Selling Away

Wells Fargo Terminates Robert Meyers for Recommending Private Investments

July 6, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Robert Meyers (Meyers).

According to the Financial Industry Regulation Authority (FINRA) BrokerCheck records, in October 2017, Meyers was terminated from Wells Fargo Clearing Services LLC (Wells Fargo) for recommending investments to customers that he did not notify the firm about.

In addition, Meyers has been subject to eight customer disputes. In August 2005, a customer alleged that Meyers failed to follow the customer’s instructions regarding the investment. The customer requested $1,000,000 in damages.

James and Lorraine Conaway Accused of Selling Unapproved Tycon Properties to Investors

July 4, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor James and Lorraine Conaway (Conaway), formerly associated with USA Financial Securities Corporation (USA Financial) in Tustin, California was terminated by his firm concerning allegations of failure to comply with firm advertising and outside business activity (OBA) procedures, participating in financial transactions with securities clients, and failure to fully cooperate with a firm investigation.

In May 2018 FINRA sanctioned the Conaways and provided more details in their private securities transactions. FINRA alleged that Conaway failed to timely and completely disclose the scope of his real estate related outside business activities in referring clients to Tycon Properties among other business relationships. FINRA found that the Conaways established Tycon Properties to refer clients to investments in rental real estate properties. FINRA found that Conaway began a business relationship with a vendor of distressed rental properties in St. Louis, Missouri which was controlled by an individual who had pleaded guilty to unrelated federal charges for submitting false loan applications to banks and sentenced to 15 months imprisonment. FINRA determined that Conaway’s company received over $450,000 in referral fees from the individual’s vendor company and referred more than 35 investors who contracted to purchase one or more rental properties.

At this time it is unclear the extent of Conaways outside business activities or private securities transactions. However, Conaway disclosed a number of outside business activities including that he operates his securities business through a d/b/a C&C Wealth Advisory Group. Other OBAs include Lorcon Inc., Brancor Properties, LLC, and American Family Life Assurance Company of Columbus.

Advisor Oscar Francis Terminated By MML Investor Services After Private Securities Transactions Discovered

June 12, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Oscar Francis (Francis), formerly associated with MML Investor Services, LLC (MML) in Ft. Lauderdale, Florida, was terminated for cause by MML concerning allegations that he engaged in private securities transactions. MML stated that Francis’ was “terminated in connection with an investigation into an undisclosed outside business activity, potential selling away and an unauthorized non-securities life insurance transaction.” In addition, Francis has been subject to three customer complaints concerning unapproved investments. Further, in April 2017, the Department of Justice opened an investigation into Francis’ investment activities.

At this time it is unclear the extent and nature of the outside business activities or private securities transactions that occurred. The allegations concerning private securities transactions is a practice known in the industry as “selling away” – a serious violation of the securities laws.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees 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. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

Advisor Brian Travers Barred By Regulator For Failing to Disclose Securities Transactions

June 11, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Brian Travers (Travers), operating under the d/b/a Travers and Associates, Inc., in December 2017, was barred from the financial industry by FINRA concerning allegations that he engaged in private securities transactions. According to FINRA Travers consented to the sanction and bar due to the fact that he refused to appear and provide FINRA with testimony in connection with their investigation into potential undisclosed outside business activities and private securities transactions. At this time it is unclear the extent and nature of the outside business activities or private securities transactions that occurred.

Travers employer, MML Investors Services, LLC (MML) discharged Travers in March 2017 alleging that Travers engaged in undisclosed outside business activities. The only activity listed on Travers’ public records is his insurance business. FINRA’s allegations concern private securities transactions– a practice known in the industry as “selling away” – is a serious violation of the securities laws.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees 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. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

Broker Keith Michelfelder’s FINRA Registration is Revoked

January 17, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are interested in hearing from investors who lost money due to the mishandling of their accounts by broker Keith Michelfelder (Michelfelder).

According to BrokerCheck records, in August 2017, FINRA sanctioned Keith Michelfelder (Michelfelder) for allegedly effecting “at least 16 transactions in the accounts of a member firm customer without having obtained prior written authorization from the customer and written acceptance of the accounts as discretionary by his firm. The findings stated that the firm’s policies prohibited the use of non-firm email addresses to conduct firm business. In 2010 and 2011, Michelfelder signed annual certifications agreeing to use the firm’s domain email only for communications with customers and concerning firm business. Nevertheless, during July 2012, Michelfelder knowingly used a non-firm email address to communicate with the above customer.” Michelfelder was fined $10,000 and was suspended for 60 days. In November 2017, Keith’s FINRA registration was revoked for failure to pay fines.

In August 2012, a customer alleged he discovered numerous unauthorized trades in his account. The customer was granted an award of $702,037.

FINRA Suspends Kenneth Savino for Selling Away

January 4, 2018 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Kenneth Savino (Savino).

According to BrokerCheck records, Savino allegedly purchased shares of a security for $100,000 without providing prior notice to his member firm and Savino inaccurately indicated on an annual compliance questionnaire that he had not participated in any private securities transactions. Savino was suspended for 15 days and fined $5,000. Without admitting or denying the findings, Savino consented to the sanctions and the entry of findings.

Savino was discharged from LPL Financial in October 2015 for allegedly entering into a loan transaction with another company, receiving shares of the company in return, with no pre-approval by the firm. Additionally, Savino allegedly made private securities transaction that he did not have pre-approved by the firm. Savino also allegedly introduced a client to a potential outside investment opportunity that was not approved by the firm.

James Merkel Terminated by Merrill Lynch Over Private Securities Sales

December 21, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor James Merkel (Merkel), in August 2017, was terminated by his employer Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) after the firm alleged that Merkel violated firm policy relating to selling away.

Prior to the firm’s termination, in June 2016 a customer filed a complaint alleging unsuitable investment recommendations and misrepresentation and omission of material facts involving options. The customer alleged $1,000,000 in damages and the claim is currently pending.

At this time it is unclear the extent and scope of Merkel’s securities violations and outside business activites. Merkel’s CRD lists that he operates an outside business activity concerning real property. Merkel also lists an entity called Merkel’s Lfan LLC that is a business that produces adironack chairs and other items. At this time it is unknown the exact nature of the firm’s allegations concerning private securities transactions – a practice known in the industry as “selling away”.

Ahmed Gheith Terminated by Paulson Investment Over Sale of Promissory Note

December 18, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ahmed Gheith (Gheith), in August 2017, was terminated by his employer Paulson Investment Company, LLC (Paulson Investment) after the firm alleged that Gheith was terminated subsequent to discovery of violations of firm supervisory procedures, failure to provide honest answers on annual questionnaires, violations of FINRA Rule 3280, and due to initiation of customer arbitration alleging fraud, negligence, and unjust enrichment. The firm referenced that the product involved was a promissory note. Thereafter, in April 2018 FINRA Suspended Gheith.

FINRA alleged that two registered representatives informed Gheith about a private offering related to a real estate development in Belize. The investment was described as a short-term note meant to raise money for the development of an airport and Gheith thereafter referred several customers to invest. FINRA found that Gheith’s communications with four customers included a description of the Private Offering and leading the customers to invest a total of $3.5 million in the offering. FINRA alleged that Gheith was paid $93,165 for his role in soliciting and referring the customer.

FINRA’s allegations concerning promissory notes, a private securities transaction, –is known in the industry as “selling away”.

Masood Azad Barred by FINRA Over Securities Sales Practices

December 18, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Masood Azad (Azad), in May 2017, was terminated by his employer First Allied Securities, Inc. (Frist Allied) after the firm alleged that Azad violated firm policy relating to borrowing money from clients, engaging in an unapproved private securities transaction and outside business activity. Thereafter, FINRA opened an investigation and ultimately barred Azad from the industry. FINRA found that Azad failed to provide FINRA requested documents and information in connection with its investigation into allegations of misconduct by Azad. FINRA stated that the allegations included that Azad participated in an unapproved private securities transaction by soliciting investments and/or directly investing in an electronic data security company and engaged in outside business activities involving the company without obtaining authorization from the firm.

At this time it is unclear the extent and scope of Azad’s securities violations and outside business activites. Azad’s CRD lists that he is also an attorney and operates the Law Offices of M.H. Azad. Azad also lists an insurance business called Consolidated Working Group and operates a d/b/a for his securities business called Robertson Wealth Management. Finally, Azad lists American Retirement Solutions as another securities related d/b/a outside business activity. While at this time it is unknown the exact products and services sold away any selling of notes or other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees 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. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

Advisor Jerry Guttman Barred For Investing $7,000,000 of Client Funds in Private Companies

December 17, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Jerry Guttman (Guttman), operating under the d/b/a Guttman Financial Group, in November 2017, was barred from the financial industry by FINRA concerning allegations that he sold more than $7,000,000 worth of membership interests in at least six different limited liability companies to 38 customers without proper disclosure. FINRA found that Guttman participated in the sales of these membership interests by soliciting the membership interests to investors; communicating with investors about their investments; drafting, distributing, and collecting the investment agreements; collecting and depositing investors’ checks into the companies’ bank accounts; and managing the companies as one of only two managing members.

Guttman’s employer, United Planners Financial Services of America (United Planners) discharged Guttman in September 2017 alleging that Guttman offered unapproved investments.

At this time it is unclear the extent and scope of Guttman’s securities violations and outside business activites. However, Guttman’s CRD lists a number of outside business activities and companies that may be vechiles for his fundraising activities. Guttman is involved with Walled Lake Properties – a condo rental property, Serenity Management, LLC – a cemetery business, Leasing USA – commercial property rental company, Sofa Society for Financial Awareness as a consultant, Nationwide Planning & Benefits (NPB Solutions) – the marketing and sale of insurance products, Leasing USA II – a commercial property rental company, Champion Entertainment Group, LLC – a company that records TV songs, 92^nd Street Holdings – a commercial property rental company, and Total Living Plan, LLC – estate planning company.