Articles Tagged with Crown Capital Securities

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.