The investment lawyers of Gana LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Ameriprise Financial Services, Inc. (Ameriprise) broker William Marshall (Marshall) (FINRA No. 2012033291204) and his supervisor John J. Kolinofsky, Jr. (Kolinofsky) working out of the firm’s Plano, Texas office. According to the FINRA action against Marshall, from January 6, 2011 through May 2, 2012, Marshall participated in the sale of $1.72 million of privately issued preferred stock of BioChemics, Inc. (BioChemics) to his immediate firm supervisor, Kolinofsky, his Complex Manager, two other Ameriprise registered representatives, and several firm customers, all without having provided prior written notice to Ameriprise.
According to FINRA, Marshall received compensation for facilitating the private securities transactions in the form of common stock purchase warrants from BioChemics. Marshall is also alleged to serve as a member of BioChemics’ Scientific Advisory Board during his association with Ameriprise and received common stock purchase warrants from BioChemics as compensation. Moreover, FINRA found that Marshall used an unapproved personal e-mail account to communicate with firm customers about investing in BioChemics. FINRA also alleged that Marshall distributed sales literature prepared by BioChemics to investors that failed to disclose his business and personal financial interest in BioChemics and otherwise contained misleading, exaggerated, and/or unwarranted statements and inadequate risk disclosures.
BioChemics was later found to be an investment fraud. On December 14, 2012, the U.S. Securities and Exchange Commission (SEC) filed a civil enforcement action in the United States District Court for the District of Massachusetts against BioChemics. In March 2015, the District Court enjoined BioChemics from violating the antifraud provisions of the federal securities laws and ordered BioChemics to pay over $17 million in disgorgement of ill-gotten gains and prejudgment interest and $750,000 as a civil penalty.
The Commission’s Complaint alleged that from 2009 until mid-2012, BioChemics and others named raised at least $9,000,000 from approximately 70 investors by misrepresenting: (a) that BioChemics had ongoing research and development collaborations with pharmaceutical companies when this was not true; (b) that BioChemics had two drugs currently under FDA review, when this was not true; (c) the status and results of clinical trials for BioChemics’ drugs; and (d) that certain purported valuations of BioChemics at between $500 million and $2 billion were independent and reliable when this was not true.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.