Articles Tagged with Crown Capital Securities

shutterstock_1081038-300x200The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that former broker Martin Batstone (Batstone), barred from acting as a broker from FINRA, has been subject to at least six customer complaints and two regulatory actions during the course of his career. Batstone was most recently associated with Newbridge Securities Corporation (Newbridge). According to records kept by The Financial Industry Regulatory Authority (FINRA), Batstone’s customer complaints alleges that Batstone recommended unsuitable investments in various investments including allegations involving private securities, annuities, mutual funds, and REITs, among other allegations of misconduct relating to the handling of their accounts.

In October 2019, FINRA filed a regulatory action finding that Batstone consented to sanctions. Batstone was a respondent in a FINRA complaint. The complaint alleged that Batstone willfully violated Section 10(b) of the Securities Exchange act of 1934, and Rule 10b-5(a)-(c), and FINRA Rule 2010, by transferring client funds into his personal bank accounts. FINRA has barred Batstone from acting as a broker or otherwise being associated with a broker-dealer firm, starting February 2020.

In October 2017, a customer complained that Batstone violated the securities laws by alleging that Batstone engaged in unsuitable investment advice, due to the purchase of two annuities unsuitable for the client based on her risk tolerance.  The claim settled in the amount of $5,000.

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shutterstock_85873471-300x200Advisor Kenneth Barroga (Barroga), currently employed by Crown Capital Securities, L.P. (Crown Capital) has been subject to at least five customer complaints during the course of his career.  According to a BrokerCheck report most of these customer complaints appears to concern unsuitable investments in alternative investments.  These allegations may also concern investments in GPB Capital Holdings (GPB Capital) related investments.  Crown Capital is known to have approved their brokers to sell GPB Capital to their clients.

GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation.  Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships.  While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice.  In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future.  The firm has admitted that it has never been profitable and has merely returned investor capital in the past in order to fake a successful business model.  In sum, investors now know there is nothing to hang onto.  By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.

In June 2020 a customer complained that Barroga violated the securities laws by alleging that Barroga engaged in sales practice violations related to lack of suitability, breach of fiduciary duty, misrepresentation and omissions of material facts and lack of due diligence in connection with transactions in alternative investment products. The claim alleges $180,000 in damages and is currently pending.

In November 2018 a customer complained that Barroga violated the securities laws by alleging that Barroga engaged in sales practice violations related to misrepresentations concerning REITs and unsuitable investments in alternative investments.  The claim alleges $250,000 in damages and resolved for $160,097.69 with another party settling for $40,000.

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shutterstock_20354398-300x200Advisor Thomas Burns (Burns), formerly employed by Crown Capital Securities, L.P. (Crown Capital) has been subject to at least seven customer complaints and two regulatory actions.  According to a BrokerCheck report some of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.  The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In February 2019 FINRA settled a regulatory dispute with Burns where Burns consented to sanctions and an entry of findings that he negligently made numerous mistakes causing errors and inaccuracies in identifying customer assets on alternative investment forms causing his firm to have inaccurate books and records. For instance, FINRA found that Burns mistakenly double counted assets held away from his firm in direct pension benefit plans by placing the individual holdings in their individual categories and by counting them again in the other assets category. FINRA found that Burns made computational errors in adding up holdings when calculating net worth.  In addition, FINRA alleged that Burns erroneously understated the amount of existing alternative investment holdings by either unintentionally understating the value of existing tenants in common or rental holdings or by misclassifying those existing holdings as personal real estate, instead of as alternative investments.

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shutterstock_173509961According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Kenneth McDonald (McDonald) has been the subject of at least three customer complaints and one regulatory action. Customers have filed complaints against McDonald alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations and false statements in connection with recommendations to invest in private placements such as tenants-in-common (TICs) interests.

McDonald was a registered representative with Crown Capital Securities, L.P. from June 2003 through February 2013. Thereafter, McDonald has been registered with Newport Coast Securities, Inc.

TIC investments have come under fire by many investors. Indeed, due to the failure of the TIC investment strategy as a whole across the securities industry, TIC investments have virtually disappeared as offered investments.   According to InvestmentNews “At the height of the TIC market in 2006, 71 sponsors raised $3.65 billion in equity from TICs and DSTs…TICs now are all but extinct because of the fallout from the credit crisis.” In fact, TICs recommendations have been a major contributor to bankrupting brokerage firms. For example, 43 of the 92 broker-dealers that sold TICs sponsored by DBSI Inc., a company whose executives were later charged with running a Ponzi scheme, a staggering 47% of firms that sold DBSI are no longer in business.

Broker Neil Winterrowd (Winterrowd), formerly of J.P. Turner & Company, LLC (“JP Turner”), has been barred by the Financial Industry Regulatory Authority (FINRA) concerning allegations that from August 12, 2009, through September 21, 2011, Winterrowd misappropriated approximately $1.5 million from at least four different customers and used the funds for his own purposes.  FINRA’s action against Winterrowd is the latest in a number of recent actions against brokers formerly associated with JP Turner, many of which highlight allegations of supervisory failures at the firm.

Winterrowd was associated with Crown Capital Securities, L.P. from 2004 through August 2009.  In August 2009, Winterrowd transferred to JP Turner until September 21, 2011 at which time he was discharged from JP Turner for improper handling of customer funds.  According to Winterrowd’s BrokerCheck, there have been seven customer complaints filed against the broker.

FINRA alleged that Winterrowd provided a variety of financial services to his clients, including annuity products, life insurance, and fixed annuities.  According to FINRA, Winterrowd’s customers held brokerage accounts at JP Turner but were also sold products that did not need to be sold through a registered firm.  FINRA’s investigation uncovered that Winterrowd misappropriated approximately $1.5 million from at least four different customers.  FINRA found that broker accomplished the misappropriations by directing withdrawals from customer accounts to a company under his control.  According to FINRA, Winterrowd obtained the funds through partial withdrawals, surrenders, and the proceeds of a death benefit from the annuity products sold to customers.  In addition, FINRA alleged that checks were made payable to Annuity Investment Group, an entity owned and controlled by Winterrowd.  After funds were deposited in the bank accounts of Annuity Investment Group, FINRA alleged that Winterrowd improperly and without his clients’ knowledge or consent converted funds for his own benefit.

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