Securities Lawyers Blog

Derrick Trussell Barred Over Unapproved Product Sales – Investor Recovery

May 27, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating multiple claims that advisor Derrick Trussell (Trussell) has engaged in an investment fraud scheme by selling products not approved by his brokerage firm. Trussell, formerly registered with PFS Investments Inc. (PFS Investments) out of San Antonio, Texas has been accused by at least four customers of engaging in unapproved activity.

In May 2017 PFS Investments terminated Trussell after alleging that the firm received allegation that the representative engaged in an unapproved outside business activity and/or an undisclosed private securities transaction in which a client’s funds were used to purchase securities not offered by PFSI without the client’s knowledge or consent.

Thereafter in August 2018 FINRA barred Trussell after FINRA stated that Trussell failed to respond to FINRA request for information.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in fraudulent securities sales or misappropriation schemes. Trussell’s activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Advisor Ashley Woodard Subject to Complaints Over REITs and Alternative Investments

May 26, 2019 | by Staff Attorney

Advisor Ashley Woodard (Woodard), currently employed by NYLife Securities LLC (NYLife Securities) has been subject to at least five customer complaints, one tax lien or judgment, and one bankruptcy. According to a BrokerCheck report some of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

Woodard operates under the d/b/a name West End Financial Strategies LLC out of Greenville, South Carolina. In addition, Woodard has several other disclosed outside business activities including Mancora Enterprises LLC and 9/6 Productions LLC.

In May 2019 a customer complained that Woodard violated the securities laws by alleging that the financial advisor invested them in various alternative, illiquid, and unsuitable securities causing $1,000,000 in damages. The claim is currently pending.

In April 2019 a customer filed a complaint alleging that Woodard violated the securities laws by alleging misrepresentations and suitability related to the alternative/illiquid securities that were recommended. The claim alleged $100,000 in damages and is currently pending.

James Bylenga Accused of Borrowing Client Funds – Investor Recovery

May 26, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor James Bylenga (Bylenga) has engaged in a loan scheme with clients. Bylenga, formerly registered with LPL Financial LLC (LPL Financial) and operating out of Portage, Michigan, has been accused by a customer of soliciting funds for a loan. Bylenga operated out of the d/b/a firm The Retirement Wealth Management Group while working for LPL Financial.

In April 2019, FINRA brought an action and found that Bylenga consented to sanctions that he refused to produce documents and information requested by FINRA during the course of an investigation that commenced after his former member firm amended his termination reporting form. According to FINRA, LPL Financial’s an internal review determined that Bylenga may have received loans from his clients while associated with the firm.

Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in loan or misappropriation of asset schemes. The provision of loans, promissory notes, and activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.

Advisor Richard Bernstein Has Investor Complaints

May 24, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Richard Bernstein (Bernstein), currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo) 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), Bernstein’s customer complaints allege that Bernstein recommended unsuitable investments and securities among other allegations.

In February 2019 a customer filed a complaint alleging that Bernstein violated the securities laws by, among other things, that the client is seeking at least $53,000.00 in damage and claims that from February 2013 to July 2015 the advisor made unauthorized trades which conflicted with the client’s stated investment goals. The claim is currently pending

In January 2019 a customer filed a complaint alleging that Bernstein violated the securities laws by, among other things, that from 2015 through 2016 the advisor made unsuitable investments. The claim is currently pending.

Advisor Michael Greenfield Subject to Investment Complaints

May 24, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Michael Greenfield (Greenfield), currently employed by Newbridge Securities Corporation (Newbridge Securities) has been subject to at least six customer complaints and one bankruptcy cause during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Greenfield’s customer complaints allege that Greenfield recommended unsuitable securities recommendations in a variety of products including master limited partnerships (MLPs), municipal and corporate bonds, and other securities among other allegations of misconduct in the handling of customer accounts.

In January 2019 a customer filed a complaint alleging that Greenfield violated the securities laws by, among other things, that Greenfield was negligent and breached his fiduciary duty with respect to the purchase of MLPs. MLPs are speculative oil and gas related investments that are linked to the oil markets. The alleged damages are $200,000 and the claim is currently pending.

In July 2015 Greenfield declared bankruptcy. Large tax liens or bankruptcy filings on a broker’s CRD can be a red flag that the broker may be influenced to engage in high commission activity in order to satisfy personal debts. In addition, a broker’s inability to manage their own finances is relevant in a customer’s decision to use their services.

Advisor Kurt Jackson Subject to Complaints Over REIT Investments

May 23, 2019 | by Staff Attorney

Advisor Kurt Jackson (Jackson), currently employed by Commonwealth Financial Network (Commonwealth Financial) has been subject to at least three customer complaints. According to a BrokerCheck report some of the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs. The attorneys at Gana Weinstein LLP have extensive experience handling investor losses caused by these types of products.

In March 2019 a customer filed a complaint alleging that Jackson violated the securities laws by alleging breach of fiduciary duty, negligence and other causes of action related to the sale of several alternative investments. The claim alleges $500,000 in damages and is currently pending.

Our firm often handles cases involving direct participation products, Non-Traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These products are almost always unsuitable for investors. In addition, the brokers who sell them are paid additional commission in order to hype inferior quality investments which provides a perverse incentives by brokers to create an artificial market for products that no honest advisor would sell.

Advisor Paul Mante Alleged to Have Recommended Unsuitable Puerto Rico Municipal Bonds

May 23, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Paul Mante (Mante), employed by The GMS Group, LLC (The GMS Group), has been subject to eight customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA) Mante has been accused by a customers of unsuitable investment advice concerning recommendations to invest in Puerto Rico bonds. Puerto Rico has been devastated by a $70 billion debt it cannot pay in addition to extensive hurricane damage. However, according to news reports, the process to resolve Puerto Rico’s debts could take years.

In January 2018 a customer filed a complaint alleging that Mante violated the securities laws by, among other things, making misrepresentations of Puerto Rico bonds for the period of May 2014 through to December 2017. The complaint alleged $1 million in damages and was settled for $450,000.

In January 2018 a customer filed a complaint alleging that Mante violated the securities laws by, among other things, that the broker negligently recommended and misrepresented the safety of the Puerto Rico bonds from the time period of May 2013 through to September 2014. The complaint alleged $40,000 in damages and was settled for $13,500.

Xavier Patino Sanctioned Over Variable Annuity Sales Practices

May 22, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Xavier Patino (Patino), currently employed by Newbridge Securities Corporation (Newbridge Securities) and formerly with J.P. Morgan Securities LLC (JP Morgan) has been subject to one regulatory action, one one employment termination for cause, and two customer disputes during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the regulatory action against Patino concerns allegations over variable annuity sales practices.

In June 2018 Patino consented to sanctions and to the entry of findings that Patino made material misstatements to a customer and guaranteed the customer against loss in connection with a variable annuity purchase. FINRA also found that Patino solicited this customer to purchase a $192,000 variable annuity contract with the variable annuity prospectus describing the features and risks of the product. However, FINRA found that prior to finalizing the sale the client presented Patino with a document she had prepared and asked Patino to sign it explicitly signifying that he agreed with the statements. FINRA found that thereafter, the customer’s variable annuity lost value, she complained to Patino’s member firm about her losses, and presented the guarantees signed by Patino.

In April 2017, JP Morgan discharged Patino claiming that he admitted to signing an unapproved document that guaranteed the customer would not lose principal on an investment in violation of firm policy.

Yield Enhancement Strategy (YES) – Did Your Broker Downplay the Risk?

May 22, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to investigate significant investor losses in a risky options trading strategy employed by several large brokerage houses referred to as a Yield Enhancement Strategy (YES) or Collateral Yield Enhancement Strategy (CYES). These firms include UBS Financial Services, Merrill Lynch, Credit Suisse, and Morgan Stanley. According to marketing materials, the YES strategy seeks to increase returns for investors through the trading of options. These options trading program employ various options trading strategies including the iron condor.

Our firm is investigating whether or not brokers misrepresented the safety of the strategy by pitching a yield enhancement strategy as a safe way to generate additional returns. For instance Rick Selvala (Selvala), CEO and co-founder of Harvest Volatility Management, LLC (Harvest) discussed his firm’s CYES strategy with FINalternatives who claimed the strategy “works particularly well for clients who are running more conservative asset allocations or portfolios.”

The article states that CYES has over 800 separately managed accounts across eight different platforms such as Merrill Lynch, Morgan Stanley, UBS Schwab, Fidelity, and Pershing via independently registered investment advisors.

YES’ “elevator pitch” distilled is less risk more return. The article states that investors in fixed income are being forced to take on more duration or credit risk to increase returns exposing investors to a high degree of risk. The solution pitched is CYES which has the ability to add incremental returns without taking on more equity, duration, or credit risk. Selvala claims that “because we manage risk and keep the maximum loss contained” clients can employ three to four time leverage to generate even larger returns.

James Heafner Allegedly Sold Fraudulent 1st Global Capital Securities

May 21, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are looking into potential actions to help investors ensnared in the 1^st Global Capital LLC (1^st Global Capital) investment fraud scheme. According documents filed by The Securities and Exchange Commission’s (SEC) it appears that some of the victims were brought to 1st Global by brokers who formerly worked for Taylor Capital Management (Taylor Capital). These advisors include James Heafner (Heafner) and Trae Wieniewitz (Wieniewitz). Heafner operated out of a d/b/a company called Heafner Financial Solutions, Inc.

In August 2018 Heafner’s employer terminated him alleging that he failed to follow written policies concerning the firm’s outside business activities. In addition, Heafner has three customer complaints alleging that the clients lost funds in the now defunct 1^st Global Capital scheme.

As revealed in court documents and the complaint filed by SEC – 1^st Global Capital engaged in a four year unregistered securities offering overseen by Carl Ruderman (Ruderman) – also charged. The SEC has alleged that more than 3,400 investors nationwide have been caught in the company’s $287 million fraud.