Securities Lawyers Blog

Customers File Claims Against RBC Capital Markets Broker Jeffrey Fladell

October 15, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Jeffrey Fladell (Fladell) has been the subject of at least 6 customer complaints, one regulatory action, and one criminal matter. Customers have filed complaints against Fladell alleging securities law violations including churning and excessive trading, unsuitable investments, negligence, and overconcentrated positions among other claims. Most of the claims against Fladell relate to allegations that the investor was concentrated in municipal bonds or other debt obligations that caused losses. For instance once complaint alleged damages of $1,000,000 as a result of concentration in municipal bonds that were inconsistent with the client’s objective of principal protection.

Fladell entered the securities industry in 1970. From March 1995, until October 2009, Fladell was associated with J.B. Hanauer & Co. Since October 2009, Fladell became associated with RBC Capital Markets, LLC out of the firm’s Parsippany, New Jersey office location.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Gana LLP Investigation: Broker Robert Marks

October 15, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Robert Marks (Marks) has been the subject of at least 2 customer complaints. Customers have filed complaints against Marks alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, negligence, fraud, and unauthorized trading among other claims. One customer complaint focuses on speculative trading in penny stocks.

Marks entered the securities industry in 2000. From August 2008, until October 2009, Marks was associated with GunnAllen Financial, Inc. Thereafter, Marks became associated with Synergy Investment Group, LLC from October 2009, until October 2011. Finally, since September 2011, Marks has been associated with Cape Securities Inc. where he remains registered out of the Coram, New York office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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 Spotlight: Morgan Stanley Broker Hilary Zimmerman

October 14, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Hilary Zimmerman (Zimmerman) has been the subject of at least 6 customer complaints over the course of her career. Customers have filed complaints against Zimmerman alleging securities law violations including that the broker made unsuitable investments, negligence, unauthorized trading, misrepresentations, churning and excessive trading, fraud, and breach of fiduciary duty, among other claims.

Zimmerman entered the securities industry in 1991. From December 2007 until present Zimmerman has been associated with Morgan Stanley out of the firm’s Ridgeland, Mississippi office.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Customers File Churning Complaints Against Legend Securities Broker Daren Dorval

October 14, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Daren Dorval (Dorval) has been the subject of at least 6 customer complaints, 1 regulatory matter, and one criminal matter over the course of his career. Customers have filed complaints against Dorval alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, negligence, fraud, unauthorized trading, and misrepresentations, among other claims.

According to a 2010 FINRA finding, the regulator alleged that Dorval engaged in unauthorized discretionary trading in a customer account by entering trades based upon the orders of a person related to the customer without appropriate written trading authority.

Dorval entered the securities industry in 2001. From January 2002, until September 2009, Dorval was associated with vFinance Investments, Inc. Thereafter, Dorval became associated with Legend Securities, Inc where he remains registered.

FINRA Files Complaint Against Former Woodstock Financial Group Broker David Wolk

October 13, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Wolk (Wolk) has been the subject of an astonishing 13 customer complaints, 3 regulatory matters, one criminal matter, and 6 judgments and liens over the course of his career. Customers have filed complaints against Wolk alleging securities law violations that focus on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, negligence, fraud, unauthorized trading, and misrepresentations, among other claims. In total the customer complaints allege several million dollars in damages.

The latest FINRA complaint (Disciplinary Proceeding No. 2012033981601) alleges that from November 2003, through January 2014, while Wolk was associated with Woodstock Financial Group, Inc. (Woodstock), Wolk was subject to six tax liens totaling over $810,000 and a state tax levy for $106,871.02. FINRA alleges that Respondent willfully failed to timely update his Form U4 to disclose these matters within FINRA’s 30-day reporting deadline. In addition, FINRA alleged that Respondent made a false attestation to Woodstock on an annual compliance questionnaire failing to disclose the liens. The latest FINRA complaint is only one of three total FINRA complaints. In October 2014, Wolk faied to pay fines associated with another FINRA matter. In August 2014, Wolk consented to FINRA’s findings that he attempted to settle a customer complaint without notifying his firm.

Wolk entered the securities industry in 1998. From February 2003 until September 2014, Wolk was associated with Woodstock out of the firm’s Garden City, New York office.

Customers File Dozens of Complaints Against Former Oppenheimer Broker Bennett Broad

October 13, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Bennett Broad (Broad) has been the subject of an astonishing 28 customer complaints and one regulatory matter over the course of his career. Customers have filed complaints against Broad alleging securities law violations including that the broker made unsuitable investments, negligence, unauthorized trading, misrepresentations, and churning and excessive trading, among other claims. In total the customer complaints allege several million dollars in damages. In May 2015, FINRA sought to investigate Broad and his activities and requested that the broker provide the regulator with information. Broad failed to respond to FINRA’s requests and was consequently subject to an automatic bar from the industry. The details of FINRA’s requests and investigation is not available at this time.

Broad entered the securities industry in 1979. From March 2003 until April 2015, Broad was associated with Oppenheimer & Co. Inc. out of the firm’s Jenkintown, Pennsylvania office.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Broker Spotlight: Ameriprise Financial Broker Michael Lipscomb

October 12, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Lipscomb (Lipscomb) has been the subject of at least four customer complaints and two criminal matters over the course of his career. Customers have filed complaints against Lipscomb alleging securities law violations including that the broker made unsuitable investments, negligence, unauthorized trading, and excessive trading among other claims.

Lipscomb entered the securities industry in 1992. From March 2007 until August 2014, Lipscomb was associated with Wunderlich Securities, Inc. Lipscomb is currently registered with Ameriprise Financial Services, Inc. out of the firm’s Orlando, Florida office.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Customers File Complaints Against Francis Velten Over Variable Annuity Practices

October 12, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Francis Velten (Velten) has been the subject of at least eight customer complaints and one regulatory investigation over the course of his career. Customers have filed complaints against Velten alleging securities law violations including that the broker made unsuitable investments relating primarily to the sale of variable annuities.

Velten entered the securities industry in 1993. Since August 2006, Velten has been a registered representative of Summit Brokerage Services, Inc. out of the firm’s New Port Richey, Florida office location.

As a background, variable annuities are complex products that combine aspects of investing and insurance. The Securities and Exchange Commission (SEC) has released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

Hedge Fund Canarsie Capital Losses 99.7% of Client’s Money Leading to SEC Investigation

October 10, 2015 | by Staff Attorney

According to news sources, the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating how the hedge fund Canarsie Capital lost nearly all of the $60 million capital in just three weeks of trading. The fund was run by Owen Li (Li), and Ken deRegt (deRegt). Canarsie Capital was named for the Brooklyn neighborhood where Li grew up and was launched in January 2013 and had offices in midtown Manhattan, New York. Li previously worked for Raj Rajaratnam’s (Rajaratnam) Galleon Group. Rajaratnam is currently serving an 11 year sentence following his May 2011 conviction on nine counts of securities fraud and five counts of conspiracy. The claims against him relate to $63.8 million in illicit profit from 2003 to 2009 by trading in stocks such as eBay Inc, Goldman Sachs Group Inc and Google Inc. Li cofounded the Canarsie Capital with his former Stanford University roommate, Eric deRegt and Eric’s father who ran Morgan Stanley’s fixed-income business.

According to filings the minimum investment accepted from an outside investor in the fund was $1 million. At its peak, Canarsie Capital had managed around $98 million in assets and had some well-known contributors. Goldman Sachs was the fund’s prime broker and clears and settles trades for the hedge fund starting in the fall of 2014. The Goldman Sachs switch came after the fund was dropped in March 2014, by Morgan Stanley’s prime brokerage over concerns with the fund’s risk practices.

On January 20, 2015, Li, wrote an apology letter to investors telling them that he “engaged in a series of aggressive transactions” during the first three weeks of 2015 that resulted in losing all but $200,000 of the fund’s capital, a 99.7% loss. According to the letter, Li engaged in aggressive trading in an attempt to recuperate prior losses the fund suffered in the fund in December 2014. At this time it’s unclear what the trading strategy was that Li engaged in January of this year. The only details in the letter concerning the securities themselves are that they included “options with strike prices pegged to the broader market increasing in value” and “some direct positions.”

SEC Accuses Dawn Bennett of Misleading Investors On Her Radio Program

October 9, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Dawn Bennett (Bennett) has been the subject of at least six customer complaints over the course of her career. Customers have filed complaints against Bennett alleging securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, negligence, misrepresentations, and excessive trading among other claims. In addition to customer complaints, The Securities and Exchange Commission (SEC) filed a press release announcing fraud charges against Bennett, a Maryland-based financial services firm and founder/CEO, accusing her of grossly inflating the amount of managed assets and exaggerating the investment returns actually obtained for customers.

Bennett entered the securities industry in 1987. From 2006, until October 2009, Bennett was associated with Royal Alliance Associates, Inc. Thereafter, from October 2009, till present Bennett is associated with Western International Securities, Inc.

The SEC’s allegations relate to Bennett’s attempts to inflate the firm’s profile and prestige by overhyping assets under management and customer returns. The SEC alleged that Bennett frequently touted to customers and on her paid radio program that highly profitable investment returns generated by Bennett Group Financial Services placed the firm in the top 1 percent of firms worldwide. However, the SEC charged that Bennett failed to disclose that the returns were calculated for a model portfolio and not based on actual investor performance. The SEC further alleged that Bennett and her firm claimed to be managing more than $2 billion in assets when in reality Bennett managed no more than one-fifth of that amount.