Securities Lawyers Blog

Thomas Buck Barred From the Securities Industry Over Unfair Commission Practices

July 28, 2015 | by Staff Attorney

Our firm has been tracking the developments related to Thomas Buck’s termination from Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), now known as Bank of America, NA (Bank of America) under highly unusual circumstances. (See Top Merrill Lynch Broker Thomas Buck Terminated Under Unusual Circumstances; Update On Broker Thomas Buck Investigation). Now, according to records kept by FINRA, Buck has accepted a bar from the securities industry.

Buck’s downfall played out quickly. Buck was terminated from Merrill Lynch on March 6, 2015, shocking colleagues. At the time of his termination there was only one customer complaint against Buck steaming from a dispute in 2006. Now, over the past four months customers have filed 11 additional complaints against him. All of the complaints have similar allegations against Buck in that the customers allege that during a time period Buck engage in unauthorized trades in corporate debt and equities. Several of the complaints allege excessive trading and misrepresentations.

Buck’s team managed nearly $1.5 billion in investor assets and was one of the Merrill Lynch’s largest producers. According to FINRA, Buck engaged in misrepresentations and other misconduct in the handling of customer accounts. FINRA alleged that beginning by at least 2009, Buck used unethical and improper business practices to generate increased commissions and enhance his status as a top-producing broker. According to FINRA, Buck held customer assets in commission-based accounts instead of fee-based accounts for the sole purpose of generating higher revenues even though he knew that some customers would have paid substantially lower fees by using fee-based accounts. In fact, FINRA goes on to allege that Buck misled customers about the relative costs of fee-based or commission-based trading for their accounts. In addition to these claims FINRA alleged that Buck exercised discretion in customer accounts without written or oral authorization, and made unauthorized trades in certain accounts.

Gana LLP Investigation: Broker James Connors

July 28, 2015 | by Staff Attorney

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

Connors entered the securities industry in 1995. From August 2006 through October 2009, Connors was associated with J.P. Turner & Company, L.L.C. (JP Turner). Thereafter from October 2009, until November 2010, Connors was registered with Brookstone Securities, Inc. Brookstone Securities was thereafter expelled from the industry by FINRA. From there, Connors was associated with Meyers Associates, L.P. Finally, Connors became associated with First Standard Financial Company LLC.

Some of these firms Connors has been associated with have been known to house troublesome brokers. For instance, Meyers Associates has an unusually high number of brokers with complaints on their records. According to FINRA, approximately twelve percent of registered representatives have some form of disclosure on their record. However, as we have previously reported, forty seven out of seventy five, or nearly sixty-three percent of the brokers employed by Meyers Associates, have a marked-up history as revealed by BrokerCheck. Even more disturbing is the fact that of those forty seven brokers have on average of 4.5 disclosure events per broker.

Broker Spotlight: Broker Clarence Patton Jr

July 27, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Clarence Patton Jr (Patton) has been the subject of at least four customer complaints. Customers have filed complaints against Patton alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, fraud, breach of fiduciary duty, unauthorized trading, churning (excessive trading), and failure to execute among other claims.

Patton entered the securities industry in 1991. From 1999 to present Patton has been registered with J.P. Turner & Company, L.L.C. (JP Turner).

It is important for investors to know that all advisers have an obligation and 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.

Gana LLP Investigation: Legend Securities Broker Peter Girgis

July 27, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Peter Girgis (Girgis) has been the subject of at least three customer complaints, several unreported judgement or liens, one employment separation following allegations by his brokerage firm, and two regulatory actions taken by FINRA. Customers have filed complaints against Girgis alleging a number of securities law violations including that the broker made unsuitable investments, fraud, churning (excessive trading), breach of fiduciary duty, and unauthorized trading among other claims.

Bergen entered the securities industry in 2002. From August 2006 until November 2009, Girgis was registered with J.P. Turner & Company, L.L.C. (JP Turner). From there, Girgis was associated with Brookstone Securities, Inc. until June 2012. Thereafter, Girgis was a registered representative of Joseph Gunnar & Co. LLC from June 2012 until June 2013. Finally, Girgis is currently registered with Legend Securities, Inc.

In one of the FINRA actions, FINRA alleged that, while registered through Joseph Gunnar, Girgis caused a violation of Regulation S-P of the Securities Exchange Act of 1934 on the part of his employer firm by sending nonpublic personal information about a customer to an unauthorized individual. In the second FINRA action, the regulator alleged that between February 2011 and January 2013, Girgis failed to disclose and/or timely disclose on his Form U4 four unsatisfied judgments and/or liens including a January 2011 New York income tax warrant of approximately $4,488; a January 2011 New York income tax warrant of approximately $13,418; a November 2011 New York income tax wan-ant of approximately $2,524; and a March 2011 federal income tax warrant of approximately $30,635. Subsequent to these allegations Joseph Gunnar terminated Girgis alleging that the broker violated the conditions of the FINRA action.

New York Attorney General Arrests Advisor Frederick Monroe On Charges of Running a Ponzi Scheme

July 25, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Frederick Monroe (Monroe) has been the subject of at least three customer complaints alleging that the broker misappropriated funds. In total the customers complaint that over $2 million has been taken by the broker. Subsequently, Monroe’s brokerage firm, Voya Financial Advisors (Voya Financial), terminated Monroe due to the allegations. Monroe had been associated with Voya Financial since 2006.

On June 10, 2015, Attorney General Eric T. Schneiderman announced the arrest of Monroe and charging him with stealing over $1 million from investors by fraudulently soliciting them to reinvest their retirement monies in what essentially was a Ponzi scheme. Monroe was accused of luring clients that he provided services to as a financial planner by diverting their monies for his own personal use and paying back earlier investors he had defrauded. Monroe faces up to 25 years in prison.

The New York Attorney General also stated that while the current charges pertain to three victims the investigation has identified at least a dozen individuals who Monroe allegedly defrauded. According to the Attorney General’s felony complaint, Monroe’s fraud was carried by instructing investors to write checks to him personally and then deposited them into his personal operating account. Monroe is alleged to have advertised his services on the Capital Financial Planning, LLC website to “clients who have amassed a significant level of assets and seek to take advantage of advance advisory programs.”

Broker Spotlight: Broker Christopher Orlando

July 24, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Christopher Orlando (Orlando) has been the subject of at least two customer complaints, and one judgement or lien. Customers have filed complaints against Orlando alleging a number of securities law violations including that the broker made unsuitable investments, misrepresentations, and exorbitant commissions and fees among other claims.

Orlando entered the securities industry in 2002. From August 2006 until November 2009, Orlando was registered with J.P. Turner & Company, L.L.C. (JP Turner). From there, Orlando was associated with Brookstone Securities, Inc. until June 2012. Thereafter, Orlando was a registered representative of Joseph Gunnar & Co. LLC from June 2012, until December 2013. Finally Orlando was registered with National Securities Corporation from December 2013 until July 2015.

It is important for investors to know that all advisers have an obligation and 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.

Update On Broker Thomas Buck Investigation

July 24, 2015 | by Staff Attorney

As we previously reported, (See Top Merrill Lynch Broker Thomas Buck Terminated Under Unusual Circumstances) news sources have been investigating the termination of financial advisor Thomas Buck (Buck) and his daughter Ann Buck by Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), now known as Bank of America, NA (Bank of America) under circumstances that some would consider unusual.

Buck’s team managed nearly $1.5 billion in investor assets, was one of the company’s largest producers, and has been associated with Merrill Lynch since. Despite all these factors that would likely lead Merrill Lynch to continue to wish employ Buck, allegations were made that Buck executed unauthorized trades in client accounts.

Buck’s termination happened on March 6, 2015, and shocked colleagues. One person was quoted in news articles foreshadowed additional developments saying “There is a lot more out there. I think it’s a little bit of heavy-handedness on Merrill’s part. Tom was shocked.”

Think Twice Before Investing in Equity Indexed Annuities

July 23, 2015 | by Staff Attorney

As long time readers of our blog know, this is not the first time we have alerted investors to the potential pitfalls to investing in equity indexed annuities. Recently, the Wall Street Journal ran an article concerning a probe being conducted by Sen. Elizabeth Warren (D., Mass.) regarding sales incentives for annuities products issued by insurance companies. The senator’s investigation comes on the heels of a speech given by Luis Aguilar, Commissioner to the Securities and Exchange Commission (SEC), before the North American Securities Administrators Association (“NASAA”), stating that the SEC is looking closely at sales practices with respect complex securities including equity-indexed annuities, leveraged and inverse-leveraged exchange traded funds, reverse convertibles, alternative mutual funds, exchange traded products, and structured notes.

According to news sources, the senator’s focus is on indexed annuities which have become widely known within the industry for granting perks to agents. Sen. Warren is said to have quoted from some of the marketing materials aimed at insurance agents describing sales incentives including “four days in the heart of California’s wine country at the prestigious Calistoga Ranch and Spa”; a trip to South Africa to visit Cape Town and Kruger National Park; and the ability to win “tour the Mediterranean on a private yacht, like royalty, celebrities, and the wealthy elite.” According to the report, Sen. Warren is concerned that earning perks may provide a greater incentive for making recommendations that acting in their clients’ best interest.

Equity indexed-annuities promise a return tied to a stock-market index while protecting against losses if the market falls. Sounds good right. Except there are serious limitations built into the products which make them both very expensive and limited to almost CD like returns. Accordingly, if the market has a blockbuster year, your equity-linked annuity will not perform in kind.

Former Morgan Stanley Broker Debra Lyman Sanctioned Over Unauthorized Trading

July 23, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) fined and suspended broker Debra Lyman (Lyman) concerning allegations that between January 2013 through November 2013 Lyman engaged in unauthorized or discretionary trading in six client accounts without proper written permission.

Lyman was associated with Morgan Stanley from 1998 , through January 17, 2014. Respondent was terminated by the firm for exercising discretion in client accounts without obtaining written authorization. In addition to the FINRA complaint, Lyman has been the subject of at least five customer complaints, the majority of which complain of high commissions and fees associated with unauthorized and excessive trading activity, commonly known and referred to as churning.

NASD Conduct Rule 2510(b) prohibits brokers from exercising discretionary power in a customer’s account unless such customer has given prior written authorization to the broker and the brokerage firm has accepted the account as discretionary. FINRA alleged that from January through November 2013, Lyman effected discretionary transactions in at least six customer accounts without obtaining prior written authorization from the customers and without the accounts being accepted as discretionary by Morgan Stanley.

Gregory Bray and Matt Maberry Under Investigation By FINRA For Unsuitable Security Sales

July 22, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently sanctioned supervisor Gregory Bray (Bray) concerning allegations that Bray failed to adequately supervise the firm’s chief executive officer and compliance officer Matt Maberry (Maberry), who FINRA refers to by the initials “MM”, concerning sales of certain complex products and recommendations of Class A mutual fund shares. In September 1996, Bray became registered with Alton Securities Group, Inc. (Alton Securities) where the alleged misconduct took place.

FINRA alleged that Bray was responsible for supervising the sales activity of Maberry. Maberry was responsible for all other supervisory functions at the Alton Securities. FINRA found that Bray’s supervision of Maberry’s sales activity consisted of a daily review of a trade blotter reflecting trades made by Maberry to customers together with conversations with Maberry regarding trading activity.

FINRA found that Maberry recommended and sold certain complex products to his customers. For example, FINRA found that Maberry recommended and sold leveraged or inverse exchange traded funds and leveraged/inverse mutual funds. In addition, Maberry is alleged to have recommended and sold a steepener note designed to increase in value as the gap between short and long term interest rates increased. FINRA found that Maberry’s sales were unsuitable because he lacked a reasonable basis to recommend these products to his customers because he did not fully understand the potential risks associated with these securities.