securities attorney

Broker Investigation: Customer Complaints Against Frank Marinelli

December 8, 2015 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints against Frank Marinelli (Marinelli). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Marinelli has been the subject of at least 3 customer complaints, 1 employment termination, 2 judgment or liens, and 1 criminal matter. The customer complaints against Marinelli allege a number of securities law violations including that the broker made unsuitable investments, churning (excessive trading), misrepresentations, negligence, fraud, and unauthorized trading other claims.

The most recent customer complaint was filed in March 2014 and alleges unsuitable investments and churning causing $120,000 in damages. Another complaint filed in March 2012 alleges high pressure sales tactics unauthorized trading and mismanagement of the client’s account leading to $200,000 in damages.

Marinelli also has two liens listed, both filed in 2010 related to taxes. One lien is for $123,240 and the other is for $41,306. A broker with large liens are an important consideration for investors to weigh when dealing with a financial advisor. An advisor may be conflicted to offer high commission investments to customers in order to satisfy liens and debts that may not be in the client’s best interests.

FINRA Sanctions Joseph Daigneault Over False Account Statements

December 7, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2013038133001) against broker Joseph Daigneault (Daigneault) resulting in a monetary sanction and a suspension. In addition, according to the BrokerCheck records kept by FINRA, Daigneault has been the subject of at least 1 customer complaint. The customer complaint against Barthole allege unsuitable investments concerning alternative investments and claims $1,000,000 in damages.

FINRA’s findings stated that from October 2005 through September 2013, Daigneault provided consolidated statements to at least eight customers that included misleading information regarding the customers’ financial holdings. According to FINRA, Daigneault manually created the consolidated statements using a spreadsheet program. However, many of the statements that Daigneault created included values for non-traded, illiquid assets that Daigneault listed the value of the customer’s initial investment regardless of the current actual value of the investment. In addition, FINRA found that several statements had a death benefit column where investment values were listed even where the securities in question did not have death benefits.

A consolidated report is a single document that combines financial information regarding a customer’s financial holdings on one statement. Consolidated reports are supplements but do not replace customer account statements. Due to the increasing complexity of investments offered by brokers from multiple different issuers and platform FINRA issued Regulatory Notice 10-19 reminding brokers and brokerage firms that consolidated report are communications with the public that must be must be clear, accurate, and not misleading. The valuations and values provided on the statements must be consistent with the customer’s official account statement. When creating consolidated account statements broker must take reasonable steps to accurately report information.

FINRA Sanctions Daniel Barthole Over Attempt to Privately Settle a Customer Complaint

December 7, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2012034393401) against broker Daniel Barthole (Barthole) resulting in a monetary sanction and a suspension. In addition, according to the BrokerCheck records kept by FINRA, Barthole has been the subject of at least 2 customer complaints. The customer complaints against Barthole allege unsuitable investments, churning (excessive trading), misrepresentations, fraud, and unauthorized trading among other claims. The most recent complaint against Barthole alleged $227,632 in damages concerning unauthorized ETF trading and churning from February 2012 through September 2014. The claim was later withdrawn.

FINRA’s findings stated that Barthole consented to a finding that he together with two other brokers attempted to settle a customer complaint away from their brokerage firm by agreeing to pay $4,000 to a customer and by sending $1,500 in cash to the customer.

Barthole entered the securities industry in 2009. From April 2009 until February 2015, Barthole was associated with Woodstock Financial Group, Inc. Since February 2015, Barthole has been registered with National Securities Corporation out of the firm’s New York, New York office location.

FINRA Sanctions David Khezri Over Unauthorized Trading

December 4, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2015044589701) against broker David Khezri (Khezri) resulting in a monetary sanction and suspension. In addition, according to the BrokerCheck records kept by FINRA, Khezri has been the subject of at least 1 customer complaint. The customer complaints against Khezri alleges excessive trading among other claims.

FINRA’s findings stated that Khezri consented to sanctions that he improperly exercised discretion by effecting around 100 trades for six customers without obtaining written authorization from the customers. The firm also did not accept the accounts as discretionary. FINRA alleged that Khezri exercised discretion by executing trades days after his customers provided him oral authority. However, FINRA found that Khezri’s firm did not permit discretionary trading except for registered investment advisors (RIA) trading in the accounts of their advisory clients and Khezri was not an RIA.

Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

FINRA Bars Broker Jeffrey Snyder Over Failure to Respond to Regulator Requests

December 3, 2015 | by Staff Attorney

The 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.

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 Broker Tracy Wengert Over Trading Customer Accounts Outside His Brokerage Firm

November 20, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Tracy Wengert (Wengert) (FINRA No. 2015044289201) resulting in a bar from the securities industry alleging that Wengert failed to provide FINRA staff with information and documents requested. The failure to provide those documents and information to FINRA resulted in an automatic bar from the industry. FINRA’s document requests related to the regulators investigation into claims in February 2015, FINRA enforcement began investigating allegations of misconduct by Wengert in that he opened brokerage accounts outside of the Transamerica Financial Advisors, Inc. (Transamerica) on behalf of customers and placed unsuitable trades in these accounts.

FINRA’s investigation appears to stem from Wengert’s termination from Transamerica in January 2015. At that time Transamerica filed a Form U5 termination notice with FINRA stating in part that the firm discharged Wengert under circumstances where there was allegations that Wengert was alleged to have managed a client account on a discretionary basis without approval or oversight through the firm.

Wengert entered the securities industry in 1999. From April 2002 until January 2012, Wengert was associated with World Group Securities, Inc. Thereafter, from January 2012 until February 2015, Wengert was associated as a registered representative with Transamerica.

FINRA Bars Broker Robert Potter Over Failure to Respond to Regulatory Requests Concerning Comingled Funds

October 27, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred broker Robert Potter (Potter) (FINRA No. 2014041579901) alleging on August 10, 2015, the agency investigated allegations that Potter commingled customer funds with his personal funds and sent Potter a letter requesting that he provide documents and information by August 17, 2015. According to FINRA Potter’s counsel requested an extension of time but that later Potter’s counsel informed staff that Potter would not provide the requested documents and information. Potter failure to provide the requested documents and information resulted in an automatic bar from the industry.

Recently, the National Futures Association (NFA) also brought action against Potter alleging that there is reason to believe that NFA Requirements are being violated in that Potter is alleged to have solicited a customer to trade futures and instructed the customer to wire funds to Potter’s personal bank account. The NFA stated that Potter’s prior firm supervisor provided NFA with copies of text messages between Potter and the customer discussing the customer’s purported investment in a futures trading account. The NFA alleges that Potter acted as an unregistered futures commission merchant by having the customer wire funds to Potter’s personal bank account, that Potter converted the customer’s funds, and that Potter lied to the customer about the value of the customer’s supposed investment.

Potter entered the securities industry in June 1983. From December 2005, until August 2011, Potter was registered with Wells Fargo Advisors, LLC. Thereafter, from August 2011, until August 2015, Potter was a registered representative with Cambria Capital, LLC out of the firm’s Salt Lake City, Utah office location.

Broker Investigation: St. Bernard Financial Broker Joseph Miles

October 19, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Joseph Miles (Miles) has been the subject of at least 3 customer complaints, 3 judgements or liens, and one bankruptcy discharge. Customers have filed complaints against Miles alleging securities law violations including poor investment performance, unsuitable investments, securities fraud, and breach of fiduciary duty among other claims. Most of the claims against Miles relate to bonds or other debt obligations that caused losses. For instance, the latest complaint alleged damages of $169,865 as a result of bonds that lost value in 2013. In addition, Miles has had difficulty managing his own finances having been through a bankruptcy in 2005. Thereafter, Miles has had three judgments filed against him for taxes in the amounts of $5,499, $27,241, and $7,900.

Miles entered the securities industry in 1983. Since May 2004, Miles has been associated with St. Bernard Financial Services, Inc. out of the Russellville, Arizona 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.