Transamerica Entities to Pay $97M to Investors Over Flawed Investment Models

Originally published by P. Clarkson Collins Jr..

Four Transamerica entities have settled US Securities and Exchange Charges accusing them of misconduct involving investment models that were faulty. Collectively, the entities, AEGON USA Investment Management LLC (AUIM), its affiliated brokerage firm Transamerica Capital Inc., as well as its affiliated investment advisers Transamerica Financial Advisors Inc. and Transamerica Asset Management Inc., will pay $97M to retail investors that were impacted. However, the entities are not denying or admitting to the regulator’s findings.

The SEC’s order contends that investors placed billions of dollars into mutual funds and strategies that employed flawed investment models that AUIM developed without knowing they had errors. AUIM’s affiliated investment advisers and broker-dealer touted the quantitative models upon which their investment decisions would be made. Between July ’11 and June ’15, they purportedly offered, sold, and oversaw 15 mutual funds, variable annuity investment portfolios, variable life insurance investment portfolios, mutual funds, and separately management account strategies that were based on these quantitative models.

Unfortunately, contends the SEC’s order, the models were created by one junior analyst who was inexperienced. Not only that, but there were a number of errors in the models, which failed to operate as promised. Moreover, said the regulator, the Transamerica entities launched the Strategies and Products without first verifying that the models worked as they were meant to and without disclosing any risks identified with the models.

The regulator said that when AUIM and Trans America Asset Management discovered the mistakes in 2013, they didn’t tell investors about them. They did, however stop using the investment models—some without disclosing that the models were no longer in use.

Addressing the flawed quantitative investment models, SEC Enforcement Division Asset Management United Co-Chief Dabney O’Riordan said that not only were investors misled about the models employed to manage their investments but that this exposed them to “significant hidden risks” and denied them the ability to be “informed” when making investment choices.

$97M Will Go To Retail Investors
As part of the SEC settlement, the Transamerica entities will pay almost $53.5M in disgorgement, $8M in interest, plus a $36.3M penalty. A fair fund will be set up so that all of the money will go to investors that were affected.

Meantime, the SEC also filed orders accusing AUIM’s ex-Global Chief Investment Officer Bradley Berman and ex-New Initiatives Director Kevin Giles of playing a part in causing the Transamerica entities’ violations. For example, Berman purportedly knew of the risks involved for investment models that didn’t work as they were meant to, and he allegedly did not take the steps necessary to inform them that the models were accurate. He and Giles are accused of playing a part in the firm’s compliance failures related to the model’s development and use.

Both have settled the regulators’ charges even though they are not denying or admitting to the findings. Giles will pay $25K in penalties and Berman will pay $65K. The money will also go to investors.

Investor Fraud Lawyers
If you are someone who invested through any of these Transamerica entities and may have been impacted by one of their flawed investment models, you may have grounds for financial recovery. Our investor lawyers at Shepherd Smith Edwards and Kantas, LTD LLP represent investors throughout the US. Contact our investment fraud law firm today.

The SEC Order in the Transamerica Case (PDF)

More Blog Posts:
401K Lawsuits: MassMutual Settles with Employees for $31M and Transamerica Settles for $3.8M, June 27, 2016

Unregistered Brokers Are Charged With Selling More Than $243M of Woodbridge Securities to Over 1600 Investors, August 24, 2018

GPB Capital Holdings Stops Selling Private Placements in GPB Funds to Investors, August 20, 2018

The post Transamerica Entities to Pay $97M to Investors Over Flawed Investment Models appeared first on Securities Fraud Attorney.

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Associates: Top 10 Questions to Ask Your Supervising Attorney

Originally published by Cordell Parvin.

Knowing that many first-year lawyers will be starting with their law firms in September, I want to share questions  I suggest associates ask the more senior lawyers who give them assignments.

 At the Beginning of a Project:

1. When would you like me to complete this project?
2. Describe what you have been told to do and then ask: Have I missed anything?
3. How many hours are you expecting me to take on the project?
4. Are there any materials I should review?
5. Would it be helpful if I gave you my initial findings/conclusions?

At the end of the project:

1. Have I covered all the areas you wanted?
2. Is there anything more I can do to help you with this?
3. Can you give me some feedback on my work?
4. Are there any areas where you think I could improve?
5. Can I help you with any other projects now?

The post Associates: Top 10 Questions to Ask Your Supervising Attorney appeared first on Cordell Parvin Blog.

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Is Being Named a Joint Managing Conservator the Same Thing as Having Joint Custody?

Originally published by Guest and Gray Law Firm.

A question we get asked frequently is whether a client or potential client can get “joint custody” of a child. The term “joint custody” is NOT a term that has legal significance under the Texas Family Code. The language in the family code that does use the word “joint” is “joint managing conservator,” and that doesn’t mean what most people think it means. This blog post is going to explain the difference in the two terms.

What is Joint Custody?

            In Texas, we don’t use the term “custody” to describe the time parents spend with their children. We use “possession and access” to describe what most people think of when they use the word custody. When people use the term joint custody they typically are speaking of a 50/50 possession and access schedule. For more information on what that may look like and what that means look here: What Does 50/50 Custody Mean. The long and short of that blog post is that there is no 50/50 possession and access schedule listed in the Texas Family Code and that there are multiple “equal” possession schedules that courts use.
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Federal Judge Grants Preliminary Injunction Against Sharing 3-D Gun Files

Originally published by Dan M. Clark.

 

U.S. District Judge Robert Lasnik of the Western District of Washington granted a preliminary injunction on Monday from a coalition of state attorneys general who are suing the Trump administration over 3-D printed guns.
      

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First Amendment attorney wins Texas freedom of information award

Originally published by Amy Starnes.

Laura Lee Prather

The Freedom of Information Foundation of Texas will award its prestigious James Madison Award to First Amendment attorney Laura Lee Prather.

Prather is a board member and past-president of the FOI Foundation of Texas. She is a partner in the litigation section of Haynes and Boone LLP in Austin.

The James Madison Award has been given out since 1987 to journalists, politicians, academics, attorneys and vigilant citizens to celebrate outstanding achievements or distinction in the areas of open government, freedom of information and other related First Amendment issues.

“Laura is fearless and tireless in championing open government. No one in Texas has done more for the cause than her during the past decade,” Chris Cobler, editor and publisher of the Victoria Advocate and president of the FOI Foundation of Texas, said in a news release.

According to the release, Prather led the drafting and negotiations for the Texas reporters’ privilege law, the anti-SLAPP statute, and the Defamation Mitigation Act. Read the full release here.

Prather will receive the award on September 21 at the John Henry Faulk Awards Luncheon during the foundation’s annual conference. The State Bar of Texas’ Texas Gavel Awards, honoring journalism that deepens public understanding of the legal system, will also be awarded at the luncheon.

For more information on the Texas Gavel Awards, winner bios, and their stories, go to texasbar.com/gavelawards.

For more information on FOIFT and its Bernard and Audre Rapoport State Conference visit www.foift.org.

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Remix

Originally published by Brittany Morris-Easley.

Nearly a decade after the surge in popularity of peer to peer sharing services Lawrence Lessig wrote Remix. Remix explored the issues surrounding the crackdown on such platforms by asking questions such as what are we willing to sacrifice to win a “war” on piracy. What if adaptation could sidestep a “war” altogether? The law is notoriously slow to adapt to new technology. But art and creator based content is growing and changing at an increasing pace. Lessig uses Remix to explore where the war on piracy is failing new and exciting art forms that he labels collateral damage.

The challenge to strike a balance between protecting the artist and encourage innovation is not new. The book relates the anecdote of John Phillip Sousa (of Stars and Stripes Forever fame) lobbying Congress to stop what he called a form of piracy. The new technology of the phonograph had not yet been accounted for in the copyright law and while he was able to control the reproduction and public performances of his work, the new technology stymied his ability to profit from his work. Sousa also worried about the decline of the amateur and the consolidation of artistic influence to the elites.  Ironically the protection he lobbied for has morphed into a consolidation of that artistic influence and potentially the loss of the connection to the art form. By remixing and playing with our cultural influences can we can strengthen our connection to these art forms? Copyright law is so powerful in the United States, that it literally shapes the cultural landscape.
 

Remix continues the discussion with a wonderful discussion on regulation and overregulation, criminalization and what the purpose of copyright should be in our legal-cultural framework. Lessig concludes with a call to reform copyright law in ways that accommodate changes in how we interact with creative expression.

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Motorcycles may soon get their own AI safety technology

Originally published by On behalf of Abraham, Watkins, Nichols, Sorrels, Agosto & Aziz.

Anyone who rides will tell you motorcycles offer a freedom that is simply unmatched by cars. The mix of speed and maneuverability is a combination that is too tempting to pass up for many Texans.

The tradeoff to the thrill of driving motorcycles are the risks to riders’ safety. Motorcycles have a smaller profile, which means lower visibility to other drivers. Their two wheels have less traction and stability in bad weather conditions. Further, motorcycles offer almost no protection from the road itself and lack the protective cage and frame found in cars, trucks and other automobiles.

According to the U.S. National Highway Traffic Safety Administration, motorcycle fatalities occurred 28 times more frequently per mile traveled than car fatalities in 2016. But many motorcycle riders will tell you the thrill of the ride is well worth the risks.

Fortunately, computer technology designed to make cars safer could soon be found in motorcycles as well.

Several companies are adapting artificial intelligence (AI) safety technology to fit bikes. In the next couple of years, motorcycles may feature technologies like:

· Automatic braking – One of the earliest examples of AI safety in cars, automatic braking must be more subtle motorcycles. Because braking too fast can have catastrophic effects for a biker, the system needs to feature gradual speed changes to keep riders safe.

· Adaptive cruise control – Already a standard in many automobiles, adaptive cruise control automatically speeds up or slows down to avoid collisions while staying on cruise control.

· Driver alert system – These systems signal when a car has swerved into the driving lane or a sensor has picked up an object in the road. For motorcycles, the sensors may not need to be as complex because bikes are usually operating in good weather and road conditions. This makes them potentially cheaper and more reliable.

These are just a few of the examples of technology that may soon be available to motorcyclists to help them stay safe on the road.

Unfortunately, regardless of how safe you drive on your motorcycle, there’s no accounting for other drivers. If you’ve been in an accident while on your bike, talk to us. Call today at 713-587-9668 for a free consultation. You may be entitled to reimbursement for damages or medical expenses.

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