Securities Lawyers Blog

Customers File Complaints Against National Securities Corporation Broker Michael Fasciglione

September 2, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Fasciglione (Fasciglione) has been the subject of at least 11 customer complaints and two regulatory actions. The customer complaints against Fasciglione allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading), breach of contract, breach of fiduciary duty, negligence, fraud, misrepresentation, and failure to supervise among other claims. The customer complaints stem from 1995 through 2014 and total allegations of investor losses of multiple millions of dollars.

Fasciglione’s first regulatory action occurred in 2004, when the NYSE initiated an action for alleging that Fasciglione failed to supervise the activities of an employee related to the business of his employer; failing to supervise accounts serviced by a registered representative under his control; failing to ensure proper authorization of account designation changes, along with several other allegations. As a result, of the complaint Fasciglione was suspended for two months and required to re-take any qualifying exams before undertaking any securities supervisory positions.

Fasciglione’s latest regulatory complaint alleges that in or about March 2010, while the IRS filed a $354,752 tax lien against Fasciglione for the tax years 2007 and 2008. An amended Form U4 was filed on November 26, 2012, but FINRA found that this filing was untimely.

FINRA Bars Merrill Lynch Broker Kai Cheng Over Unauthorized Trading Investigation

September 2, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred (Case No. 201303930510) broker Kai Cheng (Cheng) concerning the broker’s failure to respond to requests for information concerning the regulators investigation into claims that Cheng engaged in conduct including entering into personal financial transactions with a customer, using a personal email address to communicate with a customer, and unauthorized trading in a customer account. In addition, to the FINRA bar Cheng has one employment separation and one customer dispute disclosed on his BrokerCheck record. The customer complaint contains allegations of unsuitable investments, failure to follow instructions, unauthorized trading, and omissions of material facts.

Cheng first entered the securities industry in 2005 as a broker with Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) with the title of “First Vice President” and worked there until he was discharged in 2015. On March 2, 2015, Merrill Lynch filed a Uniform Termination Notice (Form U5) that reflected that Cheng was discharged on February 4, 2015. According to FINRA the Form U5 stated that Cheng was terminated for conduct including entering into personal financial transactions with a customer, using a personal email address to communicate with a customer and unauthorized trading in a customer account.

FINRA then sought to investigate these allegations and during the course of FINRA’s examination, the agency sent a letter to Cheng’s counsel pursuant to FINRA Rule 8210 requesting Respondent to provide on the record testimony. According to FINRA Cheng failed to provide testimony. Cheng’s failure to appear resulted in a bar from the industry.

FINRA Sanctions Tyler Powell Over Unauthorized Trades

September 1, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned (Case No. 2014040633301) broker Tyler Powell (Powell) concerning allegations that Powell exercised discretion in a customer’s account without obtaining prior written authorization from the customer.

Powell first became registered with FINRA in 2007 through his association with a A.G. Edwards & Sons, Inc. From January 2008, to August 2014, he was associated with Wells Fargo Advisors, LLC (Wells Fargo) and registered with FINRA. Since August 2014, Powell has been associated with Stifel, Nicolaus & Company, Incorporated (Stifel Nicolaus).

NASD Conduct Rule 2510(b) prohibits registered representatives from exercising discretion in a customer account unless the customer has provided written authorization to the broker and the brokerage firm to exercise discretion. Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. A broker must first discuss all trades with the investor before executing them. The SEC has also found that unauthorized trading to be fraudulent nature.

Broker Investigation: Aegis Capital Advisor Damian Mamane

September 1, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Damian Mamane (Mamane) has been the subject of at least one customer complaint. The customer complaint against Mamane alleges that the broker made unsuitable investments in equity and penny stock securities.

Mamane entered the securities industry in 2001. From September 2009, until April 2014, Mamane was registered with IAA Financial LLC. Since March 2014, Mamane has been associated with Aegis Capital Corp.

Advisers have an obligation to deal fairly with investors and that obligation includes 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 costs, 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.

Former Wunderlich Securities Broker Merid Amde Charged with Violation of FINRA Rules

August 31, 2015 | by Staff Attorney

Merid Amde (CRD# 1897365), formerly a broker with Wunderlich Securities, Inc. and currently a broker with L.M. Kohn & Company stockbroker, was recently named in a FINRA enforcement proceeding.

According to FINRA, alleged that in contravention of Wunderlich Securities procedures, Amde failed to disclose that a firm customer had named him as a successor trustee to her trust and had Amde named and his wife as the sole beneficiaries of the trust. The complaint alleges that Amde failed to provide Wunderlich with prior written notice of Amde’s expectation of compensation as a successor trustee in the customer’s trust. The complaint further alleges that Amde mismarked order tickets for a customer’s accounts as unsolicited when they were actually solicited. According to the complaint Amde mismarked the orders to avoid supervision of the trades and caused Wunderlich’s books and records to be inaccurate as to those trades.

FINRA’s complaint further alleges that Amde executed discretionary transactions in a customer’s account without first obtaining prior written authorization from the customer and without the account accepted by Wunderlich as discretionary. Finally, the complaint alleges that Amde provided a customer with consolidated reports that falsely stated the value of her investments and exaggerated the return on investment. Amde, denies the allegations.

Massachusetts Files Complaints Against Securities American and Its Broker Barry Armstrong

August 31, 2015 | by Staff Attorney

The Massachusetts Office of the Secretary of Securities Division filed complaints against brokerage firm Securities America, Inc. (Securities America) and one of its financial advisors Barry Armstrong (Armstrong) concerning allegations that in 2014, Securities America authorized Armstrong to run a deceptive AM radio advertising campaign. According to the complaint, the advertising campaign was designed to target vulnerable Massachusetts senior citizens by trumpeting the looming dangers of Alzheimer’s disease and implying that the brokerage firm has special access to medical information and support.

Massachusetts found that the advertising campaign was a classic “bait and switch” in which callers inquired about Alzheimer’s support and information and instead were solicited solely for brokerage and financial planning services. Massachusetts found that advertising used alarmist language designed to pull in senior citizens with concerns about Alzheimer’s disease while failing to disclose the nature of the services Armstrong actually offers. Indeed, when callers contact the number provided the only information concerning Alzheimer’s that is provided is a Fact Sheet published by the National Institute of the Aging and some other publicly available free information about Alzheimer’s.

Massachusetts found Securities America’s approval of the advertising used “astounding” stating that as a national-scale broker-dealer the firm failed to make “substantive comment or follow up of any kind” when reviewing Armstrong’s advertising materials. In sum, Massachusetts alleged that “Securities America failed to prevent or even flag glaringly unethical conduct.”

Customers File Complaints Against National Securities Corporation Broker Leonard McAbee

August 28, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Leonard McAbee (McAbee) has been the subject of at least three customer complaints, one regulatory action, one judgment and/or lien, and one employment separation. The customer complaints against McAbee allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading), among other claims. The regulatory action against McAbee involved allegations that McAbee made trades in an account at the direction of a third-party without a properly signed power of attorney.

McAbee entered the securities industry in 1990. From April 2011 till present McAbee has been registered as a broker with National Securities Corporation.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. Many of the claims against McAbee involving claims of unauthorized trading, churning, and excessive trading.

Broker Spotlight: TIC Customer Complaints Against John Notman

August 27, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Notman (Notman) has been the subject to an astonishing 31 customer complaints along with two firm terminations for cause. The customer complaints against Notman allege a number of securities law violations including that the broker made unsuitable investments and misrepresentations and false statements among other claims. Many of the complaints involve Notman’s sales of tenants-in-common (TICs). These claims along alleged combined investor losses of well over $20,000,000.

Notman entered the securities industry in 1982. From March 2003, until September 2012, Notman was registered with Berthel, Fisher & Company Financial Services, Inc (Berthel Fisher). In September 2012, Berthel Fisher filed a notice of termination Form U-5 stating that the reason for terminating Notman from the firm was due to his failure to report certain financial disclosures.

As a background, TICs largely been sold unfairly as tax advantaged products that allow customers to defer capital gains taxes on appreciated real estate. TICs are private placements that have no secondary trading market and are therefore illiquid investments. In a typical TIC, the investor receives a fractional interest in the property along with other stakeholders and the profits are generated mostly through the efforts of the sponsor and the management company that manages and leases the property. The sponsor typically structures the TIC investment with up-front fees and expenses charged to the TIC and negotiates the sale price and loan for the acquired property. Because these fees are often higher than 15%, there is often no way for the investment to be profitable for the investor.

Broker Investigation: Customer Complaints Against RBC Capital Broker David Peirce

August 26, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Peirce (Peirce) has been the subject of at least four customer complaints. The customer complaints against Peirce allege a number of securities law violations including that the broker made unsuitable investments, churning (excessive trading), among other claims..

Peirce entered the securities industry in 1989. From April 2004, until February 2009, Peirce was registered with Morgan Stanley Smith Barney (Morgan Stanley). From June 2009 onward Peirce was associated with RBC Capital Markets, LLC (RBC).

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. Many of the claims against Peirce involving claims of churning and excessive trading. When brokers engage in churning the investment trading activity in the client’s account serves no reasonable purpose for the investor and is transacted to profit the broker through the generation of commission payments. 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.

Broker Spotlight: TIC Customer Complaints Against Mark Kosanke

August 26, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Mark Kosanke (Kosanke) has been the subject of at least two customer complaints. The customer complaints against Kosanke allege a number of securities law violations including that the broker made unsuitable investments and misrepresentations and false statements among other claims. The securities involved in the customer disputes are tenants-in-common (TICs).

Kosanke entered the securities industry in 1994. From 2000, until July 2006, Kosanke was registered with Questar Capital Corporation. From July 2006, until August 2010, Kosanke was associated with Professional Asset Management, Inc. Thereafter, from August 2010, Kosanke was registered with brokerage firm Concorde Investment Services, LLC.

As a background, TICs largely been sold unfairly as tax advantaged products that allow customers to defer capital gains taxes on appreciated real estate. TICs are private placements that have no secondary trading market and are therefore illiquid investments. In a typical TIC, the investor receives a fractional interest in the property along with other stakeholders and the profits are generated mostly through the efforts of the sponsor and the management company that manages and leases the property. The sponsor typically structures the TIC investment with up-front fees and expenses charged to the TIC and negotiates the sale price and loan for the acquired property. Because these fees are often higher than 15%, there is often no way for the investment to be profitable for the investor.