Selling Away

FINRA Bars Lizabeth Yy Over Investigation Into Promissory Note Sales to Customers

September 4, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Lizabeth Ty (Ty). According to BrokerCheck records Ty is subject to three pending customer complaints, while registered with Park Avenue Securities LLC (Park Avenue) in Houston, Texas. The regulatory also filed a complaint against Ty attempting to investigate the circumstances of the sale of claimed unregistered securities. (FINRA No. 20160493150-01). When Ty refused to cooperate with the investigation, FINRA automatically barred Ty from the industry.

According to BrokerCheck records Ty has three customer complaints pending concerning the sales of promissory notes. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. At this time it unclear the nature and scope of Ty’s outside business activities and private securities transactions. However, according to Ty’s public records her outside business activities include a real estate license in Texas. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Ty was associated with brokerage firm Park Avenue from January 2006 until July 2015.

Gana LLP Files Complaint Against Newbridge Securities Concerning Broker Dennis Hayes’ USA Gold Sales

July 23, 2016 | by Staff Attorney

The law offices of Gana Weinstein LLP recently filed a statement of claim with FINRA on behalf of their 60 year old client concerning inappropriate investments in private placements, non-traded real estate investment trusts (Non-Traded REITs), low priced securities, and private securities transactions. The complaint was filed against Newbridge Securities Corporation (Newbridge) and alleges that the firm’s broker Dennis Hayes (Hayes) recommended these unsuitable transactions. In total the Claimant alleges approximately $750,000 in damages.

According to the Statement of Claim, the Claimant divorced her husband in 2012 leaving her with approximately $1,500,000 in assets of which $500,000 was non-qualified money and about $1 million was qualified IRA funds. Claimant explained to Hayes that her goals were to protect her assets while providing her with returns to meet her immediate income needs. Shortly after transferring the funds, Hayes solicited the Claimant to invest in a gold fund called USA Gold. According to the complaint, Hayes recommended $300,000 in USA Gold through a self-directed IRA account.

The complaint alleges that after a diligent search there appears to be no Regulation D filing for a private placement for USA Gold and no evidence of any registration of the offering. USA Gold appears to be an unregistered securities offering and most likely an investment scam. Even more shocking is that Newbridge has failed to properly investigate and terminate Hayes for his involvement in the unregistered offering thereby continuing to place investors at risk. According to the Statement of Claim, Claimant complained to Gene Robert Abrams (Abrams), Newbridge’s General Counsel and Co-Chief Compliance Officer that Hayes was involved in private securities transactions.

FINRA Bars Christopher Tolmacs Over Borrowing Client Funds

May 31, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Christopher Tolmacs (Tolmacs) working out of Portage, Michigan alleging that the broker borrowed client funds. The providing of loans or selling of promissory notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. According to the FINRA regulatory action (FINRA No. 20160489663-01) Tolmacs consented sanctions in the form of a permanent bar because he failed to provide documents and information requested by FINRA during the course their investigation into allegations that he borrowed funds from multiple customers.

At this time it unclear the nature and scope of Tolmacs’ outside business activities and private securities transactions. However, according to Tolmacs’ public records his outside business activities includes Harbinger Financial Group, Inc – listed as an insurance agency, and Harbinger Asset Management, Inc which is listed as a registered investment advisory firm. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance agents to clients of those side practices.

In addition, Tolmacs has been subject to significant tax liens totaling over $225,000 in late 2015. Tax liens and judgements can provide an economic incentive to brokers to violate the securities laws to garner higher commissions and income.

Broker Investigation: John McGinnis Promissory Notes and Private Placement Investments

May 16, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating at least four customer complaints brought before the Financial Industry Regulatory Authority (FINRA) against John McGinnis (McGinnis) working out of Escondido, California alleging the sale of promissory notes, private placements, and private loans. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

At this time it unclear the nature and scope of McGinnis’ outside business activities and private securities transactions. However, according to McGinnis’ public records his outside business activities includes Orchards of AZ LLC, a real estate business. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance agents to clients of those side practices.

McGinnis entered the securities industry in 1987. Since July 2008 through September 2015 McGinnis has been associated with RBC Capital Markets, LLC.

Broker Investigation: Allegations that David Ferland Solicited Private Loans From Customers

April 28, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a customer complaint brought before the Financial Industry Regulatory Authority (FINRA) against David Ferland (Ferland) working out of the York, Maine office allegedly received a loan of $721,408 from a customer. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. In addition to the loan complaint there have been seven financial disclosures on Ferland’s record indicating that broker had financial trouble.

At this time it unclear the nature and scope of Ferland’s outside business activities and private securities transactions. However, according to Ferland’s public records his outside business activities include real estate business, DL Properties LLC, The Ice House LLC, YFS, LLC, and Independent Insurance Brokering. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance agents to clients of those side practices.

Ferland entered the securities industry in 2006. From August 2007 until August 2012, Ferland was associated with Invest Financial Corporation. Since August 2012 Ferland has been associated with Ameriprise Financial Services, Inc.

FINRA Bars Broker Wayne Schultz Over Private Securities Transactions

March 31, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Wayne Schultz (Schultz) (FINRA No. 2015044640601) of Branchburg, New Jersey. According to the FINRA action, Schultz consented to a bar from the securities industry after he failed to provide documents and information requested by FINRA during its investigation concerning certain notes that Schultz had issued to an elderly client. The selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

At this time it unclear the nature and scope of Schultz’s outside business activities and private securities transactions. However, according to Schultz’s public records his outside business activities include a law practice. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Schultz was associated with brokerage firm TFS Securities, Inc. from September 2008 until December 2010. From January 2011 until June 2013 Schultz was registered with Sterne Agee Financial Services, Inc. Finally, from June 2013 until February 2016 Schultz was registered with Adirondack Trading Group LLC.

FINRA Bars Broker Robert Cross Over Private Securities Transactions

March 31, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Robert Cross (Cross) (FINRA No. 2014041637201) of Rome, Georgia. Since August 2006, Cross was registered with Allstate Financial Services, LLC, where he resigned on June 28, 2013. On June 19, 2014, Allstate Financial Services filed a Form U5 amendment disclosing that a customer complaint had been filed against Respondent regarding Cross.

Thereafter, FINRA investigated Cross on the grounds that Allstate Financial Services’ Form U5 amendment stated that a customer complained of breach of contract, fraud, conversion, and negligence related to a collateralized bond obligation. FINRA’s investigation involved Cross’ outside business activities, financial reporting obligations, and whether Cross accepted unapproved loans from a customer while engaging in a private securities transaction – otherwise known in the industry as “selling away”. Thereafter, Cross refused to appear on the record to give testimony drawing an automatic bar from the financial industry.

At this time it unclear the nature and scope of Cross’ outside business activities and private securities transactions. However, according to Cross’ public records his outside business activities include Cross, Cross & Sims, Inc. and CCS Property.

FINRA Sanctions Ameriprise Financial Broker William Marshall and Supervisor John J. Kolinofsky, Jr. Over BioChemics Stock Sales

March 20, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Ameriprise Financial Services, Inc. (Ameriprise) broker William Marshall (Marshall) (FINRA No. 2012033291204) and his supervisor John J. Kolinofsky, Jr. (Kolinofsky) working out of the firm’s Plano, Texas office. According to the FINRA action against Marshall, from January 6, 2011 through May 2, 2012, Marshall participated in the sale of $1.72 million of privately issued preferred stock of BioChemics, Inc. (BioChemics) to his immediate firm supervisor, Kolinofsky, his Complex Manager, two other Ameriprise registered representatives, and several firm customers, all without having provided prior written notice to Ameriprise.

According to FINRA, Marshall received compensation for facilitating the private securities transactions in the form of common stock purchase warrants from BioChemics. Marshall is also alleged to serve as a member of BioChemics’ Scientific Advisory Board during his association with Ameriprise and received common stock purchase warrants from BioChemics as compensation. Moreover, FINRA found that Marshall used an unapproved personal e-mail account to communicate with firm customers about investing in BioChemics. FINRA also alleged that Marshall distributed sales literature prepared by BioChemics to investors that failed to disclose his business and personal financial interest in BioChemics and otherwise contained misleading, exaggerated, and/or unwarranted statements and inadequate risk disclosures.

BioChemics was later found to be an investment fraud. On December 14, 2012, the U.S. Securities and Exchange Commission (SEC) filed a civil enforcement action in the United States District Court for the District of Massachusetts against BioChemics. In March 2015, the District Court enjoined BioChemics from violating the antifraud provisions of the federal securities laws and ordered BioChemics to pay over $17 million in disgorgement of ill-gotten gains and prejudgment interest and $750,000 as a civil penalty.

FINRA Bars Raymond James Broker Jeffrey Ingros Over Outside Business Activities

March 19, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Jeffrey Ingros (Ingros) (FINRA No. 2013039166001) working out of Beaver, Pennsylvania. According to the FINRA action, Ingros consented to a bar from the securities industry after he failed to provide information requested by FINRA during its investigation concerning undisclosed loans from a customer and outside business activities. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. In addition to the FINRA bar, Ingros has a long history of customer complaints and two employment separations for allegations of misconduct.

At this time it unclear the nature and scope of Ingros’ outside business activities and private securities transactions. However, according to Ingros’ public records his outside business activities include Fort McIntosh Group, LLC, Ingros Family, LLC, and Fort McIntosh Annuity & Insurance. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Ingros was associated with brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) from May 2007 until November 203. Finally, from November 2013 until February 2016 Ingros was registered with Raymond James Financial Services, Inc. (Raymond James).

FINRA Sanctions Broker Kevin Murphy Over Selling Away Allegations

March 9, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2015043159501) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Kevin Murphy (Murphy). FINRA alleged that in or about November 2013, Murphy sold $1.2 million of shares and warrants in a private placement to four individuals and one limited partnership without his firm’s knowledge.

According to FINRA, in August and September, 2013, Murphy made a $1.2 million investment in a private placement for which TGP Securities, Inc. (TGP), Murphy’s brokerage firm, was providing brokerage services. In return for his investment, FINRA found that Murphy received two stock certificates totaling 600,000 Series F shares and two warrants exercisable for 300,000 common shares. On November 29, 2013, FINRA alleged that Murphy resold the Series F shares and the warrants to four individuals and one limited partnership for $1.2 million without the permission of TGP.

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.