Securities Lawyers Blog

Morgan Stanley Advisor Albert Dishner Subject to Customer Complaints

February 6, 2017 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaint filed with The Financial Industry Regulatory Authority (FINRA) against broker Albert Dishner (Dishner), currently associated with Morgan Stanley. According to BrokerCheck records Dishner has been subject to at least four customer complaints among other claims. The customer complaints against Dishner allege securities law violations that including unsuitable investments, unauthorized trading, churning (excessive trading), and breach of fiduciary duty trading among other claims.

The most recent complaint against Dishner was filed in August 2016, while employed at Credit Suisse Securities, alleging $600,000.00 in damage stemming from violation of FINRA rules and federal securities laws, churning, and trading negligently in customer’s account from 2010 until 2015. The complaint settled in December 2016 for $205,000.00.

In 2012 a customer filed a complaint alleging, while employed at Credit Suisse Securities, Dishner did not follow customers instructions to sell securities and later executed an unauthorized sale causing $354,000 in damages. The complaint was denied.

FINRA Bars Broker Dominic DeBruin Over Private Securities Activity

February 6, 2017 | by Staff Attorney

Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Dominic DeBruin (DeBruin), formerly associated with LPL Financial, LLC (LPL Financial). According to brokercheck, FINRA found that DeBruin refused to provide information and documents and to appear for on-the-record testimony as requested by FINRA concerning a member firm’s Form U5 reporting that he was under internal review for depositing client’s funds related to potential private securities transactions undisclosed to the firm into a bank account DeBruin controlled.

At this time it is unclear the total scope and extent of these outside business activities and private transactions. However, according to DeBruin’s disclosures he is affiliated with the following entities: 1) Capricorn Partners, LLC – DeBruin’s securities d/b/a; 2) Out of Order LLC – an entertainment boking agency; 3) Goodlife Financial Group – an investment d/b/a; 4) Top 5 Entertainment. 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 securities.

DeBruin entered the securities industry in 1996. From October 2005 until October 2012 DeBruin was associated with Waddell & Reed, Inc. Finally, from October 2012 until October 2016 DeBruin was associated with LPL Financial out of the firm’s Mesa, Arizona office location.

FINRA Accuses Advisor Dawn Bennett of Wrongfully Selling Promissory Notes

February 5, 2017 | by Staff Attorney

Our law offices are continuing its investigation and the recent developments in the Dawn Bennett (Bennett) case. Recently the Financial Industry Regulatory Authority (FINRA) filed a complaint alleging that Bennett sold $6 million in promissory notes concerning her retail clothing business – DJBennett.com owned by DJB Holdings, LLC. As a background, we previously reported that The Securities and Exchange Commission (SEC) filed fraud charges against Bennett, a Maryland-based financial services firm and founder/CEO of Bennett Group Financial Services accusing her of grossly inflating the amount of managed assets and exaggerating the investment returns actually obtained for customers.

Thereafter, on July 11, 2016, the SEC barred Bennett from the securities industry for violating federal securities rules by for making material misrepresentations and omissions regarding her assets under management. See ln the Matter of Bennett Group Financial Services, LLC & Dawn J. Bennet, File No. 3-16801. Bennett also was ordered to cease and desist from any further violations of the federal securities rules, pay disgorgement of $556,102, and pay a civil penalty of $600,000.

FINRA continued investigating Bennett’s activities and alleged in its recent complaint that Bennett, while associated with Western International Securities, Inc., had a retail clothing business called DJBennett.com owned by DJB Holdings, LLC. FINRA found that during 2015 Bennett sold approximately $6 million in DJB convertible notes and promissory notes guaranteed by DJBennett.com, to approximately 30 investors. FINRA also uncovered evidence that Bennett may have misappropriated investors’ money, committed fraud, and engaged in undisclosed outside business activities and private securities transactions.

FINRA Bars Michael Siegel For Failing to Cooperate with Regulatory Investigation

February 4, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Michael Siegel (Siegel) formerly associated with National Securities Corporation – d/b/a HudsonPoint Capital – alleging Siegel engaged in a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims. The claim filed in July 2016 seeks $2,016,064 in damages.

Thereafter, FINRA barred Siegel from the securities industry alleging that the broker failed to respond to the regulator’s requests for documents and information.

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.

Former Morgan Stanley Broker Wendy Feldman Discharged Over Unauthorized Trading

February 4, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Wendy Feldman (Feldman) currently associated with H. Beck, Inc. (H. Beck) alleging Feldman engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims. According to BrokerCheck, Feldman currently has two customer complaints and one employment termination for cause.

In July 2015, a customer brought a complaint against Feldman alleging that between 2011 to 2014 the broker engaged in unauthorized trading, made unsuitable purchases, and failed to disclose fees. The complaint alleged damages of $5,000,000. In 2016 an arbitration was held and the customer was awarded $8,606,599 in total.

Shortly after the arbitration award Morgan Stanley terminated Feldman due to allegations involving adherence to industry rules and/or firm policy including with regard to use of trading discretion.

FINRA Opens Investigation Into Mark Schklar Over Private Securities Sales

February 3, 2017 | by Staff Attorney

Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Mark Schklar (Schklar). According to brokercheck, FINRA made a preliminary determination to recommend that disciplinary action be brought against Schklar concerning potential violations including private securities transactions, borrowing from/lending to a customer, making false attestations on annual compliance questionnaires, and false statements to FINRA. In addition, Schklar has been subject to five customer complaints over his career.

At this time it is unclear the total scope and extent of these outside business activities and private 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 securities.

Schklar entered the securities industry in 1991. From January 2006 until January 2013 Schklar was associated with Scott & Stringfellow, LLC. From November 2012 until January 2015 Schklar was associated with BB&T Securities, LLC. Finally, from January 2015 until May 2016 Schklar was associated with Ridgeway & Conger, Inc. out of the firm’s New Woodstock, New York office location.

Former UBS Broker David Fagenson Discharged Over Unauthorized Trading

February 3, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against David Fagenson (Fagenson) currently associated with Newbridge Securities Corporation (Newbridge) alleging Fagenson engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims. According to BrokerCheck, Fagenson currently has nine customer complaints, one criminal matter, two regulatory actions, and one employment termination for cause.

In September 2016 UBS terminated Fagenson after a review found that while on heightened supervision Fagenson violated firm policy by exercising time and price discretion, texting with clients and engaging in short term trading of preferred shares. Also in September 2016 a customer alleged that from 2013 through 2016 that Fagenson engaged in unauthorized trading and gave stop loss orders that were not entered. The complaint is currently pending.

In April 2011 Fagenson was sanctioned by the state of Florida for failing to disclose a criminal matter on his record that was required to be disclosed.

Broker Investigation: National Securities Advisor Christopher Bond

February 3, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Christopher Bond (Bond) currently associated with National Securities Corporation alleging Bond engaged in a number of securities law violations including that the broker made unsuitable investments and unauthorized trading among other claims. According to BrokerCheck, Bond currently has two customer complaints, three criminal matters, and one judgement / lien.

In October 2016, Bond was charged with criminal mischief in the third degree. Prior to that, in September 2016 a customer complained that Bond provided unsuitable investment advice resulting in $546,735 in damages. The claim is currently pending.

In March 2016, a tax lien was filed against Bond for $80,000. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances.

Broker Investigation: National Securities Advisor Mark Gassoso

January 31, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Mark Gassoso (Gassoso) currently associated with National Securities Corporation alleging Gassoso engaged in a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

The most recent complaint was filed in October 2016 alleging unsuitable investments, breach of fiduciary duty, and misrepresentations causing $150,000 in damages. The complaint is currently pending. In September 2013 another investor filed a complaint and alleged excessive trading. The complaint was denied.

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 Barry Rumpel Terminated By Woodbury Financial Over Private Transaction

January 31, 2017 | by Staff Attorney

Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Barry Rumpel (Rumpel) currently associated with IFS Securities alleging unsuitable investments among other claims. The majority of the complaints involve variable universal life insurance policies (VULs). According to brokercheck records Rumpel has been subject to four customer complaints, one employment separation for cause, and one criminal matter.

In May 2016 Woodbury Financial Services, Inc. (Woodbury Financial) alleged that Rumpel engaged in a personal financial transaction with a client and terminated Rumpel. The most recent customer complaint was filed in October 2016 and alleged that a VUL sold to the customer and his wife were not suitable and that wrong net worth was entered in application in 2011 and 2012. The claim was dismissed.

VULs are often unsuitable life insurance products for many investors due to their high costs compared to traditional life insurance policies. VULs can also lapse if policy premiums are not paid resulting in a complete loss of the investors capital without any life insurance benefit.