Securities Lawyers Blog

Advisor Lewis Robinson Sanctioned By FINRA

October 30, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Lewis Robinson (Robinson), currently associated with BB&T Securities, LLC (BB&T), has been subject to 10 customer complaints, one regulatory action, and one employment separation for cause. According to records kept by The Financial Industry Regulatory Authority (FINRA) Robinson has been accused by customers of unsuitable investment advice among other claims.

In August 2017, FINRA found that Robinson settled a customer’s complaint by issuing three checks in the total amount of $12,203.23 to the customer’s wife without the knowledge of his brokerage firm. FINRA determined that the customer complained on three separate occasions about the amount of commissions that he charged.

In August 2015, Morgan Stanley terminated Robinson for providing unapproved fee reimbursements to a client.

Advisor Jonathan Iraggi Terminated Over Unauthorized Trading

October 26, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Jonathan Iraggi (Iraggi), currently associated with National Securities Corporation (National Securities), has been subject to two customer complaints and one employment separation for cause. According to records kept by The Financial Industry Regulatory Authority (FINRA) Iraggi has been accused by customers of unauthorized trading among other claims.

In July 2017, Iraggi was permitted to resign from Garden State Securities, Inc. (Garden State) after allegations were made that the broker engaged in unauthorized trading. Also in July 2017 a customer filed a complaint against Iraggi stating damages of $22,000 caused by unauthorized trades. The claim was denied by the firm. In 2015 another customer filed a complaint also claiming unauthorized trading.

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.

Advisor Jeffrey Smith Sanctioned Over Forged Account Documents

October 26, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Jeffrey Smith (Smith), formerly associated with Accelerated Capital Group (Accelerated Capital), has been subject to five customer complaints and two regulatory actions. According to records kept by The Financial Industry Regulatory Authority (FINRA) Smith has been accused by customers of unsuitable investment advice, securities fraud, and excessive trading among other claims.

The most recent regulatory action occurred in September 2017. FINRA found that Smith maintained and utilized pre-signed and altered forms to conduct his securities business. FINRA determined that Smith’s conduct caused his brokerage firm to have inaccurate books and records. FINRA alleged that Smith had three customers sign blank forms and then made photocopies of some of the blank-signed forms so that he could reuse the customers’ signatures. FINRA found that Smith then utilized these blank-signed forms to effect transactions.

In 2011 FINRA sanctioned Smith for failing to supervise brokers and enforce the firm’s supervisory procedures.

American Finance Trust REIT Investment Loss Options

October 26, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in American Finance Trust, a non-traded real estate investment trust (Non-Traded REIT). According to the firm’s website, American Finance Trust is designed to protect shareholder capital and produce stable cash distributions through the acquisition and management of diversified portfolio of commercial properties leased to investment grade tenants. The portfolio consists of core retail properties such as power centers and lifestyle centers.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, American Finance Trust sells for just under $15.50 per share – a significant loss on the original purchase price of $25.00.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments. These products are almost always unsuitable for middle class investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

Seniors Continue to Be At High Risk of Financial Exploitation

October 26, 2017 | by Staff Attorney

There is a need for strong protection of the elderly investing population. About one out of every five Americans 65 years and older has been a victim of financial abuse. The elderly are estimated to lose up to $2.9 billion per year from scams. In fact, these figures are likely lower than the actual incidence of fraud since only reported accounts of frauds are considered and seniors are “less likely” to report being scammed.

Elders are abused by a variety of persons including family members, caregivers, scam artists, financial advisers, fiduciaries (such as agents under power of attorney and guardians), and others. Usually the person is already in a position of trust or is able to acquire a high level of trust due to the diminished capacity of the victim.

Now a new survey of state securities regulators by the North American Securities Administrators Association (NASAA), released on National Senior Citizens Day, shows that more need to be done in order to protect seniors from financial fraud. The NASAA’s polled its members and represents the views of securities regulators who are local state regulators of investment advisors.

Look out for the Top 10 Types of Investment Scams

October 24, 2017 | by Staff Attorney

The financial advisor rating firm Paladin Research & Registry assembled a list of the top 10 investment scams investors are facing today. If you are involved in any of these potential scams, the investment attorneys at Gana Weinstein LLP may be able to help you.

1. Ponzi Schemes

Ponzi schemes came in first-place for having stolen more money than any other type of scam. A Ponzi scheme is a fraudulent investment scam where the scammer promises a high rate of return with little or no risk to investors. Ponzi schemes generate returns for investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. The Ponzi scheme unravels when no more new investors are willing to invest and older investors demand the return of their money. The nature of Ponzi schemes (or pyramid schemes) requires investors (who believe they have a strong investment) to tell friends, family and associates about the investments. The influx of new investors provides scam operators with the assets needed to meet the withdrawal requests of the early investors.

Wells Fargo Must Pay $3.4 million for Selling Investments It Didn’t Understand

October 24, 2017 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) has ordered Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC to pay more than $3.4 million in restitution to customers for alleged unsuitable recommendations of volatility-linked exchange-traded products (ETPs) and supervisory failures, according to InvestmentNews.

FINRA found that between July 1, 2010, and May 1. 2012, “certain Wells Fargo reps recommended volatility-linked ETFs and ETNs without fully understanding their risks and features.”

According to FINRA, “certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions in the event of a market downturn. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.”

Advisor Scott Newsholme Accused of Stealing More than $1 Million From Clients

October 16, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Scott Newsholme (Newsholme), in September 2017, was accused by the Securities and Exchange Commission (SEC) of stealing more than $1 million from his clients. Newsholme’s problems began back in July 2014 when he was terminated by his then employer SII Investments, Inc. (SII). SII stated that Newsholme was terminated due to allegations that Newsholme stole her IRA assets and engaged in private securities transactions.

In addition to being an investment advisor, Newsholme is a tax preparer, accountant, and the proprietor of MVP Financial LLC in Howell, New Jersey. Between 2002 and 2010 Newsholme was president of two predecessor tax, accounting, and financial planning firms in Matawan, New Jersey – Newley Financial Group, Inc. and Newsholme Financial Center LLC.

In September 2014, FINRA brought an action against Newsholme and ultimately barred him from the industry when Newsholme failed to respond to information requests concerning the issues raised in his SII termination. In June 2015, the State of New Jersey revoked Newsholme’s securities license and imposed an $85,000 fine stating that Newsholme egage in unethical business practices.

Advisor David Zier Investigated Over ZAM Fund Investment Scheme

October 16, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor David Zier (Zier), in October 2014, was terminated by his then employer City National Securities, Inc. (City National) and was under investigation by the Securities and Exchange Commission (SEC) and FINRA. Zier was the CEO of Convergent Wealth Advisors (Convergent) through which he allegedly solicited clients for a private fund he managed called ZAM LLC (ZAM). According to regulators, from 2007 to 2014 Zier falsely told clients ZAM was profitable and gave them fabricated account statements that concealed the fund’s losses.

In October 2014, Zier was found dead in an apparent suicide. Zier’s death occurred just weeks after Convergent’s compliance officers became suspicious of the ZAM fund and began to question Zier about irregularities in ZAM’s records. It is currently unknown the total fund losses but at one time the fund had $20 million. According to the U.S. Commodity Futures Trading Commission (CFTC) Zier fraudulently solicited $2.9 million in investments in ZAM.

The allegations appear to be a value manipulation scheme that often turn into Ponzi schemes. In value manipulation frauds investment advisors provide clients with misstatement of the values of securities for the purposes of either inducing investors to continue to purchase the investment or to retain their investment position in the security. The value of a security is material information to every investor. Value manipulation schemes are most common where the securities are thinly traded or not traded at all on regular securities exchanges and the broker is the only source of information. In these cases where the asset is not regularly traded, advisors and firms may be given authority to set the value of the securities and otherwise have control over what is communicated to clients.

Advisor William Glaser Under FBI Investigation in Connection With Paul Creager Real Estate Securities

October 15, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor William Glaser (Glaser), in September 2017, was accused by FINRA of failing to cooperate in an investigation into the circumstances surrounding Glaser’s termination by National Panning Corporation (National Planning). National Planning terminated Glaser in June 2017 after alleging it had received an arbitration claim alleging that Glaser had solicited a private investment away from the firm. Glaser operated his securities business through a dba called Legacy Wealth Advisors, Inc.

The private investments Glaser was participating appear to be connected to the arrest of Paul Creager (Creager) in August 2017. Creager has been indicted on two felony counts of wire fraud. According to the indictment Creager financed his development company through promissory notes and by selling interests in his companies to investors. The indictment claims that Creager misled investors by failing to disclose that Financial & Marketing Solutions LLC had lent him more than $3.2 million and had a priority secured position in his real estate developments. It appears that some of the investors were brought to Creager through Glaser.

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”.