Securities Lawyers Blog

Waddell & Reed Terminates Paul Stanley Over Violation of Firm Policies

June 6, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating Waddell & Reed Inc.’s (Waddell & Reed) termination of former broker Paul Stanley (Stanley) working out of the Edmond, Oklahoma office. Stanley had been in the industry for 16 years and was a licensed supervisor with the firm. Waddell & Reed terminated Stanley in January 2016. According to the broker’s Financial Industry Regulatory Authority (FINRA) BrokerCheck filing the firm stated that Stanley was “terminated for violation of firm’s Professional Conduct, Supervisory and Compensation Policies following firm investigation evidencing that Principal failed to provide complete information during firm’s internal investigation, suggested to [registered representative] under Principal’s supervision they also not provide complete information during firm’s internal investigation, allowed [registered representative] who was not properly licensed to participate in solicitation of investment advisory business, directed [registered representative] to conduct firm business during an internal firm-imposed administrative suspension, directly compensated [registered representative] outside of firm compensation policies, failed to intercede in the sharing of investment advisory compensation between [registered representative] outside of firm compensation policies and where [registered representative] were not all properly licensed for the products at issue, emailed firm business to [registered representative] on [registered representative] outside email account, and improperly managed client paperwork.”

Subsequently, in March 2017 FINRA barred Stanley when Stanley consented to the sanction and bar for refusing to appear for on-the-record testimony requested by FINRA.

Stanley entered the securities industry in 1998. From October 2012 until October 2013, Stanley was associated with J.P. Morgan Securities LLC. From October 2013 until January 2016 Stanley was associated with Waddell & Reed out of the firm’s Edmond, Oklahoma office location.

Thomas Sullivan Subject to Churning Complaints

June 6, 2017 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Thomas Sullivan (Sullivan). According to BrokerCheck records Sullivan has been the subject of at least six customer complaints and two terminations for cause. The customer complaints against Sullivan allege a number of securities law violations including that the broker made unsuitable investments and churning (excessive trading) among other claims.

In May 2010 Sullivan was discharged by Hallmark Investments on allegation that Sullivan stole revenue from the brokerage firm. The most recent customer complaint was filed in November 2016 alleging $23,616 in damages stemming from excessive trading and churning. The claim was settled

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.

Broker Joeann Mitchell Walker Subject to Alleged Unsuitable Trades of Variable Annuities

June 6, 2017 | by Staff Attorney

Gana Weinstein LLP is investigating a customer complaint filed with the Financial Industry Regulatory Authority (FINRA) again broker Joeann Mitchell Walker (Walker). According to FINRA’s BrokerCheck records for Walker, there are several settled disclosures on her record. Walker entered the securities industry in 1992 and currently employed at Next Financial Group, Inc. She was previously employed at LPL Financial LLC (8/2006 – 4/2015), Commonwealth Financial Network (7/1998 – 8/2006), American Express Financial Advisors (6/1992 – 7/1998), and IDS Life Insurance Company (06/1992 – 7/1998).

In March 2016, a customer complaint was filed alleging Walker made unauthorized sales of different stocks, unauthorized and unsuitable purchases of variable annuities, and unauthorized mutual fund switches during the period of June 2014 to June 2015 while Walker was employed at LPL Financial LLC. The stated alleged damages were $208,764.00. The claim was settled in November 2016 for the amount of $175,000.00.

Walker has two additional previous disclosures from 2005 and 1999. In April 2005, a claim was filed alleging that Walker practiced in excessive turnovers in the client’s mutual fund account. The claim alleged damages of $30,000.00. This claim was settled in July 2005 for the final settlement amount of $9,900.00.

Broker James Paul Kolf Barred from FINRA

May 31, 2017 | by Staff Attorney

The securities and investment lawyers of Gana Weinstein LLP are investigating customer complaints filed with the Financial Industry Regulatory Authority (FINRA) against broker James Paul Kolf (Kolf). According to FINRA’s BrokerCheck records for Kolf, there are at least 6 disclosures on Kolf’s record including customer complaints and regulatory actions resulting in being barred from FINRA. The customer complaints against Kolf allege securities law violations that claim fraud, unsuitable investments, and breach of fiduciary duty.

Kolf was barred permanently from FINRA on September 2016. FIRNA ruled that he violated Securities Exchange Act of 1934 and FINRA Rules 2020 and 2010 by selling at least $588,000 worth of misrepresented securities to his clients. The securities resulted in being falsified by Kolf and the clients’ funds were used to fund his personal business expenses. He created false statements for his clients to show their interests in these investments that they were not aware were fake.

The most current customer complaint pending against Kolf was from November 2016, alleging Kolf used client funds for personal expenses. This claim occurring during Kolf’s employment at MSI Financial Services, Inc. The customer alleged losses of $29,000.00. A second customer complaint was submitted in December 2016 regarding Kolf’s actions while employed at MSI Financial Services, Inc. The customer alleged that Kolf made inappropriate recommendations to purchase a variable life insurance policy and alleged damages of $54,701.00. This complaint is still pending. The third customer complaint was lodged in December 2016 alleging that Kolf misrepresented the benefits of transferring money from one firm into variable annuities. This allegation occurred in February 2014 when Kolf was with MSI Financial Services, Inc. and is still pending.

FINRA Bars Norman Farra Jr. Over Private Securities Transactions

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the allegations made by The Financial Industry Regulatory Authority (FINRA) resulting in a bar of broker Norman Ferra Jr. (Ferra) who was previously registered with International Assets Advisory, LLC working out of the Tampa, Florida office. Ferra has 20 years of experience in the securities industry and three disclosures on his record.

In March 2017, Ferra was barred after he consented to the sanction and to the entry of findings that he failed to respond to letters requesting that he produce documents and information in connection with an investigation regarding undisclosed outside business activities and private securities transactions. No other disclosure concerning the extent and nature of the activity is disclosed.

However, Ferra has disclosed several outside business activities including his d/b/a Rockport Global Advisors. Ferra has also disclosed entities including EG Advisory LLC It is unclear at this time what entities Ferra’s outside business activities that were the subject of the FINRA bar involve.

LPL Financial Terminates Christopher Russell Over Private Securities Transactions

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the LPL Financial LLC’s (LPL) termination of former broker Christopher Russell (Russell) working out of the Huntsville, Alabama office. LPL terminated Russell in November 2016. According to the firm’s Financial Industry Regulatory Authority (FINRA) BrokerCheck filing the firm stated that Russell was in “Violation of Firm policy regarding private securities transactions.” No other disclosure concerning the extent and nature of the activity is disclosed. However, Russell has disclosed several outside business activities including his d/b/a Cadence Investment Services. Russell has also disclosed Cadence Bank described as a private bank. Russell has also disclosed involvement with the Huntsville Chamber of Commerce and the Community Foundation of Huntsville.

The providing of loans, selling of promissory notes, or recommending investments outside of the firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate agents, or insurance agents to clients of those side practices.

Russell entered the securities industry in 2005. From May 2008 until March 2013, Russell was associated with Wells Fargo Advisors, LLC. Then, from May 2014 until November 2016 Russell was associated with LPL out of the firm’s Huntsville, Alabama office location.

Barry Connell Accused by SEC of Misappropriating $5 Million of Client Funds

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating allegations by The Securities and Exchange Commission (SEC) finding that former Morgan Stanley broker Barry Connell (Connell) working out of the Ridgewood, New Jersey office misappropriated about $5 million from clients. After a customer complained of about $2,500,000 in unauthorized fund transfers in November 2016 Morgan Stanley terminated Connell about a week later. Morgan Stanley terminated Connell on ground that there were “Allegations regarding unauthorized withdrawals and transfers of funds from client’s household accounts to third-party payees, which appear to be for the benefit of the former registered representative.” Thereafter, Connell was barred by the Financial Industry Regulatory Authority (FINRA) for failing to provide documents and information related to Morgan Stanley’s statement.

In February 2017, the SEC alleged that Connell stole money from investors to settle a private lawsuit among other misuses. Connell was alleged to have engaged in misappropriation of approximately $5 million from investment advisory clients. The SEC found that from approximately December 2015 through November 2016, Connell carried out his scheme primarily by moving funds between client accounts and then sending wire transfers and checks from the accounts to third parties for his own benefit. The SEC stated that over the course of approximately 11 months Connell made more than 100 unauthorized transactions through forms falsely representing that he had received verbal client authorizations for the transactions. The SEC changed that this conduct was the engaging in transactions, acts, practices and courses of business that constitute violations of Section 206(1) and Section 206(2) of the Investment Advisers Act of 1940.

Connell entered the securities industry in 1998. Since May 2008, Connell was associated with Morgan Stanley.

Broker Robert Schultz Subject to Multiple Customer Complaints

May 29, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Robert Schultz (Schultz). According to BrokerCheck records, Schultz has been subject to four disclosures including four customer complaints. The customer complaints against Wolfe allege a number of securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, misrepresentations, negligence, and omissions of material information among other claims.

The most recent customer complaint was filed in October 2016 claims $95,000 in damages and alleges suitability misconduct, misrepresentations, and breach of fiduciary duty from 2005 through 2010. The claim is currently pending.

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.

Stephen Swarbrick Subject to Multiple Complaints Over Equipment Leasing and Oil and Gas Investments

May 29, 2017 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against current Questar Capital Corporation (Questar) broker Stephen Swarbrick (Swarbrick). According to BrokerCheck records, Swarbrick has spent 23 years in the securities industry and is currently located in Roseville, California operating under the d/b/a Weston and Tuttle Wealth Advisors, LLC. Over his career, Swarbrick has been the subject of at least three customer complaints.

The most recent complaint was filed in January 2017 alleging that a complaint was filed with the California Department of Business Oversight alleging unsuitable sales for $400,000 in equipment leasing and oil and gas partnerships from December 2009 through June 2014. The customer alleged $400,000 in damages. The claim is currently pending. Many of Swarbrick’s other customer complaints similarly allege damages resulting from the sale of alternative investment products such as equipment leasing and oil and gas private placements.

Our firm often handles cases involving direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.

FSC Securities Broker Brian Presley Subject to Multiple Alternative Investment Complaints

May 29, 2017 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against current FSC Securities Corporation (FSC Securities) broker Brian Presley (Presley). According to BrokerCheck records, Presley has spent 34 years in the securities industry and is currently located in Punta Gorda, Florida operating under the d/b/a The Presley Advisory. Over his career, Presley has been the subject of at least eight customer complaints and two regulatory actions.

The most recent complaint was filed in August 2015 alleging that Presley breached his duties to his clients in illiquid investments including oil and gas and non-traded REIT’s. The customer alleged $117,000 in damages. The claim has been settled. Many of Presley’s other customer complaints similarly allege damages resulting from the sale of alternative investment products.

Our firm often handles cases involving direct participation products (DPPs) and private placements including oil and gas partnerships, non-traded real estate investment trusts (REITs), and other alternative investments.