Cohmad Securities, a small New York-based brokerage firm, is at the center of a lawsuit related to its ties to Bernard Madoff, the infamous Ponzi schemer.
The firm was founded by Maurice "Marty" Chaisson and Stanley Chais, who were friends with Madoff and had invested with him. Madoff's scheme was uncovered in 2008, resulting in billions of dollars in losses for investors.
Cohmad Securities was accused of failing to properly supervise its brokers, who were allegedly using the firm as a front to sell fake investments in Madoff's fund. The lawsuit claims that the firm's owners knew about Madoff's scheme but chose to ignore it.
Madoff Fraud Charges
Cohmad Securities was a key player in the Madoff Ponzi scheme, and the firm's involvement is still being felt today. The SEC charged Cohmad with secretly funneling billions of dollars to Madoff's firm.
Cohmad's CEO, Maurice Cohn, and his daughter, Marcia Cohn, were also charged with fraud. The civil complaint alleged that they ignored numerous red flags in dealing with Madoff.
Cohmad officials, including Robert Jaffe, a vice president, would often coax investors to invest with Madoff at country clubs in New Jersey and Palm Beach, Florida. Jaffe brought in over 150 accounts and withdrew at least $150 million from Madoff funds.
The SEC alleged that Madoff hid Cohmad's dealings from regulators and concealed the fees he paid to the firm. Cohmad received over $100 million in fees, and Madoff owned 15% of the firm.
The SEC's complaint accused Cohmad of functioning as Madoff's "in-house marketing arm", letting him manufacture an air of prestige around his firm.
Expand your knowledge: Sec Rule 15c2-11 Otc Expert Market
Cohmad Securities Penalties
The SEC charged Cohmad Securities with secretly funneling billions of dollars to Bernard Madoff's Ponzi scheme, and the firm's CEO and president, Maurice Cohn and Marcia Cohn, were also charged with fraud.
Cohmad received more than $100 million in fees from Madoff, and the firm's vice president, Robert Jaffe, was accused of participating in the fraud and luring more than $1 billion to Madoff.
Cohmad's lawyer, Clifford Thau, could not be reached for comment, but Jaffe's lawyers called the complaint "unfair" and "baseless".
A hearing officer found Cohmad guilty of eight state securities violations and revoked the firm's Massachusetts brokerage license, fining it $200,000.
Cohmad was accused of engaging in unethical or dishonest conduct and making false or misleading statements to investigators.
The firm's former Boston chief, Robert Jaffe, was accused of ordering a secretary to shred customers' monthly statements, which is a violation of state laws requiring stockbrokers to keep records for three years.
Jaffe was also accused of failing to provide investigators with a computer spreadsheet, which is also a violation of state laws.
A lawsuit targets Jaffe, the Cohns, and Cohmad, alleging that the firm's income was mostly from Madoff kickbacks.
The lawsuit claims that Cohmad and Jaffe recommended the investment in Madoff's firm despite knowing it was fictitious and that Cohmad and Jaffe received kickbacks for steering investors to Madoff's firm.
Cohmad earned nearly $100 million in referral fees from 1996 to 2008, and Jaffe was receiving undisclosed kickbacks for directing investments to Madoff's firm, which constituted a conflict of interest between Jaffe and the investors.
A fresh viewpoint: Can I Sue My Employer for Hipaa Violation
Lawsuit Against Cohmad
Cohmad Securities Corporation is facing a lawsuit from a couple who lost $2.8 million in retirement savings invested with Bernard Madoff's firm.
The lawsuit accuses Cohmad and its brokers, including Robert Jaffe and Maurice and Marcia Cohn, of breach of duties and omitting information pertinent to the investment.
Cohmad earned nearly $100 million in referral fees from 1996 to 2008, with 90% of their revenue coming from kickbacks.
The lawsuit alleges that Jaffe received undisclosed kickbacks for directing investments to Madoff's firm, creating a conflict of interest between Jaffe and the investors.
Jaffe is accused of recommending the investment in Madoff's firm despite knowing its fictitious nature, and of claiming that Madoff's firm used a conservative strategy to manage accounts.
The Rosenbergs' lawyer, George Hinkley Jr., warns that any investor in Cohmad should seek counsel before the two-year anniversary of the Madoff fraud scheme discovery, as Cohmad may claim that further claims are barred by the statute of limitations.
Targets Jaffe, Cohns
Robert Jaffe, a part-time Palm Beach resident, is the target of a lawsuit from the Rosenbergs, who claim they lost $2.8 million in retirement savings invested with Bernard Madoff's firm.
Jaffe is accused of recommending the investment in Madoff's firm despite knowing it was fictitious, and of receiving kickbacks in return for steering investors to Madoff's firm.
Cohmad Securities Corporation, Jaffe's brokerage firm, earned nearly $100 million in referral fees from 1996 to 2008, according to the suit.
The Rosenbergs contend that Jaffe's firm, Cohmad, and its brokers, including Maurice and Marcia Cohn, omitted information pertinent to the investment and breached their duties.
Jaffe allegedly solicited investors at country clubs in Palm Beach and Massachusetts, and received undisclosed kickbacks for directing investments to Madoff's firm.
The lawsuit seeks damages equal to three times the amount of the lost investment, which the Rosenbergs claim is $2.8 million.
Jaffe's spokesman Elliot Sloane wouldn't comment on the lawsuit, but has said that Jaffe did nothing wrong.
Related reading: Turtle Beach Stock Quote
V. Galvin et al
V. Galvin et al filed a lawsuit against Cohmad, claiming the firm was a "sham" and a "front" for Bernard Madoff's Ponzi scheme.
The lawsuit alleged that Cohmad, along with other defendants, was a key player in the Madoff scheme, helping to funnel money into the scheme and conceal its true nature.
Galvin's investigation found that Cohmad's employees were not registered with the Financial Industry Regulatory Authority (FINRA).
Cohmad's employees, including Maurice J. Cohn and Marcia Cohn, were accused of helping Madoff's scheme by not reporting suspicious activity.
Suggestion: Lended a Helping Hand
Featured Images: pexels.com
