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shutterstock_112866430-300x199The law offices of Gana Weinstein LLP are currently investigating claims that advisor Timothy Johnson (Johnson) was discharged by his employer after being accused of diverting client funds.  According to BrokerCheck records, Johnson is formerly registered with The Financial Industry Regulatory Authority (FINRA) member firm MML Investors Services, LLC (MML).  In addition, Johnson disclosed one regulatory complaint. If you have been a victim of Johnson’s alleged misconduct our firm may be able to assist you in recovering funds.

In July 2019 MML discharged Johnson after alleging that he was terminated in connection with an investigation into the registered representative’s diversion of customer funds for his own use.

In September 2019 FINRA filed a regulatory action alleging that Johnson consented to the sanction and findings that he failed to provide documents and information requested by FINRA during the course of an investigation into the allegations made concerning his termination.  FINRA’s suspension will automatically become a bar if Johnson fails to respond.

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shutterstock_188874428-300x200The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Christopher Watkins (Watkins), currently employed by Silver Oak Securities, Incorporated (Silver Oak Securities) has been subject to at least one employment termination for cause and one customer complaint during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Watkins’ customer complaint alleges that Watkin recommended unsuitable investments among other allegations of misconduct relating to the handling of their accounts.

In November 2018 Watkins’ then employer, LPL Financial LLC (LPL Financial), discharged Watkins claiming that he facilitated the distribution of advisory fee monies to an unregistered person.

In August 2019 a customer complained that Watkins violated the securities laws by alleging violations of the securities laws including unsuitable investments involving REITs and energy investments. The claim alleges $115,000 in damages and is currently pending.

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shutterstock_120556300-300x300The law offices of Gana Weinstein LLP are currently investigating claims that advisor Michael Carter (Carter) was discharged by his employer after being accused of misappropriating client funds.  According to BrokerCheck records, Carter is formerly registered with The Financial Industry Regulatory Authority (FINRA) member firm Morgan Stanley.  In addition, Carter disclosed three customer complaints related to misappropriating funds. If you have been a victim of Carter’s alleged misconduct our firm may be able to assist you in recovering funds.

In July 2019 Morgan Stanley discharged Carter after alleging that he was terminated after allegations of misappropriation of funds occurred.

In September 2019 FINRA filed a regulatory action alleging that Carter consented to the sanction and findings that he failed to provide documents and information requested by FINRA during the course of an investigation after FINRA received a tip relating to allegations of misconduct made by Morgan Stanley.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling fraudulent securities sales through OBAs.  The sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws.  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.  Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

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shutterstock_21147109-300x234The investment fraud lawyers at Gana Weinstein LLP are investigating reports and accusations that health start-up uBiome routinely billed patients multiple times without consent and pressured doctors to approve tests.  According to a CNBC report in May 2019, the FBI raided the company’s offices its co-CEOs and founders Jessica Richman and Zac Apte went on administrative leave.  Our firm is analyzing private placement offerings by uBiome and believe that brokerage firms that sold this investment may have done so unsuitably and otherwise failed to conduct due diligence would have revealed problems with the company.

The company’s product, the SmartGut test, promised users to provide new insights into the bacterial makeup so that they can make improvements to their health. However, according to users and CNBC report when patients one one test uBiome sends multiple kits in the mail.  uBiome then charges insurance companies for these tests which are reported to be up to $2,970 per test. According to CNBC’s investigation uBiome was routinely billing patients multiple times without their consent causing insurance plans to start rejecting claims. In addition, uBiome has been accused of pressuring doctors to approve tests with minimal oversight.

It is possible that uBiome sought to over bill in order to increase the valuation of the company to investors.  uBiome was founded in 2012.  The company raised more than $100 million in venture funding and was valued at about $300 million at its most recent round of financing last September.  The company reported used used billable samples, rather than reimbursement rates, as the key growth metric for the company and routinely shared these figures with investors.

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shutterstock_130706948-300x199According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Peter Monson (Monson), currently associated with Van Clemens & Co. Incorporated (Van Clemens), has been subject to a regulatory investigation by FINRA.  The focus of the regulatory investigation is for potential violations of NASD Conduct Rule 2510(b) – Authorization and Acceptance of Account, FINRA Rules 2111 – Suitability, and 2010 – Standards of Commercial Honor and Principles of Trade.  This investigation appears to be related to a regulator action FINRA took against his firm Van Clemens concerning allegations of high frequency trading activity also referred to as churning or excessive trading.

FINRA alleged that Van Clemens, from June 1, 2015, through June 30, 2016, failed to establish and maintain a supervisory system reasonably designed to ensure that the firm reviewed transactions in customer accounts for potentially unsuitable excessive trading in order to achieve compliance with FINRA’s suitability rule.  FINRA found that the firm’s procedures did not directly address quantitative suitability and, as such, did not set forth a process or identify personnel responsible for reviewing customer accounts for potentially excessive trading.

Accordingly, FINRA determined that Van Clemens did not instruct its supervisors to review account activity for potential excessive trading nor did it train its supervisors to do so.  In addition, FINRA found that the firm lacked the necessary tools to even make a determination that excessive trading occurred such as reports for turnover rates or cost-to-equity ratios.  FINRA found that a registered representative referred to by the initials “PM”, believed to be Monson, recommended transactions to a firm customer that resulted in the customer’s account having an annualized turnover rate above 9.0 and an annualized cost-equity ratio of 32.3%.  FINRA found this activity was excessive, given the customer’s investment objectives and financial situation, and coincided with losses in the account of more than $100,000 during the 13-month period

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shutterstock_168478292-300x222Our firm represents multiple clients who have collectively lost millions in the sale of fraudulent GPB Capital Holdings (GPB Capital) related investments.  Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review these offerings in any significant detail.  Any serious due diligence would have revealed that GPB Capital was an investment fraud scheme.

Advisor Robert Smith (Smith), according to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), has been accused of selling GPB Capital.  Smith is currently registered with member firm Concorde Investment Services, LLC (Concorde Investment).  In addition, Smith disclosed four total customer complaints. If you have been a victim of Smith’s alleged misconduct our firm may be able to assist you in recovering funds.

Our firm’s investigation has found that brokerage firms failed to conduct due diligence and investigate multiple aspects of GPB Capital’s business including its senior management, fantastical business claims, and intra-fund lending practices.  For instance, with respect to GPB Capital’s senior management the company was founded by David Gentile (Gentile).  Had brokerage firms investigated GPB Capital’s senior manager it would have found that prior to founding GPB Capital, Gentile’s experience was as a CPA and company advisor with the accounting practice his family ran at Gentile Pismeny & Brengel, LLP (GP&B) in New York.  Nonetheless, GPB’s PPMs claimed expertise in these areas.   GPB Holdings II, LP, PPM, pg. 9 (Apr. 13, 2015) (“GPB’s senior management have a great deal of experience investing in the Automotive Retail, Managed IT Services and Life Sciences sectors.”).

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shutterstock_188383739-300x300The law offices of Gana Weinstein LLP are currently investigating claims that advisor Bobby Coburn (Coburn) engaged in undisclosed outside business activities (OBAs) and private securities transactions that were not approved by the brokerage firm.  Coburn, formerly registered with Securities America, Inc. (Securities America) was subject to a regulatory investigation and barred form the industry according to records kept by The Financial Industry Regulatory Authority (FINRA).  In addition, Coburn disclosed one employment termaintion for cause and two customer complaints.

In August 2019, FINRA alleged that Coburn accepted a bar from the financial industry, after consenting to sanctions and to the entry of findings that he refused to provide FINRA with requested information and documents. FINRA stated that Coburn’s member firm had terminated his association and stated on his Form U5 that he was involved in the solicitation of multiple clients to invest in an unapproved private securities transaction and engaged in the settlement of a related customer’s complaint without the firm’s knowledge or consent.

In March 2019 Securities America discharged Coburn and accused him of misconduct.

At this time it is unclear what the activity was that was the focus of FINRA’s investigation or the scope of Coburn’s activities.  Coburn’s publicly available BrokerCheck information discloses one OBA called Born to Retire which appears to be an insurance sales business.  It is unknown whether the activity investigated by FINRA involves any of these entities.

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shutterstock_76996033-300x200The law offices of Gana Weinstein LLP are currently investigating claims that advisor David Rockwell (Rockwell) was discharged by his employer after being accused of misappropriating client funds.  According to BrokerCheck records, Rockwell is formerly registered with The Financial Industry Regulatory Authority (FINRA) member firm Cetera Advisor Networks LLC (Cetera).  In addition, Rockwell disclosed two customer complaints related to misappropriating funds. If you have been a victim of Rockwell’s alleged misconduct our firm may be able to assist you in recovering funds.

Rockwell also discloses multiple criminal events, firm terminations, and one regulatory event.  In May 2013 Rockwell discloses a guilty plea for assault and battery along with operating while intoxicated.  Then in November 2018 Rockwell was accused of aggravated stalking.

In July 2015 the State of Florida accused Rockwell of making material false statement on the application for registration and denied his securities registration in the state.

In June 2019 a customer complained that Rockwell violated the securities laws by alleging that Rockwell misappropriated money from his investment accounts to invest in a private security related to a company owned by Rockwell. The claim alleges $500,000 in damages and settled for $215,000.

In July 2019 a customer complained that Rockwell violated the securities laws by alleging that Rockwell was involved in forgery and fraud regarding their accounts.  The claim alleges $700,000 in damages and is currently pending.

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shutterstock_32215765-300x200Recently, Steven Orr’s (Orr) attorney reached out to our firm to inform us our posts on Orr was inaccurate.  The post detailed that Orr had been subject to five customer complaints concerning allegations of securities law violations including unsuitable investments and misrepresentations among other claims.   Many of the complaints involve direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

Orr’s attorney has brought it to our attention that Orr has succeeded in using The Financial Industry Regulatory Authority (FINRA) flawed expungement process system to remove all five complaints from his BrokerCheck record.  As shown in Orr’s expungement “award”, Orr sued his own employer, H. Beck, Inc. (H. Beck) for damages of $1.00 due to the placement on his record of five customer complaints.  The “hearing” that took place appears to have been perfunctory at best.  The hearing concerning five customer complaints took only one hearing session to complete.  Usually there are two hearing sessions a day – meaning in this case five cases were probably decided in time for the arbitrator to catch lunch.  The total cost to Mr. Orr by FINRA to expunge five customer complaints from his record was $100 – excluding any fees he privately paid his counsel.

During this less than four hour hearing to decide five cases, H. Beck did not contest the request for expungement.  In FINRA expungement cases, brokerage firms like H. Beck profit from being sued by their own brokers to clean their records.  Of the five investors that complained concerning Orr’s investment recommendations – four of which resulted in documented settlements and compensation for the victims – none of the investors participated in the short hearing.  Only one investor submitted a letter to the arbitrator opposing expungement.  In sum, there was no meaningful opposition to Orr’s expungement request.

Without any significant opposition, the arbitrator found that there was “credible evidence presented demonstrated that Claimant made suitable recommendations to each of the Customers, fully and accurately representing the recommended investments including, but not limited to, any associated risks.”  Further, “public disclosure of the false and clearly erroneous allegations made by the Customers does not offer any public protection and has no regulatory value.”   In other words, the arbitrator found that Orr was the subject of lies by five of his clients – all of which astonishingly appear to have told the same or similar lie concerning Orr’s investment advice.  From the record, it appears the arbitrator made this determination without ever speaking to a single client.

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shutterstock_183525509-300x200The law offices of Gana Weinstein LLP are currently representing investors who were surprised to find out that the “bonds” that were recommended by their advisors have almost completely stopped paying interest while plummeting in value.  What many investors in this situation did not realize was that they were not sold bonds at all but instead complex structured products that go by a variety of names including steepener notes, adjustable rate market notes, spread linked notes, or structured notes.  Regulators have already stated that it is improper to sell these investments as a fixed income substitute or to compare them to bonds in terms of producing a revenue stream.  However, in our firm’s experience it appears that many brokers have been selling structured products as bond alternatives.

Structured products range in risk from benign to extreme.  However, most structured products produce inferior risk/return profiles than ordinary debt or equity instruments because the brokerage firms that issue these products seek to profit from the spread between the payment to investors and the amount of money the brokerage firm can make from the issuance.  When dealing with complex structured products most investors will lack the ability to understand the merits of investments nor are they appropriate for investors seeking a fixed or reliable income and have a desire for preservation of capital.

Some of the more complex structured products that our firm is seeing reference two different bond yield curves and sometimes one stock market index in order to compute if interest will be paid and how much.  A math degree is needed to even begin to comprehend the probabilities of payment on these kinds of instruments.  The biggest driving factor on payment – assuming the S&P 500 Index performs well – is the spread between interest rates on various treasuries.  The structured products often reference the spread between either the 2 year and the 5, 10, and 30 year treasury bonds for the most part.  The wider the spread the greater the profit and payment from the structured product.

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