Securities Lawyers Blog

Teryl Trenchard Under Investigation For Securities Fraud

January 2, 2018 | by Staff Attorney

According to records kept by The Financial Industry Regulatory Authority (FINRA), former Capitol Securities Management (Capitol Securities) employee Teryl Trenchard (Trenchard) in under investigation for fraud. In March 2017 FINRA initiated its investigation into Trenchard for fraud. On the same day Capitol Securities terminated Trenchard for the same reason. Thereafter, in July 2017 a customer filed a complaint alleging breach of fiduciary duty, conversion, and unsuitable investments causing $700,000 in damages. The claim is currently pending.

Thereafter, in September 2017 another customer alleged that from 2005 to March 15, 2017 Trenchard engaged in misappropriation, forgery, fraud, and unauthorized trading in unsuitable transactions. The customer alleged $1,800,00 in damages. The claim is currently pending.

At this time it is unclear the extent and scope of Trenchard’s securities violations and the exact details of the fraud under investigation. Trenchard’s CRD lists a business called Market Technician’s Association and no other businesses.

Broker Jeffrey Eglow Subject to Multiple Customer Complaints

December 27, 2017 | by Staff Attorney

The 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.

Anthony Ferrara Subject to Customer Complaints Over Variable Universal Life Policies

December 27, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Anthony Ferrara (Ferrara), currently employed by Larson Financial Securities, LLC (Larson Financial), has been subject to four customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), in July 2017 a customer filed a complaint alleging that Larson Financial made unsuitable recommendations and material omissions in the sale of a variable universal life (VUL) policy that was purchased in 2013. The customer requested $40,000 in damages and is currently pending. Many of the complaints concerning Ferrara’s conduct include claims concerning the sales of VULs.

In January 2017 another customer filed a complaint alleging unsuitability of the product, misrepresentation, breach of fiduciary duty, deceptive business practices, general fraud and negligence. The customer alleged $350,000 in damages and the claim is currently pending.

VUL are complex insurance and investment products that investors must fully understand the risks and benefits of prior to investing. One feature of a VUL policy is that the owner can allocate a portion of his premium payments to a separate sub-account that can be used to grow in value through investments. Monthly charges for the life insurance policy, including a cost of insurance charge and administrative fees, are deducted from the policy’s cash value. The cash value of the policy may increase or decrease based on the performance of the sub-account investments. In addition, the VUL policy terminates, or lapses, if at any time the net cash surrender value is insufficient to pay the monthly cost deductions. Upon termination of the policy, the remaining cash value becomes worthless.

James Cox Suspended from Securities Industry

December 27, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against broker James Cox (Cox).

According to Cox’s Brokercheck records, he has been sanctioned by FINRA because he allegedly recommended unsuitable annuity transactions to a customer and received commissions of $25,460 in connection with the exchange. Without admitting or denying the findings, Cox consented to the sanctions and to the entry of findings. Cox was suspended from FINRA for four months and fined a total of $35,460.

In April 2017, Cox was terminated from Stifel, Nicolaus & Company, Incorporated because of a “lack of confidence after settlement of customer complaint and nondisclosure of outside business activity”

John Schneider Has Multiple Customer Complaints Over Investment Losses

December 27, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor John Schneider (Schneider), formerly employed by PWA Securities, Inc. (PWA Securities), has been subject to five customer complaints and one regulatory action. According to records kept by The Financial Industry Regulatory Authority (FINRA), in August 2017 a customer filed a complaint alleging that Schneider made unsuitable recommendations, over-concentration of accounts, and failed to supervise. The claim is currently pending.

In June 2017 a customer claimed that after receiving a 50% return of principal on a real estate private placement investment the investment became worthless.

In July 2016 a customer alleged unauthorized trading, inadequate supervision, and unsuitable investments that took place from June of 2010 through May of 2016 causing $100,000 in damages. The claim was settled for $60,000.

James Merkel Terminated by Merrill Lynch Over Private Securities Sales

December 21, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor James Merkel (Merkel), in August 2017, was terminated by his employer Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) after the firm alleged that Merkel violated firm policy relating to selling away.

Prior to the firm’s termination, in June 2016 a customer filed a complaint alleging unsuitable investment recommendations and misrepresentation and omission of material facts involving options. The customer alleged $1,000,000 in damages and the claim is currently pending.

At this time it is unclear the extent and scope of Merkel’s securities violations and outside business activites. Merkel’s CRD lists that he operates an outside business activity concerning real property. Merkel also lists an entity called Merkel’s Lfan LLC that is a business that produces adironack chairs and other items. At this time it is unknown the exact nature of the firm’s allegations concerning private securities transactions – a practice known in the industry as “selling away”.

Jeanette Adcock Sanctioned by FINRA

December 21, 2017 | by Staff Attorney

According to BrokerCheck records kept by the Financial Industry Regulatory Authority (FINRA), broker Jeanette Adcock (Adcock) has been sanctioned for allegedly not complying with Illinois Securities Law.

Additionally, Adcock has been subject to three customer disputes in 2017. Moreover, In April 2017, Adcock was “permitted” to resign from Wayne Hummer Investments because she “failed to forward a written customer complaint to her supervisor or compliance department as required.”

In November 2017, a customer alleged that Adcock made misleading statements regarding a risky investment. The customer is requesting $25,000 in damages in this pending dispute.

Michael McTigue Terminated by ProEquities Over Multiple Rule Violations

December 21, 2017 | by Staff Attorney

According 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.

Benefit Street Partners Realty Trust REIT Investment Loss Options

December 21, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in Benefit Street Partners Realty Trust (Benefit Street) a non-traded real estate investment trust (Non-Traded REIT). Benefit Street was formerly known as Realty Finance Trust. However, in September 2016 Realty Finance Trust appointed Benefit Street as its new advisor replacing AR Global Investments.

According to the firm’s website, Benefit Street originates, acquires, and manages a diversified portfolio of commercial real estate debt secured by properties located in the United States. The funds manager is a leading credit-focused alternative asset management firm with over $20 billion of assets under management. The manager claims it has an experienced real estate team and lends against all commercial property types across the United States. The REIT invests throughout the capital structure with a focus on generating attractive risk-adjusted returns.

However, according to secondary market sources for non-traded REITs, shares of Benefit Street are currently listed for $12.99 per share a far drop from the sale price of $25 per share.

Ahmed Gheith Terminated by Paulson Investment Over Sale of Promissory Note

December 18, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ahmed Gheith (Gheith), in August 2017, was terminated by his employer Paulson Investment Company, LLC (Paulson Investment) after the firm alleged that Gheith was terminated subsequent to discovery of violations of firm supervisory procedures, failure to provide honest answers on annual questionnaires, violations of FINRA Rule 3280, and due to initiation of customer arbitration alleging fraud, negligence, and unjust enrichment. The firm referenced that the product involved was a promissory note. Thereafter, in April 2018 FINRA Suspended Gheith.

FINRA alleged that two registered representatives informed Gheith about a private offering related to a real estate development in Belize. The investment was described as a short-term note meant to raise money for the development of an airport and Gheith thereafter referred several customers to invest. FINRA found that Gheith’s communications with four customers included a description of the Private Offering and leading the customers to invest a total of $3.5 million in the offering. FINRA alleged that Gheith was paid $93,165 for his role in soliciting and referring the customer.

FINRA’s allegations concerning promissory notes, a private securities transaction, –is known in the industry as “selling away”.