Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that Broker Stephen Polak (Polak) has been accused by investors of engaging in fraudulent misappropriation of their funds. According to records kept by The Financial Industry Regulatory Authority (FINRA), it appears that Polak was employed by Avantax Investment Services, Inc. at the time of the activity. If you have been a victim of Polak’s alleged misconduct our firm may be able to assist you in recovering funds.
FINRA BrokerCheck shows a final customer complaint on July 31, 2024.
Without admitting or denying the findings, Polak consented to the sanctions and to the entry of findings that he failed to provide prior written notice to his member firm of his role as an officer and director of an OBA. The findings stated that Polak served as a board member of a corporation that grew and sold hemp related products. Polak had signatory authority over the corporation’s bank accounts, and primary responsibility for its accounting and bookkeeping, including maintaining the corporation’s ledger of transactions for its unregistered offering, and receiving payments from shareholders. Polak received annual compliance trainings about regulatory requirements relating to OBAs and affirmed in annual compliance certifications that he understood his obligation to comply with regulatory requirements and his firm’s WSPs, including those about outside business activities. Polak’s firm learned about his OBA with the corporation from his state Department of Financial Regulation and questioned him about it. Polak orally acknowledged the activity but did not provide written notice to his firm until almost a year later. The findings also stated that Polak participated in private securities transactions without disclosing or seeking his firm’s written approval to participate as required by its WSPs. The corporation issued 3.25 million shares of its unregistered common stock to Polak to compensate him for his work as an Officer and Director of the corporation.
We have a strong track record of advocating for victims of fraud when advisors obtain loans from clients or engage in securities sales via OBAs. The sale of unauthorized investment products, fraudulent schemes that disguise misused funds, and other deceptive practices are collectively known in the industry as “selling away,” a serious breach of securities laws. In the industry, “selling away” describes a financial advisor soliciting investments in companies, promissory notes, or other securities that lack prior approval from their affiliated brokerage firm. In some cases, these investments are legitimate, but more often than not, they result in Ponzi schemes or financial advisors converting funds for personal use.
However, federal securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. To adequately supervise their brokers, firms must implement systems that track advisors’ activities and communications with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Polak has been in the securities industry for more than 9 years. Polak has been registered as a Broker with Avantax Investment Services, Inc. since 2014.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.