Securities Lawyers Blog

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.

Tripoint Global Equities, Robert Nathan, Mark Elenowitz, and Michael Boswell Accused of Raising Funds for Hamilton Ponzi Scheme

May 28, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating allegations by investors that Tripoint Global Equities, LLC (Tripoint Global) and its agents Robert Nathan, Mark Elenowitz, and Michael Boswell acted as placement agents to solicit investments tied to a massive $97 million Ponzi scheme involving the false sale of tickets for shows such as the Broadway hit Hamilton.

Tripoint Global allegedly formed a joint venture with certain entities under the control of Joseph Meli and Matthew Harriton such as 875 Holdings, LLC, 127 Holdings, LLC, Advance Entertainment, LLC, and Advance Entertainment II, LLC to sell interests in these entities.

As reported, The Securities and Exchange Commission (SEC) and the also the Department of Justice have alleged in civil and criminal charges that Joseph Meli ran a fraudulent ticket business. Meli also used other to raise funds for the ventures such as Steven Simmons who was the head of an alternative investments at Sideris Capital Partners – were also arrested on securities fraud and wire fraud charges related to the scheme.

Former LPL Financial Advisor Paul Dorion Terminated For Unauthorized Trading

May 27, 2017 | by Staff Attorney

Our firm is investigating claims made by regulators and brokerage firms including LPL Financial LLC (LPL Financial) concerning broker Paul Dorion (Dorion). Dorion is currently not associated with any brokerage firm due to his bar by The Financial Industry Regulatory Authority’s (FINRA) in October 2016 for failing to response to the regulator’s request for information.

FINRA’s investigation likely revolves around the disclosures concerning Dorion’s termination from LPL Financial in October 2015. At that time Dorion was terminated for cause alleging that the broker engaged in unauthorized trading, violation of firm’s document signature policy, and concerns regarding concentrated equity positions in client accounts. Doriaon was also alleged to have failed to respond to inquiries from the firm’s compliance department. Subsequently, in October 2016 a customer filed a complaint alleging that Dorion had excessively traded her account which contained funds from a home mortgage. The complaint is currently pending. Dorion also has several tax liens dating from 2010 through 2015.

Dorion entered the securities industry in 1983. From November 1992 until October 2015, Dorion was associated with LPL Financial out of the firm’s Killington, Vermont office location. Dorion also does business as Dorion Associates.

FINRA Bars Advisor Juan Alejos (a/k/a John Alejos) Over the Sale of Private Investments

May 27, 2017 | by Staff Attorney

Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Juan Alejos – a/k/a John Alejos (Alejos), formerly associated with brokerage firms Charles Morgan Securities, Inc. (Charles Morgan) and Spartan Capital Securities, LLC (Spartan Capital). According to brokercheck, Alejos failed to respond to FINRA request for information resulting in an automatic bar from the financial industry. The subject matter of FINRA’s investigation likely concerned his termination by Spartan Capital in December 2015 concerning allegations that Alejos engaged in outside business activities and possible private securities transactions without first providing the firm written notice of his activities. At this time it is unclear what outside businesses or the extent of the private securities transactions.

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”. Often times brokers who engage in this practice use outside businesses in order to market their own securities and raise capital for various ventures or get themselves through times of personal economic hardship. In Alejos case the broker had a judgment imposed upon him of over $75,000 in 2011.

Alejos entered the securities industry in 2000. From February 2008 until November 2012 Alejos was associated with Charles Morgan. Finally, from October 2012 until December 2015 Alejos was associated with Spartan Capital out of the firm’s New York, New York office location.

Financial Advisor Sara Eng Subject to Multiple Firm Terminations

May 25, 2017 | by Staff Attorney

Our firm is investigating claims made by various regulators and brokerage firms including Axiom Capital Management, Inc. (Axiom) and Financial West Group (FWG) concerning broker Sara Eng (Eng a/k/a Sara Aiping Ng). Eng is currently associated with brokerage firm Moloney Securities Co., Inc. (Moloney).

The allegations revolve around Eng’s offering of investments to clients. In October 2015, FWG terminated Eng for cause and allowed Eng to voluntarily resign after allegations were made that Eng was being placed on heightened supervision for potential violation of firm policy regarding marketing of investments to firm customers. Thereafter, in September 2016, Axiom terminated Eng for cause for violation of the firm’s policies and procedures regarding email correspondence. At the same time The Financial Industry Regulatory Authority’s (FINRA) opened its own investigation into Eng concerning Axiom’s disclosures for Eng’s termination. At this time it is unclear the exact nature and extent of the investigation.

Eng entered the securities industry in 1997. From November 2002 until March 2014, Eng was associated with Berthel, Fisher & Company Financial Services, Inc. From February 2014 until November 2015, Eng was associated with FWG. From October 2015 until September 2016, Eng was registered with Axiom. Finally, since November 2016 Eng has been registered with Moloney out of the firm’s Oak Brook, Illinois and Flushing, New York office locations.

Broker Louis Frederick Scherschel Subject To Customer Complaint

May 23, 2017 | by Staff Attorney

The securities and investment lawyers of Gana Weinstein LLP are investigating a customer complaint and an employment separation after allegations filed with the Financial Industry Regulatory Authority (FINRA) again broker Louis Frederick Scherschel (Scherschel). According to FINRA’s BrokerCheck records for Scherschel, there is a disclosure on his record for a customer complaint that resulted in arbitration. In October 2015, a customer complaint alleged that Scherschel made unsuitable sales of leveraged EFTs and failed to follower the customer’s instructions to implement sell stops. The original requested damages amount was $500,000 and the case was settled in September 2016 for $295,000.

In September 2015, Scherschel was discharged from his position at Sigma Financial Corporation for failing to comply with the company’s correspondence policy for leveraged ETFs.

Scherschel entered the securities industry in 2009. He was previously registered with:

Advisor Douglas Donnelly Sanctioned Over Recommending Private Placements

May 17, 2017 | by Staff Attorney

Our firm is investigating claims made by various regulators and brokerage firms including the State of Washington against broker Douglas Donnelly (Donnelly), formerly associated with brokerage firms Wells Fargo Advisors, LLC (Wells Fargo), Northwest Asset Management (Northwest), and Dinosaur Financial Group, L.L.C. (Dinosaur Financial). The allegations revolve around the offering of investments outside of the brokerage firm –a practice known in the industry as “selling away”. Often times brokers who engage in this practice use outside businesses in order to market their securities. According to The Financial Industry Regulatory Authority’s (FINRA) brokercheck records Donnelly has been subject to two customer complaints, two regulatory events, and two terminations for cause. Donnelly has also disclosed outside business activities including Passing Time Winery and Concert Wealth Management.

One of the regulatory events involves claims by the State of Washington alleging that in June 2010, Donnelly began to invest $200,000 in a private placement. Thereafter, Washington alleged that Donnelly sent information about the private placement to potential investors from his Wells Fargo email account. It was also alleged that Donnelly held meetings at his Wells Fargo office to introduce his Wells Fargo clients to the company’s personnel and provided disclosure information about the company to potential investors. Washington found that Donnelly introduced approximately 40 individuals to the private placement who invested approximately $4,000,000. Washington found that Wells Fargo investigated and terminated Donnelly for introducing firm clients to the private placement without written approval.

Donnelly entered the securities industry in 1988. From July 2003 until March 2012 Donnelly was associated with Wells Fargo. Finally, from April 2013 until May 2016 Donnelly was associated with Dinosaur Financial out of the firm’s Seattle, Washington office location.