Articles Tagged with investments

Maurice Joseph Chelliah (Chelliah) was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that Chelliah converted $90,000 from two World Group Securities, Inc. (WGS) clients and made unsuitable recommendations to five WGS customers.  FINRA alleged that Chelliah recommended that these customers refinance their primary residences and use the proceeds to purchase securities and insurance policies that they did not need and that were beyond the customers’ ability to afford.  FINRA found that as a result of Chelliah’s recommendations some of the customers lost their securities, their life insurance policies, and their residences when they were unable to keep their mortgages current.

FINRA alleged that Chelliah violated NASD Rule 2110 and FINRA Rule 2010 by converting customer funds.  These rules provide that a member, “in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade.”  FINRA found that two of Chelliah’s customers were 80 and 75 years-old respectively and were unsophisticated investors.  Chelliah recommended that the customers liquidate their mutual fund shares.  Following the liquidation, $90,000 in proceeds was transferred to Chelliah’s three outside businesses.  The customers had provided these funds to Chelliah in order for him to pay monthly bills and expenses on their behalf but instead Chelliah used these funds for his own personal benefit.

FINRA also alleged that Chelliah made unsuitable transactions in at least five customer accounts. NASD Rule 2310 provides that “in recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs…”

This is the most common question a potential client asks during an initial interview.  This article is directed to those investors who are wondering if they have a claim but have not yet sought a consultation.  Hopefully, this article will provide some insight into what a securities fraud attorney looks at when reviewing a potential client’s claim.  However, I would stress that all evaluations are individual in nature and while this article is meant to provide generally instructive insight, only a full one-on-one consultation with an attorney can provide a full review of your claim and provide individual guidance.

In my analysis of a potential client’s securities claim I look at two primary factors: 1) the strength of the liability case; and 2) the ability to collect from the defendant.  The answer to these two factors weigh heavily in moving forward with the potential client’s claim.  The strength of the liability of the claim is the initial assessment of how likely a judge or arbitration panel would likely find the defendant liable for misconduct.  The ability to collect factor looks at what potential defendants could be liable for the misconduct the client is alleging and the ability of those defendants to compensate the client’s losses.  In many cases, the second factor will not need to be seriously investigated.

What factors influence the strength of the liability of the case?  This is a hard question to answer because each case is different and liability is premised on different factors given the type of claims being made.  In cases of fraud or misrepresentation the strength of the case often lies in the ability to prove the false statements made to the client.  Written communications, emails, advertisements, and other documents that can be proven false or misleading tend to make stronger cases.  If a securities regulator has also found the defendant’s conduct to be fraudulent or misleading or has disciplined the same or another brokerage firm for similar conduct such evidence helps to strengthen the case.

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