securities attorney

Broker Jeffrey Hill Subject to Multiple Regulatory and Customer Complaints

June 16, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein 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.

Broker Todd Douglas Ryman Subject to Multiple Customer Complaints

June 8, 2017 | by Staff Attorney

Gana Weinstein 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)

Waddell & Reed Terminates Paul Stanley Over Violation of Firm Policies

June 6, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein 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.

Stanley entered the securities industry in 1998. From October 2012 until October 2013, Stanley was associated with J.P. Morgan Securities LLC. From October 2013 until January 2016 Stanley was associated with Waddell & Reed out of the firm’s Edmond, Oklahoma office location.

Broker Robert Schultz Subject to Multiple Customer Complaints

May 29, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein 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.

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.

Invest in High Risk Contingent Convertible (CoCo) Bonds?

June 1, 2016 | by Staff Attorney

In 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.

Gana LLP Investigates Investor Losses in Valeant Pharmaceuticals

May 18, 2016 | by Staff Attorney

Until about August 2015, Valeant Pharmaceuticals (Valeant)(Stock Symbol: VRX) was one of the fastest growing pharmaceutical companies on the market. Then its stock price all but collapsed. After shares peaked at more than $260 a share in August of 2015, it is now trading at about $26 a share and is down more than 80 percent since last August.

What happened? According to news sources, as a background Valeant pioneered the financialization of pharmaceuticals. That is the company does not research and sell drugs. Instead, Valeant continually buys rivals in musty and unloved segments of the market to squeeze inefficiencies out of the companies. In other words, it engages in drug arbitrage and hikes drug prices. Remember Martin Shkreli, the executive who hiked up the price of the anti-parasitic pill Daraprim used by AIDS patients by more than 5,000 percent? That’s what Valeant does.

But Valeant racked debt and then lied to investors about its drug sales. After months of scandals which include the firing of its CEO and reshuffling some of the seats on its board of directors the company admitted to some poor accounting practices. Basically, the company recorded drug sales twice. One time when it sold them to mail-order pharmacy company Philidor, and once when Philidor sold them which inflated revenues in 2014 and 2015. The company will re-release almost all of its financial statements which will paint an even bleaker picture of the company. On top of all this the company is the subject of several investigations by Congress and the Securities and Exchange Commission.

Morgan Stanley Broker Edward Barger has Four Customer Complaints

May 17, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Edward Barger (Barger). According to BrokerCheck records Barger has been subject to at least four customer complaints, two regulatory action, and one criminal matter. The customer complaints against Barger allege securities law violations that including unsuitable investments among other claims.

In April 2016, a customer complained that Barger made unsuitable investments in his account from August 2011 until December 2015. In May 2015, another customer alleged that Barger made unsuitable investments in the account from February 2011 until December 2014 causing damages of $300,000.

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.

FINRA Files Complaint Against Ricky Moore Over Church Bonds Selling Away Allegations

March 9, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2013038770901) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Ricky Moore (Moore). FINRA alleged that between March 2012 and April 2013, while he was registered with Commonwealth Financial Network (Commonwealth Financial) Moore failed to disclose to the firm his outside business activities, also referred to as “selling away”, involving the facilitation of a church bond offering for a church located in Brazoria, Texas. In addition, to the FINRA complaint Moore has been subject to three customer complaints.

FINRA alleged in the complaint that Moore failed to disclose to his member firm his outside business activities involving the facilitation of a church bond offering for a church. The complaint alleges that Moore acted as the president and director of the church and facilitated the church bond offering for the church. In addition, FINRA found that Moore made a false and misleading statement on his firm’s annual compliance questionnaire when asked whether he had participated in raising capital, equity, or debt for a public or private investment. Moore answered “No” and also falsely stated that he had no undisclosed outside business activities. Thereafter, Commonwealth Financial conducted an investigation and Moore was permitted to resign after the firm terminated Moore’s registration.

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.

Merrill Lynch Terminates Broker Patrick Sands on Selling Away Allegations

February 29, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating the employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Patrick Sands (Sands). According to BrokerCheck records Sands has been the subject of at least one customer complaint and one employment termination for cause.

In November 2015, Sands’ then brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) terminated Sands for cause alleging that the broker engaged in conduct inconsistent with the firm’s selling away policies. Participated in private securities transactions without approval of the firm is a practice known as “selling away” in the industry. The allegations appear to involve investments in private placements or direct participation programs such as non-traded real estate investment trusts (Non-Traded REITs), oil and gas programs, or equipment leasing.

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.

FINRA Bars Broker Eugene Smietana For Failing to Respond to Investigation Requests

February 25, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) and the agency’s bar of broker Eugene Smietana (Smietana). According to BrokerCheck records Smietana has been the subject of at least four customer complaints, one employment termination for cause, and four tax liens or judgments. The customer complaints against Smietana allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

In September 2015, Smietana was barred by FINRA for failing to respond to the regulators requests for information. In addition, Smietana has several sizeable liens and judgments entered against him. Substantial judgements and liens on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

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.