Securities Lawyers Blog

NorthStar Healthcare REIT Investors Suffer Massive Losses

June 17, 2019 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating recommendations by brokerage firms for their clients to invest in NorthStar Healthcare Income Inc., (NorthStar Healthcare) – a non-traded real estate investment trust (Non-Traded REIT). According to newsources, NorthStar Healthcare has suffered massive losses and may only be worth less than 30 cents for every dollar purchased. In addition, NorthStar Healthcare no longer distributes a dividend – which previously had only been a return of investor principal and not funds from any business operations. As is too common in the brokerage industry, firms fail to understand the flawed Non-Traded REIT business model and only recommend these products for their 7% commissions – not because they benefit investors.

According to the NorthStar Healthcare’s website, the investment formed to originate, acquire and asset manage equity and debt investments in healthcare real estate. NorthStar Healthcare claims that it is focused on making investments in the needs-driven senior housing sector including independent living facilities, assisted living, memory care, and skilled nursing facilities. NorthStar Healthcare launched in February 2013 and raised total gross proceeds of $2 billion, including $225.3 million through its distribution reinvestment plan. The company claims to have a $2.4 billion portfolio of 652 properties as of the third quarter of 2018.

According to The DI Wire, in December 2017, NorthStar Healthcare reduced its distribution rate from 6.67% to 3.31%. One year later NorthStar Healthcare lowered the net asset value of its common stock from $8.50 per share to $7.10 per share. In addition, in October 2018, NorthStar Healthcare told shareholders that it was suspending its repurchase program – unless the shareholder was dead or had a qualifying disability.

Gabriel Block Subject to Regulatory Actions and Churning Complaints

June 16, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Gabriel Block (Block) has been subject to at least 12 customer complaints and five regulatory actions during his career. Block is currently barred from the industry but was formerly employed by First Standard Financial Company LLC (First Standard Financial) and National Securities Corporation (National Securities). The majority of the customer complaints against Block concern allegations of high frequency trading activity also referred to as churning.

In May 2019 the New Jersey Bureau of Securities revoked Block’s license in his home state of New Jersey finding that Block engaged in dishonest or unethical business practices in the securities business. The state went on to find that Block engaged in a device, scheme, or artifice to defraud.

In April 2019 a customer complained that Block violated the securities laws by alleging that the financial advisor engaged in unsuitable and excessive trading causing $2,000,000 in damages. The claim is currently pending.

In March 2019 a customer complained that Block violated the securities laws by alleging that the financial advisor engaged in unsuitable trading. The claim is currently pending.

In February 2019 a customer complained that Block violated the securities laws by alleging that the financial advisor engaged in unsuitable and unauthorized trading causing $668,000 in damages. The claim is currently pending.

Ricky Flatt Terminated Over Taking Money From Clients – Investor Recovery

June 11, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Ricky Flatt (Flatt) has taken loans from a client and engaged in certain business activities not approved by his advisory firm. Flatt, formerly registered with Royal Fund Management, LLC (Royal Fund) out of Troy, Michigan has been terminated by Royal Fund and under investigation by the State of Michigan for accepting funds from a client. In addition, Flatt disclosed at least 12 tax or judgement liens totaling hundreds of thousands of dollars.

In March 2019 the State of Michigan opened an investigation into Flatt alleging that he borrowed money from a client and defaulted on the loan while also failing to disclose an outside business activity.

In March 2019 Royal Fund terminated Flatt after alleging that Flatt breached the firm’s internal policies and procedures concerning reporting business activities and loans from a client.

Flatt’s IARD disclosures state that Flatt has an outside business activity called Financial Strategies, Inc. selling certain insurance policies. It is unclear at this time what business activity that investigations concern.

Wells Fargo Employed Risky Broker Leonard Kinsman

June 11, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Leonard Kinsman (Kinsman), currently employed by Wells Fargo Advisors Network, LLC (Wells Fargo) has been subject to at least five customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Kinsman’s customer complaints allege that Kinsman recommended unsuitable securities recommendations among other allegations of misconduct in the handling of customer accounts.

In addition, a recent Washington Post article exposed how brokerage firms as large as Wells Fargo still hire brokers with troubling work histories. Kinsman had prior multiple complaints from clients and worked for two banned brokerages firms. One firm was Meyers Pollock Robbins, a notorious bucket shop whose ex-president pleaded guilty to charges of engaging in a pump-and-dump stock scheme. The fraud was alleged to have been linked to a bribery scheme coordinated by organized crime.

Recently, Kinsman was the subject to a new customer complaint where the client accused the broker of losing a $2.25 million insurance settlement after the client’s husband died unexpectedly in 2011. The complaint alleges aggressive options trading and false documentation.

Laidlaw’s Peter Viglione Subject to Multiple Churning Complaints

June 10, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Peter Viglione (Viglione) has been subject to at least four customer complaints during his career. Viglione is currently employed by Laidlaw & Company (UK) Ltd. (Laidlaw). The majority of the customer complaints against Viglione concern allegations of high frequency trading activity also referred to as churning.

In May 2018 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione’s activities from 2015 through 2017 caused $20,179 in damages. The claim settled.

In May 2018 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione engaged in unauthorized trading and excessive trading from 2015 through 2016 caused $200,000 in damages. The claim is currently pending.

In July 2012 a customer filed a complaint alleging that Viglione violated the securities laws by, among other things, that Viglione engaged in unauthorized trading, excessive trading, and misrepresentations causing $780,000 in damages. The claim was settled for $125,000.

Dana Hawkins Subject to Customer Disputes Over Structured Products

June 10, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Dana Hawkins (Hawkins), currently employed by Centaurus Financial, Inc. (Centaurus Financial) has been subject to three customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), most of Hawkins’ customer complaints allege that Hawkins made unsuitable recommendations in certain structured products.

Our firm has brought cases against brokers for misrepresenting the features of structured products or selling them as a bond alternative. Structured products are typically debt instruments where the payout is based on the underlying stock, equity index, currency, or any reference source. Many, but not all, structured products are advertised as having some principal protection component – meaning that the investor is guaranteed the return of some amount of their initial investment. However, studies have shown that structured products are often best used as a niche product for sophisticated investors employing complicated strategies. The typical investor cannot benefit from these products over traditional investments.

In February 2019 a customer filed a complaint alleging that Hawkins violated the securities laws by, among other things, that Hawkins sold unsuitable investments and several other allegations associated from activity in late 2013 to early 2019. The customer alleged $253,757 in damages. The claim is currently pending.

SEC Brings Action Against Christopher McClure Over Undisclosed Fees

June 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Christopher McClure (McClure), currently employed by Westport Capital Markets, LLC (Westport Capital) has been subject to at least two customer complaints and a regulatory action brought by the SEC during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), McClure’s customer complaints allege that McClure breached his fiduciary duty among other allegations.

In December 2017 The Securities and Exchange Commission (SEC) Connecticut-based investment advisory firm and its principal, McClure, with breaching their fiduciary duties and defrauding advisory clients by repeatedly purchasing securities that generated significant amounts of undisclosed compensation.

The SEC’s complaint filed in the U.S. District Court for the District of Connecticut alleged that Westport Capital and McClure invested advisory clients’ funds in risky securities that generated hundreds of thousands of dollars in undisclosed mark-ups for Westport and resulted in more than $1 million in losses for clients. The SEC found that Westport purchased securities from underwriters at a discount to the public offering price and then, acting as a principal for its own account, re-sold those same securities to its advisory clients at higher prices without disclosing the mark-up. The SEC further alleged that Westport and McClure defrauded a client by acting contrary to the client’s express objectives and instead repeatedly investing the client in risky offerings that generated hidden mark-ups. Moreover, the SEC also found that Westport and McClure made false and misleading representations to clients regarding the compensation that Westport would receive from their accounts.

Demos Argyros Subject to Investment Disputes

June 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Demos Argyros (Argyros), currently employed by Oppenheimer & Co. Inc. (Oppenheimer) has been subject to at least five customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Argyros’ customer complaints allege that Argyros recommended unsuitable securities recommendations in a variety of products including unsuitable equities and warrants among other allegations of misconduct in the handling of customer accounts.

In February 2019 a customer filed a complaint alleging that Argyros violated the securities laws by, among other things, that Argyros breached his fiduciary duty, negligence, breach of contract relating to unsuitable equities and warrants from May 2008 until November 2016 causing $100,000 in damages. The claim is currently pending.

In April 2017 a customer filed a complaint alleging that Argyros violated the securities laws by, among other things, that Argyros breached his fiduciary duty, churning, excessive fees and missing funds from January 2008 until December 2016 causing $900,000 in damages. The claim settled for $275,000.

Mitchell Black Has Several Variable Annuity Sales Practice Complaints

June 6, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Mitchell Black (Black), currently employed by Ameriprise Financial Services, Inc. (Ameriprise) has been subject to six customer disputes during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the majority of customer complaints against Black concerns allegations over variable annuity sales practices.

In March 2019 a customer filed a complaint alleging that Black violated the securities laws by, among other things, that Black recommended inappropriate variable annuities in 2013 and 2014 and misrepresented the associated provisions causing $1,000,000 in damages. The claim was denied by the firm.

In May 2014 a customer filed a complaint alleging that Black violated the securities laws by, among other things, that Black sold unsuitable variable annuities, REITs, and was charged excessive commissions and fees of $40,000. The claim was settled for $24,787.

In March 2011 a customer filed a complaint alleging that Black violated the securities laws by, among other things, that Black sold unsuitable variable annuities, insurance policies, and VULs causing $750,000 in damages. The claim was settled for $126,424.

Merrill Lynch Advisor Jeffrey Smith Subject to Multiple Investment Complaints

June 5, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Jeffrey Smith (Smith), currently employed by Merrill Lynch, Pierce, Fenner & Smith Incorporated (Smith) has been subject to at least eight customer complaints during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Smith’s customer complaints allege that Smith recommended unsuitable securities recommendations in equity securities among other allegations of misconduct in the handling of customer accounts.

In April 2019 a customer filed a complaint alleging that Smith violated the securities laws by, among other things, that Smith made unsuitable investments and failed to follow instructions. The claim is currently pending.

In February 2019 a customer filed a complaint alleging that Smith violated the securities laws by, among other things, that Smith made unsuitable investments. The claim is currently pending.

In October 2016 a customer filed a complaint alleging that Smith violated the securities laws by, among other things, that Smith made unsuitable recommendations from March 2015 until October 2016 causing damages. The claim settled for $50,000.