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The authors have taken the rules and regulations of the brokerage industry and put them in laymen’s terms. -- Professor William C. Tyson, The Wharton School & The Law School of the University of Pennsylvania

The Book, Brokerage Fraud is a must read for all compliance professionals and brokerage firm's compliance and legal departments.

This book is a timely wake up call to the brokerage industry to clean up its ways. -- George D. Mullen, Vice President UBS PaineWebber

Tracy Stoneman and Douglas Schulz certainly know what Wall Street brokerage firms wish you didn't. -- Evan Cooper, Editor-in-Chief, On Wall Street, Co-Author

This book can save you thousands of dollars and loads of headaches! -- Jordan E. Goodman, author of Everyone's Money Book

Had "Brokerage Fraud" been available to my wife and I eight years ago, it may very well have saved us the fortune we lost to a mercenary industry that promotes itself as caring and responsible, when in fact it cares mostly for itself.

"Brokerage Fraud" is frank and friendly, organized, comprehensive, easy to digest -- and quite unique, too, because the distinguished authors tell all about an autonomous, all-powerful institution that routinely sheers the uninitiated."

". . . I am an attorney and an investor. Yet, I must say that each chapter of 'Brokerage Fraud' brought new information and insight that is invaluable . ."

Use the link below to get details, qualifications, certifications, licenses, as well as regulatory actions and violations or complaints on Brokers & Brokerage Firms.

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North American Ssecurities Administrators Association

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Search for an Investment Adviser Firm and Individual Investment Representative currently registered with the SEC and State Securities Regulators

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Abnormal Earnings Valuation Model (residual income) Abnormal earnings valuation model is a method for determining a company's worth that is based on book value and earnings

Adjusted Book Value Adjusted book value is a measure of a company's valuation after liabilities, including off-balance sheet liabilities, and assets are adjusted to reflect true fair market value

Agent A term used by states to describe a person licensed to engage in the securities business in that state.

Arbitration An alternative dispute resolution process. Instead of a judge and jury, a panel of one to three impartial people hears the evidence and reaches a decision regarding your claim for losses. Securities arbitration is a common way to resolve disputes.

Churning excessive trading by a broker in a client's account largely to generate commissions. Churning is an illegal and unethical practice that violates SEC rules and securities laws

Clearing Firm An organization affiliated with exchanges that completes securities transactions by taking care of validation, delivery and settlement. Clearing firms help ensure that executed trades are settled efficiently and within a specified time period. Also called a clearing corporation.

Central Registration Depository (CRD®) An online computerized system in which FINRA maintains the employment, qualification and disciplinary histories of more than 650,000 securities industry professionals and more than 5,000 brokerage firms that deal with the public.

CRD Number A unique number assigned to brokers and brokerage firms as part of their registration application with FINRA.

Dealer Any person or company in the business of buying and selling securities for his or her own account, through a broker or otherwise. (See broker)

Disclosure Event An occurrence required to be reported as part of the FINRA licensing and registration process for brokers and brokerage firms. These events include criminal, regulatory and civil actions, as well as certain financial incidents.

Fiduciary Duties  Duty of loyalty and the duty of care. These duties vary with different types of relationships between fiduciaries and their counter-parties ('entrustors').

Front Running (NASD IM-2110-3) Registered representative may not trade on a stock or option on it while possessing material non-public information.

Modified Book Value An asset-based method of determining how much a business is worth by adjusting the value of its assets and liabilities according to their fair market value.

Negligent misstatement Representation of fact, which is carelessly made, and is relied on by another party to their disadvantage or has caused damages to the claimant.

Regulation D: Private Placements

When a company wants to save time and money, it can sell securities in a nonpublic offering, known as a private placement.

Provided the following conditions are met, a private placement is exempted by SEC Regulation D:

  • The buyer is a sophisticated investor, experienced enough to evaluate the risks involved.
  • The buyer has access to the same financial information that is normally included in a prospectus.
  • The buyer does not intend to make a quick sale.
  • The issue is sold to no more than 35 non-accredited investors. Note that this 35-person exception does not apply to accredited investors. Accredited investors are defined as financial institutions, private business development companies, and large, tax-exempt plans; an accredited investor can also be a director, officer or partner of the issuing company, or anyone with a net worth of $1 million, or an individual whose gross income for each of the past two years was $200,000 or more (or $300,000 jointly with a spouse) and who has reasonable expectations of meeting that income level the following year.

Relative Valuation Model
A relative valuation model is a business valuation method that compares a firm's value to that of its competitors to determine the firm's financial worth.

 Securities Arbitration Claims (Typical)

  • Churning
  • Unsuitability
  • Negligence
  • Misappropriation
  • Failure to Diversify
  • Unauthorized Trading
  • Material Misrepresentation or Omission
  • Breach of Fiduciary Duty

Securities Expert  Witness

An unbiased person engaged to give an opinion based on experience, knowledge, and expertise. He provides independent, impartial, and unbiased evidence to the court or arbitration panel.                     

Self Dealing 

A situation in which a fiduciary acts in his own best interest in a transaction rather than in the best interest of his clients.


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