Securities Lawyers Blog

Advisor William Baum Subject to Multiple Customer Disputes

January 6, 2020 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor William Baum (Baum), currently employed by Great American Investors, Inc. (Great American) was has been subject to at least eight customer complaints and one regulatory action during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Baum’s customer complaint alleges that Baum recommended unsuitable investments among other allegations of misconduct relating to the handling of their accounts.

In July 2017 FINRA brought a regulatory action against Baum that he settled consenting to findings that he sent 58 text messages relating to his securities business – including messages about investment strategies and specific securities – to sixteen customers over the course of a year. FINRA found that Baum prevented his member firm from supervising those communications, violated the firm’s policy about business correspondence, and contradicted his attestation that he would use his firm’s email system for all business correspondence and retain all correspondence with customers for the firm’s review.

In September 2019 a customer complained that Baum violated the securities laws by alleging that Baum engaged in sales practice violations over the period of 2014 through 2017 by failing to recommend appropriate investments, disclose all conflicts of interest and fully inform claimants about the associated risks. The claim alleges $87,000 in damages and the case settled for $20,000.

Philip Sparacino Barred By Regulator Over Excessive Trading

January 6, 2020 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Philip Sparacino (Sparacino), formerly associated with First Standard Financial Company LLC (First Standard), has been subject to at least three customer complaints, one employment termination for cause, two financial disclosures, and two regulatory matters during his career. The majority of the customer complaints against Sparacino concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In November 2019 FINRA entered into a settlement with Sparacino where he consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA while investigating allegations that he engaged in unauthorized, excessive, and unsuitable trading while registered through his member firm. As a result Sparacino was barred from the financial industry.

In October 2019 First Standard terminated Sparacino due to a regulatory action brought by the state of New Jersey that resulted in revoking Sparacino’s license in that state. The state of New Jersey found that Sparacino made untrue statements and omitted information and engaged in practices and a course of business which operated as a fraud or deceit and was otherwise engaged in dishonest and unethical business practices in the sale of securities resulting in a $250,000 fine and a revocation of license. The state alleged that since at least June 2019, Sparacino has engaged in a pattern of unauthorized, excessive, unsuitable, and fraudulent trading activity on behalf of customers of First Standard following the departure of many of First Standard’s agents. Sparacino had access to dozens of newly inherited customer accounts which he used as a vehicle to generate exorbitant commissions at the customers’ expense.

Advisor Clint Keener Barred By Regulator Over Unsuitable Recommendations

December 30, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Clint Keener (Keener), formerly employed by Capital City Securities, LLC (Capital City) has been subject to at least five customer complaints, three regulatory actions, and one employment termination for cause during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Keener’s customer complaint alleges that Keener recommended unsuitable investments among other allegations of misconduct relating to the handling of their accounts.

In November 2019 FINRA brought a regulatory action against Keener that he settled consenting to findings that he refused to appear for FINRA on-the-record testimony requested in connection with an investigation into potential unsuitable recommendations.

In July 2010 FINRA brought a regulatory action against Keener that he settled consenting to findings that he made unsuitable trades resulting in an overconcentration in a client account of non-investment grade bonds. FINRA also determined that certain transactions were mismarked as unsolicited when in fact thery were solicited.

Advisor Jeffrey Dixson Has Customer Complaint Over Alternative Investments and GPB Capital

December 30, 2019 | by Staff Attorney

Advisor Jeffrey Dixson (Dixson), currently employed by Madison Avenue Securities, LLC (Madison Avenue) has been subject to at least seven customer complaints and one regulatory action during the course of his career. According to a BrokerCheck report the customer complaint concerns alternative investments such private placements and direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

One private placement that a large number of clients of Madison Avenue were sold is GPB Capital Holdings (GPB Capital) related investments. GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officier being indicted for illegally obtaining information on the SEC’s investigation. Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships. While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice. In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future. In sum, investors now know there is nothing to hang onto. By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.

In November 2019 a customer complained that Dixson violated the securities laws by alleging that Dixson engaged in sales practice violations related to investments made between 2016 to the present in various alternative investments and fixed index annuities that were alleged as unsuitable. The allegations include Oregon Securities Law, breach of fiduciary duty, negligence and elder abuse. The claim alleges $150,000 in damages and is currently pending.

Advisor Brian Lockett Suspended By Regulator; Subject to Multiple Client Complaints

December 27, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Brian Lockett (Lockett), formerly employed by Independent Financial Group, LLC (Independent Financial) has been subject to at least nine customer complaints and one regulatory action during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Lockett’s customer complaint alleges that Lockett recommended unsuitable investments among other allegations of misconduct relating to the handling of their accounts.

In November 2019 FINRA brought a regulatory action against Lockett that he settled consenting to findings that he participated in a private securities transaction without providing prior written notice to his member firm. FINRA found that one of Lockett’s customers invested a total of $50,000 in a private placement offering and that Lockett participated in the transaction by introducing the transaction to the customer, summarizing the reasons he liked the investment, meeting with the customer to review and sign the paperwork and causing the paperwork to be submitted. FINRA found that Lockett did not receive compensation for his participation in the transaction and that Lockett attempted to conceal his role in the transaction by suggesting to the customer that the customer communicate about the transaction with Lockett in the future via Lockett’s personal email address. According to FINRA, after the customer complained to the firm, it entered into a settlement to resolve the complaint.

Advisor Genevieve Mar Has Complaints Over Alternative Investment Sales

December 27, 2019 | by Staff Attorney

Advisor Genevieve Mar (Mar), currently employed by Berthel, Fisher & Company Financial Services, Inc. (Berthel Fisher) has been subject to at least four customer complaints and one termination for cause during the course of her career. According to a BrokerCheck report the customer complaints concerns alternative investments such as direct participation products (DPPs) like non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have represented dozens of investors who suffered losses caused by these types of high risk, low reward products.

In May 2019 a customer complained that Mar violated the securities laws by alleging that Mar engaged in sales practice violations related to investments purchased between 2010 through 2015 that were unsuitable and misrepresented to them by the representative. The customers also allege that the firm failed to supervise the actions of the representative. The claim alleges $1,500,000 in damages and is currently pending.

In July 2018 a customer complained that Mar violated the securities laws by alleging that Mar engaged in sales practice violations related to investments purchased between 2014 through 2016 were unsuitable, are not preforming as expected, and that the high risk level associated with the investments was not explained to them at the time of purchase. They also allege the firm failed to supervise the actions of the representative. The claim alleges $250,000 in damages and is currently pending.

Advisor Justine Zhou Accused of Selling Private Real Estate Investments – Recovery Options

December 26, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Jun (Justine) Zhou (Zhou) was discharged by her employer after being accused of offering securities not reported to the company. According to BrokerCheck records, Zhou is formerly registered with The Financial Industry Regulatory Authority (FINRA) member firm The Leaders Group. In addition, Zhou disclosed one regulatory complaint. If you have been a victim of Zhou’s alleged misconduct our firm may be able to assist you in recovering funds.

In November 2019 FINRA filed a regulatory action alleging that Zhou consented to the sanction and findings that she between April 2017 and June 2018, through a small real estate company she wholly owned and controlled, participated in the sale of $9,050,000 in membership interests in private real estate funds managed by a third party and $5,000,000 in a promissory note with that third-party fund manager. FINRA found that the fund membership interests and the promissory note were securities, involved 15 transactions, and seven investors. FINRA determined that Zhou’s real estate company received $179,000 in compensation from the third-party fund manager. In addition, FINRA alleged that on June 4, 2018, Zhou formed Zhou Fund I LLC (Zhou Fund), a private real estate fund managed by Zhou’s real estate company. Zhou is alleged to have subsequently filed a notice of exempt offering of securities with the Securities and Exchange Commission related to twelve transactions in June and July 2018 through which Zhou and her real estate company sold $2,000,000 in membership interests in Zhou Fund to twelve investors.

Katherine Nishnic Has Investor Complaints Over Structured Note Products

December 24, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Katherine Nishnic (Nishnic), currently associated with Centaurus Financial, Inc. (Centaurus), has been subject to at least eight customer complaints during her career. The majority of the customer complaints against Nishnic concern allegations relating to unsuitable recommendations in structured products. The law offices of Gana Weinstein LLP are currently representing investors, including Centaurus 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 improper 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.

Structured products range in risk from benign to extreme. However, most structured products produce inferior risk/return profiles than ordinary debt or equity instruments because the brokerage firms that issue these products seek to profit from the spread between the payment to investors and the amount of money the brokerage firm can make from the issuance. When dealing with complex structured products most investors will lack the ability to understand the merits of investments nor are they appropriate for investors seeking a fixed or reliable income and have a desire for preservation of capital.

Albert Foronda Has Excessive Trading Complaint

December 24, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Albert Foronda (Foronda), currently associated with Spartan Capital Securities, LLC (Spartan Capital), has been subject to at least three customer complaints and one regulatory investigation during his career. The majority of the customer complaints against Foronda concern allegations of high frequency trading activity also referred to as churning or excessive trading.

In November 2019 FINRA initiated an investigation into Foronda stating that FINRA made a preliminary determination to recommend that disciplinary action be brought against Foronda alleging violations for unauthorized transactions for exercising discretion without written authorization.

In May 2019 a customer complained that Foronda violated the securities laws by alleging that Foronda engaged in unsuitability, excessive trading, and negligence in handling of their account. The claim alleges $650,000 in damages and is currently pending.

In April 2018 a customer complained that Foronda violated the securities laws by alleging that Foronda engaged in breach of fiduciary duty, breach of contract, and negligence in handling of their account. The claim alleges $90,000 in damages and is currently pending.

GPB Capital Alleged to Have Been Sold by Purshe Kaplan Even After Compliance Discovered Red Flags of Fraud

December 22, 2019 | by Staff Attorney

According to a compliance officer with Purshe Kaplan Sterling Investments, Inc., (Purshe Kaplan) the firm continued to sell securities offered by GPB Capital Holdings (GPB Capital) after she had reported misgivings as to the entities business model and recommended that the firm not sell the product. According to court documents, the compliance officers responsibilities included reviewing new product offerings, regulatory disclosures, and conducting monthly and quarterly compliance reviews among other duties.

In January 2016, the compliance officer raised concerns about GPB Capital and did not recommend that the product be added to the Purshe Kaplan platform based upon her finding that members of senior management at the sponsor of the product were using investor funds for personal business interests. However, Purshe Kaplan dismissed her concerns and re-reviewed GPB Capital without the compliance officer’s input. Further, Purshe Kaplan instructed the compliance officer not to raise concerns about the product before it was offered to purchasers. Moreover, it was alleged that less experienced personnel were given the role to evaluate GPB Capital. If these allegations are true Purshe Kaplan may have intentionally withheld material information from all of its investors concerning GPB Capital.

One private placement that a large number of clients of Purshe Kaplan were sold is GPB Capital related investments. GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation. Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships. While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice. In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future. In sum, investors now know there is nothing to hang onto. By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.