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shutterstock_92699377-300x285According to BrokerCheck records financial advisor Michael Pepe (Pepe), currently employed by Ameriprise Financial Services, Inc. (Ameriprise) has been subject to six customer complaints, one criminal matter, and one tax lien in his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Pepe concern allegations of unsuitable investments.

In August 2018, Pepe disclosed a tax lien of $34,439.  This information has been found to be material for investors to have because an advisor who cannot manage his own finances is a relevant factor for investors to consider.  In addition, a broker in financial distress may be influenced to recommend high commission products or strategies.

In May 2018 a customer filed a complaint alleging that Pepe engaged in unauthorized trading in unsuitable securities. It was further alleged that had he been suitably invested, he would have generated a profit of approximately $750,000 under a well-managed portfolio damages analysis.  The complaint is currently pending.

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shutterstock_120556300-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Karl Foust (Foust), formerly associated with H.D. Vest Investment Services (HD Vest) in Boca Raton, Florida has been accused by at least seven clients of selling unsuitable investments in Wimbledon Health Partners leading to substantial investor losses..

In July 2018 a customer filed a complaint alleging that Foust recommended Wimbledon Health Partners LLC that was not suitable and were misrepresented to her. The customer alleged $100,000 in damages.  The claim is currently pending.

In March 2018 another customer filed a complaint alleging that Wimbledon Health Partners LLC, were not suitable and were misrepresented to him.  The customer alleged $95,000 in damages.  The claim is currently pending.

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shutterstock_185582-300x225According to BrokerCheck records former financial advisor Charles Doraine (Doraine), currently employed by Next Financial Group, Inc. (Next Financial) has been subject to at least six customer complaints and one regulatory action.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Doraine concern allegations of unsuitable investments in Puerto Rican bonds and mutual funds.

In September 2018 a customer filed a complaint alleging that during the period 2012 through 2015, Doraine excessively traded bonds and mutual funds and recommended an unsuitable concentration in Puerto Rican bonds causing $10,000,000 in damages.  The complaint is currently pending

In May 2018 a customer filed a complaint alleging that from October 2012 through 2017, Doraine made in and out mutual fund trades that were unsuitable for a low risk tolerance account.  The customer alleged $2,500,000 in damages and the claim is currently pending.

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shutterstock_168326705-199x300According to BrokerCheck records former financial advisor Charles Bloom (Bloom), formerly employed by Chelsea Financial Services (Chelsea Financial) has been subject to at least two customer complaints.  In addition, Bloom has been subject to three regulatory actions, one employment termination for cause, and two financial disclosures including a bankruptcy filing.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Bloom concern allegations of unsuitable investments.

In July 2018 Bloom consented to a FINRA sanction and findings that he refused to appear for testimony in connection with an investigation into allegations that Bloom engaged in an unsuitable pattern of trading in at least three customer accounts.  Bloom accepted a bar from the securities industry.

In November 2017 a customer filed a complaint alleging that Bloom engaged in unsuitable recommendations and made misrepresentation with regard to a REIT purchase.  The customer alleged $99,326 and the claim is currently pending.

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shutterstock_176283941-300x200The securities lawyers of Gana Weinstein LLP are investigating investor losses in VII Peaks Co-Optivist Income BDC II (Peaks Co-Optivist) a business development company (BDC).  According to the company’s SEC filings, Peaks Co-Optivist invests in discounted corporate debt, senior secured term loan and equity-linked debt securities of public and private companies that trade on the secondary loan market for institutional investors and provide distributions to investors.  Peaks Co-Optivist seeks to actively work with the target company’s management to restructure the underlying securities and improve the liquidity position of the target company’s balance sheet.  This strategy targets company management on average 24 months prior to a redemption event to create an opportunity for growth in the investments.

Because Peaks Co-Optivist in non-traded product there are no market pricing for the value of the securities.  The company issued shares at a price of $10.15 per share but due to fees and commissions of $1.015 only $9.135 was used to make investments.  Currently, the company claims that its shares are worth $8.75 per share.  However, this is highly unlikely given that the company has financed most of its distributions through returning investor capital and currently has a distribution rate of only 2.23% annualized.

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shutterstock_103079882-300x239According to BrokerCheck records financial advisor Marc Steinberg (Steinberg), currently employed by Westpark Capital, Inc. (Westpark Capital) has been subject to five customer complaints in his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Steinberg concern allegations of unsuitable investments.

In April 2018, a customer complained that Steinberg engaged in unsuitable investments causing $39,796 in damages.  The claim was denied by the firm.

In November 2016, a customer complained that Steinberg engaged in unsuitable investments from December 2012 until February 2015 causing $16,833 in damages.  The claim was denied by the firm.

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shutterstock_123928846-300x268According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Jon Pariser (Pariser), formerly associated with Independent Financial Group, LLC (Independent Financial) in Pacific Grove, California was sanctioned by FINRA resulting in a bar from the industry.  In October 2018 Pariser consented to the FINRA sanction and an entry of findings that he failed to provide FINRA with requested documents and information related to allegations that he referred some of his customers to an individual who was not registered and who may have recommended or sold potentially unsuitable securities to them.

Previously, in June 2014 Pariser was discharged by SWS Financial Services, Inc. for potentially wrongfully exercising discretion in client accounts.  In addition, Pariser has had three customer complaints.

At this time it is unclear the nature or scope of the alleged outside business activities (OBAs) and private securities transactions.  Pariser’s public disclosures list no OBA activity.

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shutterstock_174352538-300x198According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Gary Pevey (Pevey), formerly associated with Mutual Securities, Inc. (Mutual Securities) in Sacramento, California has been accused by his former firm over unapproved securities.  In addition, Pevey has one customer complaint on his record.

In February 2018 Mutual Securities terminated Pevey stating that he violated policies concerning private securities transactions.

Thereafter in September 2018 a customer filed a complaint alleging that Pevey engaged in high-risk and fraudulent investments and inadequate supervision causing $171,000 in damages.  The claim is currently pending.

At this time it is unclear the nature or scope of the alleged outside business activities (OBAs) and private securities transactions.  Pevey’s public disclosures state that the activity was conducted through his Registered Investment Advisory (RIA) firm Wealth Design Group.  It is unknown the nature of the transactions from public filings.

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shutterstock_46993942-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor John Schmidt (Schmidt), formerly associated with Wells Fargo Advisors Financial Network, LLC (Wells Fargo) in Dayton, Ohio has been accused by the Securities and Exchange Commission (SEC) of misappropriating over $1.16 million from at least seven clients.

In September 2018 the SEC filed a complaint alleging that for the past 35 years Schmidt has been a registered representative in the brokerage industry.  The SEC found that from at least 2003 through 2017, Schmidt betrayed his customers’ trust by perpetrating a classic fraudulent scheme, acting without customer authorization, and repeatedly selling securities belonging to some of his brokerage customers and secretly transferring the sale proceeds to cover shortfalls in the accounts of other customers.   The SEC alleged that Schmidt misappropriated over $1.16 million from accounts belonging to seven customers and transferred that cash to at least ten other customers whose accounts were experiencing shortfalls.  In addition, the commission found that rather than tell those customers the truth about their dwindling funds, Schmidt sent them fake account statements and falsely assured the customers that their investment returns could fund their withdrawals without jeopardizing their principal. Most of Schmidt’s customers were elderly retirees with little to no financial expertise and several of Schmidt’s victims were suffering from Alzheimer’s disease or other forms of dementia.  The SEC claimed that at least five of Schmidt’s victims passed away during the course of his fraud. Further, Schmidt’s allegedly profited from the scheme and received over $230,000 in commissions from customers who were either the source of, or recipient of, misappropriated funds.

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shutterstock_157018310-300x200According to BrokerCheck records former financial advisor James Kujawski (Kujawski), currently employed by Ameriprise Financial Services, Inc. (Ameriprise Financial) has been subject to at least seven customer complaints, one employment termination for cause, and one regulatory action.  According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Kujawski concern allegations of unsuitable investments and material misrepresentations concerning investments being recommended.

In February 2018 Kujawski was terminated by UBS Financial Services, Inc. (UBS) after the firm claimed that Kujawski’s continued failure to disclose some of his outside business activities/outside business investments was in violation of firm policies.

Thereafter, in August 2018 FINRA brought a regulatory action against Kujawski which Kujawski consented to the findings that he engaged in a private securities transaction by facilitating the repurchase of a call option between two individuals, neither of whom were customers at his member firm.  FINRA found that Kujawski’s participation included the repurchase of the option by introducing a commercial lender to participate in the transaction, attending meetings with the parties, reviewing draft sale contracts and providing comments, and accepting $73,444.90 in compensation for his participation. Kujawski was suspended for four months and agreed to pay financial penalties.

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