An investor initiated suit against NY Life concerning Bracy’s sale of these FIP investments in future income streams. The investor filed for arbitration with FINRA in July 2018.
That lawsuit, which alleged damages in the amount $142,000, settled for $80,000. The investor alleged that in December 2017 her investment in FIP, a private securities transaction, was misrepresented as a conservative and safe investment with a 7.5% annual return for ten (10) years. The FIP investment is not a conservative investment and was known to be highly aggressive and inappropriate for most, if not all, investors.
Likewise, Phillips has been the focus of multiple suits and was permitted to resign from Moloney.