Articles Posted in Securities Fraud

shutterstock_186772637-300x199Gana LLP is examining claims made by the United States Securities and Exchange Commission against broker Michael Siva (Siva). According to BrokerCheck records, Siva and five other individuals allegedly engaged in securities fraud and profited by over $5 million by trading on insider information about dozens of impending corporate mergers, acquisitions, and tender offers.

Siva entered the industry in 1996. He is currently employed at Morgan Stanley and has worked there for 8 years. Between October 2014 and April 2017, Siva allegedly used inside information to make profitable trades for his clients, earning commissions for himself in the process. Mr. Siva also allegedly traded on behalf of himself and his wife based on two of the tips he received.

Securities fraud (a/k/a investment fraud) stems from a variety of deceptive practice in the stock or commodities markets. Securities fraud stems from intentionally false information or the omission of material information that induces an investor to make purchase or sales decisions. Securities fraud violates state and federal securities laws. Securities fraud encompass a wide range of illegal activity, including violations of section 10(b) of the Securities Exchange Act of 1934, insider trading, and other illicit activity on trading floors of stock and commodities exchanges. Insider trading is the illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information.

shutterstock_172154582-300x197The securities fraud lawyers of Gana LLP are investigating customer complaints concerning alleged misrepresentation and an employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Elaine Marie Zito (Zito). According to BrokerCheck records, Zito has been in the securities industry since 1997 and is currently working for Newbridge Securities Corporation (Newbridge) in Scottsdale, Arizona.

The most recent customer complaint against Zito was filed in April 2017 alleging that she misrepresented the client’s account regarding the purchase of a variable annuity back in 2006. Zito was employed at Woodbury Financial Services, Inc during the alleged misrepresentation. The case is currently pending.

During November 2016, Zito was discharged from Questar Capital Corporation (Questar) for allegedly violating the firm’s rules and regulations in relation to unauthorized use of discretion of mutual funds.

From having spoken to many victims of securities fraud – the hardest thing for many investor victims is asking for help.  More specifically, admitting to anyone that they had been taken advantage of.  Many victims express feelings of shock, disbelief, and often times shame for having been, apparently, an easy mark for the fraudster.

The truth is there is nothing to be a ashamed of.  Fraud is a multi-billion dollar business ensnaring tens of thousands of victims a year.  The only real question is – what are you going to do about it?  Our investment attorneys are here to help.  We’ll let you know what the potential avenues of recovery are.  Consider reaching out to our firm and refusing to be another victim while considering the following SEC statistics concerning their regulatory efforts in 2016.

In 2016, the SEC filed 868 enforcement actions exposing financial reporting-related misconduct by companies and their executives and misconduct by registrants and gatekeepers.

shutterstock_94632238-300x214The experienced securities fraud lawyers of Gana LLP are investigating multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) against broker Andrew Bruce Elsoffer (Elsoffer). According to Elsoffer’s FINRA BrokerCheck records, there are several disclosures on his record pertaining to securities fraud, misrepresentation, unsuitability, breach of fiduciary duty, and negligence amongst other allegations.

Elsoffer entered the securities industry in 1994 and was only registered with Merrill Lynch, Pierce, Fenner & Smith, Inc. until November 2011. He is currently employed at Stifel Nicolaus & Co., Inc. since November 2011. He was previously employed at:

• Bank of America (December 2009 – October 2011)

shutterstock_63635611-300x200The investment lawyers of Gana LLP are investigating allegations by The Securities and Exchange Commission (SEC) finding that former Morgan Stanley broker Barry Connell (Connell) working out of the Ridgewood, New Jersey office misappropriated about $5 million from clients.  After a customer complained of about $2,500,000 in unauthorized fund transfers in November 2016 Morgan Stanley terminated Connell about a week later.  Morgan Stanley terminated Connell on ground that there were “Allegations regarding unauthorized withdrawals and transfers of funds from client’s household accounts to third-party payees, which appear to be for the benefit of the former registered representative.”  Thereafter, Connell was barred by the Financial Industry Regulatory Authority (FINRA) for failing to provide documents and information related to Morgan Stanley’s statement.

In February 2017, the SEC alleged that Connell stole money from investors to settle a private lawsuit among other misuses.  Connell was alleged to have engaged in misappropriation of approximately $5 million from investment advisory clients.  The SEC found that from approximately December 2015 through November 2016, Connell carried out his scheme primarily by moving funds between client accounts and then sending wire transfers and checks from the accounts to third parties for his own benefit.  The SEC stated that over the course of approximately 11 months Connell made more than 100 unauthorized transactions through forms falsely representing that he had received verbal client authorizations for the transactions.  The SEC changed that this conduct was the engaging in transactions, acts, practices and courses of business that constitute violations of Section 206(1) and Section 206(2) of the Investment Advisers Act of 1940.

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shutterstock_179203760-300x300Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Michael Babyak (Babyak), formerly associated with brokerage firms LPL Financial LLC (LPL) and Leigh Baldwin & Co., LLC (Leigh Baldwin).  According to brokercheck, Babyak consented to the sanction that he participated in private securities transactions involving customers of a member firm without first providing the firm written or oral notice of his activities. FINRA findings stated that Babyak had the customers invest a total of $4,250,000 into a limited liability company that he had created.

Babyak is then alleged to have assisted in wiring funds from the firm’s accounts to the borrower and the limited liability company’s bank account and signed the loan agreement and related security agreement on behalf of the company he created. FINRA alleged that Babyak then caused the company to loan the $4.25 million to a third party for the benefit of his customers.  FINRA also discovered that Babyak arranged for the company to use funds repaid from the $4.25 million loan to extend loans on behalf of the customers to two additional borrowers.

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shutterstock_184149845-300x246The securities lawyers of Gana LLP are following the case against broker Jeffrey Kluge (Kluge) who pleaded guilty to two counts of bank fraud in the state of Minnesota. A plead agreement was filed with the U.S. District Court in Minnesota on March 29, 2017. Kluge entered the securities industry in 1991 and remained with Merrill Lynch, Pierce, Fenner & Smith Inc. for the entirety of his career. Kluge started a scheme to create fraudulent Merrill Lynch account statements to falsely secure collateral for multi-million lines of credit. Kluge was able to carry out this scheme by creating a fake domain name,, and fake email address,, to send the falsified account statements to Platinum Bank. A false Merrill Lynch identity was used as a cover for the email address. Kluge ran this fraudulent scheme for 15 years, starting in 2001 to November 2016.

In 2001, Kluge received a line of credit for $150,000 from Alliance Bank by putting up municipal bond funds as collateral. These bond funds were substantiated by falsified account statements that hid the fact that the same bonds were already pledged to Merrill Lynch loans previously obtained by Kluge. The outstanding balance of Alliance Bank line of credit was at $6 million in November 2016.

Utilizing the same scheme for Alliance Bank, Kluge was able to secure a $1 million line of credit from Platinum Bank in Minnesota. He procured this line of credit by putting up the same assets used for Merrill Lynch and Alliance Bank.  The Platinum Bank line of credit balance was at $2.7 million as of November 2016.

shutterstock_176534375-300x198Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Michael Siegel (Siegel) formerly associated with National Securities Corporation – d/b/a HudsonPoint Capital – alleging Siegel engaged in a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.  The claim filed in July 2016 seeks $2,016,064 in damages.

Thereafter, FINRA barred Siegel from the securities industry alleging that the broker failed to respond to the regulator’s requests for documents and information.

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shutterstock_185219444-300x278Our securities fraud attorneys are investigating a complaint filed by The Financial Industry Regulatory Authority (FINRA) against Brian Egan (Egan) formerly associated with Independent Financial Group LLC (Independent Financial) alleging that the broker failed to disclose his trading activity in client accounts away from the firm.  According to brokercheck records Egan has been subject to one employment termination for cause by Independent Financial in July 2015 for failing disclose personal trading in accounts away from the firm.

In August 2016 FINRA sanctioned Egan alleging that he consented to the entry of findings that Egan maintained and/or held trading authority in a total of 87 brokerage accounts for himself and over 60 customers at another brokerage firm. The customer accounts over which he held trading authority included both Egan’s family members and customers of his CPA business.  FINRA found that Egan did not notify Independent Financial of his involvement in these accounts when he became associated with the firm, or at any other time.  FINRA found that Egan exercised his trading authority in the accounts at the other firm to execute trades and to transfer funds and securities from certain of the customer accounts to his own accounts.

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shutterstock_133100114Our firm is investigating potential securities claims against brokerage firms for sales practice violations related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

One investment that advisors may be recommending to clients in order to gain exposure to oil is the iPath S&P GSCI Crude Oil Total Return Index ETN (Symbol: OIL).  OIL is a speculative ETN that attempts to “reflect[] the returns that are potentially available through an unleveraged investment in the West Texas Intermediate (WTI) crude oil futures contract.”  Brokers may be recommending OIL for long-term holding when, in fact, OIL is a risky ETN that is only appropriate for short-term investment speculation on the price direction of oil.

As Morningstar has written, “Due to the extremely specialized exposure of the fund, investors should only consider it for a small position in the satellite portion of a broadly diversified portfolio.”  MorningStar also explained how the futures invested in the fund make the investment inappropriate for long-term holdings and how the price of the fund is not related to the price of oil.  “For example, in 2013 OIL increased 5.6%, close to WTI’s spot price gain of 6.9% for the year. However, over the trailing five-year period OIL lost 1% annualized, compared with an annualized gain of more than 20% for spot WTI over the same period.”

In other words even if the price of oil increases on an annualized basis by 20% an investor in OIL can still lose money.  Investors often times do not realize that index ETNs designed to track certain assets may not be successful in doing so and may be subject to different types of risks other than those of the underlining value of the asset.

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