Securities Lawyers Blog

Broker Investigation: VSR Financial Broker Robert Hardcastle

March 31, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Robert Hardcastle (Hardcastle). According to BrokerCheck records Hardcastle is subject to 11 customer complaints. The customer complaints against Hardcastle allege securities law violations that including unsuitable investments, misrepresentations, and breach of fiduciary duty among other claims. The claims appear to largely relate to allegations regarding the inappropriate sale of direct participation products such as limited partnerships, equipment leasing, and non-traded real estate investment trusts (Non-Traded REITs) and also variable annuities.

Our firm has represented many clients in these types of products. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like variable annuities are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

FINRA Bars Broker Wayne Schultz Over Private Securities Transactions

March 31, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Wayne Schultz (Schultz) (FINRA No. 2015044640601) of Branchburg, New Jersey. According to the FINRA action, Schultz consented to a bar from the securities industry after he failed to provide documents and information requested by FINRA during its investigation concerning certain notes that Schultz had issued to an elderly client. The selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

At this time it unclear the nature and scope of Schultz’s outside business activities and private securities transactions. However, according to Schultz’s public records his outside business activities include a law practice. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Schultz was associated with brokerage firm TFS Securities, Inc. from September 2008 until December 2010. From January 2011 until June 2013 Schultz was registered with Sterne Agee Financial Services, Inc. Finally, from June 2013 until February 2016 Schultz was registered with Adirondack Trading Group LLC.

Securities Investigation: Broker Gregg Templeton

March 31, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Gregg Templeton (Templeton). According to BrokerCheck records Templeton is subject to six customer complaints and one employment separation. The recent customer complaints against Templeton allege securities law violations that including misrepresentations, breach of fiduciary duty, and negligent supervision among other claims. The claims appear to largely relate to allegations regarding promissory notes and penny stocks.

The most recent complaint filed in January 2016 alleges that between December 2013 and May 2015 the customer claims to have been defrauded out of $6,750,000 through misrepresentations in what appear to be penny stocks while Templeton was associated with Oppenheimer & Co. Inc. (Oppenheimer) out of the firm’s New York, New York office location. The dispute is currently pending.

Our firm has represented many clients in who have suffered losses due to inappropriate penny stock trading and manipulation claims. Penny stocks and low priced securities are favorite targets for investment fraud because they are easily manipulated and allow schemers to profit from their victims investments.

FINRA Bars Broker Robert Cross Over Private Securities Transactions

March 31, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Robert Cross (Cross) (FINRA No. 2014041637201) of Rome, Georgia. Since August 2006, Cross was registered with Allstate Financial Services, LLC, where he resigned on June 28, 2013. On June 19, 2014, Allstate Financial Services filed a Form U5 amendment disclosing that a customer complaint had been filed against Respondent regarding Cross.

Thereafter, FINRA investigated Cross on the grounds that Allstate Financial Services’ Form U5 amendment stated that a customer complained of breach of contract, fraud, conversion, and negligence related to a collateralized bond obligation. FINRA’s investigation involved Cross’ outside business activities, financial reporting obligations, and whether Cross accepted unapproved loans from a customer while engaging in a private securities transaction – otherwise known in the industry as “selling away”. Thereafter, Cross refused to appear on the record to give testimony drawing an automatic bar from the financial industry.

At this time it unclear the nature and scope of Cross’ outside business activities and private securities transactions. However, according to Cross’ public records his outside business activities include Cross, Cross & Sims, Inc. and CCS Property.

Waveland Oil and Gas Private Placements Loss Recovery

March 31, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating the potential unsuitable sales of securities sponsored by Waveland Capital Group LLC (Waveland), a purported merchant bank with a core investment focus in the oil and gas exploration and production industry. Waveland claims on its website that it invests in oil and gas exploration and development throughout the Mid-Continent and Permian Basin regions. In addition, Waveland invests capital to special private equity opportunities in select sectors such as medical device, health sciences, technology and manufacturing. Waveland has sponsored the following investments:

Waveland Drilling Partners Series III
Waveland Resource Partners II, L.P.

Broker Investigation: Customer Complaints Against VSR Financial Broker Mickey Long

March 28, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Mickey Long (Long). According to BrokerCheck records Long is subject to nine customer complaints. The customer complaints against Long allege securities law violations that including unsuitable investments, misrepresentations, and breach of fiduciary duty among other claims. The claims appear to relate to allegations regard direct participation products and limited partnerships such as equipment leasing and non-traded real estate investment trusts (Non-Traded REITs). Other products complained of include oil and gas private placements.

Our firm has represented many clients in these types of products. All of these investments come with high costs and historically have under performed even safe benchmarks, like U.S. treasury bonds. For example, investors are destined to lose money in equipment leasing programs like LEAF Equipment Leasing Income Funds I-IV and ICON Leasing Funds Eleven and Twelve. The high costs and fees associated with these investments make significant returns virtual impossibility. Yet for all of their costs investors are in no way compensated for the additional risks of these products.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Broker Investigation: Customer Complaints Against VSR Financial Broker Jesse Griffin

March 28, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Jesse Griffin (Griffin). According to BrokerCheck records Griffin has been the subject of at least six customer complaints three of which have been filed since 2014. The customer complaints against Griffin allege a number of securities law violations including that the broker made unsuitable investments, fraud, breach of fiduciary duty, and negligence among other claims.

The most recent customer complaint filed in June 2015 alleged unsuitable investments from November 2006 through September 2008. The claim was settled.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Broker Investigation: Customer Files Churning Complaint Against Broker Bruce Stark

March 24, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Bruce Stark (Stark). According to BrokerCheck records Stark has been the subject of at least three customer complaints and one judgement or lien. The customer complaints against Stark allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

The most recent complaint was filed in August 2015 and alleged that the customer’s account was traded without authority, unsuitable, and churned causing $534,150 in damages. The complaint is currently pending. In addition, in March 2009 a tax lien of $37,875 was filed. Substantial judgements and liens on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

Mewbourne Oil Company Oil and Gas Private Placements

March 24, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating the potential unsuitable sales of securities sponsored by Mewbourne Oil Company (Mewbourne). Mewbourne claims on its website to have grown into one of the more prominent independent oil and natural gas producers in the Anadarko and Permian Basins of Texas, Oklahoma and New Mexico. The company sponsors several oil and gas private placements and investments including:

Mewbourne Energy Partners 11-A
Mewbourne Energy Partners 12-A

Vertical Funds Private Placements

March 23, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating the potential unsuitable sales of securities in Vertical Funds private placements. The Vertical Funds include Vertical Recovery Management, LLC, Vertical Mortgage Fund I, LLC, Vertical US Recovery Fund, LLC, and Vertical US Recovery Fund II, LLC.

Some of the Vertical Funds were advertised as buying real estate notes at a discount and collect mortgage funds through borrower refinancing or a future sale. Upon information and belief at least one of these funds has entered the bankruptcy alternative of General Assignment for Benefit of Creditors under California law. This development is expected to wipe away the majority of investor capital.

Private placement offerings are among the most speculative and costly investment products offered to retail investors. While the size of the private placement market is unknown, according to 2008 estimates, companies issued approximately $609 billion of securities through Regulation D offerings. Private placements allow many small companies to efficiently raise capital. However, regulators continue to find significant problems in the due diligence and sales efforts of some brokerage firms when selling private placements to investors. These problems include fraud, misrepresentations and omissions in sales materials and offering documents, conflicts of interest, and suitability abuses.