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shutterstock_187083428-300x198According to a complaint filed by the State of Illinois Securities Department Thrivent Investment has been accused of engaging in replacing its client’s existing variable annuities for new variable annuities which requiring clients to pay surrender charges and various fees that were not appropriate for the client. Thrivent Investment violated Illinois law by allegedly: (1) failing to maintain and enforce a supervisory system and adequate written procedures to achieve compliance with the securities laws; (2) failing to adequately review the sales and replacements of Variable Annuities for suitability; (3) failing to enforce its written procedures regarding documentation of sales and replacements of Variable Annuities; and (4) failing to adequately train its salespersons to variable annuity transactions.

The lawyers at Gana LLP have represented investors in their claims against brokerage firms for unsuitable investments in annuity products.  Often times the benefits of variable annuities are outweighed by the terms of the contract that include exorbitant expenses such as surrender charges, mortality and expense charges, management fees, market-related risks, and rider costs.

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shutterstock_103681238-300x300The investment fraud lawyers of Gana LLP are examining multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) against broker Scott Goldman (Goldman). Goldman’s FINRA BrokerCheck record shows several disclosures mainly pertaining to unsuitable investments.

In December 2016, an elderly customer alleged that during Goldman’s employment at LPL Financial Corporation, he recommended highly unsuitable investments that were heavily concentrated in risky, leveraged precious metal products. In addition, the broker did not properly inform his client of the risks associated with such an investment. This dispute was settled in December 2016, and resulted in $10,000 penalty and Goldman was suspended from the industry.

Another case against Goldman was filed in October 2014 for allegedly making unsuitable recommendations, failing to supervise, and breaching his fiduciary duty during his employment at H. Beck Inc. The alleged damages were worth $250,000. The case was settled in November 2015 for $75,000.

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_172154582-300x197The securities fraud lawyers of Gana LLP are investigating customer complaints concerning alleged misrepresentation and an employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Elaine Marie Zito (Zito). According to BrokerCheck records, Zito has been in the securities industry since 1997 and is currently working for Newbridge Securities Corporation (Newbridge) in Scottsdale, Arizona.

The most recent customer complaint against Zito was filed in April 2017 alleging that she misrepresented the client’s account regarding the purchase of a variable annuity back in 2006. Zito was employed at Woodbury Financial Services, Inc during the alleged misrepresentation. The case is currently pending.

During November 2016, Zito was discharged from Questar Capital Corporation (Questar) for allegedly violating the firm’s rules and regulations in relation to unauthorized use of discretion of mutual funds.

shutterstock_85873471-300x200Calton & Associates, Inc. (Calton) broker Nicolas Toadvine (Toadvine) has been subject to numerous complaints over non-traded REITs and real estate related investments.  According BrokerCheck Lynn has been subject to 12 customer complaints in total and declared bankruptcy in 2013.  The securities lawyers of Gana LLP are investigating the customer complaints against Toadvine.

Many of the complaints concern private placements and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).

All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  Further, investor often fail to understand that they have lost money until many years after agreeing to the investment.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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shutterstock_155045255-289x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Walter Starghill (Starghill), in March 2017, was discharged by brokerage firm Lincoln Investment over allegations of Starghill’s “participation in a private securities transaction in violation of Firm policy.”  In the industry all securities transactions, private investments, loans, or other financial transactions with the investing public must be disclosed and approved by the firm before the broker can engage in them.

At this time it is unclear what outside business activity Starghill was engaged in.  According to Starghill’s disclosures he was involved with TSG Transportation LLC – a transportation service.  FINRA requires brokers to disclose their outside businesses because the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities.  In addition, Starghill obtained a Series 6 license as opposed to a broader Series 7 license.  A Series 6 license is a very limited license that only allows brokers to sell variable annuities and open end mutual funds.  Sometimes brokers with Series 6 licenses engage in private securities transactions due to their limited license.

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_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_138129767-300x199According to BrokerCheck records Brian Murphy (Murphy) has been sanctioned and barred by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker failed to respond to the regulator’s requests for information.  In July 2016, Murphy was terminated by his firm Signator Investors, Inc. (Signator) on allegations that Murphy admitted to conducting an unapproved outside business activity.  In the industry all such activities must be disclosed and approved by the firm before the broker can engage in them.

Murphy has been terminated by three employers in total during his career.  In November 2014 Murphy was terminated by MetLife Securities, Inc. (MetLife) for making a representation that he had a professional designation that he did not in fact possess.  In addition, Murphy has been subject to a number of customer complaints concerning the sale of variable annuities.

At this time it is unclear what outside business activity Murphy was engaged in.  However, the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities.  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_143685652-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Michael DeBoer (DeBoer), in May 2016, was barred by FINRA over allegations of DeBoer, in June 2010, while registered with brokerage firm Dalton Strategic Investment Services Inc. (Dalton Strategic), DeBoer recommended two customers invest $200,000 in securities offered by IST – software development company.  FINRA found that DeBoer received $32,000 in compensation from the software development company for the referrals.  The investors ultimately lost the entirety of their investments.  Further, FINRA found that DeBoer did not disclose his participation in the transactions to his brokerage firm before making his recommendation.

In addition, FINRA also alleged that from November 2010 through December 2012 DeBoer marketed to his customers and other potential investors to HSG, a commodities and futures trading entity. According to FINRA, DeBoer received more than $70,000 in payments from the futures trading entity in return for his referral of approximately 28 people who collectively invested more than $1.8 million. FINRA also found that most or all of the people DeBoer referred to the futures trading entity lost a substantial amount of the money they invested.

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