Articles Tagged with Capital Investment Group

shutterstock_112866430-300x199Former IFS Securities, Inc. (IFS) and Voya Financial Advisors, Inc. (Voya) broker James Flynn (Flynn) has been subject to at least ten customer complaints, two employment terminations for cause, three tax or civil judgment liens, and one bankruptcy proceeding.  According to a BrokerCheck report many of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In February 2017 Voya discharged Flynn accusing the broker of providing misleading information to the firm during a complaint investigation.  Despite numerous customer complaints and financial troubles IFS hired Flynn anyway only to also discharge him a year later in February 2018.  IFS claims that Flynn was terminated because he executed unauthorized trades.

In addition, Flynn was subject to large tax liens totaling hundreds of thousands of dollars.  In April 2005 Flynn disclosed a tax lien of over $256,000.  Thereafter, Flynn declared bankruptcy in April 2013.  The fact that a broker cannot manage his own personal finances is material information for a client to consider.  In addition, the types of products clients have alleged were unsuitable are high commission products that may be recommended to generate high profits for the advisor at the expense of the client.

shutterstock_80511298-300x218Broker James Lynn (Lynn) was recently terminated by his former employer Voya Financial Advisors, Inc. (Voya).  According BrokerCheck  Voya alleged that Lynn provided misleading information to the firm during a complaint investigation.  In addition to the termination, Lynn has been subject to six customer complaints, one bankruptcy and three judgments or tax liens.  The securities lawyers of Gana Weinstein LLP are investigating the customer complaints against Lynn.

Many of the complaints concern variable annuities or direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  The most recent complaint filed in May 2017 requested $115,000 in damages alleging that the investor claimed the that the REIT investments and the replacement of a variable annuity policy was unsuitable. The REITs were purchased in 2014 and 2015.  The claim is currently pending.

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.

shutterstock_20354401-300x200Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Bryon Glime (Glime) formerly associated with Capital Investment Group, Inc. (Capital Investment) alleging unsuitable investments and unauthorized trading among other claims.  According to brokercheck records Glime has been subject to three customer complaints, one criminal matter, three judgments or liens, one employment termination for cause, and one regulator action.

In September 2015 Glime was terminated by Capital Investment after the firm alleged that Glime failed to timely report a criminal disclosure to the firm.  The criminal disclosure disclosed includes allegations of theft, embezzlement, and misappropriation.

Brokers in the financial industry have the fundamental responsibility to treat investors fairly.  This obligation includes making only suitable investments for their client.  The suitable analysis has certain requirements that must be met before the recommendation is made.  First, there must be reasonable basis for the recommendation for the investment based upon the broker’s and the firm’s investigation and due diligence.  Common due diligence looks into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors.  Second, if there is a reasonable basis to recommend the product to investors the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives.  These factors include the client’s age, investment experience, retirement status, long or short term goals, tax status, or any other relevant factor.

Broker Joseph Anthony Giordano (Giordano) was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that he participated in the distribution of unregistered debentures issued by Empire Corporation, a Maryland corporation (Empire Debentures) to customers of Capital Investment Group, Inc. (CIG). FINRA alleged that Giordano violated FINRA Rules by soliciting the sales of the Empire Debentures.  In addition, FINRA found Giordano’s Empire Debentures sales to customers were without a reasonable basis for making such recommendation.  Finally, FINRA found that Giordano engaged in securities fraud by making intentionally false and misleading statements in connection with the sales of the Empire Debentures to customers.

Giordano was registered with Capital Investment Group from September 1992 until his termination on June 20, 2012. Giordano’s U5 states that he was terminated for “selling away” and making false and misleading statements to the firm.  On July 2, 2012, Giordano became registered with Meyers Associates, L.P. (Meyers) until his registration was terminated by Meyers on July 10, 2013.  Giordano’s BrokerCheck states that he is the general manager of Giordano Asset Management LLC and treasurer of Giordano Holding Corporation.

FINRA found that Giordano sold approximately $3.1 million of the Empire Debentures to at least 45 customers of CIG.  The Empire Debentures had varying maturities but the majority had a five-year maturity and promised interest at an annual compounded rate of ten percent paid at maturity.  FINRA alleged that the Empire Debentures were speculative investments considering their high-yield, lack of credit analyses or an effective registration statement, and the complete absence of a secondary market.  The sale of the Empire Debentures was in contravention of Section 5 of the Securities Act of 1933 requiring the registration of securities.  The securities were also not registered with the State of Maryland.  In addition, FINRA alleged that Giordano failed to conduct adequate due diligence regarding the registration status of the Empire Debentures prior to recommending and selling the debentures to customers.