Articles Tagged with securities attorney

shutterstock_181783781-200x300In June 2016, Next Financial Group, Inc. (Next Financial) broker Dion Padilla (Padilla) was subject to a regulatory action brought by The Financial Industry Regulatory Authority (FINRA) alleging Padilla effected an unauthorized purchase of a variable annuity for a customer and misrepresented that the investment was not a variable annuity. According to FINRA, the customer stressed to Padilla that they did not want any of their funds invested in a variable annuity due to the high fees associated with variable annuities and because of their desire for liquidity.  But instead of following the customer’s instructions, FINRA found that Padilla presented a variable annuity application to the customer and assured him that the application was not for a variable annuity.  In addition, FINRA found that Padilla caused the customer to invest an additional $558,889 into the variable annuity by falsely claiming that the investment purchased was not a variable annuity.  FINRA found these statements to be misrepresentations that were all false and misleading.

In addition to the FINRA sanctions, Padilla has been subject to four customer complaints – many of which involve claims concerning variable annuity investments.  The law offices of Gana LLP are currently investigating customer complaints concerning this broker.

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shutterstock_1081038-300x200According to BrokerCheck records Kevin Curry (Curry) has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker exercised discretion in a customer’s account without obtaining written authorization or written approval of the account as discretionary from his brokerage firm.  FINRA found that Curry and spoke to the customer and agreed upon investments but that Curry exercised time and price discretion in executing transactions on dates when he had not spoken with the customer in violation of the rules.

In addition, to the FINRA sanctions, two customers have lodged complaints against Curry alleging a number of securities law violations including that the broker made engaged in churning (excessive trading), unauthorized trading, and fraud among other claims.

In June 2014, a customer complaint was filed alleging churning, unauthorized trading, fraud, and failure to supervise claiming $400,000 in damages.  The claim was settled.

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shutterstock_95643673-300x300Since the beginning of 2010 broker John Hudson (Hudson), currently employed by Next Financial Group, Inc. (Next Financial), racked up eight total tax liens and other debts.  Some of these tax liens are quite large including on in September 2010 for $1,492,190.  According to BrokerCheck this tax lien is still active and hasn’t been satisfied.  While no customer complaints have been filed against Hudson and the presence of large liens does not necessarily mean that the broker will engage in risky behavior it is an important red flag for investors to consider.  The risk is that the broker will be influenced to recommend high commission products or trading strategies to satisfy the liens at investors’ expense.  In extreme cases brokers have even misappropriated funds or asked clients for loans to satisfy their personal debts.  There is no indication that any wrongdoing has occurred in Hudson’s case.

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shutterstock_94127350-300x205In March 2017, Broker Richard Lucker (Lucker) was subject to a massive complaint alleging $14,447,501 in damages.  Lucker is currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo).  According BrokerCheck the customer complained that there was a failure to supervise with respect to Lucker’s management of her account from 2011 to 2013.  There are no other details provided as to which products or the type of trading activity that occurred that caused the losses complained of.  The complaint is currently pending.  The securities lawyers of Gana LLP continue to investigate the customer complaint against Lucker.

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_177577832-300x300The securities lawyers of Gana 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.

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shutterstock_114775264-300x200The securities lawyers of Gana LLP are investigating customer and regulatory complaints filed against broker Jeffrey Hill (Hill). According to BrokerCheck records, Hill has been subject to three regulatory actions, eight customer complaints, and one termination for cause disclosures. The most recent customer complaint against Hill alleged that between 2003 and 2014 the customer’s account was subject to churning, unauthorized trading, unsuitability and breach of fiduciary duty.  The claim alleged damages of $1,600,000 and settled.

On November 22, 2016 Wells Fargo Advisors (Wells Fargo) terminated Hill based on activity alleged to have happened at his prior firm when the broker entered into an AWC with FINRA agreeing to a fifteen month suspension from the industry.

In FINRA’s complaint settled in November 2016, Hill consented to sanctions and findings that he initiated hundreds of trades for two elderly customers without contacting them and recommended or engaged in dozens of transactions that were qualitatively or quantitatively unsuitable or lacked a reasonable basis in corporate and municipal bonds. FINRA also found that neither of those customers explicitly permitted Hill to use discretion in their accounts.  FINRA found that Hill would recommend that one of the customers sell bonds shortly after buying them.  FINRA determined that there was no justification for the trading as neither changes in the bonds’ prices, interest that accrued, changes in the issuers’ condition, nor any other factors appeared to effect the short-term trading.

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shutterstock_132704474-300x200Gana LLP’s investment fraud attorneys are investigating multiple customer disputes filed with the Financial Industry Regulatory Authority (FINRA) again broker Todd Douglas Ryman (Ryman). According to Ryman’s FINRA BrokerCheck records, there are several disclosures on his record pertaining to unauthorized trading, unsuitable trading, misrepresentation of material facts, amongst other allegations.

Ryman entered the securities industry in 1995 and currently employed at Suntrust Investment Services, Inc. since February 2017. He was previously employed at:

• Raymond James & Associates, Inc. (September 2016 – February 2017)
• Deutsche Bank Securities, Inc. (May 2011 – September 2016)
• Merrill Lynch, Pierce, Fenner & Smith Inc. (October 2009 – May 2011)
• Banc of America Investment Services, Inc. (October 2002 – October 2009)
• UBS Painewebber, Inc. (July 1998 – October 2002)
• Josephthal & Co., Inc. (February 1996 – July 1998)
• Bear, Stearns & Co., Inc. (August 1995 – February 1996)

In February 2017, a customer complaint was filed for alleged documentation during the period of September 2016 to February 2017 while Ryman was employed at Raymond James and Associates. The stated alleged damages are $300,000.00 and the claim is currently pending. Another pending case was filed in November 2016 by a customer alleging that Ryman sold an unsuitable Private Equity fund. The alleged damages were $250,000.00 and is still pending.

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shutterstock_94127350-300x205The investment lawyers of Gana LLP are investigating Waddell & Reed Inc.’s (Waddell & Reed) termination of former broker Paul Stanley (Stanley) working out of the Edmond, Oklahoma office.  Stanley had been in the industry for 16 years and was a licensed supervisor with the firm.  Waddell & Reed terminated Stanley in January 2016.  According to the broker’s Financial Industry Regulatory Authority (FINRA) BrokerCheck filing the firm stated that Stanley was “terminated for violation of firm’s Professional Conduct, Supervisory and Compensation Policies following firm investigation evidencing that Principal failed to provide complete information during firm’s internal investigation, suggested to [registered representative] under Principal’s supervision they also not provide complete information during firm’s internal investigation, allowed [registered representative] who was not properly licensed to participate in solicitation of investment advisory business, directed [registered representative] to conduct firm business during an internal firm-imposed administrative suspension, directly compensated [registered representative] outside of firm compensation policies, failed to intercede in the sharing of investment advisory compensation between [registered representative] outside of firm compensation policies and where [registered representative] were not all properly licensed for the products at issue, emailed firm business to [registered representative] on [registered representative] outside email account, and improperly managed client paperwork.”

Subsequently, in March 2017 FINRA barred Stanley when Stanley consented to the sanction and bar for refusing to appear for on-the-record testimony requested by FINRA.

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shutterstock_171721244-300x200The securities lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Robert Schultz (Schultz). According to BrokerCheck records, Schultz has been subject to four disclosures including four customer complaints. The customer complaints against Wolfe allege a number of securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, misrepresentations, negligence, and omissions of material information among other claims.

The most recent customer complaint was filed in October 2016 claims $95,000 in damages and alleges suitability misconduct, misrepresentations, and breach of fiduciary duty from 2005 through 2010.  The claim is currently pending.

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shutterstock_19498822In a recent Wall Street Journal Article, it was reported that UBS Group AG sold $1.5 billion of contingent convertible (CoCo) bonds.  According to the article, UBS received about $8 billion of orders for the sale.  These bonds will pay an interest rate of 6.875% and last summer UBS sold $1.6 billion of CoCos at the same rate.  The UBS deal was the first CoCo sale since mid-January due to price drops in February due to worries that Deutsche Bank AG might have missed an interest payment on one of its CoCo bonds.

What exactly are CoCo’s and why should investors be concerned.  CoCos have been a growing type of debt issued by mostly European issuers.  European lenders have sold around 100 billion in CoCos since 2012.

CoCos bear many of the same traits as hybrid preferred securities that were popular right up to the financial crisis.  Like hybrid preferred stock, CoCo’s act as hybrid debt/equity investments.  When times are good they behave like debt providing no growth to investors and only interest payments.  When times get rough these investments behave like equity because investors are unlikely to see returns in the event of bankruptcy.  As a result these investments tend to crash in lock step with a company’s equity.

CoCos are one way that some banks are issuing investments in order to acquire extra capital.  Because of their hybrid structure CoCos can be counted toward a bank’s capital requirements mandated by regulators without raising share capital.  From a bank’s standpoint CoCos are attractive because the cost of capital on the firm’s balance sheet is lower than it is for a share capital increase.  CoCo bonds also have a capital trigger where if the trigger is reached, the CoCo is automatically converted into equity or the nominal value is written off.  The trigger on CoCos can also be activated by a regulatory authority if the bank’s existence threatened.

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