Securities Lawyers Blog

VII Peaks Co-Optivist Income BDC II – Investor Recovery Options

December 4, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investor losses in VII Peaks Co-Optivist Income BDC II (Peaks Co-Optivist) a business development company (BDC). According to the company’s SEC filings, Peaks Co-Optivist invests in discounted corporate debt, senior secured term loan and equity-linked debt securities of public and private companies that trade on the secondary loan market for institutional investors and provide distributions to investors. Peaks Co-Optivist seeks to actively work with the target company’s management to restructure the underlying securities and improve the liquidity position of the target company’s balance sheet. This strategy targets company management on average 24 months prior to a redemption event to create an opportunity for growth in the investments.

Because Peaks Co-Optivist in non-traded product there are no market pricing for the value of the securities. The company issued shares at a price of $10.15 per share but due to fees and commissions of $1.015 only $9.135 was used to make investments. Currently, the company claims that its shares are worth $8.75 per share. However, this is highly unlikely given that the company has financed most of its distributions through returning investor capital and currently has a distribution rate of only 2.23% annualized.

Westpark Capital Advisor Marc Steinberg Subject to Suitability Complaints

December 3, 2018 | by Staff Attorney

According to BrokerCheck records financial advisor Marc Steinberg (Steinberg), currently employed by Westpark Capital, Inc. (Westpark Capital) has been subject to five customer complaints in his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Steinberg concern allegations of unsuitable investments.

In April 2018, a customer complained that Steinberg engaged in unsuitable investments causing $39,796 in damages. The claim was denied by the firm.

In November 2016, a customer complained that Steinberg engaged in unsuitable investments from December 2012 until February 2015 causing $16,833 in damages. The claim was denied by the firm.

Advisor Jon Pariser Terminated Over Securities Rule Violation

December 3, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Jon Pariser (Pariser), formerly associated with Independent Financial Group, LLC (Independent Financial) in Pacific Grove, California was sanctioned by FINRA resulting in a bar from the industry. In October 2018 Pariser consented to the FINRA sanction and an entry of findings that he failed to provide FINRA with requested documents and information related to allegations that he referred some of his customers to an individual who was not registered and who may have recommended or sold potentially unsuitable securities to them.

It is believed that Pariser recommended that his clients invest with Christopher Parris, an unlicensed broker. At that time Parris has been accused by the SEC of running an investment fraud scheme through First Nationle Solution. According to an Securities and Exchange Commission (SEC) complaint filed in June 2018, Parris and others orchestrated the First Nationle Solution Ponzi scheme and bilked investors out of over $102 million. Parris and others have been accused of using brokers like Pariser to liquidate safe or non-fraudulent investments in order to obtain financing of their scheme.

Former Mutual Securities Advisor Gary Pevey Accused of Selling Unapproved Securities

December 3, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Gary Pevey (Pevey), formerly associated with Mutual Securities, Inc. (Mutual Securities) in Sacramento, California has been accused by his former firm over unapproved securities. In addition, Pevey has one customer complaint on his record.

In February 2018 Mutual Securities terminated Pevey stating that he violated policies concerning private securities transactions.

Thereafter in September 2018 a customer filed a complaint alleging that Pevey engaged in high-risk and fraudulent investments and inadequate supervision causing $171,000 in damages. The claim is currently pending.

At this time it is unclear the nature or scope of the alleged outside business activities (OBAs) and private securities transactions. Pevey’s public disclosures state that the activity was conducted through his Registered Investment Advisory (RIA) firm Wealth Design Group. It is unknown the nature of the transactions from public filings.

Advisor John Schmidt Accused of Stealing Client Funds By SEC

November 27, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor John Schmidt (Schmidt), formerly associated with Wells Fargo Advisors Financial Network, LLC (Wells Fargo) in Dayton, Ohio has been accused by the Securities and Exchange Commission (SEC) of misappropriating over $1.16 million from at least seven clients.

In September 2018 the SEC filed a complaint alleging that for the past 35 years Schmidt has been a registered representative in the brokerage industry. The SEC found that from at least 2003 through 2017, Schmidt betrayed his customers’ trust by perpetrating a classic fraudulent scheme, acting without customer authorization, and repeatedly selling securities belonging to some of his brokerage customers and secretly transferring the sale proceeds to cover shortfalls in the accounts of other customers. The SEC alleged that Schmidt misappropriated over $1.16 million from accounts belonging to seven customers and transferred that cash to at least ten other customers whose accounts were experiencing shortfalls. In addition, the commission found that rather than tell those customers the truth about their dwindling funds, Schmidt sent them fake account statements and falsely assured the customers that their investment returns could fund their withdrawals without jeopardizing their principal. Most of Schmidt’s customers were elderly retirees with little to no financial expertise and several of Schmidt’s victims were suffering from Alzheimer’s disease or other forms of dementia. The SEC claimed that at least five of Schmidt’s victims passed away during the course of his fraud. Further, Schmidt’s allegedly profited from the scheme and received over $230,000 in commissions from customers who were either the source of, or recipient of, misappropriated funds.

Amerprise Financial Advisor James Kujawski Has Customer Complaints and Regulatory Action

November 27, 2018 | by Staff Attorney

According to BrokerCheck records former financial advisor James Kujawski (Kujawski), currently employed by Ameriprise Financial Services, Inc. (Ameriprise Financial) has been subject to at least seven customer complaints, one employment termination for cause, and one regulatory action. According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Kujawski concern allegations of unsuitable investments and material misrepresentations concerning investments being recommended.

In February 2018 Kujawski was terminated by UBS Financial Services, Inc. (UBS) after the firm claimed that Kujawski’s continued failure to disclose some of his outside business activities/outside business investments was in violation of firm policies.

Thereafter, in August 2018 FINRA brought a regulatory action against Kujawski which Kujawski consented to the findings that he engaged in a private securities transaction by facilitating the repurchase of a call option between two individuals, neither of whom were customers at his member firm. FINRA found that Kujawski’s participation included the repurchase of the option by introducing a commercial lender to participate in the transaction, attending meetings with the parties, reviewing draft sale contracts and providing comments, and accepting $73,444.90 in compensation for his participation. Kujawski was suspended for four months and agreed to pay financial penalties.

Did A Aegis Capital Broker Recommend Biotech Stock Akers Biosciences?

November 27, 2018 | by Staff Attorney

Biotech company Akers Bioscience (AKER) went public in 2014 using Aegis Financial as its investment underwriter. The company’s IPO price was $5 but has subsequently fallen to only $.25. According to SeekingAlpha not only did Aegis underwrite the security but it also promoted it to investors and potentially the firm’s own brokerage clients buy maintaining a buy rating on the stock. Akers was given an $11.00 price target in June 2014.

The company has also been subject to a recent class action complaint. The complaint alleges that the company made materially false and misleading statements regarding the Akers’ business, operational and compliance policies.

According to the company’s website, Akers Biosciences, Inc. (aka Akers Bio) was founded in 1989, with the objective of developing proprietary, in vitro diagnostic technologies that accelerate the rate at which clinicians, and in some cases consumers, can obtain health information. The tests are designed to provide the same level of accuracy as traditional laboratory testing methods but at a fraction of the cost and turn-around time.

Brandon Stimpson Subject to Multiple Customer Complaints Over Put Options Trading

November 24, 2018 | by Staff Attorney

According to BrokerCheck records former financial advisor Brandon Stimpson (Stimpson), formerly employed by Allegis Investment Services, LLC (Allegis Investment) has been subject to at least eight customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), many of the complaints against Stimpson concern allegations of unsuitable investments in a put options trading strategy.

In December 2017 Stimpson was terminated by Allegis Investment after the firm claimed that Stimpson failed to follow firm policies and code of ethics. Prior to his termination, Stimpson was subject to multiple complaints.

In October 2017 a customer complained that Stimpson engaged in unsuitable investments in an options strategy that was active in the account was unsuitable and a trade in Aug 2015 caused the account losses. The customer alleged $300,000 in damages and the claim is currently pending.

In June 2016 a customer complained that Stimpson engaged in unsuitable investments in an options strategy and a trade in Aug 2015 caused the account losses. The customer alleged $400,000 in damages and the claim is currently pending.

Advisor Dexter Thomas Accused of Engaging in Client Loans and Unapproved Securities

November 24, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Dexter Thomas (Thomas), formerly associated with United Planners Financial Services of America LP (United Planners) in Dallas, Texas has been accused by his former firm over unapproved securities and making client loans. In addition, Thomas has 19 customer complaints on his record – most of which relate to the unapproved activities.

In August 2018 United Planners terminated Thomas stating that he affiliated with the firm in late-2017. A short period of time later, the Thomas passed away. The firm claimed that immediately before his death, Thomas disclosed that he was involved with a number of private loans or private investments with individuals which private loans or investments were neither disclosed to, nor approved by, the firm. After Thomas’ death customers have claimed that Thomas did not return all of the funds privately loaned to or invested.

At this time it is unclear the nature or scope of the alleged outside business activities (OBAs) and private securities transactions. Thomas’ public disclosures state that his securities activity was conducted through a d/b/a – Dexter Thomas Financial Services, LLC.

Investor Recovery Options: Global Credit Recovery, Rhino Capital, Kevin Merrill, and Jay Ledford $345 Million Ponzi Scheme

November 22, 2018 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating potential recovery options concerning an investment fraud scheme recently enjoined by the the Securities and Exchange Commission (SEC). The SEC recently announced it obtained a court order halting an ongoing Ponzi-like scheme conducted by Kevin B. Merrill (Merrill), Jay B. Ledford (Ledford) and Cameron Jezierski (Jezierski) that raised more than $345 million from over 230 investors. Investors dealt with the defendants entities including Global Credit Recovery, LLC (Global Credit Recovery), Delmarva Capital, Rhino Capital, DeVille Asset Management, and Riverwalk Financial Corporation.

The SEC alleged that Merrill, Ledford and Jezierski, from at least 2013 through the present, through the web of entities they control have offered and sold investments relating to consumer debt portfolios, claiming to generate significant profits through their expertise in collecting on and reselling consumer debt. However, the SEC found that in nearly every interaction with investors Merrill and Ledford misled investors about what they would do with the raised money. The SEC found that the defendants made false statements, fabricated nonexistent debt portfolios, created fake wire transfers and contracts, and founded shell companies meant to mimic legitimate companies. The SEC claimed that instead of purchasing debt as promised, investor money was largely used investor money to fund the defendants’ lavish lifestyles and prop up the scheme with Ponzi-like payments to other investors.