Articles Tagged with Scott & Stringfellow

shutterstock_177577832-300x300The securities lawyers of Gana Weinstein LLP are investigating customer complaints and a FINRA enforcement action with The Financial Industry Regulatory Authority’s (FINRA) against broker Henry Watson (Watson). According to BrokerCheck records, Watson has been subject to three customer complaints and one FINRA action. The customer complaints against Watson allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, portfolio mismanagement, and excessive trading among other claims.

The most recent claim was filed in October 2016 alleging Watson purchased shares of a security from without authorization seeking $13,017.  Subsequently in January 2017 FINRA barred Watson for failing to appear to testify concerning an arbitration claim.  FINRA claimed that the testimony was requested in connection with an inquiry into an arbitration claim filed by a customer against Watson.  FINRA alleged that Watson acknowledges that he received FINRA’s request but would not appear for on-the-record testimony at any time resulting in the bar.

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.

shutterstock_61142644-300x225Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Mark Schklar (Schklar).  According to brokercheck, FINRA made a preliminary determination to recommend that disciplinary action be brought against Schklar concerning potential violations including private securities transactions, borrowing from/lending to a customer, making false attestations on annual compliance questionnaires, and false statements to FINRA.  In addition, Schklar has been subject to five customer complaints over his career.

At this time it is unclear the total scope and extent of these outside business activities and private transactions.  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”.  Often times brokers who engage in this practice use outside businesses in order to market their securities.

Schklar entered the securities industry in 1991.  From January 2006 until January 2013 Schklar was associated with Scott & Stringfellow, LLC.  From November 2012 until January 2015 Schklar was associated with BB&T Securities, LLC.  Finally, from January 2015 until May 2016 Schklar was associated with Ridgeway & Conger, Inc. out of the firm’s New Woodstock, New York office location.

shutterstock_115971289The attorneys at Gana Weinstein LLP have been following the collapse of a series of mutual funds managed by Cushing Asset Management. The funds involved include:

Cushing Closed-End Funds

Cushing Renaissance Fund

shutterstock_95643673The Financial Industry Regulatory Authority (FINRA) sanctioned financial advisor James Applewhite (Applewhite) concerning allegations that from about January 2010, through October 2012, Applewhite exercised discretion by effecting approximately 171 transactions in eight customer accounts without obtaining prior written authorization from the customers and without having the accounts accepted as discretionary accounts as required by NASD Rule 2510(b). FINRA found that the discretion was generally exercised pursuant to a strategy previously agreed upon with the customers. Nonetheless, FINRA alleged the firm did not permit discretionary trading, except for managed accounts, with pre-approved written discretion. As a result FINRA found that Applewhite violated NASD Rule 2510(b) and FINRA Rule 2010.

Applewhite entered the securities industry in November 1983. During all periods mentioned in the FINRA finding he was associated with Wells Fargo Advisors, LLC. Applewhite’s employment with Wells Fargo ended on October 22, 2012. Thereafter, Applewhite became registered with BB&T Securities, L.L.C f/k/a Scott & Stringfellow, LLC.

The allegations made against Applewhite constitute unauthorized trading. Unauthorized trading occurs when a broker sells, buys, or exchanges, securities without the prior consent or authority from the investor. Unless an investor gives discretion to make trades, the broker must first discuss all trades with the investor before executing them. Even if the a customer verbally grants a broker discretion such an agreement is not valid under industry rules The SEC has found that unauthorized trading also constitutes securities fraud due to its fraudulent nature. No omission of information could be more material than the failure to inform the investor of his or her own purchases and sales.

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