The law offices of Gana Weinstein LLP are currently investigating claims that advisor Allen Hershberg (Hershberg) has been accused by his former employer of engaging in business investment activities including undisclosed outside business activities (OBAs) and private securities transactions. According to records kept by The Financial Industry Regulatory Authority (FINRA), Hershberg was employed by Morgan Stanley Smith Barney, LLC (Morgan Stanley) at the time of the activity. If you have been a victim of Hershberg’s alleged misconduct our firm may be able to assist you in recovering funds.
Hershberg has been subject to regulatory action by FINRA and termination by Morgan Stanley. In July 2022, Morgan Stanley alleged that it had “Concerns Investigation regarding the representative’s unapproved outside real estate investments, as well as concerns regarding the representative’s recommendation of those same outside real estate investments to Firm clients and others, including through limited liability companies the representative created.”
With respect to the FINRA action, the regulator found that Hershberg consented to sanctions and findings that that he failed to provide documents and information requested by FINRA in connection with its investigation into allegations made in a Form U5 filed by his member firm. FINRA found that Morgan Stanley permitted Hershberg to resign due to concerns regarding his unapproved outside real estate investments, as well as concerns regarding his recommendation of those same outside real estate investments to firm clients and others, including through limited liability companies he created.
A review of Hershberg’s disclosed OBAs includes Ian Media Networks Advisor, CPV, LLC, Oak Park, Worthfield 1 LLC, and Dorchester 1 LLC. In addition, Hershberg discloses that he engages in rental property ownership and it appears that some of these entities are related to that business.
Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling 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.
However, federal securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Hershberg entered the securities industry in 1983. From February 2005 through July 2022 Hershberg was registered with Morgan Stanley out of the firm’s Beverly Hills, California branch office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein 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.