Articles Tagged with Cabot Lodge Securities

shutterstock_153912335-300x189The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that advisor Russell Green (Green), currently employed by Cabot Lodge Securities LLC (Cabot Lodge) has been subject to at least five customer complaints during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Mr. Green’s customer complaints alleges that Mr. Green recommended unsuitable investments, among other allegations, including: churning, and misconduct relating to the handling of their accounts.

In August 2017, a customer complained that Mr. Green violated the securities laws by alleging that Mr. Green engaged in excessive trading and unsuitable recommendations.  The claim settled in the amount of $250,000.

In June 2014, Mr. Green was subject to a FINRA regulatory action. Mr. Green allegedly engaged in misconduct regarding necessary client information in connection with the deposit and sale of stock. Mr. Green consented to sanctions; he was faced with $5,000 in fines.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typically 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.

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shutterstock_113872627-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ahmed Gheith (Gheith), in August 2017, was terminated by his employer Paulson Investment Company, LLC (Paulson Investment) after the firm alleged that Gheith was terminated subsequent to discovery of violations of firm supervisory procedures, failure to provide honest answers on annual questionnaires, violations of FINRA Rule 3280, and due to initiation of customer arbitration alleging fraud, negligence, and unjust enrichment.  The firm referenced that the product involved was a promissory note.  Thereafter, in April 2018 FINRA Suspended Gheith.

FINRA alleged that two registered representatives informed Gheith about a private offering related to a real estate development in Belize. The investment was described as a short-term note meant to raise money for the development of an airport and Gheith thereafter referred several customers to invest.  FINRA found that Gheith’s communications with four customers included a description of the Private Offering and leading the customers to invest a total of $3.5 million in the offering. FINRA alleged that Gheith was paid $93,165 for his role in soliciting and referring the customer.

FINRA’s allegations concerning promissory notes, a private securities transaction, –is known in the industry as “selling away”.

shutterstock_85873471-300x200Calton & Associates, Inc. (Calton) broker Nicolas Toadvine (Toadvine) has been subject to numerous complaints over non-traded REITs and real estate related investments.  According BrokerCheck Lynn has been subject to 12 customer complaints in total and declared bankruptcy in 2013.  The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Toadvine.

Many of the complaints concern private placements and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).

All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed.  However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them.  Further, investor often fail to understand that they have lost money until many years after agreeing to the investment.  In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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