Merrill Lynch

FINRA Bars Scott Muirhead Over Private Security Transaction Investigation

September 16, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the regulatory investigation filed by The Financial Industry Regulatory Authority (FINRA) against broker Scott Muirhead (Muirhead). According to BrokerCheck records Muirhead is subject to one bankruptcy filing in 2013 and one criminal matter. The FINRA regulatory matter concerns the agencies attempt to investigate the circumstances surrounding alleged sales of private securities transactions. (FINRA No. 2015044785301). When Muirhead refused to cooperate with the investigation, FINRA automatically barred Muirhead from the industry.

According to FINRA, Muirhead consented the entry of findings that he failed to respond to FINRA’s requests for documents during its investigation into allegations that Muirhead engaged in unapproved private securities transactions and misused customer funds. 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”. At this time it unclear the nature and scope of Muirhead’s outside business activities and private securities transactions. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Muirhead entered the securities industry in 2006. From April 2008 until September 2010 Muirhead was registered with Princor Financial Services Corporation. From September 2010 until March 2011 Muirhead was associated with Bright Trading, LLC. Thereafter from June 2011 until June 2012 Muirhead was registered with Signator Investors, Inc. Then from June 2012 until November 2012, Muirhead was associated with Multi-Financial Securities Corporation. Finally, from March 2014 until December 2014, Muirhead was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated out of the firm’s Jacksonville, Florida office location.

Investor Recovery Options for Merrill Lynch Strategic Return Notes

July 24, 2016 | by Staff Attorney

According to the Wall Street Journal, The Securities and Exchange Commission (SEC) is preparing an enforcement action against brokerage firm Merrill Lynch over an investment that collapsed losing investors as much as 95% of their initial investment. According to the financial advisors at the firm, the advertising and marketing for the product was called “borderline crooked.”

The SEC action involves a product called Strategic Return Notes that Merrill began selling in 2010 and raised about $150 million for. Market-Linked Notes to generate are structured product investments that create returns through the use of embedded derivatives designed to track the performance of a security, index, commodity or currency. Brokerage firms like Merrill Lynch have perverse incentives to market these proprietary products over safer and cheaper alternative investments. Structured Products like Market-Linked Notes often have substantial fees and/or commissions paid to affiliated companies for banking, underwriting, asset management, and ultimately broker commission.

The Strategic Return Notes in question are linked to a Merrill Lynch index tracking the volatility of the S&P 500 stock index. According to the Wall Street Journal, the five-year notes lost value rapidly as market volatility fell and the cost of buying the options that allow the note to track the index rose sharply. Because of the substantial costs of the options, volatility based investments tend to lose money over the long term no matter what the performance of the underlining index is. According to the article, roll costs for the options averaged an astounding 12% of the principal per quarter in the first half of 2011, before falling to less than 4% per quarter in the second half of the year. However, clients and brokers alike claim they were never told the costs could grow so large.

Gana LLP Investigates Customer Complaints Against Merrill Lynch Broker Jacquin Fink

May 18, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Jacquin Fink (Fink). According to BrokerCheck records Fink has been subject to at least six customer complaints. The customer complaints against Fink allege securities law violations that including unsuitable investments, misrepresentations, excessive trading, and unauthorized trading among other claims.

In April 2016, a customer complained that unsuitable investments were made and excessive trading occurred from October 2013 to January 2016 causing $581,144 in damages. The claim is pending. Also in April 2016, another customer alleged that unsuitable investment recommendations and misrepresentation occurred in August 2015. The claim is pending. In November 2015 a customer alleged unsuitable investment recommendations from October 2012 to August 2014 causing $106,092 in damages. The claim settled.

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.

Customers File Suitability Complaints Against Merrill Lynch Advisor Lisa Wolf

April 25, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Lisa Wolf (Wolf). According to BrokerCheck records Wolf has been subject to at least six customer complaints. The customer complaints against Wolf allege securities law violations that including unsuitable investments, unauthorized trading, misrepresentations, and excessive trading among other claims.

In April 2015 a customer filed a complaint alleging $364,630 in damage stemming from unauthorized trades and unsuitable investment recommendations from July 2008 through June 2014. The complaint is currently pending. In May 2013, another customer filed a complaint alleging unsuitable investments from May 2008 through March 2009 causing $220,000. The claim settled.

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.

Financial Advisor Roman Reed Discharged From Merrill Lynch Over Customer Complaint

April 23, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Roman Reed (Reed). According to BrokerCheck records Reed has been subject to at least four customer complaints. The customer complaints against Reed allege securities law violations that including unsuitable investments and unauthorized trading among other claims.

In February 2015 Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) discharged Reed for cause stating that the reason related to the broker’s handling of a customer complaint. In April 2014 a customer filed a complaint alleging $1,153,803 in damage stemming from the Reed conducting unauthorized trades from March 2011 through January 2014.

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.

Merrill Lynch Terminates Broker Patrick Sands on Selling Away Allegations

February 29, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating the employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Patrick Sands (Sands). According to BrokerCheck records Sands has been the subject of at least one customer complaint and one employment termination for cause.

In November 2015, Sands’ then brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) terminated Sands for cause alleging that the broker engaged in conduct inconsistent with the firm’s selling away policies. Participated in private securities transactions without approval of the firm is a practice known as “selling away” in the industry. The allegations appear to involve investments in private placements or direct participation programs such as non-traded real estate investment trusts (Non-Traded REITs), oil and gas programs, or equipment leasing.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

Broker Spotlight: Customer Complaints Against Merrill Lynch Broker John Boukamp

January 22, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker John Boukamp (Boukamp). According to BrokerCheck records there are at least 10 customer complaints that have been filed against Boukamp. The most recent customer complaint against Boukamp filed in November 2013 alleges that Boukamp, from December 2011 until September 2013 engaged in excessive trading, sometimes referred to as churning, and made unsuitable investments. This complaint was denied. In October 2013, another customer complained and alleged unsuitable investment recommendations and unauthorized trading from June 2012 to September 2012 resulting in a loss of $522,000. The case was resolved with the customer receiving $275,000.

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.

The number of customer complaints against Boukamp is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Broker Investigation: Wells Fargo Advisor Robert Giusti

January 3, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Robert Giusti (Giusti). There are at least 4 customer complaints against Giusti and one civil action. The customer complaints against Giusti allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and excessive trading among other claims.

The most recent complaint was filed in April 2015 and alleged unsuitable investments and excessive trading among other claims for investments made between 2010 through June 2015 causing the investor $1,326,374 in damages. A civil judgment was filed against Giusti in April 2015 for $1,100,000. Another complaint filed in January 2012 alleged unsuitable investments and unauthorized use of margin funds causing $45,000.

Giusti entered the securities industry in 1995. From November 2006 through June 2009, Giusti was associated with Citigroup Global Markets Inc. Thereafter, from June 2009 through September 2009, Giusti was briefly associated with Morgan Stanley Smith Barney. From August 2009 until December 2013, Giusti was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Finally, since December 2013, Giusti has been registered with Wells Fargo Advisors, LLC out of the firm’s New York, New York office location.

Broker Investigation: Oppenheimer Advisor Matthew Giannone

November 18, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Matthew Giannone (Giannone) has been the subject of at least 6 customer complaints. The customer complaints against Giannone allege securities law violations that claim churning and excessive trading, unsuitable investments, unauthorized trading, fraud, misrepresentations, and inappropriate loans among other claims. The most recent claim filed against Giannone claims $1,200,000 in damages due to churning and an inappropriate loan. The complaint was denied and closed.

Giannone entered the securities industry in 1997. From June 1997, until June 2005, Giannone was associated with Citigroup Global Markets Inc. From May 2005, until March 2013, Giannone was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Finally, since May 2013, Giannone has been registered with Oppenheimer & Co. Inc. out of the firm’s New York, New York branch office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

Broker Investigation: Aegis Capital Financial Advisor Louis Baudendistel

October 17, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Louis Baudendistel (Baudendistel) has been the subject of at least 4 customer complaints. Customers have filed complaints against Baudendistel alleging securities law violations that focus primarily on churning and excessive trading. In addition to the churning claims, customers have complained of unsuitable investments, breach of fiduciary duty, and negligence among other claims.

Baudendistel entered the securities industry in 1965. From 1983, until August 2010, Baudendistel was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. From August 2010, until April 2012, Baudendistel was associated with Paulson Investment Company, Inc. Thereafter, from April 2012, until July 2015, Baudendistel was a registered representative of JHS Capital Advisors, LLC. Finally, since July 2015, Baudendistel has been associated with Aegis Capital Corp. where he remains registered out of the Portland, Oregon office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.