investment fraud attorney

Adviser Michael Greenstone Accused of Making Unsuitable Investment Recommendations

April 10, 2021 | by Staff Attorney

Adviser Michael Greenstone (Greenstone), currently employed at Merrill, Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch), has been subject to at least nine customer complaints during the course of his career. Eight of the nine complaints against Greenstone allege unsuitability. In addition, Greenstone recently had nine customer complaints expunged in mass from his record using FINRA’s notoriously flawed expungement process. According to the PIABA Foundation, 1,078 expungement-only cases have been filed from 2015 to 2018. The study concluded that “The Finra [expungement] process is being systematically gamed, exploited and abused with one-sided hearings, manipulation of arbitrator selection, deletion of significant customer complaints and abusive (and possibly fraudulent) conduct to such an extent that it must be frozen until it can be repaired.”

According to a BrokerCheck report, there have been two complaints against Greenstone in the past two years alleging him of making unsuitable investment recommendations. The most recent allegation against Greenstone is pending and the customer is seeking $5 million in damages for unsuitable investment recommendations made from 2013 through 2019. Over the course of Greenstone’s career, several customers have accused him of making unsuitable investment recommendations. The aggregate settlement amount for his collective complaints is in excess of $240,000.00. Greenstones two largest reported settlements occurred in 2009 and in 1999. In July 2009, a customer alleged Greenstone placed her in a portfolio that was not suitable for her risk tolerance and age. This matter settled for approximately $114,000.00. Moreover, in July 1999, accused Greenstone of excessive and unsuitable trading. This matter settled for $106,000.00.

Advisor James G. Babineaux Accused of Making Unsuitable Investment Recommendations and Unauthorized Trading

April 10, 2021 | by Staff Attorney

Advisor James Babineaux (Babineaux), currently employed by Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) has been subject to at least two customer complaints during the course of his career. According to a BrokerCheck report the customer complaints concern unsuitable investment recommendations and unauthorized trading. In August 2018, a customer alleged Babineux engaged in unauthorized trading from July 26, 2018 through July 27, 2018. Additionally, that same year, another customer alleged that Babineux engaged in unsuitable investment recommendations and unauthorized trading from January 18, 2018 through July 27, 2018. Both matters settled for $1,322.21 and $2,853.93 respectively.

Unauthorized trading occurs when a broker sells securities without the prior consent from the investor. All brokers, who do not have discretionary authority to trade an account, are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). Under the NASD Conduct Rule 2510(b), a broker is prohibited from trading in a non-discretionary customer account without prior written authorization from the customer. Unauthorized trading is a type of investment fraud because the Securities Exchange Commission (SEC) has found that disclosures of trades being made are essential and material to an investor. Unauthorized trading is often a gateway violation to other securities violations including churning, unsuitable investments, and excessive use of margin.

Adviser Stuart Henley Sanctioned by Regulator Over Trading Activity

April 9, 2021 | by Staff Attorney

Adviser Stuart Henley, previously employed at Calton and Associates, Inc. (Calton), has been subject to a customer complaint, discharged for his handling of client accounts, and was suspended and fined by the Financial Industry Regulatory Authority (FINRA). Additionally, Henley has also been subject to a tax lien. His most recent customer complaint alleges churning, excessive trading, and unsuitable trading.

According to a BrokerCheck report, in September 2016, a customer alleged that Henley excessively traded their account to gain commission. The matter was settled for $800,000. Moreover, in March 2018, Morgan Stanley discharged Henley for engaging in unauthorized trading. Thereafter, FINRA sanctioned Henley and he consented to findings that he exercised discretion in an elderly customer’s account without receiving acceptance of the account as discretionary by his member firm. Further, FINRA stated that although Henley had been given express or implied authority to exercise discretion in the account, the customer did not provide written authorization for Henley to exercise discretion. Moreover, according to FINRA Henley provided inaccurate responses on annual compliance questionnaires submitted to the firm by falsely indicating that he not exercised discretion in any customer account.

Broker Audrey Croft Subject to Multiple Tax Liens and Several Customer Complaints

April 8, 2021 | by Staff Attorney

Broker Audrey Croft (Croft), currently employed at Ameriprise Financial Services, LLC (Ameriprise), has been subject to at least three customer complaints and an astonishing ten tax liens during the course of her career. Her customer complaints allege misrepresentation and unsuitable recommendation.

Croft’s BrokerCheck report shows a substantial amount of disclosures (13). Over the course of her career, Croft has disclosed ten tax liens totaling approximately $80,000.00. Most recently, Croft disclosed two tax liens in April and October 2019 totaling approximately $600.00. In February 2012, Croft disclosed her largest tax lien totaling approximately $64,000.00. Large tax liens on a broker’s CRD can be a red flag that the broker may be influenced to engage in high commission activity in order to satisfy personal debts. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.

Additionally, Croft has been alleged of making misrepresentations and unsuitable recommendations. In January 2019, a customer alleged Croft misrepresented the surrender charges and premium payments of an insurance policy. Additionally, in February 2009 a customer alleged Croft did not disclose the full details of a policy. The Broker Comment stated, “THE VUL POLICIES DID NOT APPEAR TO BE SUITABLE FOR THE CLIENTS’ INSURANCE NEEDS OR ABILITY TO SUSTAIN LARGE PAYMENTS AND THEY DID NOT APPEAR TO HAVE UNDERSTOOD THERE COULD BE SURRENDER CHARGES OR THE POLICIES COULD LAPSE.” This matter settled for approximately $37,000.00. Similarly, in September 2008, a customer alleged Croft of making unsuitable recommendations. This matter also settled in favor of the customer for approximately $44,000.00.

Broker Paul Porter Accused of Unauthorized Trading and Making Unsuitable Recommendations

April 7, 2021 | by Staff Attorney

Financial advisor Paul Porter, currently employed at Wells Fargo Clearing Services, LLC (Wells Fargo), has been subject to at least four customer complaints during the course of his career. His most recent customer complaints allege unauthorized trading and unsuitability. All of Porter’s complaints have occurred at Wells Fargo – his most recent place of employment. According to a BrokerCheck report, in 2018 Porter was accused of selling the client’s stock without her knowledge. This matter against him settled approximately $61,000.00. In 2012, another client accused porter of engaging in unauthorized trading. Then, in October 2008, another client accused porter of making unsuitable investments. This matter ultimately settled for $30,000.00.

Unauthorized trading occurs when a broker sells securities without the prior consent from the investor. All brokers, who do not have discretionary authority to trade an account, are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). Under the NASD Conduct Rule 2510(b), a broker is prohibited from trading in a non-discretionary customer account without prior written authorization from the customer. Unauthorized trading is a type of investment fraud because the Securities Exchange Commission (SEC) has found that disclosures of trades being made are essential and material to an investor. Unauthorized trading is often a gateway violation to other securities violations including churning, unsuitable investments, and excessive use of margin.

Broker Chadwick David Carrick Accused of Churning and Making Unsuitable Investments

April 4, 2021 | by Staff Attorney

Broker, Chadwick Carrick (Carrick), currently employed at The Jefferey Matthews Financial Group, LLC, has been subject to at least two customer complaints and one employment termination for cause over the course of his career. The two most recent occurring in 2018. According to a BrokerCheck report, the customer complaints include churning, allegations of unsuitable investments, unauthorized trading, and altering a journal form and a letter of authorization.

As of January 2018, there is a matter pending for allegations made by a client against Carrick for, among other things, churning and breach of fiduciary duty. Additionally, in September 2018, another client alleged that Carrick made unsuitable investments and engaged in unauthorized trading. This matter settled for $35,000. Moreover, in 2009, Carrick was discharged from Morgan Stanley after working there for five years for altering a journal form and a letter of authorization previously signed by the client.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typically 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.

Aegis Capital Advisor Thomas Duggan Has Suitability Customer Complaints

February 15, 2021 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Thomas Duggan (Duggan), currently employed by Aegis Capital Corp. (Aegis Capital) has been subject to at least three customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Duggan’s customer complaints alleges that Duggan recommended unsuitable investments in various investments and makes allegations including common law fraud, gross negligence, breach of contract, and elder abuse among other allegations of misconduct relating to the handling of their accounts.

In January 2020 a customer complained that Duggan violated the securities laws by alleging that Duggan made investments recommendations from June 2017 through August 2019 that were unsuitable and claimed common law fraud, gross negligence, breach of contract, and elder abuse. The claim alleges $1,079,155 in damages and is currently pending.

In January 2019 a customer complained that Duggan violated the securities laws by alleging that Duggan made investments recommendations from June 2017 through 2019 were in breach of his fiduciary duty, breach of contract, and misrepresentation. The claim alleges $80,000 in damages and is currently pending.

Gana Weinstein LLP Files Case on Behalf of Client of Advisor Kevin McCallum and Investment in Medley Capital Corporation

February 6, 2021 | by Staff Attorney

The law offices of Gana LLP recently filed a complaint before The Financial Industry Regulatory Authority (FINRA) on behalf of a investor against brokerage firm LPL Financial, LLC (LPL) involving the firm’s financial advisor, Kevin McCallum (McCallum) and his use of discretion to invest substantial sums in Medley Capital Corporation (MCC). The Claimant alleged that LPL failed to supervise Mr. McCallum’s discretionary trading in MCC, breached their fiduciary duty to Claimant, and failed to conduct due diligence on the investment. In addition, due to the massive amount of MCC that LPL allowed Mr. McCallum to purchase on behalf of all of his clients, the Claimant alleged that LPL had an undisclosed conflict of interest in the MCC transaction.

MCC is a low-priced thinly traded security and is a non-diversified closed end management investment company incorporated in Delaware that is a business development company (BDC). MCC commenced operations on January 20, 2011 with an investment objective to generate current income and capital appreciation by lending directly to privately held middle market companies. BDCs often enter into high risk lending arrangements.

In this case, MCC was even more risky than the average BDC due to several factors including: 1) the BDC was a thinly traded micro-cap issuer and a low-priced or penny stock; 2) MCC had suffered from years of ongoing losses and declines in its business portfolio; and 3) MCC’s management was accused and found to have engaged in an unethical bidding process. Due to the foregoing high risk factors, an investment in MCC was unsuitable for the vast majority of investors and certainly unsuitable in large concentrations for any investor.

Newbridge Securities Financial Advisor Kerri Jamison Has Multiple Customer Complaints

December 2, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Kerri Jamison (Jamison), currently employed by Newbridge Securities Corporation (Newbridge Securities) has been subject to at least four customer complaints during the course of her career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Jamison’s customer complaints alleges that Jamison recommended unsuitable investments in various investments including allegations involving energy securities and alternative investments among other allegations of misconduct relating to the handling of their accounts. Jamison also hold herself out as an estate planning attorney and real estate agent.

In April 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in negligent investment advice, breach of fiduciary duty, and breach of contract. The claim alleges $99,0000 in damages and is currently pending.

In February 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in unsuitable investment advice, breach of fiduciary duty, and material misrepresentations. The claim alleges $200,000 in damages and is currently pending.

In January 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in negligent investment advice, breach of fiduciary duty, and breach of contract. The claim alleges $99,000 in damages and is currently pending.

Advisor James Parrelly Accused of Churning and Sanctioned By Financial Regulator

August 10, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker James Parrelly (Parrelly), formerly associated with Investment Planners, Inc. (Investment Planners), has been subject to at least eight customer complaints, three regulatory complaints, and one employment termination for cause during his career. Several of those complaints against Parrelly concern allegations of high frequency trading activity also referred to as churning or excessive trading among other securities laws violations.

In June 2020, Parrelly was terminated by Investment Planners which alleged that at time of his resignation Parrelly was on heightened supervision and was engaging or had engaged in activities in violation of firm policies and/or FINRA rules, including: (1) use of personal email and texts to communicate with firm clients regarding their accounts; (2) failing to abide by terms of his heightened supervision plan (by continuing to use his personal email and texts and by not providing copies of his personal emails and texts to the firm); and (3) unauthorized trading. Parrelly then resigned in response to the anticipated commencement of an internal review into his activities.

In May 2020, FINRA suspended Parrelly finding that he consented to findings that he executed discretionary transactions in the securities account of a customer pursuant to the customer’s prior verbal authorization, but without written authorization from the customer or written approval from his member firm.

In April 2019 a customer complained that Parrelly violated the securities laws by alleging that Parrelly engaged in sales practice violations related to churning, negligence of duty and unsuitable investments. The claim is currently pending and seeks $500,000 in damages.