Articles Tagged with securities fraud attorney

shutterstock_24531604-200x300The investment lawyers of Gana LLP are investigating claims against Robert Clarke (Clarke). According to BrokerCheck records, Clarke has five disclosures, four of them being customer complaints.

In August 2017, a customer alleged Clarke misrepresented the nature of an investment and the purchase of the investment in the customer’s accounts. The customer is seeking $500,000 in this pending dispute.

In March 2016, a customer alleged Clarke misrepresented and made an unsuitable recommendation for the customer to invest in collateralized mortgage obligations. This dispute settled for $120,000.
In April 2014, a customer alleged unsuitable investment, transfer of accounts handled negligently, lack of fiduciary duty, and lack of supervision. This dispute settled for $77,205.

False representations include either written or oral statements containing misrepresentations or omissions of information that are material to an investor and induce the purchase, sale, or holding of a security. Under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and Rule 10b-5 a misrepresentation or omission of a fact is material if a reasonable investor might have considered the fact important in the making of the investment decision. Also the Financial Industry Regulatory Authority (FINRA) Rule 2020 also prohibits members from effecting “any transaction in, or induce the purchase or sale of, any security by means of any manipulative, deceptive or other fraudulent device or contrivance.”

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shutterstock_173509961-300x200According to records kept by The Financial Industry Regulatory Authority (FINRA), former Capitol Securities Management (Capitol Securities) employee Teryl Trenchard (Trenchard) in under investigation for fraud.  In March 2017 FINRA initiated its investigation into Trenchard for fraud.  On the same day Capitol Securities terminated Trenchard for the same reason.  Thereafter, in July 2017 a customer filed a complaint alleging breach of fiduciary duty, conversion, and unsuitable investments causing $700,000 in damages.  The claim is currently pending.

Thereafter, in September 2017 another customer alleged that from 2005 to March 15, 2017 Trenchard engaged in misappropriation, forgery, fraud, and unauthorized trading in unsuitable transactions.  The customer alleged $1,800,00 in damages.  The claim is currently pending.

At this time it is unclear the extent and scope of Trenchard’s securities violations and the exact details of the fraud under investigation.  Trenchard’s CRD lists a business called Market Technician’s Association and no other businesses.

Brokerage firms are responsible for implementing supervisory procedures to review and approve fund transfers and wires to ensure that funds are not being used for wrongful purposes or being converted.

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shutterstock_12144202-300x200The investment lawyers of Gana LLP are investigating claims against John Eglow (Eglow). According to BrokerCheck records, Eglow, who works out of Delray Beach, Florida, has been subject to four customer disputes.

In May 2017, a customer alleged she was overcharged for trades. This dispute settled for $48,758.

In July 2016, a customer alleged Eglow made unsuitable recommendations, resulting in unrealized losses. This dispute settled for $115,000.

In March 2015, a customer alleged that the terms and provisions of investments were misrepresented by Eglow. This dispute settled for $3,205.73.

Brokers have a responsibility to 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_178801082-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor James Merkel (Merkel), in August 2017, was terminated by his employer Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) after the firm alleged that Merkel violated firm policy relating to selling away.

Prior to the firm’s termination, in June 2016 a customer filed a complaint alleging unsuitable investment recommendations and misrepresentation and omission of material facts involving options.  The customer alleged $1,000,000 in damages and the claim is currently pending.

At this time it is unclear the extent and scope of Merkel’s securities violations and outside business activites.  Merkel’s CRD lists that he operates an outside business activity concerning real property.  Merkel also lists an entity called Merkel’s Lfan LLC that is a business that produces adironack chairs and other items.  At this time it is unknown the exact nature of the firm’s allegations concerning private securities transactions – a practice known in the industry as “selling away”.

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shutterstock_101456704-300x197According to BrokerCheck records financial advisor Martin Stevens (Stevens), currently associated with Stifel, Nicolaus & Company, Incorporated (Stifel Nicolause), has been subject to seven customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA), in August 2017 a customer filed a complaint alleging that Stevens conduct breached his fiduciary duty, negligence, unsuitable investments, violations of Arizona’s Securities Fraud Statute, negligent misrepresentation, and breach of contract among other claims.  The customer seeks $249,000 in damages and the claim is currently pending.

Also in August 2017 another customer filed a complaint alleging unsuitable investments causing $34,719 in damages.  The claim is currently pending.

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shutterstock_160304408-300x199The investment lawyers of Gana LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Broker Tommy Mai (Mai).

According to Mai’s Brokercheck records, he has been sanctioned by FINRA because he allegedly “forged or caused to be forged customers’ signatures on various types of customer account documents including his member firm’s new account forms and non-firm insurance applications. In total, 53 customer account forms were forged, altered, or otherwise improperly signed (i.e., signed when partially completed or blank). The findings also stated that Mai paid to air a television program, on two Los Angeles Vietnamese-language television stations, appeared in every episode of the program and discussed a range of insurance and investment-related topics, without obtaining prior approval from the firm or FINRA prior to airing the program. In addition, the content of the program was, at times, misleading, promissory, and/or unbalanced.” Mai was suspended from FINRA for four months and fined $10,000.

The term “securities fraud” relates to inappropriate and illegal activities. Principally, it relates to investor deception and market maipulation. Fraud can sometimes include the unauthorized trading, false or misleading representations and of course, Ponzi schemes. Many laws protect investors.

shutterstock_120556300-300x300According to BrokerCheck records financial advisor Frederick Houck (Houck), formerly associated with Freedom Investors Corp. (Freedom Investors), has been subject to one customer complaint, six tax liens or judgments, and one FINRA sanction.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Houck has been accused by a customer of churning, negligence, excessive trading, and breach of fiduciary duty from August 2011 to January 2016 causing $150,000 in damages.  The claim is currently pending.

In August 2017 FINRA sanctioned Houck alleging that Houck exercised discretion in executing 491 transactions in the accounts of two customers as part of a recommended investment strategy without obtaining prior written authorization to exercise discretion and without his member firm having approved these accounts for discretionary trading.

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.  Often times, brokers engage in unauthorized trading as part of an attempt to churn or excessively trade a client’s account.

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shutterstock_20354398-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Anthony Vultaggio, Jr. (Vultaggio), in September 2017, was accused by FINRA of failing to cooperate in an investigation into the circumstances surrounding Vultaggio alleged sale of undisclosed securities through an undisclosed outside business.  Vultaggio is formerly associated with American Capital Partners, LLC (American Capital).  According to the FINRA action, Vultaggio was barred by the regulator after the broker failed to respond to requests for documents and information during the investigation.

At this time the extent of Vultaggio’s outside business activities and securities sales are unknown.  The only public disclosure on Vultaggio’s BrokerCheck contains is Vultaggio’s investments in commercial and residential real estate.

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”.

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shutterstock_1744162-300x200According to BrokerCheck records financial advisor Jeffrey Smith (Smith), formerly associated with Accelerated Capital Group (Accelerated Capital), has been subject to five customer complaints and two regulatory actions.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Smith has been accused by customers of unsuitable investment advice, securities fraud, and excessive trading among other claims.

The most recent regulatory action occurred in September 2017.  FINRA found that Smith maintained and utilized pre-signed and altered forms to conduct his securities business. FINRA determined that Smith’s conduct caused his brokerage firm to have inaccurate books and records. FINRA alleged that Smith had three customers sign blank forms and then made photocopies of some of the blank-signed forms so that he could reuse the customers’ signatures.  FINRA found that Smith then utilized these blank-signed forms to effect transactions.

In 2011 FINRA sanctioned Smith for failing to supervise brokers and enforce the firm’s supervisory procedures.

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shutterstock_178801067-300x200The securities lawyers of Gana LLP are investigating investor losses in American Finance Trust, a non-traded real estate investment trust (Non-Traded REIT).  According to the firm’s website, American Finance Trust is designed to protect shareholder capital and produce stable cash distributions through the acquisition and management of diversified portfolio of commercial properties leased to investment grade tenants.  The portfolio consists of core retail properties such as power centers and lifestyle centers.

According to a secondary market providers which allow investors to bid and sell illiquid products such as Non-Traded REITs, American Finance Trust sells for just under $15.50 per share – a significant loss on the original purchase price of $25.00.

Our firm often handles cases involving direct participation products (DPPs), private placements, Non-Traded REITs, and other alternative investments.  These products are almost always unsuitable for middle class investors.  In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments providing perverse incentives for brokers to sell high risk and low reward investments.

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