Securities Lawyers Blog

Aequitas Funds Ponzi-Scheme Recovery Options

March 20, 2016 | by Staff Attorney

The attorneys with the offices of Gana Weinstein LLP are investigating customer complaints and The Securities and Exchange Commission (SEC) recently filed complaint alleging that Oregon-based investment firm Aequitas Management, LLC (Aequitas Management) and its subsidiaries operated a Ponzi-like scheme that defrauded its 1,500 customers of approximately $350 million.

Upon information and belief, the following firms sold Aequitas notes to clients: CONCERT Wealth Management, Summit Advisor Solutions, LLC, Private Advisory Group, Elite Wealth Management, Integrity Bank & Trust, CliftonLarsonAllen Wealth Advisors (CLA Wealth Advisors), and Innovator Management LLC.

The SEC also alleged that the top three executives of Aequitas Management – CEO Robert Jesenik (Jesenik), executive vice president Brian Oliver (Oliver) and chief operating officer N. Scott Gillis (Gillis) were aware as early as 2014 that constraints in the company’s cash flow would make it difficult to meet existing obligations but continued to raise money anyway based on false premises in order to prop up the company.

Pengrowth Energy Corporation (PGH) Investor Loss Recovery

March 19, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Pengrowth Energy Corporation (Stock Symbol: PGH). Over the past two years the trust has suffered a 89% loss in value.

Pengrowth Energy Corporation is an intermediate Canadian oil and natural gas producer with a 27 years operating history and headquartered in Calgary, Alberta. The company claims to have exposure to large oil-in-place conventional plays, large low-risk resource plays, and early-stage development plays. The resources that the company claims access to include Cardium light oil, Lindbergh thermal bitumen, Swan Hills light oil, and Montney natural gas projects.

Our clients tell us similar stories that their advisors hyped energy investments as high yielding securities without significant discussion of risk. In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas private placements were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

FINRA Bars Raymond James Broker Jeffrey Ingros Over Outside Business Activities

March 19, 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 Jeffrey Ingros (Ingros) (FINRA No. 2013039166001) working out of Beaver, Pennsylvania. According to the FINRA action, Ingros consented to a bar from the securities industry after he failed to provide information requested by FINRA during its investigation concerning undisclosed loans from a customer and outside business activities. The providing of loans or 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”. In addition to the FINRA bar, Ingros has a long history of customer complaints and two employment separations for allegations of misconduct.

At this time it unclear the nature and scope of Ingros’ outside business activities and private securities transactions. However, according to Ingros’ public records his outside business activities include Fort McIntosh Group, LLC, Ingros Family, LLC, and Fort McIntosh Annuity & Insurance. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Ingros was associated with brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) from May 2007 until November 203. Finally, from November 2013 until February 2016 Ingros was registered with Raymond James Financial Services, Inc. (Raymond James).

Baytex Energy Corp. (BTE) Investor Loss Recovery

March 19, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Baytex Energy Corp. (Stock Symbol: BTE). Over the past two years the trust has suffered a 93% loss in value.

Baytex Energy Corp. is an oil and gas company based out of Calgary, Alberta. The company’s business is engaged in the acquisition, development, and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States.

Our clients tell us similar stories that their advisors hyped oil and gas and commodities high yielding investments without significant discussion of risk. In a recent Associated Press article, common stories of how investors are pitched by their financial advisors on oil and gas investments were reported on. Often times these products are pitched as ways to ride the boom in U.S. oil and gas production and receive steady streams of income.

Hugoton Royalty Trust (HGT) Investor Loss Recovery

March 14, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP are investigating and representing investors who were inappropriately recommended oil and gas and commodities related investments. Investors may have potential legal remedies due to unsuitable recommendations by their broker to invest in this speculative and volatile area. One royalty trust that has suffered substantial declines is Hugoton Royalty Trust (Stock Symbol: HGT). Over the past year the trust has suffered a 77% loss in value.

Hugoton Royalty Trust was created in 1998 when XTO Energy Inc. conveyed 80% net profits interests in gas-producing properties located in Kansas, Oklahoma and Wyoming to the trust. The trust was created to distribute monthly net profits related to the 80% net profits interests.

Oil and gas royalty trusts, like master limited partnerships (MLPs), invest in the energy and commodities sector. However, unlike MLPs, royalty trusts generate income from the actual production of natural resources such as coal, oil, and natural gas and therefore the cash flows from royalty trusts are subject to swings in commodity prices and production levels causing them to be very inconsistent. Royalty trusts have no physical operations, no management, and no employees. Instead, royalty trusts are merely financing vehicles run by banks that trade like stocks. Another company actually mine the resources and pay the royalties to the trust.

FINRA Investigates Broker Bahram Mirhashemi for Unauthorized Trades and Churning

March 14, 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 Bahram Mirhashemi (Mirhashemi). According to BrokerCheck records Mirhashemi has been the subject of at least five customer complaints, one regulatory action, one regulatory investigation, two employment separations, four judgments or tax liens, and one financial disclosure. The customer complaints against McMahon allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, negligence, breach of fiduciary duty, and churning (excessive trading) among other claims.

In December 2015, FINRA initiated an investigation that looked into claims of unauthorized trades, unsuitable mutual fund switching, churning of customer accounts, fraud, misleading communications with customers, using unapproved methods of communications, filing false forms with FINRA concerning tax liens, and engaging in unapproved outside business activities. Shortly thereafter, Mirhashemi’s firm terminated him stating the FINRA investigation as the reason for the termination.

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.

Broker Investigation: Customer Complaints Against Michael McMahon

March 14, 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 Michael McMahon (McMahon). According to BrokerCheck records McMahon has been the subject of at least nine customer complaints since November 2007. The customer complaints against McMahon allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, negligence, breach of fiduciary duty, and churning (excessive trading) among other claims.

The most recent customer complaint filed in July 2015 and alleged breach of fiduciary duty, negligence, and misrepresentations claiming $1 million in damages. The claim is still pending. Also in July 2015, another client filed a complaint alleging McMahon made unsuitable investments among other claims claiming $442,000 in damages. The dispute is currently pending. In a third complaint filed in June 2015, an investor claimed that McMahon engaged in excessive trading and made unauthorized trades among other claims resulting in over $250,000 in damages. The claim is still pending.

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.

Gana LLP Files Complaint on Behalf of Investor Alleging Breach of Fiduciary Duty in the Sale of MLPs Against Wells Fargo

March 13, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP have brought a claim on behalf of an investor who suffered a loss of nearly all of their assets due to investments made by their Wells Fargo Advisors, LLC (Wells Fargo) advisor, Andrew Kevlahan (Kevlahan), almost exclusively in master limited partnerships (MLPs), Business Development Corporations (BDC), commodities linked investments, and other private equity high yield funds. The investor is 79 years old and retired with her husband.

The complaint alleges that on or about May 2011, the couple had become completely retired and had a securities backed loan with Wells Fargo secured by their investment account. The complaint alleged that due to these major lifestyle and financial circumstance changes, which were disclosed and known to Kevlahan, the couple’s investment objectives, income needs, and risk tolerance had changed requiring suitable investments that would diversify and protect the couple’s savings.

Instead, the complaint alleges that Kevlahan failed to properly advise the investor and breached his fiduciary duty to his client by continually increasing the concentration of the account in risky high yielding investments. By May 2011, the complaint alleges that concentration of high yield investments and MLPs grew to more than 50% of all of the investor’s assets. Despite the change in life circumstances, the complaint alleges that Kevlahan used his discretionary authority in order to continually increase the amount of risk in the account and by August 2014, the investor had a concentration of 62% of the couple’s assets in MLPs and 18% in other high yield investments – a total of 80% of the couple’s assets were exposed to extreme risk.

Broker Investigation: George Merhoff Unsuitable Oil and Gas Investments

March 13, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). According to Brokercheck records, George Merhoff (Merhoff) with Cetera Advisors LLC (Cetera) has recently received at least one customer complaint alleging overconcentrated positions in oil and gas equities.

One of the most popular energy related investments that have become increasingly popular in the brokerage industry in recent years are MLPs. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

Broker Investigation: William Berg Unsuitable Oil and Gas Investments

March 11, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). According to Brokercheck records, William Berg (Berg) with Wells Fargo Advisors, LLC (Wells Fargo) has recently received a customer complaint alleging overconcentrated positions in oil and gas equities.

As a background, MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”