Articles Tagged with Rockwell Global Capital

shutterstock_12144202The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Steven Luftschein (Luftschein). According to BrokerCheck records there are at least 12 customer complaints against Luftschein. The customer complaints against Luftschein allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and churning (excessive trading) among other claims. The most recent customer complaint filed in July 2015 alleged unsuitable investments, failure to supervise, unauthorized trading, breach of fiduciary duty, and misrepresentations from March 2010 until September 2011. The case is still pending.

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.

The number of customer complaints against Luftschein 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.

shutterstock_103681238The Financial Industry Regulatory Authority (FINRA) brought and enforcement action (FINRA No. 2015045289901) against broker Jeffrey Snyder (Snyder) resulting a permanent bar from the securities industry. In addition, according to the BrokerCheck records kept by FINRA, Snyder has been the subject of at least 6 customer complaints, and 1 regulatory event. The customer complaints against Snyder allege a number of securities law violations including that the broker made unsuitable investments, engaged in churning (excessive trading), misrepresentations, negligence, fraud, and unauthorized trading other claims.

FINRA’s findings stated that although Snyder appeared for an on-the-record interview, he refused to respond to certain questions concerning allegations that he paid a customer compensation for investment losses without the knowledge or authorization of his member firm. Snyder’s refusal resulted in an automatic bar.

An examination of Snyder’s employment history reveals that Snyder 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 Snyder’s 12 year career he has worked at 6 different firms. Snyder entered the securities industry in 2003. From February 2006, through June 2008, Snyder was associated with New Castle Financial Services LLC. Thereafter from June 2008 until August 2008, Snyder was a registered representative of The Concord Equity Group, LLC. From August 2008, until April 2012, Snyder was registered with Spartan Capital Securities, LLC. From April 2012 until April 2015, Snyder was associated with Rockwell Global Capital LLC. Finally, in March 2015, Snyder was registered with Network 1 Financial Securities Inc. until September 2015 out of the firm’s Danbury, Connecticut office location.

shutterstock_20354398According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Stapleton (Stapleton) has been the subject of at least 2 customer complaints, 1 regulatory action, and 6 judgements or liens. Customers have filed complaints against Stapleton alleging securities law violations including misrepresentations of investments among other claims.

In 2005 the NASD brought action against Stapleton alleging that the broker committed securities fraud and made unsuitable investments while exercising control over the purchases and sales in a client’s account. The NASD found that Stapleton did not have a reasonable basis to believe that the purchases and sales in the account were suitable for the customer given the size and frequency of the transactions and the customer’s circumstances.

In addition, Stapleton has had difficulty managing his own finances and on April 16, 2014, disclosed a tax lien of $105,7191, on December 6, 2013, disclosed a tax lien of $12,478, on April 23, 2012, disclosed a tax lien of $1,592, on January 25, 2012, disclosed a tax lien of $9,642, on August 10, 2010, disclosed a tax lien of $121,506, and on March 27, 2009, disclosed a tax lien of $11,180. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

shutterstock_182053859According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Glen Delaney (Delaney) has been the subject of at least 2 customer complaints and 3 judgements or liens. Customers have filed complaints against Delaney alleging securities law violations including unauthorized trades, breach of fiduciary duty, and unsuitable investments among other claims. In addition, Delaney has had difficulty managing his own finances and on August 13, 2015, disclosed a civil judgment of $50,225, on November 19, 2010, disclosed a civil judgement of $9,720, and in 2006 had a civil judgement of $600. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Delaney entered the securities industry in 2005. Since 2008 Delaney has been registered with Pointe Capital, Inc., until June 2009. From June 2009, until October 2010, Delaney was registered with Global Arena Capital Corp. Thereafter, from October 2010, until April 2012, Delaney was associated with Brookstone Securities, Inc. From April 2012, until June 2015, Delaney was a registered representative of Rockwell Global Capital LLC. From June 2015, until August 2015, Delaney was registered with Primary Capital, LLC. Finally, since August 2015, Delaney has been associated with Craig Scott Capital, LLC out of the firm’s Uniondale, New York office location.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

shutterstock_112362875According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Edward Segur (Segur) has been the subject of at least 2 customer complaints, 3 judgements or liens, 1 criminal matter, and 2 regulatory actions. Customers have filed complaints against Segur alleging securities law violations including excessive commissions and unauthorized trades among other claims. In addition, Segur has had difficulty managing his own finances and had a tax lien of $125,687 imposed in February 2015. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, two state regulators have brought actions against Segur. The state of Arkansas alleged that in January 2013, Segur cold called a resident of the state to recommend the purchase of Sandridge Energy, Inc. (Sandridge). At that time Sandridge was trading at about $7 per share and that Segur stated that he had information that the stock would rise to $12 in less than three months because a new chief executive officer would take over Sandridge causing the stock price to increase. The state of Arkansas found that such statements were unjustified and violated the state’s securities laws. In addition, the state of New Hampshire alleged that Segur cold called one of its residents even though the resident was on the state’s do not call list.

Segur entered the securities industry in 1998. An examination of Segur’s employment history reveals that Segur 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 Segur’s 16 year career he has switched firms 22 times even returning to several firms on different occasions. Many of the firms have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

shutterstock_173809013According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Brent Porges (Porges) has been the subject of at least four customer complaints, six judgements or liens, and one regulatory investigation. The Customer complaints against Porges alleges securities law violations that claim churning and excessive trading, unsuitable investments, securities fraud, and excessive commissions among other claims. The most recent complaint filed alleges losses of $900,000. In addition, in May 2015, a customer was awarded $338,454 in an arbitration claim including Porges where the panel assessed $107,944 against Porges and others jointly and severally and also a finding of punitive damages against Porges and others jointly and severally under New York law.

In addition to customer complaints Porges is subject to numerous liens including a $7,500 tax lien in March 2015, a $9,000 tax lien in February 2014, a $64,000 tax lien in August 2013, a $5,200 tax lien in December 2012, among other liens. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, the brokercheck record also states that on September 29, 2015, FINRA initiated an investigation into Porges conduct. The investigation relates to false statements and testimony, violations of FINRA’s supervisory rules and churning.

shutterstock_182357357According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Capolongo (Capolongo) has been the subject of at least two customer complaints and one criminal matter over the course of his career. Customers have filed complaints against Capolongo alleging securities law violations including that the broker made unsuitable investments and churning among other claims.

An examination of Capolongo’s employment history reveals that Capolongo 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 Capolongo’s six year career he has worked at eight different firms returning to one firm on three separate occasions. Many of the firms have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

Since 2009 Capolongo has been registered with John Thomas Financial, New Castle Financial Services LLC, EKN Financial Services Inc., National Securities Corporation, and Laidlaw & Company (UK) LTD. Since September 2014, Capolongo has been associated with Rockwell Global Capital LLC out of their Melville, New York office.

shutterstock_103681238The law offices of Gana Weinstein LLP is investigating Rockwell Global Capital LLC (Rockwell) after having filed a complaint on behalf of an investor. We have posted on several previous occasions that brokers at Rockwell have been alleged by dozens of investors in recent years of churning client accounts. In Three Rockwell Global Capital Brokers Accused of Securities Misconduct by Customers we wrote about three brokers, Robert E. Lee Jr. (Robert Lee), Douglas Guarino (Guarino), and Lawrence Lee (Lee) that have been the subject of at least 29 combined customer complaints. All three brokers have been accused by clients of churning their accounts and making unsuitable investment recommendations.

Recently, an arbitration panel awarded a customer and ordered Rockwell to pay $119,000 in compensation together with costs and attorneys fees due to claims that included excessive trading.

What is “churning”? This type of securities misconduct includes investment trading activity that serves no reasonable purpose for the investor and is transacted in order for the broker to generate commissions. The elements that an arbitration panel will look at to establish a churning claim, 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.

shutterstock_120556300The law offices of Gana Weinstein LLP recently filed a complaint on behalf of an investor against Rockwell Global Capital, LLC (Rockwell), accusing the firm of making unsuitable recommendations and failing to properly supervise one of its financial advisers.  In or around July 2013, the client alleged that he received a cold call from Rockwell financial adviser, Patrick Lofaro. A cold call is when someone solicits and individual who was not anticipating such an interaction. Cold calling is a technique used by a salesperson to contact individuals who have not previously expressed an interest in the products or services that are being offered.

It was alleged that Mr. Lofaro aggressively pursued the client’s investment related business and that Mr. Lofaro convinced him that he could build a diversified portfolio with minimal risk to the client.  In reliance upon Mr. Lofaro’s assurances, the Claimant alleged that he opened an account with Rockwell in or around August 2013.  Over a seven-month period, the Claimant invested a substantial sum with Rockwell which represented close to 50% of his liquid net worth.  The complaint alleges that Mr. Lofaro, rather than create a suitable portfolio, implemented a high-leverage, excessive trading strategy that generated a high amount of commissions without providing any material benefit to the Claimant.

According to the complaint, over the course of just over a year, Mr. Lofaro executed nearly one-hundred-forty (140) trades into and out of thirty-five (35) different stocks, including seventeen (17) small caps, two (2) initial public offerings (IPO’s), eight (8) penny stocks, and fifteen (15) different stocks that were more than twice as volatile as the S&P 500.  The complaint alleges that Mr. Lofaro created a portfolio laden with risk while providing no material benefit to the Claimant. Mr. Lofaro’s investment strategy ultimately cost the Claimant an estimated $837,131, while Mr. Lofaro received over $261,080 in commissions.

Rockwell Global Capital LLC (Rockwell) brokers Robert E. Lee Jr. (Robert Lee), Douglas Guarino (Guarino), and Lawrence Lee (Lee) have been the subject of at least 29 combined customer complaints.  All three brokers have been accused by clients of churning their accounts and making unsuitable investment recommendations.

Robert Lee first became registered in 1988.  From March 2005, through November 2009, Robert Lee was registered through former FINRA member firm GunnAllen.  Since November 2009, Robert Lee has been registered through Rockwell.

In August 2013, Robert Lee accepted a settlement with FINRA barring the broker from associating with any broker dealer.  FINRA found that between September 25, 2008, and October 31, 2008, while Robert Lee was registered with GunnAllen, Robert Lee failed to follow a customer’s instructions regarding the purchase of three securities.  FINRA also found that between September 2008, and at least December 2009, while Robert Lee was registered with two member firms, Robert Lee made material misrepresentations and omissions to a customer regarding the status of their investments.  Specifically, FINRA found that Robert Lee misrepresented to the client that certain investments had earned $49,591 in dividends when in fact the investments did not exist and no dividends had been earned.