Securities Lawyers Blog
At least one action has been initiated against Jason T. Knapp (Knapp) accusing the broker of running a Ponzi scheme. Knapp is a former broker of Dawson James Securities, Inc. (Dawson James) and operated under the company name Steeple Chase Group, LLC (Steeple Chase). Steeple Chase holds itself out as a real estate, financial lending, consulting, and investment related company.
From 2006 through September 2008 Knapp was a registered representative of Chicago Investment Group, LLC. From September 2008 through June 2012 Knapp was registered with Dawson James. Dawson James terminated Knapp citing that Knapp had falsified documents and solicited clients to purchase investments, presumably in Steeple Chase, that were not approved by the firm. In addition, an allegation was made by another client that Knapp engaged in an unauthorized transaction that Knapp could not provide the firm with a satisfactory explanation for.
In total two customer actions have been initiated against Knapp and Dawson James Securities for failing to supervise Knapp’s business activities. In March 2013, FINRA barred Knapp from the securities industry when he failed to respond to the agency’s request for additional information concerning the customer complaints and the circumstances of his termination.
The accusations made against Knapp are consistent with a “selling away” securities violation. Selling away occurs when a securities broker solicits securities that are not approved by the broker’s affiliated firm. Selling away is prohibited under FINRA Rule 3040, as well as other securities laws. Common securities products solicited in selling away schemes are private placements and promissory notes. Because selling away securities activity is not properly supervised investor fraud is commonly occurs.
In the typical selling away scenario the investor is not aware that the broker is acting outside of the regular securities channels. The investor is may be provided with false account statements or confirmations that contain values that the broker can manipulate and control. In other cases, the broker will have the investor open a self-directed account that helps the broker cloak the illegitimacy of the investment by having a third-party prepare statements and distribute income payments. However, these account statements are also misleading to investors because the broker has complete discretion to stop or alter payments and values.
The attorneys at Gana Weinstein LLP are experienced in investigating claims of financial fraud. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.