Securities Lawyers Blog

Andre Davis Accused by Multiple Clients of Churning Their Accounts

September 21, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Andre Davis (Davis), currently associated with Paulson Investment Company LLC (Paulson Investment), has been subject to at least 15 customer complaints and two criminal matters during his career. The majority of the customer complaints against Davis concern allegations of high frequency trading activity also referred to as churning.

In August 2019 a customer complained that Davis made unsuitable investment recommendations, excessive trading, and unauthorized trading. The claim alleges $350,000 in damages and is currently pending.

In June 2019 a customer complained that Davis churned their account and made unauthorized trades. The claim alleges $152,400 in damages and is currently pending.

In May 2019 a customer complained that Davis violated the securities laws by excessive trading, unauthorized trades, and unsuitable investments. The claim alleges $461,000 in damages and is currently pending.

In April 2019 a customer complained that Davis violated the securities laws by excessive trading and unauthorized trades. The claim alleges $300,000 in damages and 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.

Broker Rick Konecny Has Several Suitability Complaints

September 20, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Rick Konecny (Konecny) engaged in violations of the securities laws. Konecny, formerly registered with National Securities Corporation (National Securities) and J.P. Morgan Securities LLC (JP Morgan) out of Chicago, Illinois was barred from the financial industry according to a BrokerCheck report. In addition, Konecny has been subject to at least eleven customer complaints, three regulatory actions, and one termination for cause during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Konecny concern allegations of unsuitable investments.

In March 2016, Konecny was terminated J.P. Morgan Securities LLC over allegations of his failure to escalate client matters and failed to follow requirements with respect to execution of trades on a discretionary basis.

In April 2018, a customer alleged that from 2008 to 2013, Konecny’s recommendation of high-risk mining and metal equities was unsuitable to the customer’s investment needs. The customer requested $1,210,380 in damages.

In January 2018, a customer alleged that from July 2013 to October 2015, Konecny invested the account in an unsuitable and over concentrated manner causing $81,856.00 in damages. The claim settled for $2,768.

Former Broker Paul Soll Barred from the Securities Industry

September 20, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating advisor Paul Soll (Soll), formerly registered with Western International Securities, Inc. (Western International) and Financial West Group (FWG) out of Los Angeles, California. According to records kept by The Financial Industry Regulatory Authority (FINRA), Soll was barred from the financial industry for failing to provide the regulator with information about his trading activities that concern possible excessive trading a securities law violation that is similar to churning. According to a BrokerCheck report, Soll also disclosed at least one customer complaint alleging breach of fiduciary duty.

In July 2018, FINRA stated that Soll violated FINRA Rules 8210 and 2010 by failing to provide the regulator with information about his potential trading abuses. Soll was thereby barred from the securities industry.

Moreover, a customer filed a complaint alleging that Soll engaged in breach of fiduciary duty, breach of contract, and misrepresentation in the sale of bonds. The amount of damages was not specified. The claim settled for $660,574.

SagePoint Advisor Paul Mauro Subject to Multiple Investment Complaints

September 18, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating broker Paul Mauro (Mauro), currently associated with SagePoint Financial, Inc. (SagePoint Financial) out of Westborough, Massachusetts. According to a BrokerCheck report, Mauro has been subject to at least nine customer disputes, two regulatory actions, 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 Mauro concern allegations of unsuitable investment recommendations and misrepresentations.

In February 2018, as a result of Mauro’s disclosure incidents, the State of Massachusetts Securities Division placed conditions on Mauro’s registrations in Massachusetts and required him to be placed under heightened supervision by his brokerage firm.

In December 2018 a customer alleged that in 2017 Mauro unsuitably purchased variable annuity causing $6,630 in damages. The claim was denied.

In June 2017 a customer filed a complaint alleging that Mauro made unsuitable recommendations causing $86,000 in damages. The claim was denied.

Former Morgan Stanley Advisor Ian Deliz has Numerous Complaints Over Unsuitable Puerto Rico Bond Investments

September 18, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims against advisor Ian M. Deliz Morales (Deliz), formerly registered with Morgan Stanley out of Tampa, Florida. According to a BrokerCheck report, Deliz has been subject to at least 22 customer disputes, 13 of which are still pending. In addition, Deliz disclosed a $169,324 tax lien against him. According to records kept by The Financial Industry Regulatory Authority (FINRA), the majority of these disputes concern violations of securities laws regarding unsuitable investments of Puerto Rico bonds and closed-end funds.

Most recently, in June 2019, a client alleged that Deliz violated the securities laws by recommending unsuitable investments in Puerto Rico bonds causing $315,000 in damages. This dispute is currently still pending.

In July 2017 a customer filed a complaint alleging that Deliz made unsuitable recommendations to hold Puerto Rico bonds in an over-concentrated manner. The complaint alleged $1 million in damages and was settled for $275,000.

Broker Douglas Hyer Subject to Multiple Investment Complaints

September 16, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating broker Douglas Hyer (Hyer), currently associated with First Allied Securities, Inc. (First Allied) out of Great Neck, New York. According to a BrokerCheck report, Hyer has been subject to at least four customer disputes and one termination for cause during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints allege that Hyer engaged in unsuitable sales of alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In April 2019 a customer alleged that from 2009 through 2012, Hyer recommended illiquid, risky and non-traded products that were unsuitable to the customer’s investment needs. The claim alleged over $5,000 in damages and settled for $15,000.

In February 2013 Hyer was permitted to resign from Next Financial Group, Inc. (Next Financial) after the firm found that Hyer failed to follow company policies and misused the social media.

Broker Stephen Sullivan Subject to Excessive Trading Complaint

September 16, 2019 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating broker Stephen Sullivan (Sullivan), currently associated with SW Financial out of Melville, New York. According to a BrokerCheck report, Sullivan has been subject to at least two customer disputes, one regulatory action, one financial disclosure, and three civil judgements during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Sullivan concern allegations of excessive trading also referred to as churning.

In May 2018 a customer filed a complaint against Sullivan alleging unsuitable transactions, excessive trading, and failure to supervise. The customer requested $540,618 in damages. This dispute is still pending.

In February 2016 FINRA found that Sullivan violated NASD Rules 2510(b) and 2010 by exercising discretion in customers’ accounts without obtaining authorization from the customers or approval by his member firm. Without admitting or denying the allegations, Sullivan consented to the described sanctions and to the entry of the findings. Sullivan was fined $5,000 and suspended for 10 business days.

Broker John Eads Has Several Complaints Alleging Misrepresentation of Variable Annuities

September 12, 2019 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are currently investigating advisor John Eads (Eads), formerly registered with Lion Street Financial, LLC (Lion Street Financial) and AXA Advisors, LLC (AXA Advisors) out of Titusville, Florida. According to a BrokerCheck report, Eads has been subject to at least seven customer complaints and one employment termination for cause during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Eads concern allegations of variable annuity sales practices.

In January 2018 a customer alleged Eads over forgery. In February 2018 Lion Street Financial discharged Eads claiming that he submitted client documents without their legal signatures.

In June 2016 a customer filed a complaint alleging that in March 2015 Eads recommended an unsuitable annuity causing damages. The claim settled for $85,821.

In April 2016 a customer alleged that Eads misrepresented and unsuitably recommended variable annuities causing damages. The claim was denied.

Advisor Jeffrey Nesseth Subject to Complaints Over Alternative Investments

September 12, 2019 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Jeffrey Nesseth (Nesseth) currently associated with Independent Financial Group, LLC (Independent Financial) out of Plano, Texas. According to a BrokerCheck report, Nesseth has been subject to at least four customer disputes, two of which are still pending. Nesseth’s customer complaints mostly concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In June 2018 a customer alleged that Nesseth engaged in an over-concentration in REITs that was unsuitable to the customer’s investment needs. The customer has requested $100,000 in damages. This dispute is currently still pending.

In June 2010 a customer alleged that from December 2007 to May 2008, Nesseth made unsuitable investments of corporate debt and oil & gas causing $300,000 in damages. The claim settled for $47,500.

DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for products that no honest advisor would sell.

Lloyd Johnston Subject to Complaints Over Alternative Investments

September 10, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating claims against advisor Lloyd Johnston (Johnston). According to records kept by The Financial Industry Regulatory Authority (FINRA), Johnston, formerly registered with Capital Financial Services, Inc. (Capital Financial) out of Spokane, Washington was barred from the financial industry. According to a BrokerCheck report, Johnston has been subject to at least two customer complaints, four regulatory actions, two investigations, one bankruptcy disclosure, one termination, and 15 tax liens. Johnston’s customer complaints allege that Johnston engaged in unsuitable sales of alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have handed many cases with these types of investments causing investor losses.

In September 2018 Johnston failed to disclose or timely disclose tax liens with a balance exceeding $1,000,000 and violated the terms of a Conditional Registration Order, which resulted in the revocation of his license. Large tax liens on a broker’s CRD can be a red flag that the broker may be influenced to engage in high commission activity in order to satisfy personal debts. In addition, a broker’s inability to manage their own finances is relevant in a customer’s decision to use their services.

In May 2018 Johnston failed to respond to FINRA’s request for information and was suspended indefinitely.

In May 2018 a customer alleged that Johnston’s sales of alternative investments were unsuitable to the customer’s investment needs. The exact amount of damages cannot be determined. The claim settled for $35,000.