Articles Tagged with QA3 Financial

shutterstock_138129767The securities lawyers of Gana Weinstein LLP are investigating customer complaints against broker Leon Vaccarelli (Vaccarelli). The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2014042302001) against Vaccarelli. In addition, there are at least two customer complaints against Vaccarelli and two judgements or liens. The customer complaints against Vaccarelli allege a number of securities law violations including that the broker misrepresented investments and mismanaged the account among other claims.

In a FINRA regulatory action against Vaccarelli, the agency alleged that between 2011 through 2015 Vaccarelli exercised discretion in four customers’ accounts. FINRA found that Vaccarelli exercised discretion even though he did not have written authorization from the customers to place discretionary trades. In addition, Vaccarelli’s brokerage firm had not approved and accepted the accounts as discretionary. FINRA also found that on four annual compliance questionnaires between 2011 and 2014, Vaccarelli falsely certified that he did not handle any customer accounts on a discretionary basis.

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.

shutterstock_20354401The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Bernthal (Bernthal). According to BrokerCheck records there are at least 4 customer complaints against Bernthal and 1 judgments or liens. The customer complaints against Bernthal allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, excessive trading, and unauthorized trading, among other claims.

According to the disclosures, the most recent customer complaint against Bernthal was filed in February 2013 and alleged $100,000 in damages due to unsuitable trades and excessive transactions. The case was resolved for $50,000.

As a background, when brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim 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.

shutterstock_61848763According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Eric Wegner (Wegner) has been the subject of at least 5 customer complaints and two financial disclosures. Customers have filed complaints against Wegner alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations, breach of fiduciary duty, and false statements mostly in connection with recommendations to invest in private placements such as tenants-in-common (TICs) interests. In addition, one complaint involves a dispute over a variable annuity recommendation.

Wegner entered the securities industry in 2000. From December 2002, until December 2008, Wegner was a registered representative with Sammons Securities Company, LLC. Thereafter, from January 2009, until February 2011, Wegner was associated with QA3 Financial Corp. From February 2011, until July 2013, Wegner was associated with Sigma Financial Corporation. Finally, Wegner is currently a registered representative with Cambridge Investment Research, Inc. out of the firm’s Delafield, Wisconsin office location.

TIC investments have led to devastating investor losses and are in almost all cases unsuitable products. The near certainty of failure of investing in TICs as a whole has led to the product virtually disappearing as an offered investment from most reputable brokerage firms.   According to InvestmentNews “At the height of the TIC market in 2006, 71 sponsors raised $3.65 billion in equity from TICs and DSTs…TICs now are all but extinct because of the fallout from the credit crisis.” In fact, TICs recommendations have been a major contributor to bankrupting brokerage firms. For example, 43 of the 92 broker-dealers that sold TICs sponsored by DBSI Inc., a company whose executives were later charged with running a Ponzi scheme, a staggering 47% of firms that sold DBSI are no longer in business.

shutterstock_128655458According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Patrick Teutonico (Teutonico) has been the subject of at least nine customer complaints and one regulatory action over the course of his career. Customers have filed complaints against Persaud alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, churning, negligent supervision, excessive mark ups, and fraud among other claims. In addition to customer complaints, Teutonico was also subject to a regulatory action by FINRA where the regulator found that Teutonico effected unauthorized trades and was fined and suspended.

An examination of Teutonico’s employment history reveals that Teutonico moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Teutonico’s 17 year career he has worked at 10 different firms. Since 2008 Teutonico has been registered with First Midwest Securities, Inc., A&F Financial Securities, Inc. QA3 Financial Corp., Obsidian Financial Group, LLC. Since December 2012, Teutonico has been associated with Network 1 Financial Securities Inc. located in Lynbrook, New York.

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 fraudulent nature.

shutterstock_94719376The Financial Industry Regulatory Authority (FINRA) sanctioned and barred financial advisor Stephen Lard (Lard) concerning allegations that Lard recommended and sold various private-placement securities, that were speculative, high risk, and illiquid to customers three customers. FINRA alleged that Lard’s recommendations resulted in an unsuitable concentrated position for each investor of approximately 50% or greater. Such a concentration exposed each investor to a risk of loss that exceeded each investor’s risk tolerance and investment objectives. FINRA found that some of the investors did in fact suffer substantial losses and financial difficulty due to the illiquidity of the investments.

Lard entered the securities industry in 1994 and was associated with QA3 Financial Corp. (QA3) from 2000 until February 11, 2011. Thereafter, Lard was registered with Centaurus Financial, Inc.

FINRA found that between June 2007, and February 2008, one of Lard’s client’s executed suitability forms for her individual account. The forms reported an annual income of $80,000, a net worth excluding primary residence of $1,780,120, and a worth of all assets, including residence, minus all debts, of $1,852,120, and a liquid net worth of $650,000. The suitability form reflected “Moderate” as her risk exposure and “Income” as her investment objective.

Contact Information