Securities Lawyers Blog

Customers File Complaints Against Former National Securities Corporation Broker William Gillis

October 7, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker William Gillis (Gillis) has been hit with at least 11 customer complaints over his career of which three have been filed in 2015 alone. Customers have filed complaints against Gillis alleging securities law violations including that the broker made unsuitable investments, poor investment advice and recommendations, failure to follow instructions, negligence, unauthorized trading, and misrepresentations among other claims. The claims against Gillis primarily involve his advice concerning equity securities. In addition, two of the claims resulted in arbitration panels awarding damages to customers.

Gillis entered the securities industry in 1986. From 2002, until August 2008, Gillis was associated with Wachovia Securities, LLC. Thereafter, from August 2008 until June 2015, Gillis was associated with brokerage firm National Securities Corporation (National Securities). Gillis does business through his DBA company Gillis Wealth Management Services in Seattle, Washington.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

FINRA Sanctions John Jones Over Unsuitable Investments

October 7, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker John Jones (Jones) (FINRA No. 2013036960801) alleging that between January 2004 and December 2006, Jones engaged in unsuitable trading in a customer’s account by recommending purchases of three speculative investments inconsistent with the customer’s investment objectives and financial condition and resulting in an overconcentration in the customer’s account in speculative investments. FINRA determined that the recommendations were made without reasonable grounds by Jones for believing that they were suitable for the customer. Finally, FINRA found that Jones willfully failed to timely amend his Form U4 to disclose two tax liens.

In addition to FINRA’s latest regulatory action, Jones has been the subject of two customer disputes, one tax lien, one bankruptcy, and two other regulatory actions, and one employment separation. The customer complaints allege that Jones’ made misrepresentations in recommending private placements, made unsuitable investments and engaged in fraudulent activity. One of the other regulatory actions was by the state of Georgia found that Jones misrepresented private placements. The other regulatory action also involved the state of Georgia and customer complaints concerning Jones’ private placement sales.

Jones first became associated with a FINRA member in 1986. From December 2007 until February 2010, Jones was a registered representative of First Legacy Securities, LLC. Thereafter, from March 2010, until July 2015, Jones was associated with Moloney Securities Co., Inc.

Gana LLP Files $3.7 Million FINRA Arbitration Complaint on Behalf of Investors In Connection with Paul Godlewski’s Investment Scheme

October 6, 2015 | by Staff Attorney

The law offices of

Gana Weinstein LLP has filed an arbitration complaint before the Financial Industry Regulatory Authority (FINRA) alleging damages in excess of $3.7 million against Allstate Financial Services, LLC (Allstate) and the estate of Paul J. Godlewski (Godlewski). The complaint alleges improper supervision and selling away related to Godlewski’s fraudulent Ponzi scheme. Godlewski’s scheme was targeted at the retirement savings of around two dozen victims, mostly in the Pennsylvania area. The complaint alleges that Allstate failed to properly supervise and enforce compliance measures over Godlewski, one of Allstate’s registered representatives. The failure to supervise was alleged to cause violations of federal, state securities laws, and the financial industry’s rules and regulations. The complaint alleged that these investors, many of whom used IRA or 401K proceeds, have lost substantially all of their investment.

“I believe there are more victims out there who are in need of help to assert their rights under the securities industry rules,” according to securities attorney Adam Gana. As background on Godlewski, the broker was barred from the securities industry by FINRA in April 2015 after failing to respond to the regulator’s requests concerning his activities. In June 2015, Godlewski passed away. After Godlewski’s death many of his investors received letters from Godlewski’s estate stating that the estate was conducting a four to six months accounting on the assets and liabilities left behind by Godlewski. Beyond these brief correspondence, investors have been left in the dark as to the status of their funds.

In the complaint, it is alleged that Godlewski created a fictional persona of a brilliant venture capital fund manager in order to sell investors. Godlewski claimed that he created innovative trading algorithms and and managed funds with $100 million in assets under management. To promote this persona Godlewski made appearances on television talk shows such as Money Matters purporting to be the president of Global Enterprise Investment Venture Capital a/k/a GEIVC. GEIVC was one of the fraudulent funds that the complaint alleged Godlewski sold to claimants. Over time Godlewski’s scheme is alleged to evolved and improved in order to better protect Godlewski from being found out. These other more sophisticated funds include Tall Tree Note Fund I, LP (Tall Tree), another Godlewski fund, and 611 Swede Street LLC, a real estate property investment.

Customers File Churning Complaints Against National Securities Corporation Broker Todd Henrich

October 5, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Todd Henrich (Henrich) has been hit with a couple customer complaints this year. Henrich’s record reveals a total of 2 customer complaints in his short four year career. Customers have filed complaints against Henrich alleging securities law violations including that the broker made unsuitable investments, churning, negligence, breach of fiduciary duty, and misrepresentations among other claims. Both claims have been filed against the broker since July 2015.

Henrich entered the securities industry in 2011 and became associated with National Securities Corporation (National Securities). In December 2011, Henrich became associated with Obsidian Financial Group, LLC until December 2012. At that time Henrich again became associated with National Securities and has been associated with that brokerage firm ever since.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

FINRA Sanctions Donald Levin Over Unsuitable Mutual Fund Switching

October 5, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Donald Levin (Levin) (FINRA No. 2014040335101) alleging that between December and April 2014, Levin hosted a weekly radio show and during that show he made statements that were unbalanced, promissory, misleading and lacked reasonable basis in violation of the FINRA Rules. According to Levin’s BrokerCheck records Levin also has a long and troubled history of customer complaints, regulatory actions, and employment separations. In September 2012, FINRA accepted an settlement with Levin where he accepted the entry of findings that Levin made unwarranted and misleading statements on his weekly radio show. At that time Levin agreed to accept a five month suspension and a $30.000 fine. Going back to December 2008, the Securities and Exchange Commission (SEC) issued a cease and desist order to Levin fining him $25,000 for his violations in the offering and selling mutual fund class A shares to retail customers without adequate disclosure of material information about the availability of breakpoint discounts for which customers could have qualified.

In addition to the regulatory actions, Levin has approximately 15 customer complaints filed against him dating back to 1999. The customer complaints allege a host of securities laws violations concerning a variety of investment products. Some of the more recent complaints allege that Levin failed to conduct due diligence in private placement securities some of which include oil & gas private placements. In another customer complaint, the customer alleged that he was induced to take out a home equity loan in order to purchase securities and suffered losses of $440,000 as a result. Other investor complaints involve alternative investments and mutual funds.

Levin first became associated with a FINRA member in 1980. From 2004 until June 2012, Levin was a registered representative of Milkie/Ferguson Investments, Inc. Thereafter, from June 2012, until September 2012, Levin was associated with Berthel, Fisher & Company Financial Services, Inc. Finally, from January 2014, unitl August 2014, Levin was a registered representative of Titan Securities.

FINRA Sanctions Ronald Benevento Over Unsuitable Mutual Fund Switching

October 4, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Ronald Benevento (Benevento) (FINRA No. 20130353695) alleging that between September 2011 through April 2013 Benevento engaged in unsuitable mutual fund switching activity in three customer accounts in violation of the FINRA Rules. In addition, FINRA alleged that during this time Respondent mismarked 15 order tickets as “unsolicited” causing the books and records of his employer, American Portfolios Financial Services, Inc. (American Portfolios) to become inaccurate.

Benevento first became associated with a FINRA member in 1997. From 1997 until February 2010, Benevento was a registered representative of AXA Advisors, LLC. Thereafter, from March 2010, until March 2015, Benevento was associated with American Portfolios.

FINRA alleged that, Benevento recommended 29 mutual fund switch transactions in three customer accounts without having reasonable grounds for believing that the transactions were suitable for the those customers due to the frequency of the transactions and the costs incurred due to the switches. In these transactions, FINRA alleged that Benevento recommended that the customers sell Class A mutual fund shares within as little as two to three months after recommending the purchase of them. These purchases were made in different mutual fund families than the previous purchase.

Customers File Complaints Against Advisor Newbridge Securities Broker Anil Jethmal

October 3, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Anil Jethmal (Jethmal) has been hit with a large number of customer complaints. Jethmal’s record reveals a total of 5 customer complaints. However, 1996, the state of Georgia revoked Jethmal’s securities license in the state stating that approximately 27 customer’s had filed complaints against Jethmal up until that time. Customers have filed complaints against Jethmal alleging securities law violations including that the broker made unsuitable investments, churning, unauthorized trading, unauthorized use of margin, and misrepresentations among other claims.

Jethmal entered the securities industry in 1988. An examination of Jethmal’s employment history reveals that Jethmal moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Jethmal’s 26 year career he has worked at 12 different firms. Since 2008 Jethmal has been registered with Westrock Advisors, Inc. and Summit Brokerage Services, Inc. Since March 2011, Jethmal has been associated with Newbridge Securities Corporation located in Boca Raton, Florida.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

Florida Office of Financial Regulation Sanctions JP Turner Over Broker John McGriskin’s Churning Activity

October 1, 2015 | by Staff Attorney

According to the records kept by the State of Florida, Office of Financial Regulation brokerage firm J.P. Turner & Company, L.L.C., (JP Turner) was sanctioned (Administrative Proceeding: 0757-S-12/13) concerning allegations that the firm’s broker, John McGriskin (McGriskin) engaged in mutual fund switching, a form of churning, in client accounts.

From December 2002, until May 9, 2013, McGriskin was an associated person of JP Turner and worked out of the branch located in Palm Coast, Florida, in his home. According to Florida, McGriskin typically purchased Class A shares for his clients. Class A shares of mutual funds come with high front-end sales charges. Florida found that McGriskin sold Class A shares of one mutual fund company and used the proceeds to purchase Class A shares of another mutual fund company resulting in McGriskin’s clients being subject to additional front-end sales charges on those transactions.

In addition, many mutual fund families offer “breakpoint” discounts for total investment amounts equaling certain minimum thresholds across multiple funds with the same fund family. However, Florida found that McGriskin made six mutual fund switching transactions which were not in the same mutual fund family or issuer from August through December of 2010, thirty-six mutual fund switching transactions which were not in the same mutual fund family or issuer in 2011, thirty-seven mutual fund switching transactions which were not in the same mutual fund family or issuer in 2012, and thirty-six mutual fund switching transactions which were not in the same mutual fund family or issuer from January through May of 2013.

FINRA Files Churning Complaint Against Leonard Goldberg

September 30, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Leonard Goldberg (Goldberg) (FINRA No. 2011026098504) alleging during the seven year period from August 2007 through August 2014, while he was registered with FINRA through J.P. Turner & Company, LLP (JP Turner) and Newport Coast Securities Inc. (Newport Coast) Goldberg caused over $123,600 in losses to five customers while making over $77,900 for himself by using discretion without authorization in connection with 300 mutual fund and Exchange Trading Fund (ETF) transactions to his benefit and the customers’ loss. FINRA also alleged that from August 2007 through February 2012, Goldberg used discretion to facilitate a scheme of effecting fraudulent and unsuitable short term switching of Class A mutual funds – a/k/a excessive trading activity or churning – in the accounts of the five customers. Finally, FINRA alleges that Goldberg also falsified firm documents in furtherance of his scheme.

Goldberg first became associated with a FINRA member in 1972. From July 2007, until October 2010, Goldberg was associated with JP Turner. Thereafter, from October 2010, until December 2014, Goldberg was associated with Newport Coast. According to BrokerCheck records Goldberg has had at least six customer complaints filed against him during his career.

According to FINRA, Goldberg’s fraudulent and unsuitable short term mutual fund switching scheme involved replacing one Class A mutual fund position with another one more than 90 times in a five year period. FINRA determined that the accounts held those mutual funds for an average of only five to six months before Goldberg switched the funds. FINRA also found that the customers generally trusted Goldberg to trade on their behalf in their accounts and he did not inform them in advance of the trades. In sum, FINRA determined that Goldberg’s mutual fund switching had no business purpose other than to generate commissions for himself through repeated fees and charges.

FINRA Bars Former NYLife Broker Jonathan Williams Over Outside Business Activities

September 29, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Jonathan Williams (Williams) (FINRA No. 20150452689) resulting in a bar from the securities industry alleging that Williams failed to provide FINRA staff with information and documents requested. The failure to provide those documents and information to FINRA resulted in an automatic bar from the industry. FINRA’s document requests related to the regulators investigation into claims the Williams falsified certain bank records and potentially commingled client funds in a bank account under his control.

FINRA’s investigation appears to stem from Williams’ termination from NYLife Securities LLC (NYLife) in March 2015. At that time NYLife filed a Form U5 termination notice with FINRA stating in part that the firm discharged Williams under circumstances where there was allegations that Williams commingled client funds. It is unclear the nature of the outside business activities from publicly available information at this time. However, from the three customer complaints filed against Williams potentially relating to these activities, the clients allege that Williams sold those customers CDs that were issued by Mid-Atlantic Financial and that the funds used to purchase these CDs were withdrawn from accounts with NYLife.

Williams entered the securities industry in 2000. From February 2006, until April 2015, Williams was associated with NYLife out of the firm’s Timonium, Maryland office.