Articles Tagged with Investment Attorney

shutterstock_103476707Our investment attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against financial advisor Victor Lambert (Lambert) currently not registered with any firm, alleging unsuitable investments among other claims.  According to brokercheck records Lambert has been subject to seven customer complaints and two judgement/liens.

In January 2016 Lambert disclosed a tax lien of $46,706.  A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

In October 2015 a customer filed a complaint alleging that Lambert purchased two equities that were inappropriate for the client causing damages.  The claim was resolved for $85,000.

Continue Reading

shutterstock_94127350The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker James Noto (Noto). According to BrokerCheck records Noto is subject to at least one regulatory sanction and seven customer complaints. The customer complaints against Noto allege securities law violations that claim unsuitable investments and lack of due diligence among other claims.  Many of the more recent claims involve the sale of Variable Annuity products.

The most recent complaint was filed in March 2016, and alleged that James Noto, while employed at Summit Brokerage Services (Summit), recommended an unsuitable investment in a variable annuity.  In 2015, another customer filed a complaint alleging that Noto made unsuitable investment recommendations.

Variable annuities are complex financial and insurance products.  In fact, recently the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing.  Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you.  The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen.  The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

However, the benefits of variable annuities are often outweighed by the terms of the contract that include exorbitant expenses such as surrender charges, mortality and expense charges, management fees, market-related risks, and rider costs.

Continue Reading

shutterstock_19498822In a recent Wall Street Journal Article, it was reported that UBS Group AG sold $1.5 billion of contingent convertible (CoCo) bonds.  According to the article, UBS received about $8 billion of orders for the sale.  These bonds will pay an interest rate of 6.875% and last summer UBS sold $1.6 billion of CoCos at the same rate.  The UBS deal was the first CoCo sale since mid-January due to price drops in February due to worries that Deutsche Bank AG might have missed an interest payment on one of its CoCo bonds.

What exactly are CoCo’s and why should investors be concerned.  CoCos have been a growing type of debt issued by mostly European issuers.  European lenders have sold around 100 billion in CoCos since 2012.

CoCos bear many of the same traits as hybrid preferred securities that were popular right up to the financial crisis.  Like hybrid preferred stock, CoCo’s act as hybrid debt/equity investments.  When times are good they behave like debt providing no growth to investors and only interest payments.  When times get rough these investments behave like equity because investors are unlikely to see returns in the event of bankruptcy.  As a result these investments tend to crash in lock step with a company’s equity.

CoCos are one way that some banks are issuing investments in order to acquire extra capital.  Because of their hybrid structure CoCos can be counted toward a bank’s capital requirements mandated by regulators without raising share capital.  From a bank’s standpoint CoCos are attractive because the cost of capital on the firm’s balance sheet is lower than it is for a share capital increase.  CoCo bonds also have a capital trigger where if the trigger is reached, the CoCo is automatically converted into equity or the nominal value is written off.  The trigger on CoCos can also be activated by a regulatory authority if the bank’s existence threatened.

Continue Reading

shutterstock_140321293The securities lawyers of Gana LLP are investigating a customer complaint filed with The Financial Industry Regulatory Authority (FINRA) against broker Nathaniel Clay (Clay).  According to BrokerCheck records Clay has been subject to at least six customer complaint and one employment termination for cause.  The customer complaints against Clay allege securities law violations that including unsuitable investments, churning, excessive trading, and unauthorized trading among other claims.

The most recent complaint was filed in December 2015 alleging $513,218 in damage stemming from unauthorized trading, negligence, breach of fiduciary duty, and misrepresentations.  The complaint is still pending.

Clay’s former brokerage firm National Securities Corporation (National Securities) was recently featured in a study ranking brokerage firms by incidents of misconduct.  According to a study conducted by the Securities Litigation and Consulting Group entitled “How Widespread and Predictable is Stock Broker Misconduct?” the incidents of investor harm at National Securities is extraordinarily high.  The study ranked National Securities as the third worst brokerage firm finding that brokers at the firm had over a 31% misconduct rate.  The study stated that investors should stay away from National Securities “Given their coworkers’ disclosure record as of 2014, 83.7% of the brokers at these six firms would be in the highest risk quintile as defined in the FINRA study and should be avoided by investors. The BrokerCheck reports for most of the brokers at these six firms should prominently display a skull and crossbones warning.”

Continue Reading

shutterstock_183011084The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Edward Barger (Barger).  According to BrokerCheck records Barger has been subject to at least four customer complaints, two regulatory action, and one criminal matter.  The customer complaints against Barger allege securities law violations that including unsuitable investments among other claims.

In April 2016, a customer complained that Barger made unsuitable investments in his account from August 2011 until December 2015.  In May 2015, another customer alleged that Barger made unsuitable investments in the account from February 2011 until December 2014 causing damages of $300,000.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Continue Reading

shutterstock_176284139The securities fraud lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Jesse Griffin (Griffin). According to BrokerCheck records Griffin has been the subject of at least six customer complaints three of which have been filed since 2014. The customer complaints against Griffin allege a number of securities law violations including that the broker made unsuitable investments, fraud, breach of fiduciary duty, and negligence among other claims.

The most recent customer complaint filed in June 2015 alleged unsuitable investments from November 2006 through September 2008. The claim was settled.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Continue Reading

shutterstock_85873471The securities fraud lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Bruce Stark (Stark). According to BrokerCheck records Stark has been the subject of at least three customer complaints and one judgement or lien. The customer complaints against Stark allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

The most recent complaint was filed in August 2015 and alleged that the customer’s account was traded without authority, unsuitable, and churned causing $534,150 in damages. The complaint is currently pending. In addition, in March 2009 a tax lien of $37,875 was filed. Substantial judgements and liens on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

Continue Reading

shutterstock_177792281The securities fraud lawyers of Gana LLP are investigating a regulatory complaint (Disciplinary No. 2015043159501) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Kevin Murphy (Murphy). FINRA alleged that in or about November 2013, Murphy sold $1.2 million of shares and warrants in a private placement to four individuals and one limited partnership without his firm’s knowledge.

According to FINRA, in August and September, 2013, Murphy made a $1.2 million investment in a private placement for which TGP Securities, Inc. (TGP), Murphy’s brokerage firm, was providing brokerage services. In return for his investment, FINRA found that Murphy received two stock certificates totaling 600,000 Series F shares and two warrants exercisable for 300,000 common shares. On November 29, 2013, FINRA alleged that Murphy resold the Series F shares and the warrants to four individuals and one limited partnership for $1.2 million without the permission of TGP.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

Continue Reading

shutterstock_128856874The securities fraud lawyers of Gana LLP are investigating a regulatory complaint (Disciplinary No. 1013038289101) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Nixon (Nixon). FINRA alleged that Nixon failed to provide prior written notice to Bridge Capital Associates, Inc. (Bridge Capital), his then employing brokerage firm, before selling $600,000 of convertible promissory notes – practice referred to as “selling away” in the industry. FINRA found that Nixon provided detailed written notice to Bridge Capital only after he had already disseminated investor presentations to approximately 40 potential investors and completed sales to three accredited investor. In addition, FINRA alleged that Nixon provided investor presentations that contained exaggerated and misleading statements about the issuer of the promissory notes, by the initials BRT, and failed to include a meaningful risk disclosure.

Nixon entered the securities industry in 1987. Nixon was registered with Bridge Capital Associates since December 2007 until September 2013, when Bridge Capital discharged Nixon in connection with the conduct concerning FINRA’s allegations. Shortly after Bridge Capital terminated his registrations Nixon became registered with a different firm, Source Capital Group, Inc. out of the firm’s Westport, Connecticut office location.

FINRA found that the promissory notes were offered without a PPM and that instead the notes were offered through an investor PowerPoint presentation that Nixon prepared in conjunction with the issuer. FINRA found that the investor presentation was devoid of any cautionary language specific to the promissory notes and that the prospects for notes were presented in very optimistic terms and stated financial projections at aggressive multiples without sources or support for such representations. FINRA found these representations to violate its communications rules.

Continue Reading

shutterstock_43547368The securities fraud lawyers of Gana LLP are investigating the regulatory action filed (Disciplinary Action No. 2014043025701) by The Financial Industry Regulatory Authority’s (FINRA) against broker Carlos Benavidez Jr (Benavidez). According to the allegations, between January 2013 and January 2015, Benavidez exercised discretion in 80 customer accounts without obtaining prior written authorization from the customers while with brokerage firm Waddell & Reed.

FINRA found that beginning in or about December 2009, Benavidez and two other representatives registered with Waddell & Reed, formed RBR Group and shared a customer base for their securities business. Between January 2013 and January 2015, FINRA found that Benavidez exercised discretion in effecting hundreds of securities transactions in approximately 80 customer accounts without obtaining written authorization from his customers or Waddell & Reed’s approval.

Also according to FINRA, Benavidez tried to hide the evidence of unauthorized trading by falsifying documents. FINRA found that on or about September 9, 2014, Benavidez and another individual with the firm backdated approximately 26 customer notes that had been created in the firm’s computer program in order to falsely reflect that Benavidez or another member of the RBR Group had conversed with those customers on before the trades were effected when, in fact, it was not until six days later when Benavidez or another individual talked with the 26 customers about the trades that had been effected in their accounts.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Continue Reading