Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisors Gurpreet Chandhoke (Chandhoke) and Stephen Shea (Shea) are subject to a complaint filed by The Financial Industry Regulatory Authority (FINRA) concerning their actions selling VII Peaks Capital to investors. The two representatives were registered with the same brokerage firms at relatively the same time.
FINRA alleged that over the course of more than three years, between March 2014 and August 2017, Chandhoke and Shea consistently failed to meet their obligations to disclose private securities transactions and other outside business activities (OBAs) to the FINRA member firms with which they were associated. FINRA claims that Chandhoke separately engaged in unethical business-related misconduct by structuring deposits of cash into multiple bank accounts to evade federal reporting requirements and making false statements to a member firm to obtain a line of credit.
In total, between March 2014 and March 2017, FINRA alleged that Chandhoke and Shea participated in private securities transactions totaling $9,902,425 without providing written notice to their employer member firms. FINRA alleged that in April 2009, Chandhoke and Shea co-founded VII Peaks Capital LLC (VII Peaks Capital), an investment advisory company that is registered with the Securities and Exchange Commission (SEC). FINRA found that in October 2013, Chandhoke and Shea, through VII Peaks Capital, created VII Peaks BDC Investors, LLC (VII Peaks BDC Investors). VII Peaks BDC Investors was alleged by FINRA to be an offering to provide an opportunity for the prior investors in the Co-Optivist Funds to continue to participate in the investments but also to raise funds to offset start-up costs associated with a new managing broker-dealer for the Co-Optivist Funds.
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.
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.
Chandhoke and Shea between September 2012 and September 2014, were associated with Gordian Investments, LLC (Gordian). Between January 2015 and April 2016, Gurpreet Chandhoke were associated with Penserra Securities, LLC (Penserra). Between April 2016 and August 2017, Gurpreet Chandhoke were associated with Arete Wealth Management, LLC (Arete).
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.