Securities Lawyers Blog

FINRA Bars Broker Ricardo Fancois During Investigation Into Sales Practices

February 3, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating the termination by The Financial Industry Regulatory Authority (FINRA) of broker Ricardo Fancois (Fancois). According to BrokerCheck records Fancois is subject to one regulatory action, one investigation, and two judgement or lien.

FINRA terminated Fancois after the broker failed to respond to a letter request for information in July 2015. Prior to that time, in March 2015, FINRA opened an investigation into Fancois alleging potential willful violations of the securities fraud laws and FINRA rules. Because FINRA terminated Fancois due to the broker’s failure to respond to the regulator’s requests for information, there is no additional information listed with specifics of Fancois’ alleged wrongdoing. Prior to that time Fancois was subject to over $3,000 in liens.

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.

Investor Recovery Options for Milagro Oil & Gas Losses

February 2, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in 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. Milagro Oil & Gas and several of its affiliates filed for Chapter 11 bankruptcy protection in July 2015. At that time, Milagro Oil reported that it had $1 million to $10 million in assets and $500 million to $1 billion in liabilities that it would not be able to pay because its business became unprofitable in light of the decline in the oil market. The company has 1,200 wells in South Texas, Gulf Coast, and in Louisiana. The company plans to sell its oil and gas properties and liabilities to Houston-based White Oak Resources VI for $217 million in cash and equity.

Our firm continues to file complaints on behalf of investors who have been overconcentrated in oil and gas investments. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.

FINRA Bars Broker Honetta Kao During Investigation Into Sales Practices

February 2, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Honetta Kao (Kao). According to BrokerCheck records Kao is subject to two customer complaints, one regulatory action, onr investigation, and one financial matter.

FINRA terminated Kao after the broker failed to respond to a letter request for information in August 2015. Prior to that time, in January 2015, FINRA opened an investigation into Kao alleging potential willful violations of securities fraud laws and FINRA rules. In addition, in April 2015, a customer filed a complaint alleging that Kao mishandled the account and provided bad advice. The complaint is pending. Another client alleged in May 2013, that Kao engaged in unsuitable recommendations and unauthorized trading.

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 James Starks During Investigation Into Sales Practices

February 1, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Starks (Starks). According to BrokerCheck records Starks is subject to one regulatory action, two investigations, and one criminal matter.

FINRA terminated Starks after the broker failed to respond to a letter request for information in July 2015. Prior to that time, in January 2015, FINRA opened an investigation into Starks alleging potential willful violations of the FINRA rules. Prior to that time, in March 2014, FINRA opened another investigation into Starks alleging potential willful violations of securities fraud laws and FINRA rules.

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.

Mutual Fund Tortoise Energy Infrastructure (TYG) Investor Recovery Options

February 1, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in 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. Our firm has been tracking a number of leveraged Master Limited Partnership (MLP) closed-end funds that have suffered significant losses. Among those funds is Tortoise Energy Infrastructure (NYSE:TYG) with $2.2B billion in assets. Over the past year the fund has suffered a 43% loss.

As a background, about 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. In the past year, investors have lost $20 billion in publicly traded in master limited partnerships, publicly traded oil funds. This amounts to an astonishing $8 of every $10 they had invested, according to a report prepared for The Associated Press article. The research does not include losses from $37 billion of bonds sold by the partnerships in the five years since 2010 or losses from private placement partnerships. However, banks like Citigroup, Barclays, and Wells Fargo made an estimated $1.1 billion in fees for selling these products to investors.

Our clients tell us similar stories that their advisors hyped MLPs as 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 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.

Investor Recovery Options for Swift Energy Co. Losses

February 1, 2016 | by Staff Attorney

The investment attorneys with Gana Weinstein LLP continue to report on investor related losses in 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. Swift Energy Co., a U.S. shale driller, recently sought Chapter 11 bankruptcy protection. The Houston driller was founded in 1979 by Aubrey Earl Swift and had trimmed 60 percent of its capital budget, cut 20 percent of its workforce, and made other capital expenditure reductions in order to adjust to a 68% percent fall in oil prices over the past 19 months.

Swift Energy operates oil fields in the Eagle Ford Shale in South Texas and in Louisiana fields with listed assets of about $1 billion and with debts of $1.35 billion. The company’s revenues sank 55 percent from the same period last year and posted a $354.6 million net loss from July to September. In November lenders reduced the company’s borrowing base by $45 million.

Our firm continues to file complaints on behalf of investors who have been overconcentrated in oil and gas investments. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. Some experts are saying that if production volume continues to be as high as it currently is and demand growth weak that the return to $100 a barrel is years away.

FINRA Bars Broker Marat (a/k/a Matt) Zeltser

February 1, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Marat (a/k/a Matt) Zeltser (Zeltser). According to BrokerCheck records there are at least one customer complaint, one regulatory, one investigation, and one employment separation that have been filed against Zeltser. The customer complaints against Zeltser alleges a number of securities law violations including that the broker invested money in triple leveraged ETFs over long periods of time among other claims. The claim is currently pending.

FINRA terminated Zeltser after the broker failed to respond to a letter request for information in August 2015. Prior to that time, in January 2015, FINRA opened an investigation into Zeltser alleging potential willful violations of securities fraud laws and FINRA rules. Prior to that, Zeltser was discharged from Pointe Capital, Inc. for violating the firm’s advertising policy and the use of unapproved communications.

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 Spotlight: Customer Complaints Against National Securities Corporation Broker James Eichner

January 30, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Eichner (Eichner). According to BrokerCheck records there are at least 3 customer complaints that have been filed against Eichner. The customer complaints against Eichner allege a number of securities law violations including that the broker was negligent, breached a fiduciary duty, and churning (excessive trading) among other claims. The most recent customer complaint against Eichner filed in June 2015 alleges that Eichner breached his fiduciary duty and was negligent in the handling of the customer’s account leading to $500,000 in damages. The claim is currently pending.

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.

The number of customer complaints against Eichner is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Broker Spotlight: Customer Complaints Against Independent Financial Broker Brian Zimmerman

January 30, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Brian Zimmerman (Zimmerman). According to BrokerCheck records there are at least 5 customer complaints that have been filed against Zimmerman. The customer complaints against Zimmerman allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, failure to supervise, and churning (excessive trading) among other claims. The most recent customer complaint against Zimmerman filed in July 2014 alleges that Zimmerman breached his fiduciary duty, negligence, and misrepresentations in the handling of the customer’s account leading to $128,405 in damages. The claim is currently pending.

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.

The number of customer complaints against Zimmerman is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Odebrecht Offshore Drilling Finance Investor Recovery Options

January 30, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP continue to report on investor losses in oil and gas related investments. Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks.

According to Bloomberg, bonds of Odebrecht Oleo & Gas SA (Odebrecht), the oil services arm of Latin America’s largest construction conglomerate plunged to record lows after Petroleo Brasileiro SA, the corruption plagued stated owned oil company, canceled a contract to rent one of its drilling rigs. Odebrecht Offshore Drill Finance’s $1.5 billion of bonds come due in 2022 and are backed by cash flows coming from four drilling rigs. On the news back in September 2015, shares of the bonds fell 12% to about 26 cents on the dollar. Also $550 million in perpetual dollar bonds from Odebrecht Oil & Finance also declined.

More recently, Fitch Ratings has downgraded the senior secured notes issued by Odebrecht Offshore Drilling Finance Ltd. (OODFL) to ‘CCC’, and affirmed the senior secured notes issued by Odebrecht Drilling Norbe VIII/IX Ltd. at ‘B’.