Articles Posted in Failure to Supervise

shutterstock_110076890-300x233According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA), broker David Reynolds (Reynolds) was barred in November 2017 from the financial industry for concerning allegations that he misappropriated customer funds and did not provide requested documents to FINRA. According to FINRA, Reynolds consented to the sanction and bar due to the fact that he refused to provide requested documents during a period of investigation.   At this time it is unclear the extent and nature of the appropriation that occurred.

Reynolds employer, Allstate Financial Services LLC (Allstate Financial), discharged Reynolds in October 2017 for Reynold’s failure to produce requested documents for the firm’s investigation of his alleged misappropriation of customer funds.

In addition, Reynolds has been subject to a customer complaint. In January 2018, a customer alleged that Reynolds did not return customer’s investment funds to the customer. The dispute settled at $66,654.25. Continue Reading

shutterstock_63635611-300x200The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge).  The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensnaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages.  In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Gary Forrest (Forrest) appears to be an agent for Woodbridge fraudulent note sales.  Forrest was formerly associated with American Portfolios Financial Services, Inc. (American Portfolios) out of the firm’s Flint, Michigan office location.  Thereafter, the State of Michigan Sanctioned Forrest finding that Forrest offered or sold twelve Woodbridge securities in the State of Michigan which were not federally covered, exempt from registration, or registered, in violation of the securities laws.

Federal securities laws and the FINRA rules require firms to monitor and supervise its employees, like Forrest, 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.  Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including recommending fraudulent investments.

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shutterstock_173864537-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Kimberly Kitts (Kitts), formerly associated with Royal Alliance Associates, Inc. (Royal Alliance) in Palmer, Massachusetts was terminated for cause by Royal Alliance concerning allegations that she engaged in misappropriation of funds.  Royal Alliance stated that it received correspondence from a client that Kitts had converted or misappropriated funds.  In addition, Kitts has been subject to four customer complaints.

In December 2017, FINRA barred Kitts from the securities industry when she failed to respond to requests for information concerning her activities.

At this time it is unclear the extent and nature of Kitts’ alleged misappropriation of funds, outside business activities, or private securities transactions.  Kitts disclosed a number of outside business activities including Marquis Consulting which is described as an investment related activity involved in business valuation.  Kitts also disclosed involvement as a trustee for an estate and also a volunteer for a non-profit company called Center for Coastal Studies.

The allegations concerning conversion are often accompanied by claims of engaging in outside business activities and private securities transactions – a practice known in the industry as “selling away” – a serious violation of the securities laws.

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shutterstock_174495761-300x200According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), broker Brent Van Lott (Lott) is being investigated for allegedly violating FINRA rules.  Lott has also been subject to three customer disputes.

In January 2016, a customer alleged Lott initiated trades without the customer’s written consent.  This dispute was settled for $50,000.

In March 2014, a customer alleged that a third party, acting in concert with Lott, forged the customer’s signature on contracts to acquire insurance policies.  This dispute is pending.

In another pending dispute from December 2013, a customer alleged that he never met Lott who was listed as the selling agent for his contracts.  The customer also alleged that Lott may be aware that the signatures on the contract delivery receipts are not those of the customer.

In October 2014, Lott was terminated from LPL Financial LLC for allegedly submitting equity indexed annuity applications without meeting or discussing them with clients as well as allegedly violating the firm’s document signature policy.

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shutterstock_177577832-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Brian Royster (Royster), formerly associated with HD Vest Investment Services (HD Vest), in November 2017, was barred from the financial industry by FINRA concerning allegations that he borrowed funds from clients.  FINRA found that Royster consented to the sanction and findings that he refused to comply with a FINRA request for documents related to its investigation into the circumstances surrounding his termination from HD Vest. FINRA found that HD Vest filed a Form U5 terminating Royster’s registration and stating that he had violated its policy regarding borrowing money from clients.

In addition to the bar Royster has been subject to two customer complaints concerning his variable annuity sales practices.

At this time it is unclear the extent and scope of Royster’s securities violations and outside business activites.  The firm’s allegations concern borrowing of funds could be considered a private securities transaction – a practice known in the industry as “selling away”.

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shutterstock_70999552-300x200The investment attorneys at Gana Weinstein LLP are investigating claims against broker Lyle Boudreaux (Boudreaux). According to BrokerCheck records, Boudreaux has received three customer complaints. Additionally, Boudreaux was terminated from Merrill Lynch in 2012.

In October 2017, a customer allegedly suffered losses in an advisory account due to an allegedly inappropriate investment.

In April 2017, a customer alleged breach of contract, violation of state securities laws, and negligence. The customer is seeking $100,000 in this pending dispute.

In January 2017, a customer allegedly suffered losses as a result of an exchange-traded fund position in an advisory account. This dispute settled for $80,000.

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shutterstock_185582-300x225According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Kenneth Jones (Jones), in May 2017, was terminated by his firm, Aegis Capital Corp. (Aeigs Capital) based on allegations that Jones was under investigation for failure to disclose outside business activities.  Subsequently, Jones was barred from the industry by FINRA after FINRA requested documents and information and he failed to provide the FINRA requested documents and information.  FINRA sought documents concerning the circumstances surrounding Jones’s termination from his member firm and of certain municipal bond trades that Jones performed while registered with the firm.

At this time it is unclear the extent and scope of Jones’ outside business activities or if they involve private securities transactions.  Jones’ CRD lists that he is engaged in insurance an outside business activity at the Mather Christian Church.  Often times undisclosed outside business activities can lead to private securities transactions.  The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

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shutterstock_164637593-300x199The investment lawyers of Gana Weinstein LLP are investigating regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Christopher Stephen Jorgensen (Jorgensen). Jorgensen allegedly refused to appear for on-the-record testimony requested by FINRA resulting in a ban from the securities industry.

In April 2017, Jorgensen was terminated from his position at Summit Brokerage Services after “the firm received a verbal complaint from a customer who alleged that [he] instructed her not to respond to a FINRA inquiry.”

In 2012, he was terminated from his position at Raymond James Financial Services “due to client complaint and settlement relating to unauthorized discretion.”

shutterstock_173849111-227x300The Financial Industry Regulatory Authority (FINRA) has ordered Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC to pay more than $3.4 million in restitution to customers for alleged unsuitable recommendations of volatility-linked exchange-traded products (ETPs) and supervisory failures, according to InvestmentNews.

FINRA found that between July 1, 2010, and May 1. 2012, “certain Wells Fargo reps recommended volatility-linked ETFs and ETNs without fully understanding their risks and features.”

According to FINRA, “certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions in the event of a market downturn. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.”

shutterstock_20354401-300x200The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against John P. Correnti (Correnti), working out of Cleveland, Ohio. Correnti allegedly failed to provide FINRA staff with information and documents related to an investigation into claims that Correnti engaged in undisclosed outside business activities. The failure to provide those documents and information to FINRA resulted in an automatic bar from the industry.

Correnti began his securities career in 2007. From 2007 until 2015, Correnti was associated with MVP Financial. He moved to Forest Securities in 2015 and was with them for less than a year. Finally, he moved to AXA Advisors where he was terminated in less than a year.

According to BrokerCheck records, Correnti was terminated by AXA Advisors in July 2016 “due to his apparent involvement in the possible market manipulation of a low price security.”