Securities Lawyers Blog

Gary Barth Has Complaint Over Alternative Investment Sales Practices

June 29, 2020 | by Staff Attorney

Advisor Gary Barth (Barth), currently employed by Ameritas Investment Company, LLC (Ameritas) has been subject to at least four customer complaints during the course of his career. According to a BrokerCheck report one customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In November 2019 a customer complained that Barth violated the securities laws by alleging that Robare engaged in sales practice violations related to an misrepresentation in the sale of REITs. The claim alleges $600,000 and is currently pending.

According to BrokerCheck, Barth operates through several d/b/a entities including Barth Financial Wealth Management Group and Barth Financial. Barth also engages in other businesses including Kaufmann Building LLC, BAB Properties LLC, and Kearney Hub among other business related disclosures.

Advisor David Weisberg Suspended Over Excessive Trading Charges

June 25, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker David Weisberg (Weisberg), formerly associated with Worden Capital Management LLC (Worden Capital), has been subject to at least four customer complaints and one regulatory action during his career. Several of those complaints against Weisberg concern allegations of unauthorized trading activity and the regulatory action includes allegations of excessive trading also referred to as churning among other securities laws violations.

In April 2020 FINRA filed a regulatory action finding that Weisberg consented to sanctions and findings that he engaged in excessive and unsuitable trading in the account of an elderly customer. FINRA found that Weisberg began soliciting stock trades and some of Weisberg’s recommendations involved in-and-out trading and many of them used margin. FINRA determined that the customer relied on Weisberg’s advice and in virtually every case the customer purchased or sold exactly the quantity of shares that Weisberg suggested. FINRA found that the costs of Weisberg’s trading in the customer’s account were significant and Weisberg did not track the trading costs or take them into consideration when making recommendations. FINRA found that the trading generated commissions of approximately $75,638 while the customer lost approximately $55,627. Finally, FINRA also found that Weisberg used discretion to initiate stock trades in customers’ accounts without written authorization and his member firm who never accepted the accounts for discretionary trading.

In July 2019 a customer complained that Weisberg violated the securities laws by alleging that Weisberg engaged in sales practice violations related to negligence, unsuitability, breach of fiduciary duty, breach of contract, negligent misrepresentation and omissions. The claim is alleges $21,579 and is currently pending.

Mark Robare Has Complaint Over Alternative Investment Sales Practices

June 24, 2020 | by Staff Attorney

Advisor Mark Robare (Robare), currently employed by Triad Advisors LLC (Triad Advisors) has been subject to at least one customer complaint and one regulatory matter during the course of his career. According to a BrokerCheck report one customer complaint concerns alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.

In March 2020 a customer complained that Robare violated the securities laws by alleging that Robare engaged in sales practice violations related to an unsuitable investment strategy beginning in 2014. The claim alleges $500,000 and is currently pending.

In September 2014 the SEC alleged that Robare used Fidelity Investments for clearing services for its advisory clients whereby Robare entered into a revenue sharing arrangement with Fidelity Investments in 2004. In this arrangement, Fidelity paid Robare to invest in certain mutual funds offered on Fidelity’s platform and Robare received nearly $400,000 from Fidelity from 2005 to 2013 as a result of the arrangement. The SEC claimed that Robare modified its Form ADV disclosures in December 2011 after Fidelity advised Robare that it would cease making payments if the arrangements were not disclosed. The SEC fined Robare $50,000.

Carey Watermark Investors 2 Suffer Losses – Investment Attorneys

June 24, 2020 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating recommendations by brokerage firms for their clients to invest in Carey Watermark Investors 2 aka Watermark Lodging Trust – a non-traded real estate investment trust (non-traded REIT). Carey Watermark Investors 2 originally sold shares for $10.00. The fund claims to have an estimated net asset value per share of $11.41. However, secondary market trading sources cite a far smaller value at only $5.50 a share – implying that the trading markets anticipate that Carey Watermark Investors 2 has substantially dropped in value.

As a background, Watermark Lodging Trust claims to be a premier lodging REIT with a portfolio of high-quality lodging assets led by an internal management team with a distinctive record of stockholder value creation. WLT claims to have been formed to take advantage of current and future opportunities in the lodging industry and seeks to provide investors with attractive, risk-adjusted returns and long-term growth in value.

Thereafter, on April 13, 2020, Carey Watermark Investors 2 and Carey Watermark Investors 1 merged in an all-stock transaction to create Watermark Lodging Trust. In addition, since March 2020 the REIT has suspended distributions due to the reduced travel demand and related financial impact resulting from COVID-19.

In May 2020 the company filed a notice with the SEC stating that “approximately $277 million of indebtedness is scheduled to mature after the date of this Form 8-K through December 31, 2020. This indebtedness is nonrecourse mortgage indebtedness and the Company has extension options with respect to a portion of such indebtedness. If the Company’s lenders do not provide covenant relief or if the Company is unable to repay, refinance or extend any such indebtedness, the lenders may declare events of default and seek to foreclose on the underlying hotels. We may also seek to give properties back to the lenders. We have begun active efforts to raise capital through a variety of strategies, including, without limitation, sales of assets, potentially at discounted prices; incurrences of debt; joint venture arrangements; and/or issuances of equity securities in transactions which may be dilutive to our stockholders.”

Advisor Robert Radli Jr. Alleged to Have Recommended Unsuitable Energy Securities

June 23, 2020 | by Staff Attorney

According to BrokerCheck records financial advisor Robert Radli Jr. (Radli), currently employed by Raymond James & Associates, Inc. (Raymond James), has been subject to at two customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA) Radli has been accused by customers of unsuitable investment advice concerning various investment products including energy stocks most likely including master limited partnerships (MLPs). The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments.

In March 2020 a customer filed a complaint alleging that Radli violated the securities laws including by engaging in unsuitable investments which resulted in losses from a sector concentration from June 2011 through February 2020 and causing $800,000 in damages. The claim is currently pending.

In January 2020 a customer filed a complaint alleging that Radli violated the securities laws including by engaging in unsuitable investments from June 2011 concerning oil & gas investments causing $600,000 in damages. The claim is was denied by the firm.

Our firm handles claims and is also investigating 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.

Rick Davidson Has Investor Complaint Over Corporate Debt and Structured Products

June 22, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Rick Davidson (Davidson), currently employed by National Securities Corporation (National Securities) has been subject to at least six customer complaints, one employment termination for cause, and one bankruptcy during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Davidson’s customer complaints alleges that Davidson recommended unsuitable investments in various investments such structured products and corporate debt among other allegations of misconduct relating to the handling of their accounts.

In May 2016 Davidson was terminated by Morgan Stanley on allegations relating to registered representative’s exercise of discretion in clients’ accounts as well as receipt of a loan from a Morgan Stanley employee.

Thereafter, in May 2019 Davidson declared bankruptcy.

The law offices of Gana Weinstein LLP are currently representing investors who were surprised to find out that the “bonds” that were recommended by their advisors have almost completely stopped paying interest while plummeting in value. What many investors in this situation did not realize was that they were not sold bonds at all but instead complex structured products that go by a variety of names including steepener notes, adjustable rate market notes, spread linked notes, or structured notes. Regulators have already stated that it is imporoper to sell these investments as a fixed income substitute or to compare them to bonds in terms of producing a revenue stream. However, in our firm’s experience it appears that many brokers have been selling structured products as bond alternatives.

David Krumrey Barred Over Risky EFT and VIXX Trading – Investor Recovery

June 22, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor David Krumrey (Krumrey), in January 2018, was sanctioned by FINRA and barred from the financial industry concerning his failure to respond to an investigation into the sales of leveraged exchanged traded funds (Non-Traditional ETFs). Krumrey was previously terminated by his employer Oppenheimer & Co. Inc (Oppenheimer) because he attempted to settle a complaint away from the firm. In addition, Krumrey has been subject to five customer complaints concerning his securities activity. These investors have alleged in losses stemming allegations of unsuitable Non-Tradition ETF trading.

In January 2018 FINRA barred Krumrey for failing to respond to FINRA’s requests for information.

In January 2019 a FINRA panel rendered a ruling that Krumrey’s employer – Oppenheimer – was liable for investments he made to an investor. The claims involved claims of breach of fiduciary duty, negligence, negligent supervision, respondeat superior, unjust enrichment, and violations of the Louisiana Securities Law. The causes of action relate to securities including Amarin Corp. PLC ADR and Energy XXI Limited, and exchange-traded notes issued by Barclays.

As a background, Non-Traditional ETFs behave drastically different and have different risk qualities from traditional ETFs. While traditional ETFs seek to mirror an index or benchmark, Non-Traditional ETFs use a combination of derivatives instruments and debt to multiply returns on underlining assets, often attempting to generate 2 to 3 times the return of the underlining asset class. Non-Traditional ETFs are also used to earn the inverse result of the return of the benchmark.

Woodbury Financial Advisor James Kennedy Barred From Industry Over Unapproved Business Activity

June 21, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor James Kennedy (Kennedy) has been accused by a financial regulator of engaging in unapproved business activities among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Kennedy was employed by his prior employer Woodbury Financial Services, Inc. (Woodbury Financial) prior to being investigated concerning his activities. If you have been a victim of Kennedy’s alleged misconduct our firm may be able to assist you in recovering funds.

In April 2020, FINRA brought a regulatory action and fount that Kennedy consented to sanctions and findings that he failed to provide documents and information requested by FINRA in connection with its investigation into a tip received. FINRA found that Kennedy provided partial but incomplete responses to FINRA’s requests and then subsequently ceased cooperating with the investigation. FINRA also determined that Kennedy’s former firm filed a Form U5 disclosing his termination and explaining that he was permitted to resign for engaging in an unapproved outside business activity involving a financial transaction with a couple of clients.

Kennedy’s disclosed outside business disclosures include being an insurance agent, Kennedy Investment Consultants LLC, and Hoy Road Properties. It is unclear whether or not the allegations involve any of these disclosed entities.

Advisor Todd Esh Barred By SEC Over BirdDog Investment Fraud – Investor Recovery Options

June 21, 2020 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Todd Esh (Esh) has been accused by a financial regulator of engaging in the fraudulent sale of securities among other allegations. According to records kept by The Financial Industry Regulatory Authority (FINRA) Esh was employed by his prior employer LPL Financial LLC (LPL Financial) prior to being investigated concerning his activities. If you have been a victim of Esh’s alleged misconduct our firm may be able to assist you in recovering funds.

In April 2020, The SEC brought an action in the U.S. District Court for the Western District of Missouri, Western Division against Todd Esh and others. The SEC alleges that the defendants engaged in a fraudulent securities offering orchestrated by Phillip Hudnall, with help from Esh, operating through BirdDog Business, LLC and BirdDog Oil Equipment entities that Hudnall and Esh founded and controlled. According to the SEC, Hudnall and Esh raised more than $3.6 million by selling promissory notes issued by BirdDog to investors. Esh and other allegedly promised that they would use investor funds to buy and refurbish used oil and gas equipment which BirdDog would then resell at a profit. However, the SEC claims that Hudnall misappropriated most of investors’ money and squandered the rest on a bogus equipment deal.

The SEC claims that the defendants promised that the notes would pay a 30% return after just nine months to investors and also emphasized the safety of the investment, promising investors that their principal would be secured by a first priority security interest in specific oil and gas equipment. Hudnall and BirdDog further assured investors, according to the SEC, that they had experience and had done these sorts of transactions before. In offering materials provided to investors the defendants highlighted two purportedly profitable equipment transactions that they had already completed. But the SEC determined that these representations regarding previous deals were lies and, the two completed transactions described in BirdDog’s term sheet were fake. In addition to misrepresenting their experience, the SEC found that defendants were not using investor funds as promised. In fact, the SEC claims that defendants made only one attempt at investing BirdDog’s funds as promised ending in a spectacular failure.

Oil & Gas Investment Funds See Dramatic Declines – Investor Loss Recovery

June 9, 2020 | 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. Many investors do not realize that many of these investments contain futures contracts and contain derivative features that warp and distort the value of these funds and make them unsuitable for long-term holdings. Investors who have been recommended to buy and hold these products by their financial advisors may have viable claims for investment recovery.

These oil and gas investment funds include:

United States Oil Fund LP – USO
ProShares K-1 Free Crude Oil Strategy ETF – OILK
Breakwave Dry Bulk Shipping ETF – BDRY
Credit Suisse X-Links Crude Oil Shares Covered Call ETN – USOI
SPDR S&P Oil & Gas Equipment & Services ETF – XES
iShares U.S. Oil Equipment & Services ETF – IEZ
United States Brent Oil Fund LP – BNO
VanEck Vectors Oil Services ETF – OIH
InfraCap MLP ETF – AMZA
Invesco S&P SmallCap Energy ETF – PSCE
Invesco Dynamic Oil & Gas Services ETF – PXJ
iPath Pure Beta Crude Oil ETN – OLEM
United States Gasoline Fund LP – UGA

Some of these products listed utilize investments in futures contracts for natural gas, crude oil, heating oil, gasoline, and other petroleum-based fuels that are traded on the New York Mercantile Exchange, ICE Futures or other U.S. and foreign exchanges. These investments warn that the price relationship between the near month contract to expire and the next month contract to expire that compose the Benchmark Futures Contract will vary and may impact both the total return over time of the investments net-asset-value (NAV), as well as the degree to which its total return tracks other oil and gas related price indices’ total returns.