Suitability

Broker Investigation: Madison Avenue Securities’ Noel Vincent

November 30, 2015 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are interested in speaking with clients of Noel Vincent (Vincent). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Vincent has been the subject of at least 9 customer complaints, one regulatory event, and three judgment or liens. The customer complaints against Vincent allege securities law violations that claim unsuitable investments, misrepresentations, and fraud among other claims.

The most recent complaint was filed in August 2015, and alleged $50,000 in damages due to claims pertaining to investments purchased from 2005 through 2007 that were unsuitable based on the client’s risk tolerance, investment objectives, investment knowledge, time horizon, and liquidity needs.

In March 2015, a customer filed a complaint alleging an unsuitable series of investments between 2006 through 2009 resulting in damages of $413,000. In another case filed in October 2013, the client alleged unsuitable investments were made in 2007 resulting in $190,000 in damages. The case settled for $26,331. Also in April 2013, another customer complained that Vincent sold unregistered securities and committed fraud causing $638,000 in damages.

Financial Advisor Investigation: Ameriprise Financial Services’ Advisor Detlef Schoeppler

November 29, 2015 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are interested in speaking with clients of Detlef Schoeppler (Schoeppler). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Schoeppler has been the subject of at least 10 customer complaints, one criminal matter, and three judgments or liens. The customer complaints against Schoeppler allege securities law violations that claim unsuitable investments in various investment products including REITs, variable annuities, and mutual funds. The most recent complaint was filed in August 2012, and alleged $77,569 in damages due to claims that the broker recommended a variable annuity purchase in June 2011 that was misrepresented to the customer. In addition, the customer alleged that the fees were not fully disclosed and that there were trades made without the client’s authorization.

In addition, in July 2014, two tax liens were imposed on Schoeppler. One lien is for $184,519 and the other is for $182,691. A broker with large liens are an important consideration for investors to consider when dealing with a financial advisor. An advisor may be conflicted to offer high commission investments to customers in order to satisfy liens and debts that may not be in the client’s best interests.

Schoeppler entered the securities industry in 1996. Since June 1996, Schoeppler has been associated with Ameriprise Financial Services, Inc. out of the firm’s Tampa, Florida branch office location.

Gana LLP Investigates Investor Losses Tied to Oil and Commodities Linked ETNs

November 25, 2015 | by Staff Attorney

The law offices of Gana Weinstein LLP are announcing their investigation into potential securities claims against brokerage firms over sales practices related to the recommendation of exchange traded notes (ETNs) and other structured notes linked to oil & gas and commodities. These products are issued by UBS (NYSE:UBS) under the name ETRACS.

List of Commodity and Oil & Gas releated ETNs

Symbol Fund Name

Broker Investigation: Oppenheimer Advisor Luigi Mancusi

November 24, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Luigi Mancusi (Mancusi) has been the subject of at least 4 customer complaints. The customer complaints against Mancusi allege securities law violations that claim unauthorized trading, unsuitable investments, misrepresentations, failure to supervise, and breach of fiduciary duty among other claims. The most recent complaint was filed in July 2015, and alleged $250,000 in losses due to unauthorized trading from November 2012 through November 2014. Another complaint was filed in July 2013 where the client alleged fraud and unsuitable investments given the client’s age, risk tolerance, and income need. The claimant alleged $322,000 in damages.

Mancusi entered the securities industry in 1992. From November 2002, until October 2012, Mancusi was associated with Wayne Hummer Investments L.L.C. From September 2012, onward Mancusi has been associated with Oppenheimer & Co. Inc. Mancusi is also associated with David A. Noyes & Company out of the firm’s Lake Forrest, Illinois branch office location.

All advisers have a fundamental responsibility to deal fairly with investors including 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 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.

Broker Investigation: Financial Advisor Mark Hughes

November 23, 2015 | by Staff Attorney

The attorneys at Gana Weinstein LLP are interested in speaking with investors of broker Mark Hughes (Hughes) According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Hughes has been the subject of at least 7 customer complaints, and 1 regulatory action over the course of his career. The customer complaints against Hughes allege securities law violations that claim excessive trading, unsuitable investments, and unauthorized trading among other claims. The most recent complaint was filed in November 2011, and alleged $500,000 in losses due to unsuitable variable annuities.

The most recent regulatory action was taken by the state of Virginia in 2010, when the state alleged that Hughes violated the states laws by offering and selling leveraged exchanged traded funds (Non-Traditional ETFs) to two Virginia residents when the investment was not suitable for them given their investment objectives, financial situation, risk tolerance, experience, and investment needs. The allegations were settled with the state and resulted in sanctions of $620,000 and the imposition of heightened supervision.

Hughes entered the securities industry in 1993. From June 2004, until November 2007, Hughes was associated with Suntrust Investment Services Inc. From October 2007, until November 2014, Hughes was associated with UBS Financial Services Inc. Presently, Hughes is associated with Oppenheimer & Co. Inc. out of the firm’s Washington, DC branch office location.

Broker Investigation: Laidlaw & Company Advisor Joseph Fedorko

November 19, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Joseph Fedorko (Fedorko) has been the subject of an astonishing 16 customer complaints. The customer complaints against Fedorko allege securities law violations that claim churning and excessive trading, unsuitable investments, unauthorized trading, fraud, misrepresentations, and breach of fiduciary duty among other claims. The most recent complaint was filed in March 2014, and alleged $292,771 in losses due to an unsuitable investment strategy from 2011 until 2013. The case settled for $120,000. Another complaint filed in November 2012, alleged $400,000 in damages stemming from trading that began in 2011. Other complaints against Fedorko when combined allege millions in investor losses.

Fedorko entered the securities industry in 1989. From January 2002, until May 2009, Fedorko was associated with with Oppenheimer & Co. Inc. Presently, Fedorko is associated with Laidlaw & Company (UK) Ltd. out of the firm’s Stamford, Connecticut branch office location.

All advisers have a fundamental responsibility to deal fairly with investors including 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 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.

Gana LLP Investigates Investor Losses In Oil-Linked Structured Notes

November 18, 2015 | by Staff Attorney

The law offices of Gana Weinstein LLP are announcing their investigation into potential securities claims against brokerage firms over sales practices related to the recommendation of structured notes linked to oil & gas. These structured products are issued by Barclays (NYSE:BCS), Morgan Stanley (NYSE:MS), Deutsche Bank (NYSE:DB), UBS (NYSE:UBS), Citigroup (NYSE:C), Bank of America Merrill Lynch (NYSE:BAC), JPMorgan Chase (NYSE:JPM), Credit Suisse (NYSE:CS), and BNP Paribas among others firms. The structured notes are issued under the names Principal Protected Notes, Principal Protected Booster Notes, Buffered Bullish Notes, Accelerated Return Notes, Strategic Return Notes, Capped Leverage Return Notes, Target Term Securities, Market Linked Notes, E-Tracs, Return Optimization Notes, Auto-Callable Securities, Performance Leveraged Upside Securities (PLUS), and Equity Linked Securities (ELKs).

Brokers often pitch structured products as providing “downside protection” against losses to a related index while allowing modest up side gain potential. However, today investors are waking up to the fact that structured products linked to the oil market are offering no protection. According to Bloomberg, retail structured notes meant to protect against a drop in crude failed to do so. Of the $437.1 million in oil related structured products that have matured this year, 44 percent, or $194.3 million of principal has been lost. The largest deal in the oil space is a $104.6 million Barclays issuance in April 2014 that has lost 42 percent of its value.

Indeed, Bloomberg found that all but three of the 39 notes examined protected against a certain percentage of losses, typically in the range of 10 percent to 20 percent. These notes quickly breached these loss limits as crude oil prices have declined more than 60 percent. Once the securities breached the “soft barriers” investors became exposed to the full loss at maturity and the value of the notes became wholly dependent on the change in oil prices.

Spruce Alpha Hedge Fund Investors Suffer Massive Losses

November 17, 2015 | by Staff Attorney

According to the New York Times, the Spruce Alpha hedge fund was pitched to investors as providing large returns in periods of market turbulence through the implementation of a complex trading strategy. According to the Spruce Alpha fund, during the 2008 financial crisis investors should have had made gains of more than 600 percent. But what Wall Street pitches in theory almost always goes wrong in practice. Thus when markets turned volatile in August 2015, Spruce Alpha, which had only just started up in April 2014, did not turn the volatility into gains for investors. Instead, the fund turned in one of the worst performances losing 48 percent of their money.

The fund’s holdings at the time were under $100 million and was managed by the $1.5 billion Spruce Investment Advisors. Spruce Investment specializes in managing money for the wealthy and institutional investors. According to the New York Times, half of Spruce Investment’s assets under management come from three family offices, a corporation, and a pension plan. The Spruce Alpha fund was the asset management firm’s first direct hedge fund trading fund that was intended to raise a $500 million portfolio.

After the collapse the Spruce Alpha moved its positions into cash and told investors that they can redeem what remains of their money. The Spruce Alpha tale is only the latest example of how managers market hedge funds and complex investment products to investors that often turn out to be too good to be true. Using back-tested results in hedge fund marketing materials are fantasy recreations with all the benefits of hindsight knowledge that are then advertised as likely future performance. However, back-tested results are derived assuming optimum trading conditions, not what the fund will encounter in real life.

Coal Investment Risk: Is this Industry Going Out of Business?

November 16, 2015 | by Staff Attorney

Coal related companies around the world are being pushed to the brink of bankruptcy due to the falling prices of commodities. For instance, the world’s third largest publicly traded coal company, Peabody Energy Corporation (Peabody) (Stock Symbol: BTU), has seen its stock price plummet from over $1,000 per share in 2011 to under $14 today. In addition, the largest U.S. coal producer, Alpha Natural Resources (Stock Symbol: ANRZ), filed Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond. Commenters are speculating that unless there are restructurings for Arch Coal (Stock Symbol: ACI) and Peabody they could be the next two coal producers to file for bankruptcy protection.

Other bankruptcy filings this year include Walter Energy (Stock Symbol: WLTGQ), JW Resources, Patriot Coal’s second bankruptcy filing, Xinergy, and James River Coal Co. Berau Capital Resources submitted a Chapter 15 petition on July 10, and Glencore (Stock Symbol: GLEN) has undergone major restructuring amidst the collapse of its stock price.

According to Bloomberg, more than three dozen coal operations have filed bankruptcy in just over three years. Due to a combination of factors the combined market value of U.S. coal company shares shrank to $12 billion in late July 2015 from $78 billion in 2011.

Broker Investigation: Ausdal Financial Broker Randy Birkinbine

November 5, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Randy Birkinbine (Birkinbine) has been the subject of at least 2 customer complaints, 4 judgements or liens, and 1 employment separation for cause. Customers have filed complaints against Birkinbine alleging securities law violations including claims of unsuitable investments among other claims. In addition, Birkinbine has six tax liens. The most recent tax lien dated December 23, 2013, is for $43,725. Previous tax liens in 2009, 2010, and May 2013 are for $51,670, $85,246, and $131,595 respectively. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts. Birkinbine was also terminated by Invest Financial Corporation (Invest) for cause stating that the firm alleged that Birkinbine violated firm policy by having multiple new account documents incomplete.

Birkinbine entered the securities industry in 1990. From June 2007, until June 2011, Birkinbine was registered with Workman Securities Corporation. From June 2011 onward Birkinbine has been associated with Ausdal Financial Partners, Inc. out of the firm’s Woodbury, Minnesota office location.

All advisers have a fundamental responsibility to deal fairly with investors including 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 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.