Articles Tagged with securities fraud attorney

shutterstock_20354398-300x200The attorneys at Gana Weinstein LLP are currently investigating claims against broker Sergio Rovner (Rovner), currently associated with Aegis Capital Corp. (Aegis) out of New York, New York.  According to a BrokerCheck report, Rovner has been subject to at least six customer disputes and two regulatory actions during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Rovner concern allegations of unauthorized trading, unsuitable investments, and misrepresentations among other claims.

In February 2018 a customer filed a complaint alleging that Son executed unauthorized trades in the customer’s account and made unsuitable investment recommendations.  The customer requested $32,398 in damages.  The claim settled for $12,635.

In December 2005 FINRA found that Rovner violated NASD Rules 2110 and 2310 by engaging in excessive trading and unsuitable investments.  Without admitting or denying the allegations, Rovner consented to the described sanctions and to the entry of the findings.  Rovner was fined $10,000 and suspended for 30 days.

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.

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dreamstime_s_24782834-258x300The law offices of Gana Weinstein LLP represents a group of 23 claimants that have been awarded $3 million by a FINRA arbitration panel after 18 days of hearing and litigation that stretched over three years.  At hearing the evidence showed that Spire Securities, LLC (Spire Securities) and the firm’s principal officers including its CEO David Blisk (Blisk) and CCO Suzanne McKeown (McKeown) failed to supervise their registered representative Patrick Churchville (Churchville).

Despite the overwhelming evidence of the firm’s failure to supervise Blisk continues to defend his conduct instead of instituting necessary reforms to his practice.  In addition, Blisk has made several false statements of fact to the media in his continuing attempts to exonerate himself and his firm.

Blisk told AdvisorHub “’We think the award is outrageous and inappropriate,’ said Blisk, noting that the majority arbitrators appeared to ignore the firm’s claims that the Ponzi scheme began after Churchville left Spire in 2011. “We can’t supervise after somebody leaves us, and we don’t have to be fraud investigators.”

False on all counts.  First the only thing that is outrageous is that Blisk and Spire Securities could not produce a single opening account form, subscription agreement, or account statement for any of the 23 claimants who invested over $10 million in Churchville’s fraud on Spire Securities watch.  Claimants repeatedly asked Respondents to provide any evidence that the firm monitored Churchville’s activities for supervision without response.  Blisk had no evidence that Claimants investments, which were overconcentrated in private equity funds, was suitable.  Further, Respondents did not even know what Churchville’s funds were invested in and claimed that brokerage firms can blindly approve products that they have no understanding of.

Finally, Blisk falsely claims that Churchville did not commit fraud on Spire Securities watch.  Claimants proved that Churchville directed and ordered the theft of over $900,000 from one of the Claimants over Spire Securities’ email servers.  In addition, Claimants introduced numerous emails that showed $750,000 had been stolen from the private equity funds while Churchville fraudulently told investors the same investment was producing fantastic returns.  Claimants also showed that Chuchville stole over $200,000 in investor funds to pay administrative expenses that had been overdue for over a year after the service provider questioned whether Churchville was going out of business.  Finally, Claimants produced evidence that Churchville’s auditor had concerns over the private equity fund’s valuation and could not find evidence to back up Churchville’s claimed returns.

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shutterstock_171721244-300x200The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ricky Flatt (Flatt) has taken loans from a client and engaged in certain business activities not approved by his advisory firm.  Flatt, formerly registered with Royal Fund Management, LLC (Royal Fund) out of Troy, Michigan has been terminated by Royal Fund and under investigation by the State of Michigan for accepting funds from a client.  In addition, Flatt disclosed at least 12 tax or judgement liens totaling hundreds of thousands of dollars.

In March 2019 the State of Michigan opened an investigation into Flatt alleging that he borrowed money from a client and defaulted on the loan while also failing to disclose an outside business activity.

In March 2019 Royal Fund terminated Flatt after alleging that Flatt breached the firm’s internal policies and procedures concerning reporting business activities and loans from a client.

Flatt’s IARD disclosures state that Flatt has an outside business activity called Financial Strategies, Inc. selling certain insurance policies.  It is unclear at this time what business activity that investigations concern.

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shutterstock_143685652-300x300The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Derrick Trussell (Trussell) has engaged in an investment fraud scheme by selling products not approved by his brokerage firm.  Trussell, formerly registered with PFS Investments Inc. (PFS Investments) out of San Antonio, Texas has been accused by at least four customers of engaging in unapproved activity.

In May 2017 PFS Investments terminated Trussell after alleging that the firm received allegation that the representative engaged in an unapproved outside business activity and/or an undisclosed private securities transaction in which a client’s funds were used to purchase securities not offered by PFSI without the client’s knowledge or consent.

Thereafter in August 2018 FINRA barred Trussell after FINRA stated that Trussell failed to respond to FINRA request for information.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in fraudulent securities sales or misappropriation schemes.  Trussell’s activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws.  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.  Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

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shutterstock_94632238-300x214According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Christopher Hibbard (Hibbard), formerly associated with Merrill Lynch, Pierce, Fenner & Smith, Incorporated (Merrill Lynch) in Louisville, Kentucky was terminated for cause by Merrill Lynch in January 2018 after the firm made allegations that Hibbard engaged in conduct including unauthorized transactions and theft.  Thereafter, in February 2018 Hibbard was barred by FINRA for failing to respond to the regulatory requests for information.  In April 2018 it was disclosed that an investigation of Hibbards activities had been opened by the United States Attorney’s Office, Western District of Kentucky.  The investigation involves the unauthorized use of client funds by Hibbard during his employment with Merrill Lynch.  In addition, eight customers have brought complaints against Hibbard alleging misappropriation of funds.

The allegations concerning conversion are often accompanied by claims of engaging in outside business activtiies and private securities transactions – a practice known in the industry as “selling away” – a serious violation of the securities laws.

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shutterstock_155271245-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Frank Zito (Zito), formerly associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) in Ridgeland, Mississippi and currently registered with Coker & Palmer was terminated concerning allegations that Zito engaged in conduct such as failure to adhere to firm standards regarding selling away and failure to fully disclose participation in an outside business activity.  A month earlier in May 2018 a customer filed a complaint against Zito alleging that the broker made unsuitable recommendations and sold unapproved products from 2013 through January 2018.  The complaint is currently pending and alleges $571,000 in damages.

At this time, the claims against Zito are unclear as to the exact nature and extent of the unapproved product sale activity.  Zito has outside business disclosures including timber purchasing from timber management firm.

It is possible that this activity is related to the alleged Ponzi Scheme orchestrated by Arthur Adams (Adams) and Madison Timber Properties LLC (Madison Timber) by The Securities and Exchange Commission (SEC).   The complaint against Adams and Madison Timber was unsealed on May 1, 2018 Mississippi federal court and revealed the SEC’s fraud charges against the Mississippi company and its principal who has been accused of stealing from at least 150 investors in a $85 million Ponzi scheme.  Adams and Madison Timber agreed to a permanent injunction, an asset freeze, and expedited discovery.

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shutterstock_191231699-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Alex Herrera (Herrera), formerly associated with UBS Financial Services Inc. (UBS) in Coral Gables, Florida was barred by FINRA.  In the regulatory action FINRA claimed that Herrera consented to the sanction and findings that he refused to provide information requested by FINRA in connection with its investigation of his possible participation in unreported outside business activities (OBAs) and private securities transactions.

At this time it is unclear the nature or scope of the alleged OBAs and private securities transactions that Herrera was involved in.  However, in May 2018 a customer filed a complaint alleging that Herrera stole her money to buy a vacation home.  The claim is currently pending.

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shutterstock_175993865-300x225Securities attorneys at Gana Weinstein LLP have been investigating previously registered broker Shaun Hayes (Hayes). According to BrokerCheck Records, Hayes has been subject to seven customer disputes in the past year, four of which are still pending. The majority of these disputes allege unauthorized trading of customer accounts.

In December 2017, a customer alleged that from May 2013 to December 2017, Hayes was executing unauthorized trades in the customer’s accounts. This dispute  is currently still pending.

In December 2017, another customer alleged that Hayes was engaging in unauthorized trades in the customer account and is requesting $139,000 in damages. This complaint is still pending.

shutterstock_85873471-300x200According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) financial advisor Osbert Haynes (Haynes), currently employed by Laidlaw & Company (UK) Ltd. (Laidlaw), has been subject to two customer complaints, one regulatory action, and six tax liens or judgments.  Most of a Haynes’ customer complaints allege that Haynes made unsuitable recommendations.

In addition, Haynes is subject to large tax liens and civil judgments totaling tens of thousands of dollars.  In September 2014 Haynes disclosed a civil judgment of over $19,000.  The fact that a broker cannot manage his own personal finances is material information for a client to consider.  In addition, an advisor with poor personal finances may be incentivized to sell unsuitable or high commission products that may be recommended to generate high profits for the advisor at the expense of the client.

In August 2017 a customer made allegations unsuitable recommendations and unauthorized trading from 2011 to 2012. The claim alleged $163,886 in damages and is currently pending.

shutterstock_182054030-300x200The securities attorneys at Gana Weinstein LLP are investigating claims against First Allied Securities, Inc. (First Allied) broker Mark Chamberlain (Chamberlain).  According to BrokerCheck records, Chamberlain has been subject to seven customer complaints and one regulatory action.  The majority of the complaints concern alternative investments and annuities.

Most recently, in May 2015, a customer alleged that Chamberlain engaged in unsuitable investments requesting $29,700 in damages.

In May 2012, a customer alleged that from October 2009 to May 2011, Chamberlain engaged in breach of fiduciary duty, constructive fraud, and unauthorized transactions. This dispute settled for $13,000.