Firm News

Gana LLP Files Complaint on Behalf of Investor Alleging Breach of Fiduciary Duty in the Sale of Merrill Lynch MLCXX6LSER Commodity Index Fund

September 18, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP have brought a claim on behalf of an investor who suffered substantial losses due to investment recommendations made by his Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) advisor, Craig Kinard (Kinard) a proprietary Merrill Lynch fund called the MLCXX6LSER Index (MLC Index). The fund is also referred to as “The Merrill Lynch Commodity Index eXtra—(Excluding Precious Metals) Excess Return Index.” The MLC Index was run at Merrill Lynch by Guido Graff (Graff), Director of Ultra Structured Solutions at Merrill Lynch.

The complaint alleged that the MLC Index is one of the most complex investment products that could be sold to a retail investor and consequently is suitable for very few investors. The strategy involves extreme leverage, commodities, derivatives, options, and swaps risk. Any investor without significant prior experience in all of these categories will not be able to understand the risks or likely performance of the investment under different market conditions. Indeed, in this case the risks and expected performance of the MLC Index proved to be too great a challenge even for the fund managers to understand. In addition, to these problems the MLC Index was offered by Merrill Lynch to clients subject to enormous costs and fees.

The MLC Index is an absolute return strategy investment fund in the long-short commodity arbitrate space. Absolute return investing seeks to produce positive returns over time regardless market conditions. Even when markets are falling, an absolute return fund is advertised to still have the potential to make money. Arbitrage strategies attempt to benefit from an assumed correlation between different market instruments or different markets.

Gana LLP Wins Arbitration Award On Behalf of Client Against Centaurus Financial

June 11, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are pleased to announce an award on behalf of their client against Centaurus Financial, Inc. (Centaurus) in the amount of $150,000 plus costs. The complaint was filed The Financial Industry Regulatory Authority (FINRA) and involved multiple brokerage firms that hired advisor Ahmad Hashemian.

The Claimant alleged that Hashemian invested over $2,000,000 in exclusively high cost products and 50% of those investments were in alternative investments such as private placements, oil and gas partnerships, and non-traded real estate investment trusts (REITs). The other 50% was invested in variable and equity-indexed annuities. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. Brokers, enticed by the high commissions, often times misled their clients into investing in these products.

In this case the panel found that “the investments Hashemian recommended while at Centaurus were not suitable and in Margaret Polito’s best interests. Margaret Polito also provided sufficient evidence to meet her burden of proof to support her allegations in her Statement of Claim that the actions by Hashemian, for which Centaurus is responsible, constitute fraudulent and negligently made material misrepresentations and omitted material information in the sale of the investments to Margaret Polito.” Award Can Be Found Here.

Gana LLP Files Complaint on Behalf of Investor Alleging Breach of Fiduciary Duty in the Sale of MLPs Against Wells Fargo

March 13, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP have brought a claim on behalf of an investor who suffered a loss of nearly all of their assets due to investments made by their Wells Fargo Advisors, LLC (Wells Fargo) advisor, Andrew Kevlahan (Kevlahan), almost exclusively in master limited partnerships (MLPs), Business Development Corporations (BDC), commodities linked investments, and other private equity high yield funds. The investor is 79 years old and retired with her husband.

The complaint alleges that on or about May 2011, the couple had become completely retired and had a securities backed loan with Wells Fargo secured by their investment account. The complaint alleged that due to these major lifestyle and financial circumstance changes, which were disclosed and known to Kevlahan, the couple’s investment objectives, income needs, and risk tolerance had changed requiring suitable investments that would diversify and protect the couple’s savings.

Instead, the complaint alleges that Kevlahan failed to properly advise the investor and breached his fiduciary duty to his client by continually increasing the concentration of the account in risky high yielding investments. By May 2011, the complaint alleges that concentration of high yield investments and MLPs grew to more than 50% of all of the investor’s assets. Despite the change in life circumstances, the complaint alleges that Kevlahan used his discretionary authority in order to continually increase the amount of risk in the account and by August 2014, the investor had a concentration of 62% of the couple’s assets in MLPs and 18% in other high yield investments – a total of 80% of the couple’s assets were exposed to extreme risk.

Gana LLP Files Claim On Behalf of Customer Against Legend Securities for Churning and Unauthorized Trading

November 11, 2014 | by Staff Attorney

Gana Weinstein LLP recently filed a claim against Legend Securities, Inc. (Legend) on behalf of a customer with the Financial Industry Regulatory Authority (“FINRA”) alleging that Legend and Legend broker, Michael Guilfoyle, recommended unsuitable investments while churning his account and executing unauthorized trades in violation of FINRA rules and other applicable law.

In 2013, the customer received a cold call from Guilfoyle soliciting his business. Guilfoyle assured the client that he would only invest according to his investment objectives. In reliance upon Guilfoyle’s assurances, the client transferred his money to Legend. In early 2014, Guilfoyle and Legend also coaxed the client into investing his wife’s money, which she inherited from her parents. Soon after the client transferred the funds to Legend, Guilfoyle allegedly leveraged over concentrated the portfolio and began to churning the account. “Churning” is the Wall St. vernacular when there is unnecessarily high or excessive trading activity in an investor’s account, simply for the purpose of generating commissions for the broker. This is a violation of Securities and Exchange Commission (“SEC”) and FINRA rules.

More egregiously, Guilfoyle failed to contact the client concerning the trades being made in his account and acted without any prior authorization. Guilfoyle allegedly day-traded different stock positions earning fees for himself while providing no benefit to the client. For example, Guilfoyle concentrated the client’s account in speculative small cap stocks, such as Voxeljet AG (Voxeljet) that had only recently gone public. At the time, analysts warned that Voxeljet was a highly volatile stock, not suited for investors looking for long-term growth. Guilfoyle’s misconduct ultimately cost client nearly his and wife’s entire account value.

Adam Gana Discusses New Rules Governing Civil Litigation in New York

October 10, 2014 | by Staff Attorney

The Daily Bulletin recently published an article about new rules governing civil litigation in New York. According to Charisma Troiano, the author of the article in 2013 the Office of Court Administration issued a letter supporting proposed changes to the New York Civil Procedure Legal Rules Section 2106. The new rule allows affirmations obtained outside of the United States, Puerto Rico and the Virgin Islands to hold the same evidentiary weight as a sworn affidavit within the United States. Adam Gana supported the new rule.

The article can be found here.

Adam Gana is Quoted in OnWallStreet.com

September 17, 2014 | by Staff Attorney

Adam Gana, managing partner of Gana Weinstein LLP was quoted in an article by Suleman Din entitled “Hammered by FINRA in Dispute with Morgan Stanely, Advisor Pays $200k.” The article discusses an advisor who took on Morgan Stanley in a contract dispute who lost and was hit with a judgment of approximately $200,000.

Scott Woller of Gana LLP discusses his Successful Career with Law Crossing

September 9, 2014 | by Staff Attorney

Congratulations to Scott Woller who was recently featured on LawCrossing.com. LawCrossing, one of the largest legal career advice websites, contacted Scott and asked to profile him on their website. “We are very proud of Scott and all of our attorneys’ many accomplishments,” said Adam Gana, the firm’s managing partner, “Scott’s career is impressive to say the least.” Scott explained in the article (which can be read in its entirety here) that his role with Gana Weinstein LLP and his role with Airfasttickets, Inc. have placed him in a position to both do corporate work and litigation. Scott has had a storied career to date having clerked at both the trial and appellate level in the federal courts and having worked at some of the most prestigious law firms in the country. Scott graduated number 1 in his class at New York Law School and continues to push his careers to new heights. Congratulations Scott!

Adam Gana of Gana LLP Receives the AVVO 2014 Cleints’ Choice Award

August 19, 2014 | by Staff Attorney

Adam Gana of Gana Weinstein LLP received the Avvo’s Clients’ Choice Award for 2014. “This is a tremendous honor,” said Mr. Gana, “Clients are the life blood of our business and we work tirelessly to make sure they are happy.” Mr. Gana received the award on August 19, 2014.

Gana LLP Represents Seven Former Clients of Sean Sheridan Against JP Turner (Part II)

August 18, 2014 | by Staff Attorney

Continuing our prior post, the law office of Gana Weinstein LLP recently filed securities arbitration case on behalf of a group of seven investors against J.P. Turner Company, L.L.C. (JP Turner), Ridgeway & Conger, Inc. (Ridgeway), and Newbridge Securities, Corp. (Newbridge) concerning allegations that Sean Sheridan (Sheridan) churned claimants’ accounts through the use of excessive and unreasonable mutual fund switches, among other claims.

In addition to specifically finding that Sheridan committed fraud and made unsuitable recommendations in Claimants accounts, FINRA also found that JP Turner general sales practice with regard to non-traditional ETFs and mutual funds was inappropriate. On December 4, 2013, FINRA released a Letter of Acceptance, Waiver, and Consent (AWC) concerning JP Turner’s non-traditional ETFs sales practices and excessive mutual fund switches and fined the firm $707,559.53. FINRA v. J.P. Turner & Company, L.L.C., AWC No. 2011026098501 (FINRA, January 2013). According to FINRA’s investigation, JP Turner failed to establish and maintain supervisory systems related to leveraged and inverse ETF sales and mutual fund purchases.

In another churning related action, on November 8, 2013, the SEC issued a similar order against JP Turner finding that Michael Bresner (Bresner), as head of supervision, failed to properly supervise firm employees. The SEC Order found that JP Turner employed an Account Activity Review System (AARS) to monitor customer accounts for signs of churning. The SEC found that the average number of accounts flagged by the AARS system for churning was shockingly high for each quarter in 2008-2009 and was between 300 and 325 accounts and included more than 100 JP Turner registered representatives. In sum, the SEC discovered that no one at JP Turner was willing to take responsibility in determining whether churning took place in a client’s account – a problem that directly affected the claimants in this case.

Gana LLP Files Complaint on Behalf of Seven Former Clients of Sean Sheridan Against JP Turner

August 15, 2014 | by Staff Attorney

The law office of Gana Weinstein LLP has recently filed securities arbitration case on behalf of a group of seven investors against J.P. Turner Company, L.L.C. (JP Turner), Ridgeway & Conger, Inc. (Ridgeway), and Newbridge Securities, Corp. (Newbridge) concerning allegations that the firms failed to supervise and prevent Sean Francis Sheridan (Sheridan) from churning claimants’ accounts through the use of excessive and unreasonable mutual fund switches and generally making unsuitable recommendations to the clients. Both FINRA and the SEC have brought actions against JP Turner and the firm’s brokers on numerous and repeated occasions concerning the firm’s failure to protect its clients from the type of unscrupulous sales practices alleged in the complaint

As discovered by FINRA, from at least January 2007, through December 2009, Sheridan recommended approximately 205 unsuitable mutual fund switch transactions in the accounts of eight customers, including some of the Claimants in the filed case. See Department of Enforcement v. Sean Francis Sheridan, Disciplinary Proceeding No. 2009019209204, (FINRA, Feb. 12, 2013) (Sheridan Action). FINRA found that Sheridan recommended the unsuitable mutual fund switches in customers’ accounts and as a result of Sheridan’s activities in claimants’ and other customers’ accounts, FINRA barred Sheridan from the financial industry.

FINRA found that Sheridan only recommended Class A mutual fund shares that require customers to pay sales charges with each new purchase when Sheridan intended to effect the switches on a short-term basis. FINRA found that the average holding period for the mutual funds Sheridan sold was just four to five months. FINRA found that Sheridan exclusively recommended Class A mutual fund shares that charged front-end sales loads of 4-5% with each new purchase, an enormous cost. FINRA also found that Sheridan would randomly switch customers between fund categories such as Growth, Natural Resources, Gold, Emerging Markets, Science and Technology without a reasonable basis for doing so.