Securities Lawyers Blog

Christopher Hibbard Accused of Misappropriating Client Funds

October 3, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Christopher Hibbard (Hibbard), formerly associated with Merrill Lynch, Pierce, Fenner & Smith, Incorporated (Merrill Lynch) in Louisville, Kentucky was terminated for cause by Merrill Lynch in January 2018 after the firm made allegations that Hibbard engaged in conduct including unauthorized transactions and theft. Thereafter, in February 2018 Hibbard was barred by FINRA for failing to respond to the regulatory requests for information. In April 2018 it was disclosed that an investigation of Hibbards activities had been opened by the United States Attorney’s Office, Western District of Kentucky. The investigation involves the unauthorized use of client funds by Hibbard during his employment with Merrill Lynch. In addition, eight customers have brought complaints against Hibbard alleging misappropriation of funds.

The allegations concerning conversion are often accompanied by claims of engaging in outside business activtiies and private securities transactions – a practice known in the industry as “selling away” – a serious violation of the securities laws.

Merrill Lynch Broker Charles Kenahan Subject to Multiple Complaints Over Unsuitable Investments

October 3, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are currently investigating Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merill Lynch) broker Charles Kenahan (Kenahan). According to BrokerCheck Records held by the Financial Industry Regulatory Authority (FINRA), Kenahan has been subject to four customer disputes, three of which are still pending. The majority of these disputes concern unsuitable investment recommendations and excessive trading of the customer account.

In May 2018, a customer alleged that from 2012 to 2017, Kenahan excessively traded the funds in the customer account and also unsuitably recommended investments to the customer. The customer has requested $700,000 in damages. This dispute is currently still pending.

In March 2018, a customer alleged that from February 2012 to December 2017, Kenahan excessively traded customer funds, misrepresented the nature of the investments, and unsuitably recommended the investments to the customer. This dispute is currently still pending.

In February 2018, a customer alleged that from December 2007 to February 2018, Kenahan had placed the customer into unsuitable investments and excessively traded the customer’s funds in the account. This dispute is currently still pending.

In August 2009, a customer alleged that from December 2007 to February 2018, Kenahan recommended investments that were unsuitable to the customer and excessively traded the account. The customer requested $148,353 in damages.

Geneos Wealth Broker Bradley Tennison Barred for Selling Away Practices

October 3, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP have currently been investigating previously registered broker Bradley Tennison (Tennison). According to BrokerCheck Records kept by the Financial Industry Regulatory Authority (FINRA), Tennison was barred from the financial industry due to a customer complaint alleging Tennison’s selling away activities during his employment at Geneos Wealth Management Inc (Geneos Wealth). In addition, Tennison has been subject to two other customer disputes and termination from employment at two firms.

In January 2018, the customer alleged that in January 2016, Tennison recommended the client to wire $300,000 of her funds into “The Joseph Project” away from the member firm, with a promise of a 5% enhancement. Geneos Wealth had no record of such investment, and the customer never received any statements or return on the principal of the investment. Subsequently after, in April 2018, Geneos Wealth discharged Tennison from employment after failing to locate any record of investment and for being unable to retrieve information from Tennison regarding the investment. This complaint is currently still pending.

Shortly after, in July 2018, Tennison was barred from the financial industry for failing to show up to on-the-record testimony regarding the selling away allegations of “The Joseph Project” at Geneos Wealth. By failing to provide information and show up to the testimony, Tennison was in violation of FINRA Rules 8210 and 2010. Without admitting or denying the findings, Tennison consented to the sanction and to the entry of findings.

In addition, Tennison has been subject to two preceding customer disputes. In March 2010, a customer alleged that Tennison placed the Continue Reading

American Finance Trust Inc. (AFIN) – Investor Recovery Options

October 1, 2018 | by Staff Attorney

The attorneys of Gana Weinstein LLP have reported on the many failings of the non-traded real estate investment trust (Non-Traded REIT) industry for years. One of the common myths is that these products (such as Behringer Harvard, Cornerstone, Inland and KBS) only failed because of the financial crisis and the decline in the real estate industry. The truth is these expensive and inefficient products never make sense to invest in.

Proving this to be the case is American Finance Trust Inc., (AFIN) which was sold in 2013 by Schorsch affiliated entities. When American Finance recently went public approximately $1 billion of the company’s claimed value was wiped out exposing investors to massive losses that had long been hidden by the complex and opague ways the Non-Traded REIT industry operates.

The company itself published its own “estimated per share” net asset value of $23.56, only slightly less than the $25 per share that investors spent to acquire it just the month before. When AFIN went public it traded as low as $14.80 with a market capitalization of about $1.6 billion – a 40% loss.

As regulators continue to turn their attention to this product and the industry works to lower commissions that brokers earn on this product the truth is now starting to come out. Brokers have been essentially bribed with 7% commissions for over a decade to sell worthless and inferior products. Now that commissions have declined sales have plummeted as the pressure to sell Non-Traded REITs dissipates.

Advisor Suhail Khan Barred by Securities Regulator

October 1, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Suhail Khan (Khan), formerly associated with LPL Financial, LLC. (LPL Financial) in Chicago, Illinois was barred by FINRA. In August 2017 Khan failed to respond to requests by FINRA for documents and information.

Thereafter, in May 2018 a customer filed a complaint alleging that between 2013 and 2017, the advisor recommended unsuitable, speculative investments in the advisor’s own business, a hedge fund, oil and gas partnerships, and a real estate investment trust and that some of these investments were unregistered securities.

At this time it is unclear the nature or scope of the alleged OBAs and/or private securities transactions that Khan may have been involved in. Khan’s disclosures state a number of OBAs including Omni Casualty and Property Insurance and SK Associates Financial.

Kenny Kim Has Numerous Customer Complaints Over Alternative Investments

October 1, 2018 | by Staff Attorney

Former Sandlapper Securities, LLC (Sandlapper) and Independent Financial Group, LLC (Independent Financial) broker Kyusun “Kenny” Kim (Kim) has been subject to at least 23 customer complaints and one regulatory action. According to a BrokerCheck report many 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 June 2018 FINRA barred Kim from the securities industry after making findings of unsuitable recommendations to numerous senior customers to concentrate their retirement assets and liquid net worth in speculative and illiquid securities. FINRA found that Kim recommended customers to invest in speculative and illiquid investments that were inconsistent with the customers’ moderate or conservative investment objectives and risk tolerances. FINRA found that these recommendations caused Kim’s customers to have an undue concentration of the customers’ retirement assets and liquid net worth in speculative and illiquid investments. FINRA also found that Kim falsified client information on important forms by entering inaccurate and inflated net worth, liquid net worth, and investment experience figures for certain customers so that they appeared eligible to purchase speculative investments.

GPB Capital Investors Await Accounting Revisions

September 30, 2018 | by Staff Attorney

The law offices of Gana Weinstein LLP have previously reported on their investigation into GPB Capital Holdings (GPB Capital) and its dispute with a former business partner Patrick Dibre (Dibre) who allegedly reneged on the sale to GPB Capital of certain auto dealerships causing the fund to lose $40 million according to GPB’s complaint. That litigation is still playing out in court.

GPB Capital has raised an astonishing $1.8 billion in investor money since 2013. However as reported, GPB will stop raising new money for now to focus on accounting issues and financial statements of its two large funds. Subsequent reporting has alerted the public that investors should no longer rely on 2015 and 2016 financial statements and independent accounts’ reports for: GPB Automotive Portfolio, ($622.1 million); GPB Holdings II, ($645.8 million); and GPB Holdings Qualified. Apparently, these accounting revisions are only being made because GPB Capital missed an April 30 deadline to file financial statements with the Securities and Exchange Commission (SEC) which crossed industry thresholds for making such information public more than a year ago.

Investors should be concerned at this point as it is highly unusual for funds’ of this size to cease raising funds unless there are serious concerns. Moreover, delays in reporting financials and the need to release new reports concerning financial statements made three years ago are highly troubling. This suggests potentially multiple years of false information or a size and nature that is currently unknown.

Advisor Clifton Roberts Discharged Over Undisclosed Business Activity – Investment Attorneys

September 25, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Clifton Roberts (Roberts), formerly associated with LPL Financial LLC (LPL Financial) in Houston, Texas was terminated for cause by LPL Financial in April 2018 after the firm made allegations that Roberts violated of firm policy regarding outside business activities (OBAs).

At this time it is unclear the nature or scope of the alleged OBAs that Roberts was involved in. According to Roberts’ public diclsoures the broker was part of number of OBAs including IDLife, Ursus Wealth Management – a d/b/a entity for his LPL Financial business, Ursus and Company – a real estate management and construction company which Roberts claims is not investment related. In addition, an unnamed business for insurance is listed. It is unknown whether LPL’s claims relate to any of these entities.

Worden Capital Financial Advisor Michael Rosalia Subject to Customer Complaints

September 25, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Worden Capital Management LLC (Worden Capital) broker Michael Rosalia (Rosalia) has been subject to six disclosed customer complaints, eight tax liens or judgements, and two financial disclosures including bankruptcy. Many of the customer complaints against Rosalia allege churning or excessive trading.

In June 2013 Rosalia declared bankruptcy. Such disclosures on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. FINRA discloses information concerning a broker’s financial condition because a broker’s inability to handle their own personal finances has also been found to be material information in helping investors determine if they should allow the broker to handle their finances.

In May 2018 a customer filed a complaint alleging Rosalia engaged in churning, improper use of margin, unsuitability and high commissions. The complaint alleged $503,828 in damages and has been settled.

Steven Knuttila Subject to Numerous Customer Complaints Over Alternative Investments

September 25, 2018 | by Staff Attorney

Former Capital Financial Services, Inc. (Capital Financial) and Questar Capital Corporation (Questar) broker Steven Knuttila (Knuttila) has been subject to at least 25 customer complaints, one employment terminations for cause, and two regulatory actions. According to a BrokerCheck report many 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 June 2018 FINRA barred Knuttila from the securities industry after he refused to appear for FINRA on-the-record testimony relating to an investigation into allegations that Knuttila made unsuitable recommendations to customers. FINRA’s bar comes after a bar by Knuttila’s home State of Minnesota after it alleged that Knuttila sold numerous unsuitable investments to clients. In addition, in 2012 Knuttila was terminated by Questar for failing to report customer complaints and wrongful use of discretion in client accounts.