Articles Posted in Unauthorized Trading

shutterstock_120556300-300x300According to BrokerCheck records financial advisor Frederick Houck (Houck), formerly associated with Freedom Investors Corp. (Freedom Investors), has been subject to one customer complaint, six tax liens or judgments, and one FINRA sanction.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Houck has been accused by a customer of churning, negligence, excessive trading, and breach of fiduciary duty from August 2011 to January 2016 causing $150,000 in damages.  The claim is currently pending.

In August 2017 FINRA sanctioned Houck alleging that Houck exercised discretion in executing 491 transactions in the accounts of two customers as part of a recommended investment strategy without obtaining prior written authorization to exercise discretion and without his member firm having approved these accounts for discretionary trading.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.  Often times, brokers engage in unauthorized trading as part of an attempt to churn or excessively trade a client’s account.

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shutterstock_128856874-300x200According to BrokerCheck records financial advisor Jonathan Iraggi (Iraggi), currently associated with National Securities Corporation (National Securities), has been subject to two customer complaints and one employment separation for cause.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Iraggi has been accused by customers of unauthorized trading among other claims.

In July 2017, Iraggi was permitted to resign from Garden State Securities, Inc. (Garden State) after allegations were made that the broker engaged in unauthorized trading.  Also in July 2017 a customer filed a complaint against Iraggi stating damages of $22,000 caused by unauthorized trades.  The claim was denied by the firm.  In 2015 another customer filed a complaint also claiming unauthorized trading.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

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shutterstock_36343294-300x225According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) financial advisor James Lyons (Lyons), has been subject to five customer complaints and one employment terminations for cause.  Lyons was formerly associated with Raymond James & Associates, Inc. (Raymond James) until April 2017 when the firm terminated his employment due to customer allegation of unauthorized trading.

The most recent customer complaint filed against Lyons alleged that from December 2013 through June 2017 the broker engaged in unauthorized and unsuitable trading resulting in $800,000 in damages.  The complaint was filed in June 2017 and is currently pending.  Previously a customer in April 2016 alleged unauthorized trading resulting in $1.2 million in damages.  That claim was eventually settled for $400,000.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

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shutterstock_176351714-300x200According to BrokerCheck records financial advisor Marc Reda (Reda), formerly associated with Spartan Capital Securities, LLC (Spartan Capital), has been subject to eight customer complaints, three employment terminations for cause, one judgment or lien, one regulatory action, and one criminal matter.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Reda has been accused by customers of unsuitable investment advice, breach of fiduciary duty, and unauthorized trading among other claims.

The most recent complaint filed in June 2016 alleging breach of fiduciary duty and unsuitable recommendations causing $100,000 in damages.  The claim has been settled.

In addition, in June 2017 FINRA sanctioned and suspended Reda alleging that Reda exercised discretion in customers’ accounts without written authorization from the customers.  Further, FINRA determined that Reda failed to timely disclose on his Form U4 a federal tax lien filed against him in the amount of $575,101.

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shutterstock_61142644-300x225Our firm is investigating customer disclosure claims concerning broker John Nelson Crook (Crook). Crook’s FINRA BrokerCheck record shows several disclosures of allegations concerning churning (excessive trading, unauthorized trading, unsuitability, and breach of fiduciary duty. His BrokerCheck records also show a disclosure concerning an employment separation after allegations.

In July 2015, Crook was discharged from Raymond James & Associates Inc due to the findings that that the financial advisor allegedly did not respond in a timely manner to a supervisory review of trading activity. In addition, Crook allegedly did not provide a legitimate explanation for the trading activity in a certain client’s account, which lead to his termination from the firm in July 2015.

The most recent customer complaint against Crook was received in November 2015.During the period between August 2006 and June 2015, Crook allegedly engaged in excessive and unauthorized trading. Crook allegedly also recommended unsuitable investment products to his client, fraudulently misrepresented, and breached his fiduciary duty. The alleged damages are worth over $4 Million and the case is currently pending.

shutterstock_181783781-200x300In June 2016, Next Financial Group, Inc. (Next Financial) broker Dion Padilla (Padilla) was subject to a regulatory action brought by The Financial Industry Regulatory Authority (FINRA) alleging Padilla effected an unauthorized purchase of a variable annuity for a customer and misrepresented that the investment was not a variable annuity. According to FINRA, the customer stressed to Padilla that they did not want any of their funds invested in a variable annuity due to the high fees associated with variable annuities and because of their desire for liquidity.  But instead of following the customer’s instructions, FINRA found that Padilla presented a variable annuity application to the customer and assured him that the application was not for a variable annuity.  In addition, FINRA found that Padilla caused the customer to invest an additional $558,889 into the variable annuity by falsely claiming that the investment purchased was not a variable annuity.  FINRA found these statements to be misrepresentations that were all false and misleading.

In addition to the FINRA sanctions, Padilla has been subject to four customer complaints – many of which involve claims concerning variable annuity investments.  The law offices of Gana LLP are currently investigating customer complaints concerning this broker.

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shutterstock_175137287-300x200According to BrokerCheck records Michael Spolar (Spolar), now associated with International Assets Advisory, LLC (IAA), has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that Spolar exercised discretion in customers’ accounts that were non-discretionary accounts.  Since according to FINRA Spolar did not obtain written authorization from these customers to exercise discretion in their accounts and his member firms did not approve these accounts for discretionary trading, these trades were unauthorized.  FINRA found that while Spolar stated that he discussed strategy with these clients and he received verbal authority for the trades.  However, when the firm discovered the activity Spolar was terminated. FINRA also found that when Spolar moved to a different brokerage firm he continued to exercise discretion in customer accounts despite his prior termination for the same conduct.

In addition to the FINRA sanctions Spolar has been subject to eight customer complaints, one termination, and one financial disclosures including a bankruptcy filing in December 2015.  Some of the complaints against Brodt allege securities law violations including that the broker engaged in unauthorized trading among other claims.

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shutterstock_172034843-300x200Broker Clay Hoffman (Hoffman) was recently sanctioned by The Financial Industry Regulatory Authority (FINRA) in an enforcement action that led to a permanent bar against the broker.  According to BrokerCheck, FINRA found that Hoffman consented to sanctions that he executed discretionary transactions in a customer’s account without prior written authorization from the customer to exercise discretionary trading or approval by his brokerage firm.

The securities lawyers of Gana LLP are also investigating customer complaints against Hoffman.  There have been at least 14 customer complaints against Hoffman, four regulatory actions, and one employment termination for cause in Hoffman’s 14 year career.  The customer complaints against Hoffman allege a number of securities law violations including that the broker made unauthorized trading, fraud, and breach of fiduciary duty among other claims.

The most recent customer complaint was filed in April 2015 and alleges unsuitable investments, unauthorized trading, and misrepresentations causing $234,697 in damages.  The claim was settled.

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shutterstock_170949320-300x199Gana LLP’s investment fraud attorneys are looking into multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) against broker Rodger James Burskey (Burskey) that led to a regulatory action by FINRA. According to Burskey’s FINRA BrokerCheck records, there are several disclosures on his record pertaining to unauthorized, unsuitable, and excessive trading. Burskey has dealt with an employment separation and was barred by FINRA from the securities industry. In December 2016, Burskey was barred by FINRA from having any registration capacities in the securities industry. He consented to the sanctions and findings of FINRA and refused to appear on the record regarding allegations of making unsuitable recommendations and engage in discretionary trading.

Burskey entered the securities industry in 1985 and was last employed at Voya Financial Advisors, Inc. until November 2015. He was previously registered at:

• US Allianz Securities, Inc. (February 1999 – November 2006)

shutterstock_132704474-300x200Gana LLP’s investment fraud attorneys are investigating multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) again broker Todd Douglas Ryman (Ryman). According to Ryman’s FINRA BrokerCheck records, there are several disclosures on his record pertaining to unauthorized trading, unsuitable trading, misrepresentation of material facts, amongst other allegations.

Ryman entered the securities industry in 1995 and currently employed at Suntrust Investment Services, Inc. since February 2017. He was previously employed at:

• Raymond James & Associates, Inc. (September 2016 – February 2017)
• Deutsche Bank Securities, Inc. (May 2011 – September 2016)
• Merrill Lynch, Pierce, Fenner & Smith Inc. (October 2009 – May 2011)
• Banc of America Investment Services, Inc. (October 2002 – October 2009)
• UBS Painewebber, Inc. (July 1998 – October 2002)
• Josephthal & Co., Inc. (February 1996 – July 1998)
• Bear, Stearns & Co., Inc. (August 1995 – February 1996)

In February 2017, a customer complaint was filed for alleged documentation during the period of September 2016 to February 2017 while Ryman was employed at Raymond James and Associates. The stated alleged damages are $300,000.00 and the claim is currently pending. Another pending case was filed in November 2016 by a customer alleging that Ryman sold an unsuitable Private Equity fund. The alleged damages were $250,000.00 and is still pending.

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