Securities Lawyers Blog

Daniel Flores Discharged Over Selling Unapproved Financial Product

September 9, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Daniel Flores (Flores), formerly associated with Woodbury Financial Services, Inc. (Woodbury Financial) in Appleton, Wisconsin was terminated by his firm concerning allegations that Flores engaged in an unapproved financial transaction with a client. Thereafter in May 2018 a customer filed a complaint alleging that that Flores engaged in unauthorized and excessive trading. The claim is currently pending. In July 2018 FINRA sought documents and information from Flores which he refused to provide. Accordingly, Flores was barred from the industry for failing to respond to FINRA’s requests.

At this time, the claims against Flores are unclear as to the exact nature and extent of the activity. Flores has outside business disclosures including New Heights Insurance Services and Fox River Valley.

Advisor Stacy Cheney-Jamison Sanctioned Over Private Investment Sales

September 9, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Stacy Cheney-Jamison (Cheney-Jamison), a/k/a Stacy Cheney, Stacy Edwards, Stacy Kuczynski, and Stacy Sang was formerly associated with CUNA Brokerage Services, Inc. (CUNA) in Boca Rotan, Florida was barred by FINRA concerning allegations that Cheney-Jamison sold investments away from her firm.

In May 2018 FINRA found that Cheney-Jamison consented to the sanctions and to the entry of findings that she refused to provide information requested by FINRA in connection with its investigation into allegations regarding her involvement in private securities transactions and falsification of client account forms. In addition, in March 2018 a customer filed a complaint alleging multiple violations of the securities laws and claiming $350,000 in damages.

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

At this time, the selling away claims against Cheney-Jamison are unclear as to the exact nature and extent of the activity. Cheney-Jamison does not have any outside business disclosures on her public record

Advisor Thomas Sova Terminated Over Unapproved Product Sales

September 7, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Thomas Sova (Sova), formerly associated with Hornor, Townsend & Kent, Inc. (Hornor Townsend) in Baton Rouge, Louisiana was terminated by his firm concerning allegations that Sova violated firm policies and procedures regarding disclosure of outside business activities relating to the outside sale of an unapproved and unregistered security. That termination came on the heels of an arbitration complaint filed a couple of months earlier in April 2018. The customer complaint alleged that Sova sold and unregistered security in May 2016 and seeks $100,000 in damages. The claim is currently pending.

At this time, the claims against Sova are unclear as to the exact nature and extent of the activity other than that it involves a mortgage investment fraud or real estate security. Sova has outside business disclosures including Sova Financial Group – his investment d/b/a. Sova also discloses that he is the owner of rental property.

John Ernst Terminated Over Sale of Fraudulent Woodbridge Mortgage Investments

September 7, 2018 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge). The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensnaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages. In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) John Ernst (Ernst) appears to be an agent for Woodbridge fraudulent note sales. Ernst was formerly associated with Foresters Equity Services, Inc. (Foresters Equity) out of the firm’s San Diego, California office location. In November 2017 the State of Wisconsin opened an investigation into Ernst in connection with potential sales of Woodbridge promissory notes. In addition, Foresters Equity terminated Ernst in February 2018 stating that he violated the firm’s policies and procedures by engaging in an undisclosed private securities transaction away from the broker dealer without approval.

Federal securities laws and the FINRA rules require firms to monitor and supervise its employees, like Ernst, in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including recommending fraudulent investments.

Broker Randy Scott Schneider Subject to Various Complaints over Alternative Investments

September 6, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are currently investigating Securities America, Inc. (Securities America) broker Randy Schneider (Schneider). According to BrokerCheck Records kept by the Financial Industry Regulative Authority (FINRA), Schneider has been subject to nine customer disputes. The majority of these customer disputes revolve around the unsuitable recommendation of alternative investments, annuities and REITs.

Most recently, in February 2015, a customer alleged that Schneider stole and misappropriated funds in the customer account and also misrepresented the nature of the AXA annuities by providing misleading information. The customer requested $160,000 in damages.

In June 2013, a customer alleged that from November 2007 to June 2008, Schneider misrepresented the nature of certain alternative investments that were unsuitable for the customer. The case was settled at $250,000.

In September 2011, a customer alleged that Schneider unsuitably recommended an alternative investment and misrepresented the facts of the investment. This dispute was settled at $38,750.

Temenos Advisory, Inc. and Its CEO Accused of Peddling $19 Million in Risky Investments – Investor Recovery Options

September 6, 2018 | by Staff Attorney

The attorneys at Gana Weinstein LLP are reviewing court documents and complaints related to The Securities and Exchange Commission’s (SEC) charge a Connecticut investment advisory firm Temenos Advisory, Inc. (Temenos) and its principal, George L. Taylor (Taylor) put $19 million of investor money, including elderly investors’ retirement savings and pension plans, in risky investments and all the while secretly pocketing large commissions.

The SEC alleged that from 2014 through 2017, Temenos and Taylor defrauded their advisory clients and by steering the clients into unsuitable investments and by hiding commissions and other financial incentives that Temenos and Taylor were pocketing on top of the advisory fees clients paid. In addition, the SEC found that Temenos and Taylor repeatedly downplayed and concealed risks, and overstated potential gains with the illiquid private placements

The SEC accused Temenos and Taylor of violating their fiduciary duty that every investment adviser owes to its clients that requires firms to put client interests first, to deal with clients with the utmost honesty, to disclose all conflicts or potential conflicts of interest, and to use reasonable care in providing investment advice.

Matthew Walker and Pinnacle Plus Financial Allegedly Sold Fraudulent 1st Global Capital Securities

September 6, 2018 | 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 to the Kansas City Star 160 victims of the 1^st Global Capital resided in the Kansas City area. It appears that many of the victims I the Kansas City area were brought to 1st Global by Matthew Walker – CEO of Overland Park-based Pinnacle Plus Financial (Pinnacle Plus) and other affiliated businesses. Investors who invested through Walker and Pinnacle Plus have stated that they were told 1st Global Capital was essentially a sure thing and a secure investment.

Emails and other documents released by the SEC show Pinnacle Plus soliciting numerous investors and the involvement of other Pinnacle Plus staff and advisors including Kenny Riewerts.

As revealed in court documents and the complaint filed by The Securities and Exchange Commission’s (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.

Woodstock Financial Group Advisor Joseph Derrico Subject to Complaint Over Excessive Trading

September 4, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Woodstock Financial Group, Inc. (Woodstock Financial) broker Joseph Derrico (Derrico) has been subject to two disclosed customer complaints, one regulatory complaint, and one criminal matter. The regulatory action filed by the State of Montana alleges that a customer filled out an online complaint with the state making allegations concerning Derrico. Montana filed a complaint against the broker concerning unauthorized trading; excessive trading; using discretion without written discretionary authority; fraud – these allegations are associated with claims of churning or excessive trading. The regulatory complaint is still pending.

FINRA suspends Chelsea Financial Broker George Warner for Filing Inaccurate Client Records

September 4, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP are currently investigating Chelsea Financial Services (Chelsea Financial) broker George Warner (Warner). According to BrokerCheck Records, Warner has been subject to a regulatory matter in which the Financial Industry Regulatory Authority (FINRA) sanctioned Warner for the violation of the securities laws. In addition, Warner has been subject to termination from two firms of employment and a customer complaint.

In November 2014, Warner was permitted to resign from NFP Advisor Services for changing customer documents and information after the clients had signed the documents. In June 2013, Warner was discharged from LPL Financial LLC for getting customer signatures on account transfer forms that were blank.

Subsequently, in April 2017, FINRA found that Warner altered customer documents without customer knowledge or permission on over five occasions in which he included customer liquidity needs, net worth, annual income, alternative investment forms, and an IRA application. By altering the firm’s documents, Warner impeded on the firm’s ability to maintain accurate records. Without admitting or denying the findings, Warner consented to the sanctions and to the entry of findings. Consequently, FINRA imposed a $5,000 fine and 30 day suspension.

In addition, Warner has been subject to a customer dispute. In August 2009. a customer alleged that Warner purchased CIT bonds instead of CITI Corp bonds. The case was settled at $225,000.

1st Global Capital Fraud Recovery Options

September 2, 2018 | 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. As revealed in court documents and the complaint filed by The Securities and Exchange Commission’s (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.

The SEC alleged that 1^st Global Capital deceived investors through its offerings of short-term financing to small and medium-sized businesses. 1^st Global Capital used a network of barred brokers, registered and unregistered investment advisers, and other sales agents paying them millions in commissions to sell unregistered and fraudulent securities in no fewer than 25 states. The Company and their agents allegedly promised investors high-returns and a low-risk investment in which investor money is used to make short-term cash advances called Merchant Cash Advances (MCAs) to businesses that could not obtain more traditional financing.

As in many frauds, the SEC alleged that 1^st Global Capital used substantial investor funds for purposes other than the cash advances including misappropriated at least $35 million of investor money from which at least $28 million went directly to Ruderman and other entities he owned or controlled. Other alleged illegitimate uses include paying operating expenses and purchasing already-distressed, longterm credit card debt. As a result, by October 2017 1^st Global Capital experienced a shortage of investor funds of $23 million which increased to about $50 million by June 30, 2018.

After the writing was on the wall Ruderman resigned from 1st Global Capital in July after the company declared bankruptcy.