Woodbury Financial Services Tag Archives

Woodbury Financial Advisor James Kennedy Barred From Industry Over Unapproved Business Activity

June 21, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor James Kennedy (Kennedy) has been accused by a financial regulator of engaging in unapproved business activities among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Kennedy was employed by his prior employer Woodbury Financial Services, Inc. (Woodbury Financial) prior to being investigated concerning his activities. If you have been a victim of Kennedy’s alleged misconduct our firm may be able to assist you in recovering funds.

In April 2020, FINRA brought a regulatory action and fount that Kennedy consented to sanctions and findings that he failed to provide documents and information requested by FINRA in connection with its investigation into a tip received. FINRA found that Kennedy provided partial but incomplete responses to FINRA’s requests and then subsequently ceased cooperating with the investigation. FINRA also determined that Kennedy’s former firm filed a Form U5 disclosing his termination and explaining that he was permitted to resign for engaging in an unapproved outside business activity involving a financial transaction with a couple of clients.

Kennedy’s disclosed outside business disclosures include being an insurance agent, Kennedy Investment Consultants LLC, and Hoy Road Properties. It is unclear whether or not the allegations involve any of these disclosed entities.

Daniel Flores Discharged Over Selling Unapproved Financial Product

September 9, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Daniel Flores (Flores), formerly associated with Woodbury Financial Services, Inc. (Woodbury Financial) in Appleton, Wisconsin was terminated by his firm concerning allegations that Flores engaged in an unapproved financial transaction with a client. Thereafter in May 2018 a customer filed a complaint alleging that that Flores engaged in unauthorized and excessive trading. The claim is currently pending. In July 2018 FINRA sought documents and information from Flores which he refused to provide. Accordingly, Flores was barred from the industry for failing to respond to FINRA’s requests.

At this time, the claims against Flores are unclear as to the exact nature and extent of the activity. Flores has outside business disclosures including New Heights Insurance Services and Fox River Valley.

Broker Robert Hoffmann Sanctioned Over Failure to Disclose Financial Difficulties

December 7, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Robert Hoffmann (Hoffmann), formerly associated with Thurston, Springer, Miller, Herd & Titak, Inc. (Thurston, Springer), has been subject to two customer complaints, one regulatory action, and one tax lien. According to records kept by The Financial Industry Regulatory Authority (FINRA), in January 2017 a customer filed a complaint alleging that Hoffmann made unsuitable investments, unauthorized trading, and churning among other claims. The claim seeks $3,200,000 in damages and is currently pending.

In September 2017, FINRA sanctioned Hoffmann stated that Hoffmann consented to the sanctions and to the entry of findings that he willfully failed to amend his Form U4 to timely disclose an unsatisfied Internal Revenue Service (IRS) tax lien filed against him. In addition, there is one tax lien disclosed on Hoffmann’s report for $106,991 filed in December 2014. Tax liens and judgements are material information for an investor to consider for several reasons. A broker with large unpaid debts may be tempted to recommend high commission products and services to satisfy their personal debts. In addition, a broker’s inability to manage their own finances is material in a customer’s decision to retain the advisor’s services.

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.

Broker Dan Droeg Subject to Unsuitability Complaints

August 2, 2017 | by Staff Attorney

Our law firm, Gana Weinstein LLP, is investigating claims made by Financial Industry Regulatory Authority (FINRA) against broker Dan Droeg (Droeg). According to BrokerCheck, Droeg’s record contains two customer complaints filed against him regarding alleged unsuitability.

The most recent customer complaint was filed against Droeg in November 2016. During the period of July 2012 to November 2016, Droeg allegedly recommended over-concentrated and illiquid investments in variable annuities for numerous profit sharing plans. The client also claimed that the broker allegedly incorrectly reported the values and performances of the investments. The alleged damages are worth $250,067. The case is currently pending.

During January 2005, another customer complaint was filed against Droeg concerned alleged unsuitability. The broker allegedly recommended variable annuities, which were highly unsuitable for an elderly customer with low risk tolerance. The alleged damages were worth $6,000 and the case settled for $18,043.79.

Broker Elaine Marie Zito Subject to Multiple Customer Complaints

July 17, 2017 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints concerning alleged misrepresentation and an employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Elaine Marie Zito (Zito). According to BrokerCheck records, Zito has been in the securities industry since 1997 and is currently working for Newbridge Securities Corporation (Newbridge) in Scottsdale, Arizona.

The most recent customer complaint against Zito was filed in April 2017 alleging that she misrepresented the client’s account regarding the purchase of a variable annuity back in 2006. Zito was employed at Woodbury Financial Services, Inc during the alleged misrepresentation. The case is currently pending.

During November 2016, Zito was discharged from Questar Capital Corporation (Questar) for allegedly violating the firm’s rules and regulations in relation to unauthorized use of discretion of mutual funds.

Broker Barry Rumpel Terminated By Woodbury Financial Over Private Transaction

January 31, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Barry Rumpel (Rumpel) currently associated with IFS Securities alleging unsuitable investments among other claims. The majority of the complaints involve variable universal life insurance policies (VULs). According to brokercheck records Rumpel has been subject to four customer complaints, one employment separation for cause, and one criminal matter.

In May 2016 Woodbury Financial Services, Inc. (Woodbury Financial) alleged that Rumpel engaged in a personal financial transaction with a client and terminated Rumpel. The most recent customer complaint was filed in October 2016 and alleged that a VUL sold to the customer and his wife were not suitable and that wrong net worth was entered in application in 2011 and 2012. The claim was dismissed.

VULs are often unsuitable life insurance products for many investors due to their high costs compared to traditional life insurance policies. VULs can also lapse if policy premiums are not paid resulting in a complete loss of the investors capital without any life insurance benefit.

Customers File Complaints Against Woodbury Financial Broker Daniel Dunn

May 19, 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 Daniel Dunn (Dunn). According to BrokerCheck records Dunn has been subject to at least five customer complaints. The customer complaints against Dunn allege securities law violations that including unsuitable investments, and misrepresentations among other claims. Many of the complaints involve direct participation products (DPPs) and private placements including ICON Leasing, variable annuities, and tenant-in-common trusts (TICs).

Our firm has represented many clients in these types of products. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like variable annuities, ICON, and other DPPs are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

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.

Atlas Energy Oil and Gas Investments: Risks Investors Should Know Part II

December 17, 2014 | by Staff Attorney

This article follows up on a recent article reported in Reuters concerning Atlas Energy LP’s private placement partnerships in oil and gas. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal allows investors to participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of oil into viable prospects. In addition, Atlas promises to invest up to $145 million of its own capital alongside investors.

In the last article we explored how the house seems more likely to win on these deals over investors. But beyond the inherent risks with speculating on oil and gas and unknown oil deposits most investors don’t realize the deals are often unfair to investors. In a normal speculative investment as the investment risk goes up the investor demands greater rewards to compensate for the additional risk. However, with oil and gas private placements the risks are sky high and the rewards simply don’t match up.

In order to counter this criticism, issuers say that the tax benefits of their deals where the investor can write off more than 90 percent of their initial outlay the year they make it helps defray the risk and increase the value proposition. First, the same tax advantage claims are often nominal compared to the principal risk of loss of the investment as seen by Puerto Rican investors in the UBS Bond Funds who have now seen their investments decline by 50% or more in some cases. Second, often times brokers sell oil and gas investments indiscriminately to the young and old who have lower incomes and cannot take advantage of the tax benefits.

Atlas Energy Oil and Gas Investments: A Risky Proposition Part I

December 16, 2014 | by Staff Attorney

As recently reported in Reuters, Atlas Energy LP has marketed itself to investors as a way to get into the U.S. energy boom. By contributing at least $25,000 in a private placement partnership that will drill for oil and gas in states such as Texas, Ohio, Oklahoma and Pennsylvania and share in revenues generated from the wells. Atlas Resources LLC, a subsidiary the energy group, has filed documents with the SEC for Atlas Resources Series 34-2014 LP stating that it seeks to raise as much as $300 million by Dec. 31 of 2014. The deal sounds good when pitched: participate in investments where advances in drilling technology have turned previously inaccessible reservoirs of fossil fuels into potentially viable prospects and to boot Atlas will invest up to $145 million of its own capital alongside investors. Through this method and similar deals, oil and gas projects have issued nearly 4,000 private placements since 2008 seeking to raise as much as $122 billion.

But before you take the plunge a review of the Atlas’s offering memorandum reveals some red flags and given Atlas’ past failure rate investors should think twice. First, up to $45 million of the money raised will be paid to Atlas affiliate Anthem Securities that will then be turned over to as commissions to broker-dealers who pitch the deal to investors. Up to $39 million more will be used to buy drilling leases from another affiliate. Think investors will get a fair price on the leases when Atlas controls both sides of the deal? More conflicts ahead as Atlas affiliated suppliers may also get up to $53 million for buying drilling and transport equipment. Next, an additional $8 million of Atlas’s investment is a 15 percent markup on estimated equipment costs. Finally, Atlas will pay itself nearly $52 million in various other fees and markups.

In sum, at least 40% of Atlas’s $145 million investment alongside mom and pop goes right back to the company. In addition, Atlas’ profits don’t stop there, when the venture starts generating revenue Atlas is entitled to 33% before accounting for those payments and markups. In the end, not much of a risk at all for Atlas.