Securities Lawyers Blog

Investment Advisor Nadav Baum Subject to Fourteen Customer Complaints

November 30, 2017 | by Staff Attorney

The investment lawyers at Gana Weinstein LLP are investigating customer complaints against Pennsylvania Broker/Investment Advisor Nadav Baum (Baum). According to BrokerCheck records, Baum has been subject to fourteen customer complaints and two regulatory sanctions. The customer complaints allege that Baum engaged in securities law violations, including making unsuitable investments in client’s accounts.

In March 2017, the New Jersey Bureau of Securities sanctioned Baum after he allegedly failed to comply with the terms of a supervisory agreement. He was ordered to cease and desist and to pay a fine of $6,000.

In August 2009, the Financial Industry Regulatory Authority (FINRA) sanctioned Baum following allegations he executed discretionary trades without written authorization in the account of a deceased customer and executed discretionary trades in other accounts without authorization. He was issued a 30-day suspension and a fine of $15,000.

Patrick Maddren Subject to Customer Complaint For Excessive Trading

November 30, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Patrick Maddren (Maddren) has been subject to two customer complaints and two tax liens. Maddren is currently registered with WestPark Capital, Inc. (WestPark Capital). In March 2016 a customer filed a complaint alleging a number of securities law violations including that the broker engaged in churning (excessive trading), material misrepresentations and omissions, unauthorized trading, unsuitable recommendations, and breach of contract among other claims. The claim alleged $1,000,000 in damages and is now settled.

In 2012 several tax liens were filed against Maddren in amounts totaling over $300,000. Large tax liens 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.

When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

Aegis Capital Broker Paul Falcon Receives Customer Complaints over Unsuitable Trades

November 28, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating claims against Aegis Capital broker, Paul Falcon (Falcon). Falcon allegedly recommended unsuitable investments, executed unauthorized trades, made excessive transactions and recommended investments that performed properly.

According to BrokerCheck records, Falcon has received four customer complaints and one pending customer complaint.

In April 2017, a customer alleged Falcon recommended unsuitable investments, executed unauthorized trades, made excessive transactions and recommended investments that performed poorly. The customer is seeking $190,000 in damages and the complaint is still pending.

Alonza Barnett Barred By FINRA Over Failure to Respond to Requests for Information

November 28, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Alonza Barnett (Barnett), in March 2017, was barred from the industry by FINRA after FINRA requested documents and information and he failed to request termination of his suspension within three months of the date of the Notice of Suspension drawing an automatic bar from association with any FINRA member in all capacities. Previously, Barnett was registered with Ameritas Investment Corp. (Ameritas).

In February 2017 a customer filed a complaint alleging that for a 15 year period Barnett engaged in conversion of funds, breach of fiduciary duty and constructive fraud, and violation of the North Carolina Investment Advisors Act. The claim appears to involve private securities. The claim alleged $1,750,000 in damages and is currently pending.

At this time it is unclear the extent and scope of Barnett private securities activities. Barnett CRD lists that he is engaged in fixed insurance products and operates a d/b/a called Dacthler Wealth Management as an outside business activity. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.

FINRA Bars former Wells Fargo Broker John Leonard

November 28, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against John Leonard (Leonard), working out of Toledo, Ohio. Leonard allegedly failed to request termination of a previous suspension within three months resulting in an automatic bar from association with any FINRA member in all capacities.

According to BrokerCheck records, Leonard had been suspended from associating with any FINRA member in any capacity for allegedly failing to respond to a FINRA request for information. Leonard was barred by FINRA after he failed to request termination of this suspension.

Leonard has been named in five customer complaints and one that is still pending.

Hiring a FINRA Attorney

November 21, 2017 | by Staff Attorney

Are you hiring the a FINRA securities attorney to help you recover investment losses? This article will help you make the right choice when selecting a FINRA attorney by outlining the most important things to look out for. Consider these five questions to ensure you are hiring the best:

Is the attorney reputable?

It is imperative to hire a reputable attorney for FINRA arbitration who has the necessary educational background, training, and results-oriented experience. To ensure you are hiring the best securities attorney, look at the attorney’s practice areas, case experience, and client reviews.

The Department of Labor Fiduciary Rule May Impact Securities Arbitration Claims

November 21, 2017 | by Staff Attorney

The fiduciary rule passed during the Obama administration is being reviewed by the Department of Labor (DOL), leaving plenty of uncertainty for advisers and investors. As Barry Tempkin reports, “During this period, advisers who do not receive level-fee compensation are held to the DOL impartial conduct standard for retirement accounts, but are not required to enter into best interest contracts for commission-based compensation.” Under the DOL impartial conduct standard, brokers who offer retirement investing advice are required to put clients’ interests ahead of their own. Although portions of the rule went into effect in June, there are additional requirements but the DOL has proposed a delay to fully implementing the rule until July 2019.

We cannot be sure how the current DOL under Secretary Acosta will ultimately handle the adoption of a fiduciary standard. In the meantime, the impartial conduct standard for retirement accounts will likely result in more litigation and arbitration. Since the rule benefits investors, there will likely be a higher success rate for investors’ representatives.

Under the new fiduciary rule, if an adviser engages in a BIC (“Best Interests Contract”) agreement with a client, it allows the adviser to engage in transactions that are prohibited under the rule. If the “Best Interests Contract” (BIC) exception goes into effect, these claims will include breach of contract.

Broker Joseph Sterling Subject to Customer Complaints Over Real Estate Investments

November 15, 2017 | by Staff Attorney

The investment fraud attorneys with Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Joseph Sterling (Sterling) currently associated with Geneos Wealth Management, Inc. (Geneos Wealth). According to brokercheck records Sterling has been subject to three customer complaints. Two of the most recent complaints involve his conduct concerning direct participation products (DPPs) such as non-traded real estate investment trusts (REITs) and potentially other alternative investments.

In August 2017 a customer filed a complaint alleging that Sterling made unsuitable recommendations of real estate securities in 2012 and 2013 and other causes of action. The customer alleges $290,000 in damages and the claim is currently pending. Another customer filed a complaint in July 2017 alleging that in 2013 and 2014, Sterling made unsuitable recommendations of real estate securities and other direct investments and other causes of action. The claim alleged $500,000 in damages and is currently pending.

Our firm has represented many clients in illiquid alternative investments products. All of these investments come with high costs and have historically underperformed even safe benchmarks, like U.S. treasury bonds. For example, products like oil and gas partnerships, REITs, and other alternative investments are only appropriate for a narrow band of investors under certain conditions due to the high costs, illiquidity, and huge redemption charges of the products, if they can be redeemed at all. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them and have created a large market for a failed product. Further, investor often fail to understand that they have lost money in these illiquid investments until many years after investing. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.

Update: Advisor Sonya Camarco Faces New Charges

November 15, 2017 | by Staff Attorney

In early September, we reported that the investment lawyers of Gana Weinstein LLP were investigating allegations by the Securities and Exchange Commission (SEC) finding that Sonya Camarco (Camarco) misappropriated over $2.8 million in investor funds from her clients and customers.

In a separate but parallel action, Colorado state authorities have arrested Camarco on charges that she stole $850,000 from clients. According to news sources, a Colorado grand jury indicted Camarco on six counts of securities fraud and seven counts of theft on September 21. Authorities say Camarco operated her scheme between January 2013 and May 2017. An SEC investigator allegedly traced nearly 130 checks from Camarco’s clients’ accounts to a post office box she controlled. Camarco is accused of using the money to pay her own credit card bills and taxes, and to buy real estate.

LPL terminated Camarco in August 2017 “for depositing third party checks from client accounts into a bank account she controlled and accessing client funds for personal use.”

Advisor Joseph Rodriguez Subject to Bond Related Customer Complaints

November 15, 2017 | by Staff Attorney

According to BrokerCheck records financial advisor Joseph Rodriguez (Rodriguez), currently associated with Hennion & Walsh, Inc. (Hennion & Walsh), has been subject to four customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA) Rodriguez has been accused by customers of unsuitable investments among other claims. Most of the claims appear to be related to municipal bonds or other bond related investments

In June 2017, a customer filed a complaint alleging that Rodriguez recommended certain investment grade municipal bonds between 2009 and 2012 that were unsuitable. The claim alleges $125,000 in damages and is currently pending. In May 2016 another customer filed a complaint alleging that there were unsuitable recommendations from 2013 and 2014. The claim alleged $250,000 in damages and settled. In October 2015 another customer filed a complaint alleging an unsuitable recommendation causing $56,390 in damages. The claim later settled.

Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.