Articles Tagged with investment fraud

shutterstock_120556300-300x300The investment lawyers at Gana LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Donald Southwick (Southwick).

According to BrokerCheck records, without admitting or denying the findings, Southwick consented to the sanction and to the entry of findings that he failed to perform a reasonable basis suitability analysis prior to recommending investments to his customers. The findings also stated that Southwick recommended unsuitable transactions in the securities accounts of two customers by recommending purchases that resulted in an over-concentration of illiquid private offerings, inconsistent with their investment objectives and risk tolerance. Southwick has been suspended from the securities industry for six months.

Moreover, Southwick has been subject to two customer complaints.

shutterstock_189302963-300x194The investment lawyers of Gana LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against broker James Cox (Cox).

According to Cox’s Brokercheck records, he has been sanctioned by FINRA because he allegedly recommended unsuitable annuity transactions to a customer and received commissions of $25,460 in connection with the exchange. Without admitting or denying the findings, Cox consented to the sanctions and to the entry of findings. Cox was suspended from FINRA for four months and fined a total of $35,460.

In April 2017, Cox was terminated from Stifel, Nicolaus & Company, Incorporated because of a “lack of confidence after settlement of customer complaint and nondisclosure of outside business activity”

Moreover, Cox has been subject to four customer disputes.

In June 2012, a customer alleged that when the customer retired, Cox made unsuitable recommendations, made material misrepresentations, and breached his fiduciary duty. This dispute settled for $25,000.

In June 2014, a customer alleged that Cox failed to monitor the customer’s account and invested his assets in unsuitable investments. This dispute is pending.

Subsequently, In November 2014, Cox allegedly provided misleading advice to a customer who applied for two annuities to replace older annuities. This dispute settled for $480,000.

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shutterstock_160304408-300x199The investment lawyers of Gana LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Broker Tommy Mai (Mai).

According to Mai’s Brokercheck records, he has been sanctioned by FINRA because he allegedly “forged or caused to be forged customers’ signatures on various types of customer account documents including his member firm’s new account forms and non-firm insurance applications. In total, 53 customer account forms were forged, altered, or otherwise improperly signed (i.e., signed when partially completed or blank). The findings also stated that Mai paid to air a television program, on two Los Angeles Vietnamese-language television stations, appeared in every episode of the program and discussed a range of insurance and investment-related topics, without obtaining prior approval from the firm or FINRA prior to airing the program. In addition, the content of the program was, at times, misleading, promissory, and/or unbalanced.” Mai was suspended from FINRA for four months and fined $10,000.

The term “securities fraud” relates to inappropriate and illegal activities. Principally, it relates to investor deception and market maipulation. Fraud can sometimes include the unauthorized trading, false or misleading representations and of course, Ponzi schemes. Many laws protect investors.

shutterstock_157106939-300x300According to multiple news sources, a private equity fund managed by firm EnerVest Ltd. has lost essentially all of its value.  The $1.5 billion EnerVest Energy Institutional Fund XII closed in 2010 while the $2 billion EnerVest Energy Institutional Fund XIII closed in 2013 appear to be affected by the loss.  The EnerVest Fund XIII fund raised billions and focused on oil and gas and then borrowed $1.3 billion leveraging up the fund at the height of the oil market.  As oil prices declined from more than $100 in 2014 to a low of $26 the value of EnerVest’s assets, which served as collateral on the debt, fell precipitously.

The decline in asset value then triggered repayment demands from lenders that could not be met.  EnerVest has its credit facilities with Wells Fargo for its funds.  In 2015, after the valuation of EnerVest Fund XII fell, Wells Fargo accelerated EnerVest’s debt repayment to $125 million from $20 million.  EnerVest also stated in 2016 that it expected Wells Fargo to require an even larger repayment of Fund XIII in May 2016.

According to sources, investors can expect to be left with at pennies on the dollar.  A loss of this scale for a private equity firm of EnerVest’s size is highly unusual given that there are only a handful of private equity firms worth at least $1 billion that have lost money.

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shutterstock_155271245-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Bruce Barber (Barber), in September 2017, was accused by FINRA of engaging in an undisclosed outside business activity by serving as an advisor to the Board of Directors for ABC, LLC (ABC) and being compensated by the company with warrants.  According to FINRA, Barber solicited 15 clients to invest in ABC’s private securities offering.  At this time it unknown the full extent and scope of Barber’s outside business activities.

In February 2017, Barber’s then employer Securities America, Inc. (Securities America) terminated him stating Barber solicited customers to purchase an unapproved securities product and participated in an unapproved outside business activity.

The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

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shutterstock_36343294-300x225According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) financial advisor James Lyons (Lyons), has been subject to five customer complaints and one employment terminations for cause.  Lyons was formerly associated with Raymond James & Associates, Inc. (Raymond James) until April 2017 when the firm terminated his employment due to customer allegation of unauthorized trading.

The most recent customer complaint filed against Lyons alleged that from December 2013 through June 2017 the broker engaged in unauthorized and unsuitable trading resulting in $800,000 in damages.  The complaint was filed in June 2017 and is currently pending.  Previously a customer in April 2016 alleged unauthorized trading resulting in $1.2 million in damages.  That claim was eventually settled for $400,000.

Advisors are not allowed to engage in unauthorized trading.  Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b).  These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

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shutterstock_180342179-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Peter Butler (Butler), in January 2017, was terminated by his firm Ameriprise Financial Services, Inc. (Ameriprise) over claims by the firm that Butler “resigned while on suspension pending termination for violation of company policy related to selling away and disclosure of an outside activity.”  In addition to the termination Butler has been subject to one regulatory action and four customer complaints.

The regulatory action by FINRA found that Butler failed to reasonably supervise a broker who was employed as a sales associate and office manager.  FINRA found that Butler failed to detect and prevent the office manager from converting money from a business organization belonging to Butler. FINRA determined that the office manager used this control to convert funds from the business in order to pay himself an additional salary and unauthorized commissions, as well as to otherwise take money to which he was not entitled. In addition, funds were converted from firm customers who were also his family members and domestic partner by depositing those funds into the business’ bank account, from which he continued to make unauthorized withdrawals.

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shutterstock_145123405-200x300The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Brett Murphy (Murphy). According to BrokerCheck records Murphy has been subject to at least two customer complaint, and one financial disclosure. The customer complaints against Murphy allege securities law violations that including unsuitable investments and unauthorized trading among other claims.

In August 2016, a customer filed a complaint alleging that Murphy was not properly supervised, and excessively traded the account in unsuitable unit investment trusts while employed at Oppenheimer & Company Inc. from July 2011 through August 2016 causing $2,000,000 in damages.  The claim is currently pending.

One customer complaint filed in March 2015, alleged that Murphy made unauthorized transactions in customers account causing aggregate losses of approximately $5,000.

Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. The broker must first discuss all trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be of fraudulent nature.  This is because the omission that the broker intends to engage in trading is material information that the investor is entitled to have prior to the trade’s execution.

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shutterstock_157506896-300x300Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Mark Gassoso (Gassoso) currently associated with National Securities Corporation alleging Gassoso engaged in a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

The most recent complaint was filed in October 2016 alleging unsuitable investments, breach of fiduciary duty, and misrepresentations causing $150,000 in damages.  The complaint is currently pending.  In September 2013 another investor filed a complaint and alleged excessive trading.  The complaint was denied.

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shutterstock_85873471-300x200Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Samuel Koltun (Koltun) currently associated with RBC Capital Markets, LLC (RBC) alleging unsuitable investments in Puerto Rico municipal bonds among other claims.  According to brokercheck records Koltun has been subject to six customer complaints and one regulatory action.

Puerto Rico municipal bonds are speculative investments based upon the deteriorating finances of the island.  Many brokers have been accused of peddling these bonds in large concentrations to clients.  In September 2016 a customer filed a complaint against Koltun alleging over concentration in Puerto Rico bonds from 2012 through 2015.  The claim alleges $80,000 in damages and is currently pending.  In another complaint filed in April 2016, the customer alleges $260,000 caused by overconcentration in Puerto Rico municipal bonds.  The claim is currently pending.

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