Securities Lawyers Blog

Broker Sergio Rovner Subject to Multiple Investment Complaints

September 26, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are currently investigating claims against broker Sergio Rovner (Rovner), currently associated with Aegis Capital Corp. (Aegis) out of New York, New York. According to a BrokerCheck report, Rovner has been subject to at least six customer disputes and two regulatory actions during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Rovner concern allegations of unauthorized trading, unsuitable investments, and misrepresentations among other claims.

In February 2018 a customer filed a complaint alleging that Son executed unauthorized trades in the customer’s account and made unsuitable investment recommendations. The customer requested $32,398 in damages. The claim settled for $12,635.

In December 2005 FINRA found that Rovner violated NASD Rules 2110 and 2310 by engaging in excessive trading and unsuitable investments. Without admitting or denying the allegations, Rovner consented to the described sanctions and to the entry of the findings. Rovner was fined $10,000 and suspended for 30 days.

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.

Broker Marc Korsch Subject to Multiple Investment Complaints

September 25, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating broker Marc Korsch (Korsch), currently associated with Centaurus Financial, Inc. (Centaurus Financial) out of Sarasota, Florida and Port Charlotte, Florida. According to a BrokerCheck report, Korsch has been subject to at least three customer disputes, one financial disclosure, and one criminal matter during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Korsch concern allegations of unsuitable investment recommendations and misrepresentations.

In June 2019 a customer alleged that from August 2014 through May 2019, Korsch misrepresented the features of real estate securities and provided misleading information causing $53,000 in damages. This dispute is currently pending.

In April 2018 a customer alleged that Korsch made an unsuitable recommendation of annuity switches. The claim alleged $55,000 in damages and settled for $8,000.

In February 2017 a customer filed a complaint alleging that Korsch and his previous member firm, Trustmont Financial Group, Inc. (Trustmont Financial), violated the securities laws by, among other things, engaging in common law fraud, unsuitable investments, failure to supervise, and misrepresentations causing $500,000 in damages. The FINRA arbitration panel ordered Trustmont Financial to pay the customer $848,002 in compensatory damages, $100,000 in punitive damages, $15,596 in costs, and $82,500 in attorneys fees.

Broker Nick Son Subject to Complaints Over Unauthorized Trading

September 25, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims against broker Nick Son (Son), currently associated with Aegis Capital Corp. (Aegis) out of New York, New York. According to a BrokerCheck report, Son has been subject to at least seven customer disputes during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Son’s customer complaints concern allegations of unauthorized trading, unsuitable investments, and misrepresentations among other claims.

In February 2018 a customer filed a complaint alleging that Son violated the securities laws by making unauthorized trading and unsuitable investment recommendations. The customer requested $224,968 in damages. The dispute is currently pending.

In April 2016 a customer alleged that in March 2016, Son engaged in high pressure sales tactics and misrepresentations causing $65,984 in damages. The claim was denied.

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.

Broker Mel Hertz Has Several Suitability Complaints

September 24, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating claims against advisor Mel Hertz (Hertz), currently registered with The Strategic Financial Alliance, Inc. (Strategic Financial) out of Kailua, Hawaii. According to a BrokerCheck report, Hertz has been subject to at least three customer complaints and one investigation. According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaints against Hertz concern allegations of unsuitable investment recommendations.

In May 2018 Hertz was investigated by the State of Hawaii over allegations of his unsuitable investment recommendations. This investigation is currently pending.

In April 2018 a customer filed a complaint alleging that from April 2013 through April 2018 Hertz engaged in unsuitable investments and misrepresentations causing $133,000 in damages. The customer also alleged that Hertz failed to properly monitor third-party managed account. This dispute is still pending.

In April 2013 a customer alleged that Hertz made unsuitable alternative investments of direct participation products (DPPs) and real estate securities causing in damages. The claim settled for $150,000.

Advisor Anthony Conti Subject to Complaints Over Investment Suitability

September 24, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP is currently investigating advisor Anthony Conti (Conti), currently associated with Boenning & Scattergood, Inc. (Boenning & Scattergood) out of Carnegie, Pennsylvania. According to a BrokerCheck report, Conti has been subject to at least one customer dispute during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Conti’s customer complaints concern allegations of unsuitable investments.

In October 2016 it was alleged that Conti’s previous employer, Ross, Sinclaire & Associates, LLC (RSA), three clients of RSA commenced an arbitration claim against the firm. The clients alleged that RSA misrepresented the safety and security of film tax credit notes purchased from the issuer, leading clients to believe their principal was not subject to significant risk. The clients allege that these misrepresentations and negligence caused the loss of principal. The claim alleged $2,200,000 in damages. This dispute is currently still pending.

Michael Rappa Barred from the Securities Industry Over Private Securities Transactions

September 23, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Michael Rappa (Rappa) engaged in undisclosed and unapproved private securities transactions. According to records kept by The Financial Industry Regulatory Authority (FINRA), Rappa, formerly registered with Foresters Equity Services, Inc. (Foresters Equity) out of San Diego, California was barred from the financial industry and disclosed at least two customer complaints. According to a BrokerCheck report, Rappa’s customer complaints allege that Rappa made unsuitable private securities transaction recommendations.

In February 2019, FINRA stated that Rappa consented to the sanction and to the entry of findings that from August 2016 to July 2017, he engaged in undisclosed and unapproved private securities transactions totaling $2,731,287. The findings stated that Rappa solicited investors to purchase promissory notes relating to a purported real estate investment fund.

In May 2018, a customer alleged that in 2016, Rappa made unsuitable private securities transaction recommendations. The customer has requested $75,000 in damages. This dispute is currently still pending.

In February 2018, another customer similarly alleged that in 2017, Rappa was recommending unsuitable private securities transactions. The customer has requested $700,000 in damages. This dispute is currently still pending.

Richard Cagle Barred by Financial Regulatory Over Investment Violations

September 23, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Richard Cagle (Cagle), formerly employed by Hilltop Securities Independent Network Inc. (Hilltop Securities) has been subject to at least two customer complaints and one regulatory complaint resulting in a bar from the financial industry. According to records kept by The Financial Industry Regulatory Authority (FINRA), Cagle’s customer complaints allege that Cagle recommended unsuitable securities recommendations among other allegations of misconduct in the handling of customer accounts.

In July 2019 Cagle consented to the sanction and to the entry of findings that he refused to appear and provide an on-the-record testimony requested by FINRA. FINRA stated that it commenced an investigation into whether Cagle violated FINRA rules by making unsuitable investment recommendations and mismarking customer order tickets while associated with his former member firm. Cagle’s failure to respond to the investigation drew an automatic bar from the industry.

Jeffrey Blutstein Barred From the Securities Industry Over Undisclosed Activity

September 22, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Jeffrey Blutstein (Blutstein) engaged in undisclosed outside business activities (OBAs) that were not approved by his brokerage firm. Blutstein, formerly registered with American Portfolios Financial Services, Inc. (American Portfolios) and Kestra Investment Services, LLC (Kestra Investment) out of New York, was barred from the financial industry according to records kept by The Financial Industry Regulatory Authority (FINRA). In addition, Blutstein disclosed one employment termination for cause and one criminal complaint.

In July 2019 FINRA found that Blutstein consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA in connection with an investigation into whether he potentially violated FINRA rules by engaging in undisclosed outside business activities while associated with a member firm. Accordingly, Blutstein was automatically barred from the securities industry.

At this time it is unclear what OBA Blutstein engaged in that FINRA was investigating and whether or not that activity also involved private securities transactions. Blutstein’s public disclosures state that he was involved in a number of OBAs including Financial Logistics, an insurance business, among other businesses. It is unclear if these OBAs were the subject of FINRA’s investigation.

Brenda Smith and Broad Reach Capital Charged By SEC With Fraud – Investor Recovery Options

September 22, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims made by The Securities and Exchange Commission (SEC) in which the agency charged a Pennsylvania investment adviser, Brenda Smith (Smith) with operating an investment advisory fraud involving over $100 million in investments. In conjunction with the SEC action the regulatory obtained an emergency asset freeze in order to preserve investor funds.

The SEC’s complaint alleges that Brenda Smith, and her fund Broad Reach Capital, LP, (Broad Reach Capital) raised $105 million from approximately 40 investors by representing that she would invest their money in publicly traded securities through various trading strategies that were promoted as providing consistent high returns. The SEC found that Smith instead made very few investments in these trading strategies and largely used investors’ money to repay other investors and for her own personal investments. The SEC alleged that Smith through entities she controlled disseminated false statements in order to tout positive returns and fabricated documents in an attempt to inflate Broad Reach Capital’s assets in order to lull investors into believing their capital was safe.

The SEC’s complaint charges Smith, Broad Reach Capital, the fund’s general partner Broad Reach Partners, LLC, and the adviser, Bristol Advisors, LLC with violating the anti-fraud provisions of the federal securities laws.

Ross Sinclaire & Associates Sanctioned Over Private Placement Practices

September 21, 2019 | by Staff Attorney

According to BrokerCheck records Ross Sinclaire & Associates, LLC (Ross Sinclaire) has been subject to a regulatory action over, among other things, the firm’s sales practices with respect to several private placement offerings. According to records kept by The Financial Industry Regulatory Authority (FINRA) Ross Sinclaire has been accused by FINRA of failing to disclose material information to investors in relation to several offerings offerings.

FINRA alleged that in March and April 2014, Ross Sinclaire was the exclusive placement agent for a private placement of notes and was involved in the preparation and circulation of a Confidential Information Memorandum (CIM) to seven accredited investors for notes. The proceeds were to provide to a film production company for the advance funding of anticipated state tax credits. The CIM disclosed that in addition to a 2% commission, Ross Sinclaire would also earn a “certain percentage” of profits on the sale of tax credits but failed to disclose that it would earn half of those profits. FINRA found that this information was a material fact that would have been important to investors. FINRA also found that the CIM also failed to disclose that one of Ross Sinclaire’s registered representatives was Vice President or the issuer.

In another offering, FINRA alleged that between December 2015 and December 2016, Ross Sinclaire omitted material facts from the Private Placement Memorandum (PPM) for municipal bonds underwritten by the Firm to finance the construction of a community recreation center. FINRA found that Ross Sinclaire failed to disclose in the PPM: (i) that the issuer had threatened to default on an earlier series of bonds and bond anticipation notes (BANs); (ii) that a loan agreement existed between the issuer and Ross Sinclaire: and (iii) information about the finances of both the issuer and Ross Sinclaire. FINRA determined that this information should have been included in the PPM as it would have been material to investors in deciding whether to invest in the bonds.