Securities Lawyer

Advisor Felipe Henao Accused of Unsuitable VIX Trading

April 12, 2021 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Felipe Henao Vargas (Henao), currently employed by Insigneo Securities, LLC (Insigneo Securities), has been accused by a customer of investing in a VIX related investment. ETFs that invest in the VIX are part of a group of group of ETFs considered to be leveraged exchanged traded funds or Non-Traditional ETFs.

As a background, Non-Traditional ETFs behave drastically different and have different risk qualities from traditional ETFs. While traditional ETFs seek to mirror an index or benchmark, Non-Traditional ETFs use a combination of derivatives instruments and debt to multiply returns on underlining assets, often attempting to generate 2 to 3 times the return of the underlining asset class. Non-Traditional ETFs are also used to earn the inverse result of the return of the benchmark.

However, the risks of holding Non-Traditional ETFs go beyond merely multiplying the return on the index. Instead, Non-Traditional ETFs are generally designed to be used only for short term trading as opposed to traditional ETFs. The use of leverage employed by these funds causes their long-term values to be dramatically different than the underlying benchmark over long periods of time. For example, between December 1, 2008, and April 30, 2009, the Dow Jones U.S. Oil & Gas Index gained two percent while the ProShares Ultra Oil and Gas, a fund seeking to deliver twice the index’s daily return fell six percent. In another example, the ProShares UltraShort Oil and Gas, seeks to deliver twice the inverse of the index’s daily return fell by 26 percent over the same period.

Advisor Stuart Pearl Sanctioned By Regulatory and Subject to Customer Complaints

April 8, 2021 | by Staff Attorney

According to BrokerCheck records financial advisor Stuart Pearl (Pearl), currently employed by International Assets Investment Management, LLC (International Assets) and formerly employed by David A. Noyes & Company (David A. Noyes) has been subject to five customer complaints, two terminations for cause, and one regulatory action during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaints against Pearl concern allegations of unsuitable investments, unauthorized trading, and margin trading among other causes of action.

In June 2015 Pearl was terminated by Ameriprise Financial Services, Inc. (Ameriprise Financial) for violation of company policy related to use of discretion in non-discretionary accounts and complying with supervision.

In October 2017 FINRA sanctioned Pearl finding that Pearl consented to the sanctions and findings that he effected securities transactions in a customer’s account on several occasions on a discretionary basis without prior written authorization from the customer and without prior written acceptance of the account as discretionary from his member firm. FINRA also found that Pearl made unsuitable recommendations in two other customers’ joint brokerage account when he recommended the customers use margin to effect several trades. According to FINRA, the recommendations made by Pearl to purchase securities on margin were unsuitable in light of the customers’ investment objectives, risk tolerances, and their financial situation and needs. FINRA found that these purchases caused the account to be subject to seven margin calls during the relevant period.

In March 2019 David A. Noyes permitted Pearl to resign stating that Stuart Pearl resigned while on heightened supervision. The firm claims that Pearl had not followed his heightened supervision plan and would have been terminated had he not resigned.

Broker Sebastian Wyczawski Accused of Making Unsuitable Recommendations and Failure to Supervise

April 6, 2021 | by Staff Attorney

Broker Sebastian Wyczawski, currently employed at Joseph Stone Capital, LLC., (Joseph Stone) has been subject to at least three customer complaints during the course of his career. His most recent customer complaints allege unsuitability and failure to supervise. According to a BrokerCheck report, in June 2018, Wyczawski was alleged of making unsuitable recommendations. This matter against him settled for $17,500. Additionally in December 2019, a customer complaint was filed against Wyczawski for his alleged failure to supervise. In his Broker Comment, Wyczawski states: “I am being named in this arbitration due to the fact that I was the OSJ branch owner.” The matter, for the requested amount of $235,000 is still pending. Moreover, in March 2004, Wyczawski was alleged to have engaged in unauthorized trading. This matter ultimately settled for $37,500.

Brokers have an obligation to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Brokers should not present these investment options to clients. There are two screens that brokers must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The broker must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. 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.

Advisor Bruce Ciallella Has Suitability Customer Complaints

March 6, 2021 | by Staff Attorney

According to records kept by The Financial Industry Regulatory Authority (FINRA) financial advisor Bruce Ciallella (Ciallella), currently employed by Cabot Lodge Securities LLC (Cabot Lodge) has been subject to at least seven customer complaints during the course of his career. Ciallella’s customer complaints alleges that Ciallella recommended unsuitable investments in various investments and makes allegations including fraud, excessive trading, unsuitable investments, concentrated stock positions, failure to properly manage account, unauthorized trading, breach of fiduciary duty, and misrepresentation and omissions among other allegations of misconduct relating to the handling of their accounts.

In November 2019 a customer complained that Ciallella violated the securities laws by alleging that Ciallella made investments recommendations from 2015 to 2018 that the client alleges involved self-dealing and fraud, excessive trading, unsuitable investments, concentrated stock positions, failure to properly manage account, unauthorized trading, breach of fiduciary duty, misrepresentation and omissions, and violation of the Florida securities and investor protection act. The claim alleges $300,670.64 in damages and is currently pending.

Another claim brought in October 2011 from a customer complained that Ciallella violated the securities laws by alleging that Ciallella made investments recommendations that were illegal. The claim alleged $150,000 in damages and settled for $20,000.

Aegis Capital Advisor Thomas Duggan Has Suitability Customer Complaints

February 15, 2021 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Thomas Duggan (Duggan), currently employed by Aegis Capital Corp. (Aegis Capital) has been subject to at least three customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Duggan’s customer complaints alleges that Duggan recommended unsuitable investments in various investments and makes allegations including common law fraud, gross negligence, breach of contract, and elder abuse among other allegations of misconduct relating to the handling of their accounts.

In January 2020 a customer complained that Duggan violated the securities laws by alleging that Duggan made investments recommendations from June 2017 through August 2019 that were unsuitable and claimed common law fraud, gross negligence, breach of contract, and elder abuse. The claim alleges $1,079,155 in damages and is currently pending.

In January 2019 a customer complained that Duggan violated the securities laws by alleging that Duggan made investments recommendations from June 2017 through 2019 were in breach of his fiduciary duty, breach of contract, and misrepresentation. The claim alleges $80,000 in damages and is currently pending.

Newbridge Securities Financial Advisor Kerri Jamison Has Multiple Customer Complaints

December 2, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Kerri Jamison (Jamison), currently employed by Newbridge Securities Corporation (Newbridge Securities) has been subject to at least four customer complaints during the course of her career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Jamison’s customer complaints alleges that Jamison recommended unsuitable investments in various investments including allegations involving energy securities and alternative investments among other allegations of misconduct relating to the handling of their accounts. Jamison also hold herself out as an estate planning attorney and real estate agent.

In April 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in negligent investment advice, breach of fiduciary duty, and breach of contract. The claim alleges $99,0000 in damages and is currently pending.

In February 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in unsuitable investment advice, breach of fiduciary duty, and material misrepresentations. The claim alleges $200,000 in damages and is currently pending.

In January 2020 a customer complained that Jamison violated the securities laws by alleging that Jamison engaged in negligent investment advice, breach of fiduciary duty, and breach of contract. The claim alleges $99,000 in damages and is currently pending.

Michael Burkoff Has Investor Complaint Over Structured Products Sales

June 30, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Michael Burkoff (Burkoff), currently employed by National Securities Corporation (National Securities) has been subject to at least four customer complaints and one criminal matter during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Burkoff’s one of customer complaints alleges that Burkoff recommended unsuitable investments in various investments such structured products among other allegations of misconduct relating to the handling of their accounts.

In December 2019 a customer complained that Burkoff violated the securities laws by alleging that Burkoff engaged in sales practice violations related to unsuitable trading and breach of fiduciary duty relating to the sale of structured products. The claim alleges $150,000 and is currently pending.

In August 2015 a customer complained that Burkoff violated the securities laws by alleging that Burkoff engaged in sales practice violations related to poor advice. The claim was denied by the firm.

Structured products range in risk from benign to extreme. However, most structured products produce inferior risk/return profiles than ordinary debt or equity instruments because the brokerage firms that issue these products seek to profit from the spread between the payment to investors and the amount of money the brokerage firm can make from the issuance. When dealing with some of the more complex structured products most investors will lack the ability to understand the merits of investments nor are many structured products appropriate for investors seeking a fixed or reliable income and preservation of capital.

Gary Barth Has Complaint Over Alternative Investment Sales Practices

June 29, 2020 | by Staff Attorney

Advisor Gary Barth (Barth), currently employed by Ameritas Investment Company, LLC (Ameritas) has been subject to at least four customer complaints during the course of his career. According to a BrokerCheck report one customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In November 2019 a customer complained that Barth violated the securities laws by alleging that Robare engaged in sales practice violations related to an misrepresentation in the sale of REITs. The claim alleges $600,000 and is currently pending.

According to BrokerCheck, Barth operates through several d/b/a entities including Barth Financial Wealth Management Group and Barth Financial. Barth also engages in other businesses including Kaufmann Building LLC, BAB Properties LLC, and Kearney Hub among other business related disclosures.

Advisor Robert Radli Jr. Alleged to Have Recommended Unsuitable Energy Securities

June 23, 2020 | by Staff Attorney

According to BrokerCheck records financial advisor Robert Radli Jr. (Radli), currently employed by Raymond James & Associates, Inc. (Raymond James), has been subject to at two customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA) Radli has been accused by customers of unsuitable investment advice concerning various investment products including energy stocks most likely including master limited partnerships (MLPs). The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

In March 2020 a customer filed a complaint alleging that Radli violated the securities laws including by engaging in unsuitable investments which resulted in losses from a sector concentration from June 2011 through February 2020 and causing $800,000 in damages. The claim is currently pending.

In January 2020 a customer filed a complaint alleging that Radli violated the securities laws including by engaging in unsuitable investments from June 2011 concerning oil & gas investments causing $600,000 in damages. The claim is was denied by the firm.

Our firm handles claims and is also investigating securities claims against brokerage firms over sales practices 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.

Rick Davidson Has Investor Complaint Over Corporate Debt and Structured Products

June 22, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Rick Davidson (Davidson), currently employed by National Securities Corporation (National Securities) has been subject to at least six customer complaints, one employment termination for cause, and one bankruptcy during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Davidson’s customer complaints alleges that Davidson recommended unsuitable investments in various investments such structured products and corporate debt among other allegations of misconduct relating to the handling of their accounts.

In May 2016 Davidson was terminated by Morgan Stanley on allegations relating to registered representative’s exercise of discretion in clients’ accounts as well as receipt of a loan from a Morgan Stanley employee.

Thereafter, in May 2019 Davidson declared bankruptcy.

The law offices of Gana Weinstein LLP are currently representing investors who were surprised to find out that the “bonds” that were recommended by their advisors have almost completely stopped paying interest while plummeting in value. What many investors in this situation did not realize was that they were not sold bonds at all but instead complex structured products that go by a variety of names including steepener notes, adjustable rate market notes, spread linked notes, or structured notes. Regulators have already stated that it is imporoper to sell these investments as a fixed income substitute or to compare them to bonds in terms of producing a revenue stream. However, in our firm’s experience it appears that many brokers have been selling structured products as bond alternatives.