Articles Posted in Suitability

shutterstock_26813263The securities attorneys at Gana Weinstein LLP have been investigating J.P. Morgan Securities LLC (J.P. Morgan) broker Jeffrey Mcaleney (Mcaleney). According to BrokerCheck Records, Mcaleney has been subject to 10 customer disputes, the majority of which concern unsuitable equity, preferred stock, funds, and limited partnership investments.

In October 2017, a customer alleged that from 2007 to 2016, Mcaleney recommended investments that were unsuitable because they were contrary to the customer’s stated goals. The customer requested $313,909.22 in damages.

In October 2017 another customer similarly alleged that from 2014 to 2016, Mcaleney was recommending unsuitable investments that didn’t align with the customer’s needs and goals.

In March 2014, a customer alleged that Mcaleney placed the customer into risky high-yield closed-end funds, equities, and preferred stocks which were risky and volatile and unsuitable to the customer. The customer also alleged that the portfolio was over-concentrated and that the risks of the investment weren’t properly disclosed. The customer requested $200,000 in damages. Continue Reading

shutterstock_132704474-300x200The securities attorneys at Gana Weinstein LLP have been investigating The GMS Group, LLC (GMS Group) broker Cormac Maughan (Maughan). According to BrokerCheck records, Maughan has been subject to 2 customer disputes involving unsuitable recommendations of municipal bonds, one of which is still pending. Maughan has also been subject to two regulatory actions in which New York Stock Exchange (NYSE) sanctioned Maughan for various violations of the securities laws, including unauthorized trading and unsuitable investments.

In November 2017, a customer alleged that from January 2009 through to November 2015, Maughan recommended Puerto Rico municipal bonds which were unsuitable to the customer’s investment needs and that Maughan breached his fiduciary duty to the client. This dispute is still pending.

In addition, in May 2004, the NYSE found that Maughan engaged in unauthorized trading by exercising discretionary power with oral but not with written authorization from customer or member firm. The NYSE also found that Maughan also engaged in unsuitable investments that were inconsistent and excessive for his customer in terms of the  customer’s age, investment objectives, and financial circumstances. This violation of NYSE rules 408(a) and 3529c) resulted in a one month suspension for Maughan. Continue Reading

shutterstock_61142644-300x225The securities attorneys at Gana Weinstein LLP are investigating claims against Summit Brokerage Services (Summit Brokerage) broker Michael Mathias (Mathias). According to BrokerCheck records, Mathias has been subject to twenty customer complaints, two of which are still pending. The majority of the complaints concern the unsuitable recommendation of variable annuities.

Most recently, in August 2017, a customer alleged that Mathias recommended unsuitable investments to customers, requesting $433,687 in damages. This dispute is currently still pending.

In 2001, a customer alleged that Mathias did not reimburse client for deferred sales charges. The customer further alleges that the annuity investment recommended was not suitable for him.The client is requesting $10,000 in damages. This dispute is currently still pending. Continue Reading

shutterstock_141873055-300x268The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Brad Lawing (Lawing).  According to BrokerCheck records, Lawing has been subject to 11 customer complaints. In addition, Lawing has been subject to a regulatory matter in which FINRA sanctioned Lawing for various violations of the securities laws including unsuitable recommendations.

In November 2017, FINRA found that Lawing recommended shares of a business development company (BDC) to three customers that did not satisfy suitability standards for two customers and resulted in over-concentration for the other customer. FINRA found that Lawing did not use reasonable diligence to ascertain customers’ financial situation, risk tolerance, and other factors affecting for suitability consideration. FINRA also alleged that in one case Lawing recommended an investment without speaking with the customer. Additionally, Lawing disclosed non public information for ten of his customers whose previous registered representative was statutorily disqualified from participating in the brokerage industry. In November 2017, Lawing was suspended for 5 months and fined $10,000. Continue Reading

shutterstock_145368937-300x225According to BrokerCheck records financial advisor John Maloney (Maloney), formerly employed by Edward Jones has been subject to five customer complaints and one termination for cause.  According to records kept by The Financial Industry Regulatory Authority (FINRA), in May 2016 Edward Jones terminated Maloney stating that he did not adhere to the firm’s policy regarding suitability of recommendations.  Most of a Maloney’s customer complaints allege that Maloney made unsuitable recommendations in equity securities.

In November 2017 a customer made allegations of misrepresentation, suitability, breach of fiduciary duty, and churning of her accounts.  The claim is currently pending.

In September 2017 a customer alleged an unsuitable investment recommendation in Fire Eye stock causing losses of $329,523.  The claim is currently pending.

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shutterstock_61848763-300x203The investment attorneys at Gana Weinstein LLP are investigating customer complaints against Cambridge Investment Research broker John Provonost (Pronovost).

According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), a customer alleged in February 2018 that Pronovost engaged in unsuitable investments.  Another customer alleged in March 2018 that Pronovost engaged in unsuitable investments and misrepresented the investor’s needs.

Pronovost allegedly sold the LJM Preservation and Growth Fund to multiple customers (LJMAX, LJMCX, LJMIX).  Investors may have been unaware of the risks associated with this investment, as the fund’s name belies its risky strategy. Gana Weinstein LLP has already filed a case against Cambridge Investment Research, Mr. Pronovost’s employer for the sale of the LJM Preservation and Growth Funds.

shutterstock_120556300-300x300The investment lawyers at Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Donald Southwick (Southwick).

According to BrokerCheck records, without admitting or denying the findings, Southwick consented to the sanction and to the entry of findings that he failed to perform a reasonable basis suitability analysis prior to recommending investments to his customers. The findings also stated that Southwick recommended unsuitable transactions in the securities accounts of two customers by recommending purchases that resulted in an over-concentration of illiquid private offerings, inconsistent with their investment objectives and risk tolerance. Southwick has been suspended from the securities industry for six months.

Moreover, Southwick has been subject to two customer complaints.

shutterstock_24531604-200x300The investment lawyers of Gana Weinstein LLP are investigating claims against Robert Clarke (Clarke). According to BrokerCheck records, Clarke has five disclosures, four of them being customer complaints.

In August 2017, a customer alleged Clarke misrepresented the nature of an investment and the purchase of the investment in the customer’s accounts. The customer is seeking $500,000 in this pending dispute.

In March 2016, a customer alleged Clarke misrepresented and made an unsuitable recommendation for the customer to invest in collateralized mortgage obligations. This dispute settled for $120,000.
In April 2014, a customer alleged unsuitable investment, transfer of accounts handled negligently, lack of fiduciary duty, and lack of supervision. This dispute settled for $77,205.

False representations include either written or oral statements containing misrepresentations or omissions of information that are material to an investor and induce the purchase, sale, or holding of a security. Under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and Rule 10b-5 a misrepresentation or omission of a fact is material if a reasonable investor might have considered the fact important in the making of the investment decision. Also the Financial Industry Regulatory Authority (FINRA) Rule 2020 also prohibits members from effecting “any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.”

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shutterstock_184430645-300x225According to BrokerCheck records, Elaine LaCerte (LaCerte), also known as Elaine Diones and Elaine Diones Helzer, was suspended by the Financial Industry Regulatory Authority (FINRA) in August 2017.

LaCerte was suspended for allegedly engaging in an unsuitable pattern of short-term trading of Unite Investment Trusts (UITs) in over 100 customer accounts. Without admitting or denying the findings, LaCerte consented to the sanctions and the entry of findings. The findings stated that “in connection with these accounts, LaCerte repeatedly recommended that the customers purchase UITs and then sell these products well before their maturity dates. In addition, on more than 100 occasions, LaCerte recommended that her customers use the proceeds from the short-term sale of a UIT to purchase another UIT with identical investment objectives. LaCerte’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.” LaCerte has been banned from the industry for six months and was ordered to pay a $5,000 fine.

Moreover, LaCerte has been subject to four customer disputes.

In November 2016, a customer alleged LaCerte misrepresented material facts with respect to the purchase of a municipal bond. This dispute settled for $25,000.

In August 2016, a customer alleged LaCerta recommended unsuitable investments. This dispute settled for $24,464.76.

In July 2016, a customer alleged LaCerta misrepresented material facts with respect to investment risks. This dispute settled for $4,000.

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shutterstock_12144202-300x200The investment lawyers of Gana Weinstein LLP are investigating claims against John Eglow (Eglow). According to BrokerCheck records, Eglow, who works out of Delray Beach, Florida, has been subject to four customer disputes.

In May 2017, a customer alleged she was overcharged for trades. This dispute settled for $48,758.

In July 2016, a customer alleged Eglow made unsuitable recommendations, resulting in unrealized losses. This dispute settled for $115,000.

In March 2015, a customer alleged that the terms and provisions of investments were misrepresented by Eglow. This dispute settled for $3,205.73.

Brokers have a responsibility to 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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