Articles Tagged with Newbridge Securities

shutterstock_34872913-300x209Former Newbridge Securities Corporation (Newbridge) broker Austin Dutton (Dutton) has been subject to two complaints and a recent sanction citing dishonest or unethical practices in the securities business by the Pennsylvania Department of Banking and Securities and fining Dutton $200,000.  According to a BrokerCheck report Dutton recommended the purchase of a security to at least one customer without reasonable grounds to believe that the transaction was suitable for the customer.

In addition, Dutton’s firm, Newbridge, was also sanctioned by the state of Pennsylvania on findings that “From in or about January 2012 until December 2016, Newbridge did not maintain a reasonable system for applying and enforcing written procedures pertaining to their sales of structured products by one agent in Pennsylvania to certain of his clients…”  While The order does not name the broker it appears reasonably related to Dutton.

According to newssources, Dutton is known to have recommended and sold and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs).  In particular Dutton sold real estate investment trusts formerly managed by Nicholas Schorsch’s private firm, American Realty Capital (ARC), now AR Global.  An accounting scandal affected ARC and its REITs.  According to sources, Dutton sold these products to retirees and police officers.

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shutterstock_115937266-300x237According to BrokerCheck records Gaetano “Guy” Magarelli (Magarelli), now associated with Newbridge Securities Corporation (Newbridge), has been subject to five customer complaints and one lien.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Magarelli has been accused by customers of unsuitable investment advice.  Some customers have also alleged unauthorized trading among other claims.

The most recent complaint filed in June 2017 alleges $84,000 in damages stemming from a two year period.  The claim is currently pending.  Another claim was filed by a customer in March 2017 alleging that there were unsuitable trades from 2010 through 2017 causing $131,000 in damages.  The claim has been denied by the firm.

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shutterstock_123758422-300x200Gana LLP is investigating claims made by Financial Industry Regulatory Authority (FINRA) against broker David Menashe (Menashe). According to BrokerCheck records, Menashe was ordered to pay a restitution of $15,000 by the state of Montana for alleged excessive trading and unauthorized trading in June 2016.

Menashe entered the industry in 2009. He is currently registered and employed at Newbridge Securities, where he has been employed since January 2017. His past employment includes:

• Joseph Stone Capital LLC (February 2013 – January 2017)

shutterstock_103681238-300x300Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against David Fagenson (Fagenson) currently associated with Newbridge Securities Corporation (Newbridge) alleging Fagenson engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims.  According to BrokerCheck, Fagenson currently has nine customer complaints, one criminal matter, two regulatory actions, and one employment termination for cause.

In September 2016 UBS terminated Fagenson after a review found that while on heightened supervision Fagenson violated firm policy by exercising time and price discretion, texting with clients and engaging in short term trading of preferred shares.  Also in September 2016 a customer alleged that from 2013 through 2016 that Fagenson engaged in unauthorized trading and gave stop loss orders that were not entered.  The complaint is currently pending.

In April 2011 Fagenson was sanctioned by the state of Florida for failing to disclose a criminal matter on his record that was required to be disclosed.

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shutterstock_94632238In May 2016 the Department of Justice (DOJ) filed a five-count indictment in New York against nine defendants including Jared Mitchell, the Managing Partner of Mitchell & Sullivan Capital LLC; Richard Brown, a registered broker with Chelsea Financial Services; Christopher Castaldo, the Chief Executive Officer of Stock Traders Press Inc. and the President of Wall Street Buy Sell Hold Inc.; Gerald Cocuzzo, also known as “Gerry,” a registered broker formerly with Newbridge Securities Corporation; Naveed Khan, also known as “Nick,” a registered broker formerly with Meyers Associates, L.P.; Herschel Knippa III, also known as “Tres,” the owner and Head Trader at Kenai Capital Management LLC; Maroof Miyana, a registered broker formerly with Legend Securities; Pranav Patel, a registered broker formerly with Dawson James Securities; and Louis Petrossi, the founder and Chief Executive Officer of the Wealth Research Institute.

The DOJ’s charges involve the unlawful sale and activity related to stock ForceField Energy Inc. (ForceField), a publicly-traded company under the ticker symbol “FNRG.”  The charges include securities fraud, conspiracy to commit securities fraud, wire fraud, money laundering and making a false statement to law enforcement officials in connection with the fraudulent market manipulation of the stock.

The DOJ alleged that the defendants employed of scheme together with dishonest registered brokers to perpetrate an elaborate but fraudulent scheme built on lies, kickbacks and manipulated trading activity.  The defendants essentially used a company with no business operations and little revenue and deceived the market and their clients into believing it was worth hundreds of millions of dollars through unauthorized trades and deceptive promotions.

The defendants are alleged to have abused their positions as stock promoters, brokers, or investor relations to push up the stock’s price in a fraudulent fashion costing investors approximately $131 million in losses.

The specific allegations concerning the corrupt brokers focuses on that in October 2014, a ForceField executive hired Mitchell to distribute kickbacks to corrupt registered broker dealers, including Brown, Cocuzzo, Khan, Miyana, and Patel, in exchange for their purchasing of ForceField stock in their clients’ brokerage accounts.  In order to pay the brokers bribes, ForceField paid Mitchell a ten-percent commission or a kickback for purchases of ForceField stock generated by the corrupt brokers using offshore entities and bank accounts.  Mitchell then is alleged to have shared the ten-percent commission with those who had stuffed their clients’ brokerage accounts with ForceField stock.  Investors were never disclosed the secret kickbacks that were received for making the ForceField purchases.

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shutterstock_180412949The law offices of Gana LLP recently filed a statement of claim with FINRA on behalf of their 60 year old client concerning inappropriate investments in private placements, non-traded real estate investment trusts (Non-Traded REITs), low priced securities, and private securities transactions.  The complaint was filed against Newbridge Securities Corporation (Newbridge) and alleges that the firm’s broker Dennis Hayes (Hayes) recommended these unsuitable transactions.  In total the Claimant alleges approximately $750,000 in damages.

According to the Statement of Claim, the Claimant divorced her husband in 2012 leaving her with approximately $1,500,000 in assets of which $500,000 was non-qualified money and about $1 million was qualified IRA funds. Claimant explained to Hayes that her goals were to protect her assets while providing her with returns to meet her immediate income needs.  Shortly after transferring the funds, Hayes solicited the Claimant to invest in a gold fund called USA Gold.  According to the complaint, Hayes recommended $300,000 in USA Gold through a self-directed IRA account.

The complaint alleges that after a diligent search there appears to be no Regulation D filing for a private placement for USA Gold and no evidence of any registration of the offering.  USA Gold appears to be an unregistered securities offering and most likely an investment scam.  Even more shocking is that Newbridge has failed to properly investigate and terminate Hayes for his involvement in the unregistered offering thereby continuing to place investors at risk. According to the Statement of Claim, Claimant complained to Gene Robert Abrams (Abrams), Newbridge’s General Counsel and Co-Chief Compliance Officer that Hayes was involved in private securities transactions.

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shutterstock_143094109The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker James Ignatowich (Ignatowich).  According to BrokerCheck records Ignatowich has been subject to at least nine customer complaints and one regulatory action.  The customer complaints against Ignatowich allege securities law violations that including unsuitable investments and unauthorized trading among other claims.   In addition, the state of New Hampshire filed a complaint against Ignatowich alleging that the broker engaged in unlawful telemarketing and provided inaccurate and misleading information to the state during the course of their investigation.  Ignatowich was sanctioned $87,500 and barred for nine months.

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.

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shutterstock_175298066The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against former Kovack Securities Inc. (Kovack Securities) broker Andrew Corbman (Corbman).  According to BrokerCheck records Corbman was suspended from the securities industry in February 2016 after FINRA found that he made recommendations that were unsuitable as they were over-concentrated and exposed customers to a risk of loss that exceeded each customer’s risk tolerance and investment objectives.  FINRA found that Corbman also distributed a sales brochure for an alternative mutual fund to his customers that contained information that was misleading.

In addition, Corbman has been subject to at least nine customer complaints, two judgements or liens totaling over $100,000, one bankruptcy filing, and an employment separation for cause.  In 2011 his former employer FSC Securities Corporation terminated Corbman alleging that he used unapproved advertising an email accounts.  The bankruptcy and lien disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services.  A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

In addition, Kovack Securities brokers have been found to be extremely dangerous for investors to trust with their money.  According to a recent study conducted by the Securities Litigation and Consulting Group entitled “How Widespread and Predictable is Stock Broker Misconduct?” the incidents of investor harm at Kovack Securities is extraordinarily high.  The study ranked Kovack Securities as the sixth worst brokerage firm finding that brokers at the firm had over a 28% misconduct rate.  The study stated that investors should stay away from Kovack Securities “Given their coworkers’ disclosure record as of 2014, 83.7% of the brokers at these six firms would be in the highest risk quintile as defined in the FINRA study and should be avoided by investors. The BrokerCheck reports for most of the brokers at these six firms should prominently display a skull and crossbones warning.”

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shutterstock_150746The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Michael Stern (Stern).  According to BrokerCheck records Stern has been subject to at least eight customer complaints.  The customer complaints against Stern alleges securities law violations that including unsuitable investments, fraud, and breach of fiduciary duty among other claims.

In June 2015 a customer filed a complaint alleging $1,000,000 in damage stemming from negligence and breach of fiduciary duty.  The complaint is pending.

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 events listed on Stern brokercheck 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.

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shutterstock_20354401The securities lawyers of Gana LLP are investigating potential unsuitable investments and recommendations in a number of oil and gas related ventures including Adageo Energy. According to the company’s website Adageo Energy specializes in high-growth, high-return opportunities in the energy sector. The company’s focus includes the identification, acquisition, drilling, development, and operation of oil and gas properties. Adageo Energy is a sponsor of several oil and gas private placements.

One such issuance is Adageo Energy Partners, LP which according to SEC filings sought to raise $50 million and raised at least $31 million of that amount through brokerage firms including Direct Capital Securities, Inc., Madison Avenue Securities, Inc., WFP Securities, Inc., Arete Wealth Management, LLC, Newbridge Securities Corporation, Charter Pacific Securities, LLC, ePLANNING Securities, Inc., Sunset Financial Services, Inc., Jesup & Lamont Securities Corp., and Capital Guardian, LLC.

As reported in Reuters for issuers other than Adageo Energy, many of these types of private placement deals fail and investors take outsized risks compared to the scant compensation they are likely to receive. The issue with oil and gas private placements is two fold. First the much of the investor’s funds are eaten up by fees and costs and are never used for investment purposes. For instance and analysis of Atlas Energy LP found that the issuer typically charged between 15 percent and 20 percent in upfront fees from investors and paid brokers an additional 10 percent of the total offering in sales commissions. According to Reuters, investors only get to see 65-70% of their capital actually put to work on oil and gas projects.

Second, many of these deals have more in common with casinos then investments. Reuters found that slightly more than half of 43 private placements Atlas issued over the past three decades investors lost money or just broke even. While investors lost in more than half of the deals in 29 or 67% of those deals, Atlas actually out-performed their own investors.

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