Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating an alleged Ponzi scheme run by financial advisor Patricia S. Miller (Miller) of McMurray, Pennsylvania. According to allegations made against Miller by investors, she convinced customers to invest in purportedly safe mix of securities including corporate and municipal bonds. However, it is becoming increasingly clear that these investments may not exist at all.
Miller was a registered broker with several brokerage firms including Janney Montgomery Scott LLC and Investors Capital Corp. (Investors Capital). According to Miller’s BrokerCheck, on May 19, 2014, Investors Capital received a complaint alleging that an investor provided Miller with $80,000 that had been misappropriated by Miller. Two days later Investors Capital discharged Miller alleging that the broker has been accused of misappropriating funds, borrowing money from customers, fraudulent investment activity, and creating false documents.
According to investor complaints, Miller may have used various entities, including KS Investments, KS Investment Partnership, K Squared Development, K Squared Investments, Buck Harbor Investments, Buck Harbor Investment Club, and Buck Harbor Investment Partnership in order to carry out her scheme. Investors in these vehicles may have received false statements listing securities holdings and values of securities that may not truly exist. For instance some investors may have been misled into believing that they owned bonds issued by companies like General Electric, McDonald’s Corporation, Ford Motor Company, and other municipal bonds.
The allegations against Miller are consistent with a “selling away” securities violation. Selling away securities broker solicits securities that were not approved by the broker’s affiliated firm. Under the FINRA rules, a brokerage firm owes a duty to properly monitor and supervise its employees. In fact, each brokerage firm is required to establish and maintain a system to supervise the activities of each registered representative that is reasonably designed to achieve compliance with the securities laws. Selling away often occurs when brokerage firms either fail to put in place a reasonable supervisory system or fail to implement their supervisory system’s requirements. In selling away cases, investors are often unaware that the advisors activity is not authorized and potentially illegal. In addition, the investor does not learn that the broker’s activities were wrongful until the investment scheme is publicized or the broker simply shuts down shop and stops returning client calls.
Investors who have suffered losses through Miller’s alleged Ponzi scheme may be able recover their losses through arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away, Ponzi schemes, and the failure of brokerage firms to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.