Securities Lawyers Blog

Tony Barouti Sold GWG Bonds and Has Over $5 Million In Investor Complaints

September 17, 2022 | by Staff Attorney

Advisor Tony Barouti (Barouti), currently employed by brokerage firm Emerson Equity LLC (Emerson Equity) has been subject to at least 15 disclosures and customer complaints. According to a BrokerCheck report the customer complaints concern alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. In Barouti’s case many of the complaints totaling over $5 million in claimed damages have occurred from the sale of GWG Holdings L-Bonds. GWG went into bankruptcy. The attorneys at Gana Weinstein LLP represented nearly 100 investors who suffered losses in GWG.

GWG’s business focused on the acquisition of life insurance policies in the secondary market. GWG was offered to investors even though the company had no significant operating history and no profits. Until 2018, GWG’s sole business was to borrow money to buy life insurance policies in the secondary market at prices that are less than the face value of the insurance benefits payable upon the death of the insureds. GWG would then hold the policies until maturity and collect the face value upon the insured’s death.

The contours of the GWG bonds are as follows:

Brokers Earned up to 8% commissions.
GWG bonds are inadequately secured. While GWG claims that the L Bonds are secured by insurance portfolio, in the prospectus, the life insurance policies held by DLP IV and Life Trust “do not serve as direct collateral for the L Bonds” and have been “pledged as direct collateral securing” other debt obligations senior to L Bond investors.
GWG bonds are “auto-renewable.” Like a magazine subscription, unless an L bond investor gives notice ahead of the maturity date that they wish to redeem their investment, the bond is renewed automatically and replaced with a new one with the same terms and interest rate then being offered by GWG. This feature forces investors to be vigilant as expiration approaches.
GWG bonds are unlisted. This means the bonds are not tradable on any stock exchange. Because there is no market for the L Bonds there is no way for an investor to regularly gauge the value of an L Bonds or the credit worthiness of GWG based on market sentiment.
GWG bonds are not rated. L Bonds were not credit rated by any credit rating agency nor were they insured.

Mark Kemp Has 11 Customer Complaints and A Regulatory Disclosure

September 17, 2022 | by Staff Attorney

According to records kept by The Financial Industry Regulatory Authority (FINRA) financial advisor Mark Kemp (Kemp) has at least 14 disclosable events. These events include 11 customer complaints alleging that Rivero engaged in some form of investment related misconduct in the handling of the client’s accounts. In addition, Kemp has been terminated for cause by two firms and has had a regulatory matter. Kemp is currently employed by McNally Financial Services Corporation (McNally Financial). Kemp’s customer complaints alleges that Kemp recommended unsuitable investments in different investment products including reverse convertibles and direct participation programs among other allegations and complaints.

In April 2022 a customer complained that Kemp violated the securities laws by alleging that Kemp made unsuitable investment recommendations specific to reverse convertible securities. The investor alleged damages of $157,600 and the claim is currently pending.

In July 2021 a customer complained that Kemp violated the securities laws by alleging that Kemp violated equitable principles of trade and fair dealing, violation of Securities Act of 1933, violation of Securities Exchange Act of 1934, violation of Texas Securities Act, fraud, negligent misrepresentation, breach of fiduciary duty, and other claims. The claim is currently pending and the investor seeks $370,006.75 in damages.

In May 2021 a customer complained that Kemp violated the securities laws by alleging that Kemp engaged in fraud, negligent misrepresentation, breach of fiduciary duty, and other claims. The claim is currently pending and the investor seeks $100,00 in damages.

Advisor Richard Reynolds Has Numerous Trading Complaints

September 16, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker Richard Foerster Reynolds (Reynolds), currently employed by SW Financial has been subject to at least 13 customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Reynolds’ customer complaints alleges that Reynolds recommended unsuitable investments in various investments, among other allegations of misconduct relating to the handling of their accounts, including unauthorized trading.

In April 2019, a customer complained that Reynolds violated the securities laws by alleging that Reynolds charged unauthorized commissions. The damage amount requested was $8,000. The claim settled in the amount of $4,000.

In December 2018, a customer complained that Reynolds violated the securities laws by alleging that Reynolds engaged in negligence and negligent supervision. The damage amount requested was $65,000. The claim settled in the amount of $14,500.

In November 2018, a customer complained that Reynolds violated the securities laws by alleging that Reynolds engaged in statutory and common law fraud, misrepresentation, negligence, breach of contract, and breach of fiduciary duty. The damage amount requested was $56,000. The claim settled in the amount of $14,999.99.

In May 2018, a customer complained that Reynolds violated the securities laws by alleging that Reynolds engaged in churning, improper use of margin, unsuitability, and charged high commissions.. The damage amount requested was $503,828.39. The claim settled in the amount of $150,000.

Advisor Frank Avallone Has Suitability Complaints

September 16, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Frank Louis Avallone (Avallone), currently employed by Ceros Financial Services, Inc (Ceros) and formerly registered with National Securities Corporation (NSC) has been subject to at least four customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Mr. Avallone’s customer complaints alleges that Mr. Avallone recommended unsuitable investments.

In February 2020, a customer complained that Mr. Avallone violated the securities laws by alleging that Mr. Avallone engaged in unsuitable investment advice. The claim alleges $140,000 in damages and is currently pending.

In November 2019, a customer complained that Mr. Avallone violated the securities laws by alleging that Mr. Avallone engaged in unsuitable investment advice. The claim alleged $209,200 in damages and was later closed-no action.

In December 2013, a customer complained that Mr. Avallone violated the securities laws by alleging that Mr. Avallone engaged in unsuitable investment advice, breach of fiduciary duty, churning, negligence, and breach of contract. The claim settled in the amount of $6,100.

Advisor Travis Lippman Subject to Multiple Investment Complaints

September 14, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that Travis Justin Lippman, formerly employed by Primary Capital, LLC and now with Spartan Capital Securities, has been subject to at least four customer complaints during his career. According to records kept by the Financial Industry Regulatory Authority (FINRA), Lippman customer complaints allege that Lippman engaged in unsuitable investment practices.

In July 2021, a customer complained that Lippman violated the securities laws by alleging that Lippmann engaged in unsuitable trading. The claim alleges $853,231.33 in damages and is currently pending.

In January 2020, a customer complained that Lippman violated the securities laws by alleging that Lippman breached his fiduciary duty to his customer, recommended unsuitable investments, and engaged in misrepresentation and negligence. The claim settled in the amount of $90,000.

In August 2019, a customer complained that Lippman violated the securities laws by alleging that Lippman engaged in unsuitable trading. The claim alleged $200,000 in damages but was withdrawn.

In May 2017, a customer complained that Lippman violated the securities laws by alleging that Lippman engaged in unsuitable trading and is liable for misrepresentation. The claim alleged $34,000 in damages but was denied.

Advisor Thomas Kintz Has a Suitability Complaint

September 14, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker Thomas Bradley Kintz (Kintz), currently employed by T3 Trading Group, LLC (T3 Trading) and formerly with Benjamin F. Edwards & Company, Inc. (Benjamin F. Edwards) has been subject to at least one customer complaint during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Kintz’s customer complaint alleges that Kintz recommended unsuitable investments in various investments among other allegations of misconduct relating to the handling of their accounts.

In January 2021, a customer complained that Kintz violated the securities laws by alleging that Kintz engaged in unsuitable investment advice regarding exchange traded products. Further, the claim alleges Kintz engaged in unauthorized and excessive trading. The damage amount requested was $100,000. The claim settled in the amount of $65,000.

Additionally, Kintz was involved in three financial actions. In December 2015, the financial action was compromised and discharged. In August 2013, the financial action was compromised and discharged. In May 2013, the financial action was satisfied and released.

William Athas of SW Financial Sanctioned By FINRA Over Churning

September 8, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker William Nicholas Athas (Athas), currently employed by SW Financial has been subject to at least nine customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Athas’s customer complaints alleges that Athas recommended unsuitable investments in various investments among other allegations of misconduct relating to the handling of their accounts.

In January 2022, FINRA barred Athas finding that Athas willfully violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts.

In May 2020, a customer complained that Athas violated the securities laws by alleging that Athas engaged in unsuitable trading, common law fraud, churning. The claim alleges $84,932.35 in damages and is currently pending.

In January 2017, a customer complained that Athas violated the securities laws by alleging that Athas engaged in misrepresentations, breach of fiduciary duty, breach of contract, negligence, unauthorized trading, and violations of Texas State Securities Act. The damage amount requested was $290,000. The claim settled in the amount of $95,000.

In July 2011, a customer complained that Athas violated the securities laws by alleging that Athas engaged in churning and excessive trading. The damage amount requested was $100,000. The claim settled in the amount of $10,000.

Broker Robert Mann Has Suitability Disputes

September 8, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker Robert Allan Mann (Mann), currently employed by B. Riley Wealth Management after the firm acquired National Securities Corporation (NSC) has been subject to at least three customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Mann’s customer complaints alleges that Mann recommended unsuitable investments in various investments including allegations involving debt-corporate securities, mutual funds, real estate securities and common and preferred stock, among other allegations of misconduct relating to the handling of their accounts.

In January 2020, a customer complained that Mann violated the securities laws by alleging that Mann engaged in unsuitable investment advice. The damage amount requested was $175,000. The claim settled in the amount of $57,500.

In October 2014, a customer complained that Mann violated the securities laws by alleging that Mann engaged in unsuitable investment advice, and charged excessive commissions. The damage amount requested was $29,000. The claim settled in the amount of $12,500.

In June 2001, a customer complained that Mann violated the securities laws by alleging that Mann engaged in unsuitable investment advice, misrepresentation, breach of contract, breach of fiduciary duty, unauthorized trading, fraud, inappropriate use of margin, and churning in the customer’s account. The damage amount requested was $185,000. The claim settled in the amount of $61,000.

Christian Lucchetto Suspended by FINRA Over Excessive Trading

September 6, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that broker Christian Frank Lucchetto (Lucchetto), currently employed by Arive Capital Markets has been subject to at least one regulatory action and one criminal action during the course of his career.

In January 2021, Lucchetto faced a regulatory action commenced by FINRA. Lucchetto consented to the entry of findings that he engaged in unsuitability and excessive trading in his customer’s account. The sanctions included $5,000 in civil penalties and administrative fines, as well as $30,454.86 in restitution. Additionally, FINRA suspended Lucchetto in all capacities from February 2021 through May 2021.

Advisor Erik Drewes Expunges Three Customer Complaints From His Disclosures

September 6, 2022 | by Staff Attorney

The attorneys at Gana Weinstein LLP have reviewed BrokerCheck records reports that broker Erik Drewes (Drewes), currently employed by American Capital Partners LLC, has been subject to at least three customer complaints during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Drewes’s customer complaints allege that he participated in churning and failed to perform adequate due diligence on REIT investments. However, these complaints have been expunged from Drewes’ record under FINRA’s notoriously flawed expungement procedures. The expunged complaints are as follows:

In April 2020, a customer complained that Drewes violated securities laws by alleging that Drewes failed to do adequate due diligence on a REIT before investing in it. The claim settled in the amount of $14,900.

In November 2014, a customer complained that Drewes violated securities laws by alleging Drewes engaged in unsuitable investment advice and churning. The claim settled in the amount of $110,000.

In April 2008, a customer complained that Drewes violated securities laws by alleging Drewes failed to supervise in relation to unauthorized and excessive trading. The claim settled in the amount of $12,795.