Securities Lawyers Blog
The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Marc Kalter (Kalter). According to BrokerCheck records Kalter has been the subject of at least six customer complaints and two regulatory actions. The customer complaints against Kalter allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, breach of fiduciary duty, and churning (excessive trading) among other claims.
The most recent complaint was filed in July 2016 and alleged breach of fiduciary duty and unsuitable investments causing $76,043 in damages. The complaint is currently pending. Also in March 2016 another investor filed a similar complaint and alleged breach of fiduciary duty, negligence, fraud, and churning causing $182,000 in damages. The complaint is currently pending.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.
The number of customer complaints against Kalter is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.
Kalter entered the securities industry in 1990. From 1999 until November 2014, Kalter was associated with Woodstock Financial Group, Inc. Since February 2016 Kalter has been associated with Dawson James Securities, Inc. out of the firm’s New York, New York office location.
The investment fraud attorneys at Gana Weinstein LLP represent investors who have suffered securities losses due to the mishandling of their accounts. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.