securities arbitration attorney

Advisor John McKinstry Jr. Discharged After Customer Complaints

December 1, 2015 | by Staff Attorney

The securities and investment attorneys of Gana Weinstein LLP are interested in speaking with clients of John McKinstry Jr. (McKinstry). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) McKinstry has been the subject of at least 5 customer complaints, 2 regulatory actions, and two employment terminations. The customer complaints against McKinstry allege securities law violations that claim unsuitable investments and churning among other claims.

The most recent complaint was filed in July 2015, and alleged $11,400 in damages due to claims that the broker made unsuitable investments and recommendations considering the age and risk tolerance of the client. Also in July 2015, another customer filed a complaint alleging that McKinstry made unsuitable investment recommendations causing alleged damages of $216,000.

In addition, in August 2015, McKinstry’s brokerage firm Moloney Securities Co., Inc. (Moloney Securities) terminated McKinstry concerning allegations that the firm had conducted an internal review concerning customer complaints and a FINRA exam.

Advisor Investigation: Morgan Stanley Broker Kirk Gill

December 1, 2015 | by Staff Attorney

The securities and investment attorneys of Gana Weinstein LLP are interested in speaking with clients of Kirk Gill (Gill). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Gill has been the subject of at least 7 customer complaints. The customer complaints against Gill allege securities law violations that claim unsuitable investments, misrepresentations, unauthorized investments, and breach of fiduciary duty among other claims.

The most recent complaint was filed in July 2015, and alleged $300,000 in damages due to claims that the broker, from 2007 to November 2014 made unsuitable investments and recommendations to the client. In April 2015, another customer filed a complaint alleging that Gill, from October 2011, until November 2014, made unsuitable investment recommendations causing alleged damages of $450,000. Gill denied the claims made by this investor and seeks an expungement of this case from his record. In December 2013, a customer filed a complaint against Gill alleging that the client was not properly advised concerning high risk and volatile stocks causing losses of $100,000.

Gill entered the securities industry in 1992. From July 2007 onward Gill has been associated with Morgan Stanley out of the firm’s Tucson, Arizona branch office location.

FINRA Bars Former PFS Investments Broker Malcolm Babin From the Industry

September 20, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred (FINRA AWC No. 20150454876-01) former PFS Investments, Inc. (PFS Investments) broker Malcolm Babin (Babin) after the broker failed to respond to a letter from the regulator requesting information. While BrokerCheck records kept by FINRA do not disclose the nature of the regulatory inquiry, in May 2015, Babin was permitted to resign from PFS Investments stating that the broker was terminated for 1 being involved in a misappropriation; 2) unlicensed security solicitation, and 3) an undisclosed outside business activity and potentially a private securities transaction – also referred to in the industry as “selling away.”

Babin entered the securities industry in 2007 with PFS Investments as a Series 6 broker. A Series 6 license only allows the broker to solicit variable contracts and open-end mutual funds and does not allow the broker to solicit general securities. FINRA alleged that on July 7, 2015 FINRA was investigating allegations that Babin converted customer funds and engaged in undisclosed outside business activities. FINRA requested that Babin provide documents and information by July 14, 2015. The regulatory stated that they received an email from Babin acknowledging receipt of FINRA’s requests for documents but informed staff that he would not cooperate. Consequently, the regulator barred Babin from the securities industry.

The conduct alleged against Babin constitutes a potential “selling away” securities violations. 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.

Why Your Broker Asking You to Sign A Comfort Letter is A Big Misconduct Red Flag

December 8, 2014 | by Staff Attorney

Your brokerage firm reviews customer accounts for misconduct and what does it find; bizarre and unreasonable trading activity. Maybe dozens of trades are being made every month or an account previously invested in plain vanilla mutual funds is now loaded up with speculative penny stocks and private placements. Whatever the cause, the firm has a system to monitor for unusual trading activity and sends the customer a letter. These letters go by many names including “happiness”, “comfort”, and more appropriately “Cover You’re A@!” (CYA).

A recent article by the Wall Street Journal explored how the purpose of these letters is to elicit an acknowledgment from the customer that they are satisfied with how the account is being handled in order to minimize future liability from a suit concerning the wrongful activity. To clarify, when a brokerage firm finds indications of possible misconduct their first action isn’t to stop the misconduct and help their client but to get the client to release the firm from liability.

Having reviewed dozens of these letters myself they are designed to be unreadable to the average investor and use industry jargon and legal lingo that is indecipherable to anyone but a securities attorney. These letters begin warmly enough by thanking you for your business and hoping that everything is well with you. Then the conversation becomes impersonal and maybe mentions that your investment choices have become more risky or aggressive recently. These sentences are code words for your investment objectives have completely changed from generating retirement income to you are now interested in potentially losing all your money with casino level risk. Maybe some information related to a “cost-to-equity ratio” or “turnover” is given. There is no explanation as to what these terms mean or why you should be concerned because they are just being provided for legal reasons that the customer should be unconcerned with.

Choosing the Right Securities Arbitration Attorney

September 29, 2014 | by Staff Attorney

When to Call a Securities Arbitration Attorney

Securities arbitration attorneys, sometimes referred to as investment attorneys, FINRA attorneys, or securities attorneys, should be contacted whenever an investor believes he or she has been a victim of broker misconduct. An investor may have cause to retain a securities fraud attorney to file a lawsuit or arbitration claim if his or her broker failed to create a suitable investment strategy. An investor may also want to contact an attorney case if a broker made false or misleading statements about a security or omitted negative information about the risk of a security in order to persuade the investor to invest.

An investor may also want to seek legal counsel the investor’s broker bought or sold securities without prior consent (unauthorized trading) or excessively traded securities for the purpose generating commissions (churning).

Gana LLP Files Complaint on Behalf of Seven Former Clients of Sean Sheridan Against JP Turner

August 15, 2014 | by Staff Attorney

The law office of Gana Weinstein LLP has recently filed securities arbitration case on behalf of a group of seven investors against J.P. Turner Company, L.L.C. (JP Turner), Ridgeway & Conger, Inc. (Ridgeway), and Newbridge Securities, Corp. (Newbridge) concerning allegations that the firms failed to supervise and prevent Sean Francis Sheridan (Sheridan) from churning claimants’ accounts through the use of excessive and unreasonable mutual fund switches and generally making unsuitable recommendations to the clients. Both FINRA and the SEC have brought actions against JP Turner and the firm’s brokers on numerous and repeated occasions concerning the firm’s failure to protect its clients from the type of unscrupulous sales practices alleged in the complaint

As discovered by FINRA, from at least January 2007, through December 2009, Sheridan recommended approximately 205 unsuitable mutual fund switch transactions in the accounts of eight customers, including some of the Claimants in the filed case. See Department of Enforcement v. Sean Francis Sheridan, Disciplinary Proceeding No. 2009019209204, (FINRA, Feb. 12, 2013) (Sheridan Action). FINRA found that Sheridan recommended the unsuitable mutual fund switches in customers’ accounts and as a result of Sheridan’s activities in claimants’ and other customers’ accounts, FINRA barred Sheridan from the financial industry.

FINRA found that Sheridan only recommended Class A mutual fund shares that require customers to pay sales charges with each new purchase when Sheridan intended to effect the switches on a short-term basis. FINRA found that the average holding period for the mutual funds Sheridan sold was just four to five months. FINRA found that Sheridan exclusively recommended Class A mutual fund shares that charged front-end sales loads of 4-5% with each new purchase, an enormous cost. FINRA also found that Sheridan would randomly switch customers between fund categories such as Growth, Natural Resources, Gold, Emerging Markets, Science and Technology without a reasonable basis for doing so.

Gana LLP Files Customer Complaint Against JHS Capital Concerning Broker Joe Alijaj

August 11, 2014 | by Staff Attorney

The law office of Gana Weinstein LLP recently filed a securities arbitration on behalf of an investor against JHS Capital Advisors, LLC f/k/a Pointe Capital, Inc. (JHS Capital) concerning allegations that the broker recommended unsuitable investments, churned the account, and ultimately depleted the claimant’s assets.

The claimant is sixty-one years old and spent the majority of his career running seed companies. The claimant alleged that he had little understanding of the stock and bond markets. The complaint alleged that Enver Rahman “Joe” Alijaj (Alijaj), a broker with JHS Capital, cold called claimant and aggressively pursued the opportunity to manage claimant’s money. The complaint alleged that prior to opening his account with JHS, claimant never maintained a brokerage account. The claimant alleged that he explained to Alijaj that he wanted to focus on preservation of his capital.

In reliance on Alijaj’s assurances, the claimant alleged that he provided the broker with a substantial portion of his net worth. Rather than comply with the claimant’s investment needs, the complaint alleged that Alijaj took advantage of the claimant’s inexperience by investing the funds in unreasonably volatile stocks and excessively traded (churned, a type of securities fraud) his account to generate excessive commissions. According to the complaint, within days of opening the account, Alijaj leveraged the account and actively traded speculative small cap stocks in unsuitable investments including A-Power Energy Generation Systems Ltd. (APWR), Silicon Motion Technology Corp (SIMO), and Yingli Green Energy Holdings Co. (YGE).