Securities Lawyers Blog

Centaurus Advisor Conrad Corcoran Has Alternative Investment Complaints

April 22, 2021 | by Staff Attorney

Advisor Conrad Corcoran (Corcoran), currently employed by brokerage firm Centaurus Financial, Inc. has been subject to at least four customer complaints during the course of his career. According to a BrokerCheck report the two most recent customer complaints filed in 2020 concern alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In July 2020 a customer complained that Corcoran violated the securities laws by alleging that Corcoran made investments where the documentation for their investments contained incorrect personal information and that certain initials/signatures were not theirs. The claim involves a real estate security, alleged damages, and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors. Continue Reading

Broker William Campbell Accused of Making Unsuitable Recommendations

April 22, 2021 | by Staff Attorney

Broker William Campbell, currently employed at David Lerner Associates, Inc., (David Lerner) has been subject to at least four customer complaints during the course of his career. All four complaints allege Campbell of making unsuitable trading recommendations.

According to a BrokerCheck report, in August 2020, a customer made allegations against Campbell for unsuitability and sought approximately $90,000 in damages. Furthermore, in June 2019 another customer alleged that Campbell made unsuitable trading recommendations. The Claimant in this case is seeking damages in the amount of $120,000 and the claims involve a private placement.

Recently, our firm has received customer complaints concerning the sale of private placements being underwritten and offered by David Lerner in Energy 11 and Energy Resources 12 oil & gas partnerships. These funds have cut distributions and appear to have lost a substantial amount of investor capital.

Energy 11 was formed to enable investors to invest in oil and gas properties located onshore in the United States. The funds’ stated primary objectives are to acquire producing and non-producing oil and gas properties with development potential, and to enhance the value of those properties through drilling and other development activities. The fund plans to after five to seven years to engage in a liquidity transaction in which they will sell properties and distribute the net sales proceeds to investors, merge with another entity or list common units on a national securities exchange.

Investment Adviser Joseph Teifer Accused of Making Unsuitable Recommendations

April 21, 2021 | by Staff Attorney

Investment Adviser, Joseph Teifer, currently employed at Herbert J. Sims & Co. Inc., has been subject to at least two customer complaints during the course of his career. Both complaints have recently surfaced in the past year alleging Teifer making inappropriate investments.

According to a BrokerCheck report, in April 2019, two allegations were made against Teifer for making unsuitable recommendations. Both customer disputes were closed by the firm without action being taken. The first complaint alleges inappropriateness of investments and damages of approximately $19,000 for investments made during 2017-2019. Similarly, as second complaint surfaced for similar allegations alleging damages of approximately $60,000. These complaints appear to relate to mutual fund recommendations made through David Lerner.

Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. 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.

Broker John Marshall Accused of Making Unsuitable Recommendations

April 21, 2021 | by Staff Attorney

Broker, John Marshall, currently employed at Centaurus Financial. Inc., (Centaurus) has been subject to at least two customer complaints during the course of his career. Both complaints allege Marshall of making unsuitable trading recommendations.

According to a BrokerCheck report, in September 2019, a customer alleged that from 2004 through 2019 misrepresented unsuitable investments and breached his fiduciary duty. The matter settled for $55,000. Moreover, in December 2018, another customer alleged that Marshall recommended unsuitable investments throughout the period of November 2012 through August 2018. The matter is still pending and the customer is seeking damages in the amount of approximately $336.000.

Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. 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.

Broker Jonathan Ebel Accused of Excessive Trading and Subject to Tax Liens

April 13, 2021 | by Staff Attorney

Jonathan Ebel, a financial advisor currently employed at Network 1 Financial Securities, Inc. (Network 1 Financial), has been subject to at least one customer complaint during the course of his career. Additionally, Ebel has also been subject to a tax lien. His most recent customer complaint alleges excessive trading and unsuitable trading. According to a BrokerCheck report, in May 2018, Ebel was accused of excessively trading his client’s account and purchasing unsuitable investments. This matter settled for $30,000.00. Additionally, in December 2016, Ebel disclosed a tax lien in the amount of $31,962.00.

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.

Adviser Ezri Shechter Alleged of Churning and Sanctioned by Regulator

April 13, 2021 | by Staff Attorney

Adviser, Ezri Shechter, was previously employed at Spencer-Winston Securities Corporation. (Spencer-Winston), has been subject to at least five customer complaints over the course of his career with these claims alleging violations such as suitability, churning, and unauthorized trading. Most notably, Ezri has been suspended and fined by the Financial Industry Regulatory Authority (FINRA) for unauthorized trading activity.

Since May 2000 through December 2010, there have been three customer complaints against Shechter which cumulatively settled for over $170,000. Additionally, there have also been allegations of unauthorized trading against Shechter. The most recent unauthorized trading allegation occurred in June 2020 and sought damages of $25,000. Shechter’s unauthorized trading activity resulted in a three-month suspension and $12,500 fine by FINRA.

According to a BrokerCheck report, Shechter consented to “[causing] multiple customers of his member firm to sign blank or incomplete discretionary trading forms that he then copied and used to complete discretionary trading forms. The findings stated that Shechter submitted the forms with the photocopied signatures to his firm as originals, causing the firm to make and keep inaccurate books and records regarding the granting of discretionary authority.”

Advisor Felipe Henao Accused of Unsuitable VIX Trading

April 12, 2021 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Felipe Henao Vargas (Henao), currently employed by Insigneo Securities, LLC (Insigneo Securities), has been accused by a customer of investing in a VIX related investment. ETFs that invest in the VIX are part of a group of group of ETFs considered to be leveraged exchanged traded funds or Non-Traditional ETFs.

As a background, Non-Traditional ETFs behave drastically different and have different risk qualities from traditional ETFs. While traditional ETFs seek to mirror an index or benchmark, Non-Traditional ETFs use a combination of derivatives instruments and debt to multiply returns on underlining assets, often attempting to generate 2 to 3 times the return of the underlining asset class. Non-Traditional ETFs are also used to earn the inverse result of the return of the benchmark.

However, the risks of holding Non-Traditional ETFs go beyond merely multiplying the return on the index. Instead, Non-Traditional ETFs are generally designed to be used only for short term trading as opposed to traditional ETFs. The use of leverage employed by these funds causes their long-term values to be dramatically different than the underlying benchmark over long periods of time. For example, between December 1, 2008, and April 30, 2009, the Dow Jones U.S. Oil & Gas Index gained two percent while the ProShares Ultra Oil and Gas, a fund seeking to deliver twice the index’s daily return fell six percent. In another example, the ProShares UltraShort Oil and Gas, seeks to deliver twice the inverse of the index’s daily return fell by 26 percent over the same period.

Center Street Advisor Roy Williams Has Investment Complaints

April 12, 2021 | by Staff Attorney

Advisor Roy Williams (Williams), currently employed by brokerage firm Center Street Securities, Inc. (Center Street Securities) but doing business as Williams Financial Group has been subject to at least seven customer complaints and one regulatory action during the course of his career. According to a BrokerCheck report the most recent customer complaints since 2017 concern alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In May 2020a customer complained that Williams violated the securities laws by alleging that Williams made unsuitable investments and failed to conduct due diligence on the investments made. The claim involves alternative investments, alleges $100,000 damages, and is currently pending.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.

Several studies have confirmed that Non-traded REITs underperform publicly traded REITs with some showing that Non-Traded REITs cannot even beat safe benchmarks, like U.S. treasury bonds. Brokers selling these products must disclose to the investor that non-traded REITs provide lower investment returns than treasuries while being high risk and illiquid – but almost never do. Because investors are not compensated with additional return in exchange for higher risk and illiquidity, these kinds of alternative investment products are rarely, if ever, appropriate for investors. Continue Reading

Advisor Marshall Isaacson Barred By Regulator After Suitability Investigation

April 11, 2021 | by Staff Attorney

Advisor Marshall Isaacson (Isaacson), formally employed by brokerage firms National Securities Corporation (National Securities) and Newbridge Securities Corporation (Newbridge) has been subject to at least six customer complaints, one regulatory sanction, and three tax liens or judgements during the course of his career. According to a BrokerCheck report the customer complaints concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

One of the products referenced in the disclosures is GPB Capital. On February 4, 2021 the U.S. Securities and Exchange Commission (SEC), the U.S. Attorney’s Office for the Eastern District of New York (DOJ), and seven states filed separate simultaneous actions against GPB Capital and other defendants connected to the firm accusing it of being a Ponzi-like scheme. In a press release the SEC stated that it “charged three individuals and their affiliated entities with running a Ponzi-like scheme that raised over $1.7 billion…”

As reported by Bloomberg “If proved, [GPB] would be one of the largest such schemes to target individual investors since the massive frauds of Bernard Madoff and Robert Allen Stanford came to light.” The DOJ indicted David Gentile, the founder of GPB, Jeffry Schneider, the owner and CEO of Ascendant Capital LLC, and Jeffrey Lash, a former managing partner of GPB relating to the fraud. If convicted, the defendants each face up to 20 years’ imprisonment.[1]

Advisor Peter Ianace Barred By Regulator Over Undisclosed Business Dealings – Investor Recovery Options

April 11, 2021 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Peter Ianace (Ianace) has been accused by The Financial Industry Regulatory Authority (FINRA) of engaging in undisclosed outside business activities (OBAs). According to records kept by FINRA Ianace was employed by Wells Fargo Clearing Services, LLC (Wells Fargo) and Merrill Lynch Pierce, Fenner & Smith Incorporated (Merrill Lynch) through June 2020 when he abruptly resigned when he refused to cooperate in FINRA’s investigation over these allegations. If you have been a victim of Ianace’s alleged misconduct our firm may be able to assist you in recovering funds.

According to FINRA, the regulatory barred Ianace after he consented to the sanction that he refused to provide documents and information requested by FINRA in connection with its investigation into his potential failure to disclose outside business activities (OBAs) to his member firm.

Ianace’s BrokerCheck also reveals four customer complaints. The most recent allegation in January 2021 alleges unsuitable investment recommendations and misrepresentations from February 2013 until December 2019 and claims $18 million in damages. The claim is currently pending.