Articles Posted in Investment Attorney

shutterstock_188606033-300x200According to BrokerCheck records financial advisor Lewis Robinson (Robinson), currently associated with BB&T Securities, LLC (BB&T), has been subject to 10 customer complaints, one regulatory action, and one employment separation for cause.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Robinson has been accused by customers of unsuitable investment advice among other claims.

In August 2017, FINRA found that Robinson settled a customer’s complaint by issuing three checks in the total amount of $12,203.23 to the customer’s wife without the knowledge of his brokerage firm.  FINRA determined that the customer complained on three separate occasions about the amount of commissions that he charged.

In August 2015, Morgan Stanley terminated Robinson for providing unapproved fee reimbursements to a client.

The most recent customer complaint against Robinson was filed in July 2016 and alleged unsuitable investments between 2013 and 2016 causing $104,000 in damages.  The claim was settled for $29,060.

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shutterstock_113872627-300x300The financial advisor rating firm Paladin Research & Registry assembled a list of the top 10 investment scams investors are facing today. If you are involved in any of these potential scams, the investment attorneys at Gana LLP may be able to help you.

1. Ponzi Schemes

Ponzi schemes came in first-place for having stolen more money than any other type of scam. A Ponzi scheme is a fraudulent investment scam where the scammer promises a high rate of return with little or no risk to investors. Ponzi schemes generate returns for investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. The Ponzi scheme unravels when no more new investors are willing to invest and older investors demand the return of their money. The nature of Ponzi schemes (or pyramid schemes) requires investors (who believe they have a strong investment) to tell friends, family and associates about the investments. The influx of new investors provides scam operators with the assets needed to meet the withdrawal requests of the early investors.

shutterstock_36343294-300x225According to BrokerCheck records financial advisor David Capin (Capin), currently associated with Summit Brokerage Services, Inc. (Summit), has been subject to nine customer complaints and one employment termination for cause.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Capin has been accused by customers of unsuitable investment advice, misrepresentations, and excessive trading among other claims.

In February 2017 Capin was permitted to resign from Raymond James Financial Services, Inc. (Raymond James) after he admitted to the firm that he had not discussed trades with certain customers prior to the time orders were entered.  This claim appears to concern unauthorized trading.

Two customers have filed claims concerning Capin in 2017 and both have been settled.  Another customer filed a claim in 2016 concerning unsuitable investments and that claim was denied by the firm.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

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shutterstock_157106939-300x300The law offices of Gana LLP continue to report on investor related losses and potential legal remedies due to recommendations to invest in Puerto Rico bonds and bond funds.   The island has been meeting with creditors before a U.S. bankruptcy judge in the largest public finance restructuring case.  The sides have been in mediation settlement talks to concerning the outcome of the island’s $70 billion debt.  However, according to news reports, the process could take years.  In fact, it has taken more than two years of debate with Puerto Rico’s government, creditors, and federal lawmakers just to get to this point.

According to some source Puerto Rico bond investors recovery ranges could be as low as 10 to 20 cents on the dollar when the island emerges.  Why so little?  How much can $70 to $100 billion be worth when there are only 1.4 million workers in Puerto Rico and a 45% poverty rate?  In fact, workers are leaving the island in record numbers that will soon be made worse by Hurricane Maria.  84,000 people moved from Puerto Rico to the United States in 2014 resulting in 1.8% of the island leaving.

Mostly retail investors will be the victims of the Puerto Rico debt debacle.  While news focus on hedge funds that have bought Puerto Rico bonds, only about 25 percent of Puerto Rican debt is held by hedge funds.  Compare that to the estimated 500,000 individual bondholders and hundreds of thousands more investors who purchased Puerto Rico mutual funds.

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shutterstock_115937266-300x237According to BrokerCheck records Gaetano “Guy” Magarelli (Magarelli), now associated with Newbridge Securities Corporation (Newbridge), has been subject to five customer complaints and one lien.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Magarelli has been accused by customers of unsuitable investment advice.  Some customers have also alleged unauthorized trading among other claims.

The most recent complaint filed in June 2017 alleges $84,000 in damages stemming from a two year period.  The claim is currently pending.  Another claim was filed by a customer in March 2017 alleging that there were unsuitable trades from 2010 through 2017 causing $131,000 in damages.  The claim has been denied by the firm.

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shutterstock_80511298-300x218Current Independent Financial Group, LLC (Independent Financial) broker Gerhard Heuer (Heuer) has been subject to six customer complaints – many of which concern suitability concerns over recommendations for Variable Universal Life (VUL) policies.  The securities lawyers of Gana LLP are investigating the customer complaints against Heuer.

In April 2017 a customer complained that he was told that his VUL would remain active with the currently scheduled monthly premiums and requested $43,000 in damages.  The claim was settled.

VUL are complex insurance and investment products that investors must fully understand the risks and benefits of prior to investing.  One feature of a VUL policy is that the owner can allocate a portion of his premium payments to a separate sub-account that can be used to grow in value through investments.  Monthly charges for the life insurance policy, including a cost of insurance charge and administrative fees, are deducted from the policy’s cash value.  The cash value of the policy may increase or decrease based on the performance of the sub-account investments.  In addition, the VUL policy terminates, or lapses, if at any time the net cash surrender value is insufficient to pay the monthly cost deductions.  Upon termination of the policy, the remaining cash value becomes worthless.

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shutterstock_94127350-300x205In March 2017, Broker Richard Lucker (Lucker) was subject to a massive complaint alleging $14,447,501 in damages.  Lucker is currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo).  According BrokerCheck the customer complained that there was a failure to supervise with respect to Lucker’s management of her account from 2011 to 2013.  There are no other details provided as to which products or the type of trading activity that occurred that caused the losses complained of.  The complaint is currently pending.  The securities lawyers of Gana LLP continue to investigate the customer complaint against Lucker.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

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shutterstock_177577832-300x300The securities lawyers of Gana LLP are investigating customer complaints and a FINRA enforcement action with The Financial Industry Regulatory Authority’s (FINRA) against broker Henry Watson (Watson). According to BrokerCheck records, Watson has been subject to three customer complaints and one FINRA action. The customer complaints against Watson allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, portfolio mismanagement, and excessive trading among other claims.

The most recent claim was filed in October 2016 alleging Watson purchased shares of a security from without authorization seeking $13,017.  Subsequently in January 2017 FINRA barred Watson for failing to appear to testify concerning an arbitration claim.  FINRA claimed that the testimony was requested in connection with an inquiry into an arbitration claim filed by a customer against Watson.  FINRA alleged that Watson acknowledges that he received FINRA’s request but would not appear for on-the-record testimony at any time resulting in the bar.

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shutterstock_138129767-300x199The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Margaret Lech-Loubet (Lech-Loubet).  According to BrokerCheck records Lech-Loubet has been in the securities industry for 25 years and has two customer complaints on her record.  Lech-Loubet is currently registered with UBS Financial Services, Inc. (UBS) out of the firm’s Beverly Hills, California office location.  The most recent customer complaints against Lech-Loubet alleges that Lech-Loubet concentrated the client in energy related structured products and master limited partnerships (MLPs).

The most recent complaint was filed in January 2017 and alleged that from June 2014 to November 2015 the investments were not suitable and were told the investments were safer than equities.  The customer is claiming $285,582 in damages.  The claim is currently pending.

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shutterstock_158028338-300x298The securities lawyers of Gana LLP are investigating customer filed with The Financial Industry Regulatory Authority’s (FINRA) against current The O.N. Equity Sales Company (O.N. Equity) broker Richard Wesselt (Wesselt). Wesselt operates his securities practice under an d/b/a entity called Wesselt Capital Group.  According to BrokerCheck records, Wesselt has been subject to seven customer complaints over the course of his career and one termination for cause. The most recent customer complaint against Wesselt occurred in August 2016 and alleged that sale of variable annuity and life insurance were unsuitable.  The claim alleged damages of $25,709 and settled.

Variable annuities are complex financial and insurance products.  The Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing.  A variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you.  The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen.  The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

However, the benefits of variable annuities are often outweighed by the terms of the contract that include exorbitant expenses such as surrender charges, mortality and expense charges, management fees, market-related risks, and rider costs.  Brokers often solicit these products to earn lucrative up front commissions even when the product is inappropriate for the investor.  In addition, some brokers will attempt to flip or switch annuities every couple of years which has the effect of further denying the investor of benefits while increasing commissions to the broker.

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