Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisor Kerry Hoffman (Hoffman) engaged in undisclosed outside business activities (OBAs) and investment sales that were not approved by his brokerage firm. Hoffman, formerly registered with LPL Financial LLC (LPL Financial) and Union Capital Company (Union Capital) was subject to charges of securities fraud by The Securities and Exchange Commission (SEC) according to records kept by The Financial Industry Regulatory Authority (FINRA). In addition, Hoffman disclosed two customer complaints and three employment termination for cause.
In July 2019 the SEC charged Hoffman along with Thomas Conwell (Conwell) for fraudulently selling securities to retail investors. The SEC’s complaint alleges that from July 2015 through July 2018, Conwell and Hoffman raised over $3.3 million from approximately 46 investors through the sale of unregistered GT Media, Inc. securities. The SEC alleged that Conwell is no stranger to securities fraud and was previously enjoined by the SEC and criminally convicted for stealing money from investors. In the case of GT Media, the SEC alleged that investors received numerous false representations including that two Fortune 500 companies were seeking to acquire GT Media and that GT Media would soon conduct an initial public offering. The SEC claims that Conwell misappropriated $161,500 from investors for his his personal expenses. The SEC also alleged that Hoffman solicited advisory clients to invest in GT Media securities without disclosing his financial conflicts of interest, including his compensation from GT Media and his short-term loans to GT Media that were repaid using investor funds.
Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in receiving loans from clients or selling fraudulent securities sales through OBAs. 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.
When advisors convert or misappropriate funds they often create businesses or other vehicles to serve as a cover for the theft of funds. 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. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction 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.
Hoffman entered the securities industry in 1982. From February 2010 until October 2018 Hoffman was registered with LPL Financial. Finally, from September 2018 until July 2019 Hoffman was associated with Union Capital out of the firm’s Chicago, Illionis office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.