Tag Archives: financial advisor fraud

Kari Bracy – Future Income Payments (FIP)

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.  Call 1-866-817-0201 for a free and confidential consultation.

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.

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.  

 

 

 

Losses with Stuart Pearl of Ameriprise

If you have been the victim of unauthorized securities trades or been recommended unsuitable securities by your financial advisor, please call 1-866-817-0201.  We are interested to investors suffering losses with Stuart Pearl.  Mr. Pearl has recently entered into a regulatory settlement where he neither admits or denies the following:

investingstockphoto 1On May 14, 2015, Stuart Pearl used discretion to liquidate positions in six different securities with a total principal amount of approximately $20,000, on behalf of a senior investor. Although the investor had authorized Pearl to execute these liquidations in discussions that took place prior to May 14, 2015, Pearl failed to speak with the investor again on May 14, 2015, to confirm the investor’s authorization to make these sales.

Pearl’s use of discretion as described was without prior written authorization from the investor, and without prior written acceptance of the account as discretionary from his firm, Ameriprise. By virtue of the foregoing, Pearl violated NASD and FINRA rules.

In June 2010, two other customers of Pearl, who were retired and both in their 70s, opened a joint brokerage account with him at Ameriprise. The new account documentation provided that securities could be purchased on margin, a process or lending money to buy securities that involves a great deal of risk.

At the time they opened their account, the investors had an investment objective of “growth and income,” a risk tolerance of”conservative/moderate” and limited experience with trading on margin. They also had a combined annual income of $30,000, a liquid net worth of$500,000 and investable funds of $400,000.

Between September 2011 and March 2012, Pearl recommended that the investors purchase four securities valued at approximately $122,000 on margin. Prior to making those purchases, the customers bad no margin debt balance in their account. As a result of those investments, the investors experienced a significant increase in their margin debt balances in relation to their available funds and their account was subject to seven margin calls during the relevant period, where the parties must deposit funds into their account to pay the outstanding loan or risk liquidation of their portfolio.  The recommendation to purchase such investments utilizing margin was unsuitable and in violation of FINRA and NASD rules prohibiting unsuitable recommendations.

Ameriprise had a duty to oversee the transactions of Pearl and should be responsible for the lack of supervision given Pearl.

More information on this matter can be found in the October 10, 2017 issue of InvestmentNews.