Articles Tagged with H. Beck

shutterstock_177792281-300x198Our law firm, Gana LLP, is investigating claims made by Financial Industry Regulatory Authority (FINRA) against broker Dan Droeg (Droeg). According to BrokerCheck, Droeg’s record contains two customer complaints filed against him regarding alleged unsuitability.

The most recent customer complaint was filed against Droeg in November 2016. During the period of July 2012 to November 2016, Droeg allegedly recommended over-concentrated and illiquid investments in variable annuities for numerous profit sharing plans. The client also claimed that the broker allegedly incorrectly reported the values and performances of the investments. The alleged damages are worth $250,067. The case is currently pending.

During January 2005, another customer complaint was filed against Droeg concerned alleged unsuitability. The broker allegedly recommended variable annuities, which were highly unsuitable for an elderly customer with low risk tolerance. The alleged damages were worth $6,000 and the case settled for $18,043.79.

shutterstock_103681238-300x300The investment fraud lawyers of Gana LLP are examining multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) against broker Scott Goldman (Goldman). Goldman’s FINRA BrokerCheck record shows several disclosures mainly pertaining to unsuitable investments.

In December 2016, an elderly customer alleged that during Goldman’s employment at LPL Financial Corporation, he recommended highly unsuitable investments that were heavily concentrated in risky, leveraged precious metal products. In addition, the broker did not properly inform his client of the risks associated with such an investment. This dispute was settled in December 2016, and resulted in $10,000 penalty and Goldman was suspended from the industry.

Another case against Goldman was filed in October 2014 for allegedly making unsuitable recommendations, failing to supervise, and breaching his fiduciary duty during his employment at H. Beck Inc. The alleged damages were worth $250,000. The case was settled in November 2015 for $75,000.

shutterstock_184430498-300x225Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Wendy Feldman (Feldman) currently associated with H. Beck, Inc. (H. Beck) alleging Feldman engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims.  According to BrokerCheck, Feldman currently has two customer complaints and one employment termination for cause.

In July 2015, a customer brought a complaint against Feldman alleging that between 2011 to 2014 the broker engaged in unauthorized trading, made unsuitable purchases, and failed to disclose fees.  The complaint alleged damages of $5,000,000.  In 2016 an arbitration was held and the customer was awarded $8,606,599 in total.

Shortly after the arbitration award Morgan Stanley terminated Feldman due to allegations involving adherence to industry rules and/or firm policy including with regard to use of trading discretion.

Continue Reading

shutterstock_12144202The securities lawyers of Gana LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Steven Orr (Orr).  According to BrokerCheck records Orr has been subject to at least five customer complaints and two criminal matters.  The customer complaints against Orr allege securities law violations that including unsuitable investments and misrepresentations among other claims.   Many of the complaints involve direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

Our firm has represented many clients in these types of products.  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.

Continue Reading

shutterstock_128655458The securities fraud lawyers of Gana LLP are investigating customer complaints and regulatory actions filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Richard Poston (Poston). According to BrokerCheck records, Poston has spent 20 years in the securities industry and was most recently registered with H. Beck, Inc. (H. Beck) in Plano, Texas.  Poston is currently not licensed to act as a broker or an investment adviser.  Over his career, Poston has been the subject of at least four customer complaints, one regulatory investigation, one employment separation for cause, and one bankruptcy.

The most recent regulatory investigation was filed in December 2015 by FINRA alleging potential violations of FINRA Rules 2010, 2150, 3240, and 8210. These rules revolve around standards of commercial honor and equitable principles of trade, improper use of customers’ securities or funds, the borrowing or lending money from or to any customer without written approval.

The most recent complaint was filed in March 2016 while employed at H. Beck alleging that Poston, from October 2007, until September 2015 made unsuitable concentrated and illiquid investments in non-traded REIT’s.  The claim is currently pending.

Our firm often handles cases involving direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

Continue Reading

shutterstock_189006551The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Scott Goldman (Goldman).  According to BrokerCheck records Goldman has been subject to at least six customer complaints.  The customer complaints against Goldman allege securities law violations that including unsuitable investments, misrepresentations, failure to supervise, and breach of fiduciary duty among other claims.  Some of the claims involve variable annuity and variable universal life insurance products.

Our firm has represented many clients in these types of products.  All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds.  For example, products like variable annuities 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.  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.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client.  In order to make a suitable recommendation the broker must meet certain requirements.  First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors.  Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Continue Reading

shutterstock_186180719The investment lawyers of Gana LLP are investigating customer complaints against broker Michael Child (Child). There are at least 2 customer complaints against Child. In addition, there is one regulatory complaint and three employment separations disclosed. The customer complaints against Child allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and unauthorized trading among other claims. One of the claims involves allegations around the recommendation of a variable annuity.

The regulatory action was initiated by the state of Utah in March 2012 and alleged that certain information on a suitability form was not current resulting in a fine and a 12 month probation. In 2008, Child’s brokerage firm, GunnAllen Financial, Inc. alleged that Child allowed a statutorily disqualified person to represent himself as being associated with the branch office.

Child entered the securities industry in March 1998. Since March 2008, Child has been registered with H. Beck, Inc. out of the firm’s Salt Lake City, Utah office location.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Continue Reading

shutterstock_145123405The Financial Industry Regulatory Authority (FINRA) sanctioned three firms, H. Beck, Inc. (H. Beck), LaSalle St. Securities, LLC (LaSalle), and J.P. Turner & Company, LLC (JP Turner) – with fines of $425,000, $175,000 and $100,000, respectively concerning inadequate supervision of consolidated reports provided to customers.

As a background, a consolidated report is a single document that combines information regarding a customer’s financial holdings. Consolidated reports are used to supplement, but do not replace, official account statements disseminated by brokerage firms and market makers. FINRA released a regulatory notice reminding firms that consolidated reports must be clear, accurate and not misleading. Because these reports are not official reports FINRA is concerned that if consolidated report making is not rigorously supervised there is the potential for communications to be inaccurate, confusing, or misleading to customers. Consolidated reports can also be used for fraudulent or unethical purposes.

In the agency’s findings, FINRA determined that numerous registered representatives of the three firms prepared and disseminated consolidated reports to customers either without adequate review or any prior review by a principal. In particular, H. Beck and J.P. Turner did not have any written procedures specifically addressing the use and supervision of consolidated reports. In addition, while LaSalle had written procedures related to consolidated reports, it failed to enforce the procedures.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, stated in FINRA’s press release that, “Inadequate controls around consolidated reporting create the risk that unscrupulous representatives will provide inaccurate and misleading reports to their clients to conceal fraud and theft. These actions along with previous actions involving consolidated reports should be a message to firms that we will continue to examine for this issue and sanction firms that are not supervising this function properly.”

Continue Reading

shutterstock_146470052This article follows up on a recent article reported in Reuters concerning Atlas Energy LP’s private placement partnerships in oil and gas. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal allows investors to participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of oil into viable prospects. In addition, Atlas promises to invest up to $145 million of its own capital alongside investors.

In the last article we explored how the house seems more likely to win on these deals over investors. But beyond the inherent risks with speculating on oil and gas and unknown oil deposits most investors don’t realize the deals are often unfair to investors. In a normal speculative investment as the investment risk goes up the investor demands greater rewards to compensate for the additional risk. However, with oil and gas private placements the risks are sky high and the rewards simply don’t match up.

In order to counter this criticism, issuers say that the tax benefits of their deals where the investor can write off more than 90 percent of their initial outlay the year they make it helps defray the risk and increase the value proposition. First, the same tax advantage claims are often nominal compared to the principal risk of loss of the investment as seen by Puerto Rican investors in the UBS Bond Funds who have now seen their investments decline by 50% or more in some cases. Second, often times brokers sell oil and gas investments indiscriminately to the young and old who have lower incomes and cannot take advantage of the tax benefits.

In fact, of the 28 people interviewed by Reuters who invested in deals from Atlas, Reef Oil & Gas Partners, Discovery Resources & Development LLC, and Black Diamond Energy Inc. 17 were retirees who had low tax burdens when the product was recommended to them.

By now you may be asking, how do these deals even get issued? First, the private placement market is very opaque. Issuers are only required to file a statement to exempt the security from registration and a few other details about the investment. Second, investors rely upon the brokerage industry’s due diligence on each issue they sell to ensure its suitability for investors. But many brokers use outside due-diligence firms that may be paid by the issuer, a conflict of interest, when evaluating deals. Indeed, some of the largest securities frauds in the private placement space have been the result of reliance on third-party due diligence.

Continue Reading

shutterstock_103610648As recently reported in Reuters, Atlas Energy LP has marketed itself to investors as a way to get into the U.S. energy boom. By contributing at least $25,000 in a private placement partnership that will drill for oil and gas in states such as Texas, Ohio, Oklahoma and Pennsylvania and share in revenues generated from the wells. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal sounds good when pitched: participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of fossil fuels into potentially viable prospects and to boot Atlas will invest up to $145 million of its own capital alongside investors. Through this method and similar deals, oil and gas projects have issued nearly 4,000 private placements since 2008 seeking to raise as much as $122 billion.

But before you take the plunge a review of the Atlas’s offering memorandum reveals some red flags and given Atlas’ past failure rate investors should think twice. First, up to $45 million of the money raised will be paid to Atlas affiliate Anthem Securities that will then be turned over to as commissions to broker-dealers who pitch the deal to investors. Up to $39 million more will be used to buy drilling leases from another affiliate. Think investors will get a fair price on the leases when Atlas controls both sides of the deal? More conflicts ahead as Atlas affiliated suppliers may also get up to $53 million for buying drilling and transport equipment. Next, an additional $8 million of Atlas’s investment is a 15 percent markup on estimated equipment costs. Finally, Atlas will pay itself nearly $52 million in various other fees and markups.

In sum, at least 40% of Atlas’s $145 million investment alongside mom and pop goes right back to the company. In addition, Atlas’ profits don’t stop there, when the venture starts generating revenue Atlas is entitled to 33% before accounting for those payments and markups. In the end, not much of a risk at all for Atlas.

Continue Reading