Failure to Supervise

First Allied Securities Has Been Accused of Selling Advanced Equities Securities By Misleading Investors

August 23, 2013 | by Staff Attorney

The brokerage firm Advanced Equities, Inc. (Advanced Equities) specialized in so called late-stage private equity private placements. Advanced Equities had been particularly active in the clean-tech space. Through First Allied Securities, Inc. (First Allied), Advanced Equities private placements including Advanced Equities GreenTech Investments, LLC, AEI 2007 Venture Investments, LLC, AEI 2010 Cleantech Venture, LLC, and AEI Fisker Investments, LLC, were sold to hundreds of investors. Customers have alleged that First Allied misrepresented the Advanced Equities private placements to investors and failed to conduct adequate due diligence concerning the offerings.

In 2007, First Allied was acquired by Advanced Equities Financial Corp. (AEF) and became a sister corporation to Advanced Equities. At the time of the merger, Advanced Equities employed about 80 registered representatives while First Allied employed over 1,000 brokers. Utilizing First Allied’s customer and broker resources, AEI vastly expanded marketing of private placements to First Allied customers.

Sales materials developed for Advanced Equities and presented to investors touted the private placements as “late stage equities” or companies that were 12-36 months from going public through an initial public offering (IPO). The private placements were also represented as providing “higher near-term investment returns than the public equity markets” while possessing “greater short-term liquidity and lower risk profiles.”

James Glover Settles Charges with FINRA Accepting a Ban From the Securities Industry

August 21, 2013 | by Staff Attorney

James R. Glover reached a settlement with the Financial Industry Regulatory Authority (FINRA) resulting in a permanent bar from the securities industry. Glover failed to appear and participate in FINRA’s investigation of his securities activities.

The FINRA complaint alleges that while Glover was employed by Signator Investors, Inc. (Signator), Glover misappropriated customer funds and sold unregistered securities products in violation of the securities laws.

From 1998 through May 2012, Glover was associated with Signtor. During this time, it has been alleged that Glover sold interests in private placements, limited liability companies, and real estate related ventures. Glover’s CRD lists that Glover is also employed by GW Financial Group, Inc. In addition to FINRA’s sanctions against Glover, at least 25 customer complaints have been filed against Signator for the firm’s failure to supervise Glover’s business activities. Nearly all of the customer complaints accuse Glover of selling fraudulent real estate related securities and of mishandling the customer’s accounts.

The SEC Accused Blake Richards of Stealing $2 Million from Clients

August 20, 2013 | by Staff Attorney

Blake Richards (Richards), a former Georgia representative of LPL Financial (LPL), was charged by the Securities and Exchange Commission (SEC) with defrauding investors and misappropriating $2 million dollars from at least seven clients. According to the complaint filed by the SEC in the Northern District Court of Georgia, Richards directed clients to write checks from retirement accounts or from life insurance policy proceeds in the name of investment businesses he owned, such as “Blake Richards Investments” and “BMO Investments.” However, according to the SEC, his clients’ money was not used for legitimate investing purposes as Richards siphoned off millions for his own personal use.

Richards was a registered representative of LPL from 2009 through May 2013 out of his company, Lanier Wealth Management LLC. According to the SEC’s complaint, Richards used a variety of devices to deceive investors and gain their trust. For instance, Richards is alleged to have created fictitious statements on LPL letterhead in order to continue and conceal his scheme. Richards also gave investors business cards with false professional designations, such as “AAMS”, standing for Accredited Asset Management Specialist, when Richards was not accredited. Finally, Richards even delivered pain medication during a snowstorm to one client’s husband who had been diagnosed with terminal pancreatic cancer in order to gain the client’s trust.

The SEC complaint seeks an order to disgorge Richard’s ill-gotten gains and to free his assets pending further investigation.

Oppenheimer Fined $ 1.4 Million by FINRA For Alleged Improper Sale of Penny Stocks

August 19, 2013 | by Staff Attorney

On May 6, 2013 the Financial Industry Regulatory Authority (FINRA) filed a complaint against Oppenheimer & Co. (Oppenheimer) for the sale of unregistered penny stock shares and for not having an adequate anti-money laundering (AML) compliance program to detect suspicious penny stock transactions.

On July 9, 2013 and August 5, 2013, Oppenheimer settled with FINRA agreeing to the sanctions and paying a fee of $1.4 million to resolve the charges brought in the complaint. In agreeing to the settlement Oppenheimer neither admits nor denies any of the allegations made against the firm.

The alleged penny stock sales took place from August 19, 2008, through September 20, 2010. According to the settlement, the stocks were sold through seven brokers out of five different branch offices around the country. These seven brokers reportedly sold over one billion shares of twenty penny stocks without registration or any applicable exemption from registration. Customers are said to have deposited “large blocks” of penny stock shortly after opening the accounts, then liquidated the accounts and transferred the proceeds out.

SEC Sanctions Colorado-Based Portfolio Manager for Forging Documents and Misleading Chief Compliance Officer

August 19, 2013 | by Staff Attorney

August 27, 2013 – The Securities and Exchange Commission sanctioned a former portfolio manager at a Boulder, Colo.-based investment adviser for forging documents and misleading the firm’s chief compliance officer to conceal his failure to report personal trades.

An SEC investigation found that Carl Johns of Louisville, Colo., failed to pre-clear or report several hundred securities trades in his personal accounts as required under the federal securities laws and the code of ethics at Boulder Investment Advisers (BIA). Johns concealed the trades in quarterly and annual trading reports that he submitted to BIA by altering brokerage statements and other documents that he attached to those reports. Johns later tried to conceal his misconduct by creating false documents that purported to be pre-trade approvals, and misled the firm’s chief compliance officer in her investigation into his improper trading.

To settle the SEC’s charges – which are the agency’s first under Rule 38a-1(c) of the Investment Company Act for misleading and obstructing a chief compliance officer (CCO) – Johns agreed to pay more than $350,000 and be barred from the securities industry for at least five years.