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shutterstock_143685652-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Christopher Hellman (Hellman), formerly associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) in December 2018, was sanctioned and barred from the securities industry by FINRA over accusations of potentially selling unapproved products.

In December 2018 FINRA alleged that Hellman consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information during its investigation.  FINRA found that Merrill Lynch terminated Hellman’s registration for conduct including failure to adhere to firm standards regarding selling away and failure to fully disclose participation in outside business activities.

The providing of loans, misappropriating funds through false pretenses, 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 is unclear the nature and scope of Hellman’s activities.  Hellman’s disclosures do not include any outside business activities (OBAs) disclosures.

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shutterstock_184430645-300x225According to BrokerCheck records financial advisor Lynn Faust (Faust), currently employed by Stifel, Nicolaus & Company, Inc. (Stifel Nicolaus) has been subject to at least three customer complaints and one employment termination for cause during her career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaints against Faust concern allegations of unsuitable investments in market linked notes.

In November 2018 a customer complained that Faust recommended investments that violated the securities laws concerning misrepresented market linked notes.  The complaint alleges $59,000 in damages and is currently pending.

In October 2018 Faust was terminated by Raymond James & Associates, Inc. (Raymond James) due to allegations that the firm had concerns relating to the nature of advisor’s UIT activity.

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shutterstock_160304408-300x199According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Sean Kelly (Kelly), in October 2018, was accused by the Securities and Exchange Commission (SEC) of stealing more than $1 million from his clients.

According to the SEC, Sean Kelly used his companies, Lion’s Share Financial of East Cobb, Inc., Lion’s Share & Associates, Inc., and Lionsshare Tax Services, LLC, (Lion Share) to raise at least $1 million from 12 investors, including elderly retirees.  Kelley is accused of promising that he would invest investor funds in a variety of investment products including private placements and real estate funds.  However, the SEC determined that Kelly just spent the money on his own personal expenses including Super Bowl tickets, luxury vacations, and cash withdrawals. Apparently, even after he received an SEC subpoena Kelly continued to just steal money from investors.  Instead, the SEC alleged that Kelly continued to dodge the agency and did not show up for his scheduled testimony after informing the SEC’s staff that he would show up and “come clean.”  In a separate action, the U.S. Attorney’s Office for the Northern District of Georgia filed criminal charges against Kelly and arrested him.

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”.

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shutterstock_180690254-300x200The securities lawyers of Gana Weinstein LLP are investigating potential recovery options concerning unsuitable investment strategies involving Lifetime Economic Acceleration Process (LEAP).  This investment strategy claims it can help investors build and protect wealth but in practice appears to be nothing more than falsely peddling high cost whole life insurance as an investment.

LEAP typically places the investor into an annuity to fund the purchase of a large whole life insurance policies.  The financial advisor makes huge commissions on all of these purchases while the investor is stuck in several illiquid annuities and insurance products that cannot be easily liquidated and provides no traditional investment growth.

Nonetheless, the internet is full of websites touting LEAP as a strategy for building and protecting wealth.  Brokers pitching these investments lure in investors to:

  • Learn strategies to increase wealth at no additional out of pocket expense.
  • Effective and efficient approach to money decisions.
  • Improve financial and estate planning.
  • You may be missing potential for additional wealth and protection of assets.

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shutterstock_20354401-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Michael McTigue (McTigue), in August 2017, was terminated by his employer ProEquities after the firm alleged that during a recent branch inspection of the firm discovered issues relating to (1) use of unapproved email address; (2) use of unapproved performance report; (3) customer signature discrepancies on firm paperwork; (4) frequent trading of mutual fund A shares; (5) breakpoint sales of mutual funds; (6) unapproved marketing materials; (7) undisclosed outside business activities (OBA); and (8) text messaging a customer.  When the firm presented these issues to McTigue and requested an explanation he resigned prior to submitting explanation to all of the issues.

At this time it is unclear the extent and scope of McTigue’s securities violations and outside business activities.  McTigue’s CRD lists that he operates a d/b/a called South Coast Financial as an outside business activity.  In addition, McTigue lists Realty South as a real estate business.  While at this time it is unknown if McTigue used these businesses and unapproved communications methods to sell investments, 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 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.

shutterstock_164637593-300x199The investment lawyers of Gana Weinstein LLP are investigating regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Christopher Stephen Jorgensen (Jorgensen). Jorgensen allegedly refused to appear for on-the-record testimony requested by FINRA resulting in a ban from the securities industry.

In April 2017, Jorgensen was terminated from his position at Summit Brokerage Services after “the firm received a verbal complaint from a customer who alleged that [he] instructed her not to respond to a FINRA inquiry.”

In 2012, he was terminated from his position at Raymond James Financial Services “due to client complaint and settlement relating to unauthorized discretion.”

Attorney, Adam Gana was interviewed by long time correspondent Jesse Weber about the leaked photos of Tiger Woods and Lindsey Vonn. The hour long segment touched on a celebrities right to privacy, what legal actions celebrities can take when their nude images are hacked and the steps associated with such actions. For more information contact Gana Weinstein LLP at 212-776-4251.

https://livestream.com/accounts/18968940/events/7055388/videos/161821399

shutterstock_102242143-300x169The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Sean Mcelduff (Mcelduff). Mcelduff has been subject to two customer complaints – both of which pertain to suitability concerns over recommendations for investment products. Mcelduff’s BrokerCheck records from the Financial Industry Regulatory Authority (FINRA) shows that the most recent customer complaint against Mcelduff was filed in December 2016. The customer alleged that Mcelduff made unsuitable recommendations of Puerto Rican municipal bonds. The alleged damages are worth $260,000. The case is still pending.

In January 2016, another customer complaint was filed against Mcelduff claiming that the broker allegedly purchased unsuitable bonds for the client. The alleged damages were priced at $21,000 and the case was settled for $12,000.

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.

shutterstock_184149845-300x246The securities lawyers of Gana Weinstein LLP are following the case against broker Jeffrey Kluge (Kluge) who pleaded guilty to two counts of bank fraud in the state of Minnesota. A plead agreement was filed with the U.S. District Court in Minnesota on March 29, 2017. Kluge entered the securities industry in 1991 and remained with Merrill Lynch, Pierce, Fenner & Smith Inc. for the entirety of his career. Kluge started a scheme to create fraudulent Merrill Lynch account statements to falsely secure collateral for multi-million lines of credit. Kluge was able to carry out this scheme by creating a fake domain name, www.mymerrillonline.com, and fake email address, pledgecontrol@mymerrillonline.com, to send the falsified account statements to Platinum Bank. A false Merrill Lynch identity was used as a cover for the email address. Kluge ran this fraudulent scheme for 15 years, starting in 2001 to November 2016.

In 2001, Kluge received a line of credit for $150,000 from Alliance Bank by putting up municipal bond funds as collateral. These bond funds were substantiated by falsified account statements that hid the fact that the same bonds were already pledged to Merrill Lynch loans previously obtained by Kluge. The outstanding balance of Alliance Bank line of credit was at $6 million in November 2016.

Utilizing the same scheme for Alliance Bank, Kluge was able to secure a $1 million line of credit from Platinum Bank in Minnesota. He procured this line of credit by putting up the same assets used for Merrill Lynch and Alliance Bank.  The Platinum Bank line of credit balance was at $2.7 million as of November 2016.