Stifel Nicolaus

Customers File Complaints Against Charles Obryant Over Unsuitable Investments

October 19, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Charles Obryant (Obryant) alleging unsuitable investments, negligence, breach of fiduciary duty, and unauthorized trading. According to brokercheck records Obryant has been subject to four customer complaints and one employment separation for cause.

A customer complaint filed in October 2015 alleged negligence and suitability violations causing damages in the amount of $630,000. The claim was settled for $632,298.

In January 2016, Stifel Nicolaus discharged Obryant alleging a loss of confidence after settlement of complaint. The broker commented on the discharge stating that the equity concerning the dispute was a Stifel buy recommended security that went bankrupt and the broker made no personal contribution to the settlement.

Investors File Unauthorized Trading Complaints Against Broker Lance Shaw

April 4, 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) against broker Lance Shaw (Shaw). According to BrokerCheck records Shaw has been the subject of at least eight customer complaints and one criminal matter. The customer complaints against Shaw allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

The most recent complaint was filed in August 2015 and alleged that the customer’s account was traded without authority. The complaint is currently pending. Also in August 2015 another customer complained that unauthorized trading occurred causing $26,874 in damages. The complaint is pending. A third complaint also filed in August 2015 makes similar allegations that allegedly caused $56,166. This complaint has been settled.

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.

FINRA Bars Former Stifel, Nicolaus Broker Kenneth Hornyak Over Short Term Trading

September 15, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned and barred broker Kenneth Hornyak (Hornyak) (Case No. 2013038511901) alleging that the broker failed to respond the regulator’s requests for documents and information. FINRA’s investigation appeared to focus on claims that Hornyak engaged in potential discretionary trading, unauthorized trading, and unsuitable short-term trading in Unit Investment Trusts (UITs). On May 11, 2015, Hornyak informed FINRA that he would not appear for questioning and the regulator subsequently barred the broker.

According to the BrokerCheck records kept by FINRA Hornyak has been the subject of at least four customer complaints, one regulatory action, and two employment terminations for cause. Customers have filed complaints against Hornyak alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, churning, and excessive sales charges among other claims.

Hornyak entered the securities industry in 1998 with Morgan Stanley. From March 2006, until January 2014, Hornyak was associated with Stifel, Nicolaus & Company, Incorporated. In January 2014, Stifel, Nicolaus terminated Hornyak for cause alleging that Hornyak was terminated because of violation of firm policies regarding exercising discretion without written authorization.

Broker Spotlight: Customer Complaints Against Francine Frechter

September 10, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Francine Frechter (Frechter) has been the subject of two customer complaints and one employment separation. The customer complaints against Frechter allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, and failure to follow instructions among other claims.

Frechter entered the securities industry in 1984. Since 2000 Frechter was associated with Citigroup Global Markers Inc. From June 2009, until January 2014, Frechter was a registered representative with Wells Fargo Advisors, LLC. In December 2013, Frechter was discharged from Wells Fargo concerning allegations that Frechter recommended a lending product to three clients that was contrary to the firm’s policies. Currently, Frechter is associated with Stifel, Nicolaus & Company, Incorporated.

Advisers have an obligation to deal fairly with investors and that obligation includes 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 costs, 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.

FINRA Sanctions Tyler Powell Over Unauthorized Trades

September 1, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned (Case No. 2014040633301) broker Tyler Powell (Powell) concerning allegations that Powell exercised discretion in a customer’s account without obtaining prior written authorization from the customer.

Powell first became registered with FINRA in 2007 through his association with a A.G. Edwards & Sons, Inc. From January 2008, to August 2014, he was associated with Wells Fargo Advisors, LLC (Wells Fargo) and registered with FINRA. Since August 2014, Powell has been associated with Stifel, Nicolaus & Company, Incorporated (Stifel Nicolaus).

NASD Conduct Rule 2510(b) prohibits registered representatives from exercising discretion in a customer account unless the customer has provided written authorization to the broker and the brokerage firm to exercise discretion. Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. A broker must first discuss all trades with the investor before executing them. The SEC has also found that unauthorized trading to be fraudulent nature.

Cushing Mutual Funds Investor Update

August 4, 2015 | by Staff Attorney

The attorneys at Gana Weinstein LLP have been following the collapse of a series of mutual funds managed by Cushing Asset Management. The funds involved include:

Cushing Closed-End Funds

Cushing Renaissance Fund

Stifel Nicolaus Broker Robert Head Terminated and Barred for Unauthorized Trading

November 14, 2014 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) in an acceptance, waiver, and consent action (AWC) and barring former Stifel, Nicolaus & Company, Inc. (Stifel Nicolaus) broker Robert Head (Head) concerning allegations that between August 2013, and October 2013, Head exercised discretion, aka unauthorized trading, in the account of a customer without obtaining the customer’s prior written consent in violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010. In addition, FINRA alleged that Head recommended transactions to the same customer between January 2010, and October 2013, that were qualitatively and quantitatively unsuitable for the customer.

From August 2008, until January 2014, Head was registered with Stifel Nicolaus. Since that time, Head has not been registered with any brokerage firm. In December 2013, Head was discharged from Stifel Nicolaus for alleged violation of the firm’s policy regarding exercising discretion in a client’s account without written authorization.

According to FINRA, Head managed a Stifel Nicolaus trust account for a customer from August 2008, until October 2013. The customer was retired with an original account application listing investment objectives of “Growth and Income” and “Speculation / Active Trading / Complex Strategies.” FINRA found that in November 2009, the account’s investment objective was changed to identify only ”Speculation / Active Trading / Complex Strategies.” FINRA found that the customer never gave Head written authorization to exercise his own discretion for her account.

William Coolidge of Stifel Nicolaus Barred by FINRA Over Unauthorized Trading Activity

April 30, 2014 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) has barred financial advisor William B. Coolidge (Coolidge) of Stifel, Nicolaus & Company, Incorporated (Stifel Nicolaus) concerning allegations that Coolidge effected trades in the accounts of three customers without obtaining prior written authorization from the customers and without the accounts being discretionary accounts. In addition, FINRA alleged that Coolidge implemented a trading strategy and made unsuitable recommendations to five customers to switch from mutual funds and Unit Investment Trusts (UIT) to other mutual funds or UITs after holding the investments for a short time period.

Discretionary trading without written authorization is a form of unauthorized trading. Unless an investor has given the broker discretion to make trades in the account, a broker is obligated to first discuss all trades with the investor before executing them. FINRA Rules prohibit a broker from making discretionary trades in a customer’s non-discretionary account. The SEC has found that unauthorized trading is a type of securities fraud due to its fraudulent nature.

FINRA alleged that from April 2008, through April 2012, Coolidge effected approximately 233 trades in the accounts of three customers without obtaining prior written authorization from the customers. One of the customers was 86 years old. FINRA alleged that the customer’s investment objectives were growth and income, her estimated net worth was approximately $240,000, and her annual income was under $25,000. FINRA found that from April 2008 through June 2012, Coolidge implemented a trading strategy in the customer’s IRA account on forty-six occasions and in her individual account on fifty-two occasions where he switched from mutual funds and UITs to other mutual funds or UITs after holding the investments for a short time period. FINRA determined that Coolidge’s recommendations were not suitable and that the customer incurred a total loss of $43,692 and paid $52,316 in commissions.