Securities Lawyers Blog

Advisor Bruce Barber Barred By FINRA After Engaging in Private Securities Transactions

October 15, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Bruce Barber (Barber), in September 2017, was accused by FINRA of engaging in an undisclosed outside business activity by serving as an advisor to the Board of Directors for ABC, LLC (ABC) and being compensated by the company with warrants. According to FINRA, Barber solicited 15 clients to invest in ABC’s private securities offering. At this time it unknown the full extent and scope of Barber’s outside business activities.

In February 2017, Barber’s then employer Securities America, Inc. (Securities America) terminated him stating Barber solicited customers to purchase an unapproved securities product and participated in an unapproved outside business activity.

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”.

Financial Advisor Jay Jordan Barred Over Risky EFT Trading Leading to $8.4 Million in Losses

October 14, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Jay Jordan (Jordan), in August 2017, was sanctioned by FINRA and had a permanent bar imposed in connections with allegations of unsuitable investments in leveraged exchanged traded funds (Non-Traditional ETFs) based on the investor’s investment objectives, financial situation, risk tolerance, experience, and investment needs. Jordan was previously terminated by his employer WFG Investments, Inc. (WFG). WFG stated that Jordan was terminated due to his failure to follow certain policies of the firm including reporting a customer complaint, unauthorized use of personal email, and mischaracterization of an outside business activity.

In addition, Jordan has been subject to 14 customer complaints concerning his securities activity. These investors have alleged millions in losses most likely stemming from FINRA’s allegations of unsuitable Non-Tradition ETF trading.

According to FINRA, Jordan become convinced that an economic crisis or stock market collapse was imminent and recommended concentrated Non-Traditional ETFs so that they clients could benefit from rising oil prices, rising interest rates, and declining equity values. FINRA alleged that in June 2012, Jordan made widespread recommendations to his customers that they purchase Non-Traditional ETFs including: (1) UWTI (three times the daily performance of the S&P GSCI Crude Oil Index ER); (2) BOIL (two times the daily performance of the Bloomberg Natural Gas Subindex); and UGAZ (three times the daily performance of the S&P GSCI Natural Gas Index); (3) TBT and TMV (two and three times, respectively, the daily performance of the inverse of the ICE U.S. Treasury 20+ Year Bond Index); (4) SDS (two times the inverse of the daily performance of the S&P 500); (5) QID (two times the inverse of the daily performance of the NASDAQ-100 index); and (6) VIXY (matches the performance of the S&P 500 Short-Term Futures Index, which seeks to measure short-term volatility).

Former RBC Advisor Patrick Hudson Sanctioned Over Real Estate Sales

October 13, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Patrick Hudson (Hudson), in June 2015, was terminated by his then employer RBC Capital Markets (RBC). RBC stated that Hudson was terminated due to undisclosed outside business activities and the sale of unapproved products.

Thereafter, in August 2017, FINRA brought action against Hudson finding that Hudson participated in private securities transactions in the form of promissory notes, without providing written notice or seeking written from RBC. FINRA found that Hudson’s outside real estate business entered into a series of promissory notes away from the firm totaling $490,000. In addition, Hudson participated in multiple outside businesses without providing prior written notice to the firm. FINRA determined that on at least 21 occasions Hudson sent letters on firm letterhead to various third-parties for the purpose of verifying the assets of firm customers but that Hudson failed to submit these letters to the firm’s operations support department for supervisory review.

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”.

Advisor Peter Doyle Sanctioned by FINRA Over Unauthorized Trading

October 13, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Peter Doyle (Doyle), formerly associated with Morgan Stanley, has been subject to three customer complaints, one employment termination for cause, and one regulatory action. According to records kept by The Financial Industry Regulatory Authority (FINRA) Doyle has been accused by customers of unsuitable investment advice and unauthorized trading among other claims.

Doyle was barred by FINRA in July 2017 when he refused to appear for FINRA testimony in connection with its investigation into the conduct that led to his termination from Morgan Stanley. Morgan Stanley had terminated Doyle in June 2016 after it made allegations involving adherence to industry rules and use of trading discretion. The most recent complaint filed in February 2017 alleged unsuitable recommendations from June 2008 through June 2016. The claim settled for $600,000.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Strategic Realty Trust Investment Loss Options

October 12, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in Strategic Realty Trust (SRT), a non-traded real estate investment trust (Non-Traded REIT). SRT is a non-traded REIT focused on owning high quality west coast urban and street retail properties. The company states that its strategy is to build a portfolio of retail properties with solid growth prospects, strong cash flows, and visible value appreciation characteristics.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, SRT sells for just under $5.00 per share – a significant loss on the original purchase price of $10.00.

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.

Susan Welo Sanctioned By the State of North Dakota Over Securities Advice

October 12, 2017 | by Staff Attorney

Former Cetera Advisor Networks LLC (Cetera) broker Susan Welo (Welo) has been subject to nine customer complaints, one employment separation for cause, and one regulatory action. According to a BrokerCheck report Welo was terminated by Cetera after the firm alleged that Welo failed to disclose to firm that Welo provided a loan to a client while at a prior broker-dealer. In addition, Cetera claimed that Welo violated firm policies by accepting blank signed forms from clients and permitting assistant to sign representative’s name to various documents.

In addition, the State of North Dakota alleged that Welo acted as an unregistered securities agent by handling client funds and make investment recommendations.

Many of the complaints concern alternative investments, private placements, and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). Our firm has experience handling investor losses caused by these products.

Former LPL Broker Jason Anderson Sued by Elderly Customers

October 12, 2017 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating claims against former LPL Financial Broker Jason Anderson (Anderson). A pair of elderly customers are suing Anderson and alleging churning and inflated mutual fund charges.

According to news sources, A pair of elderly customers of LPL Financial are suing the firm and Anderson.

The customers, each of whom are over 65, claim to have suffered a combined $630,000 loss in retirement accounts that were originally valued at $3.5 million.

Former Advisor Clark Gardner Charged With Securities Fraud For Stealing $1.3 Million

October 10, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Clark Gardner (Gardner), in May 2014, was terminated by his then employer Cetera Advisors LLC (Cetera) subsequent to the initiation of customer arbitration claim alleging unsuitable investments. Cetera stated that Gardner was terminated due to undisclosed outside business activities and the sale of unapproved products.

Shortly thereafter on May 29, 2015, Gardner was arrested for converting approximately $1.3 million in client funds by selling promissory notes to clients and depositing the funds into his personal bank account. This activity is alleged to have occurred from November 2011 to April 2014. Allegedly, Gardner used the money for luxury vacation packages, repaying personal funds owed to other individuals, and other items unrelated to the promised investments.

In addition, The Division of Securities for Utah’s Department of Commerce investigated Gardner after receiving a complaint from an investor. During that investigation the department discovered a $150,000 property purchase Gardner completed with an unregistered real estate company that earned him $20,000 in compensation. Gardner is reported to have promised the investor a steady income from the property and a significant return in five years.

Austin Dutton and Newbridge Securities Sanctioned By the State of Pennsylvania Over Securities Sales

October 10, 2017 | by Staff Attorney

Former Newbridge Securities Corporation (Newbridge) broker Austin Dutton (Dutton) has been subject to two complaints and a recent sanction citing dishonest or unethical practices in the securities business by the Pennsylvania Department of Banking and Securities and fining Dutton $200,000. According to a BrokerCheck report Dutton recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for the customer.

In addition, Dutton’s firm, Newbridge, was also sanctioned by the state of Pennsylvania on findings that “From in or about January 2012 until December 2016, Newbridge did not maintain a reasonable system for applying and enforcing written procedures pertaining to their sales of structured products by one agent in Pennsylvania to certain of his clients…” While The order does not name the broker it appears reasonably related to Dutton.

According to newssources, Dutton is known to have recommended and sold and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). In particular Dutton sold real estate investment trusts formerly managed by Nicholas Schorsch’s private firm, American Realty Capital (ARC), now AR Global. An accounting scandal affected ARC and its REITs. According to sources, Dutton sold these products to retirees and police officers.

Gana LLP Investigates Bakken and Coachman Private Placement Investment Losses

October 9, 2017 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments. One particularly hard hit area of the commodities bust have been oil private placements sold by many brokerage firms. Once private placement that has come under scrutiny by the SEC are the Coachman Energy and Bakken Drilling private placements.

The SEC settled an action where the agency alleged that Coachman Energy Partners LLC failed to adequately disclose its methodology for calculating the management fees and expenses it charged to the funds from 2011 through 2014. The SEC found that the investment adviser for four private placement oil and gas funds miscalculated by approximately $1.1 million in management fees and $449,000 in management-related expenses. In addition, the SEC found that Randall Kenworthy, the firm’s CEO, caused Coachman’s inadequate disclosures in documents and in Coachman’s ADV Forms. Further, there were undisclosed conflicts of interests as one of the funds entered into a transaction with an affiliated entity without proper disclosure or obtaining investor consent.

Bakken Income Fund has raised $20.6 million from 309 investors. As part of the settlement, Coachman agreed to disgorge over $2 million. Coachman and Kenworthy are believed to be involved with the following private placement investments: