Securities Lawyers Blog

Morgan Stanley Terminates Broker Jamie Aguilar Over Private Securities Transactions

October 21, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Morgan Stanley involving broker Jamie Aguilar (Aguilar) out of the firm’s San Diego, California office. According to BrokerCheck records Aguilar has been subject to three customer complaints.

According to Morgan Stanley, the firm terminated Aguilar in May 2016 after alleging his conduct included an outside financial transaction between the financial advisor and a client of the firm that was not disclosed to the firm. 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”.

At this time it is unclear the nature and scope of Aguilar’s private securities transactions. However, according to brokercheck records, Aguilar has disclosed OBAs listed as including Events Magnificent, Inc. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.

Broker Investigation: Complaints Against Caeron McClintock

October 19, 2016 | 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 Caeron McClintock (McClintock). According to BrokerCheck records McClintock has been the subject of at least two customer complaints and two judgements or liens. The customer complaints against McClintock allege 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 August 2016 and alleged unauthorized trading causing $17,000 in damages. The complaint is currently pending. In December 2015 another investor filed a similar complaint and alleged negligence, misrepresentation, and churning causing $50,000 in damages. The complaint is currently pending

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.

Customers File Complaints Against Charles Obryant Over Unsuitable Investments

October 19, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Charles Obryant (Obryant) alleging unsuitable investments, negligence, breach of fiduciary duty, and unauthorized trading. According to brokercheck records Obryant has been subject to four customer complaints and one employment separation for cause.

A customer complaint filed in October 2015 alleged negligence and suitability violations causing damages in the amount of $630,000. The claim was settled for $632,298.

In January 2016, Stifel Nicolaus discharged Obryant alleging a loss of confidence after settlement of complaint. The broker commented on the discharge stating that the equity concerning the dispute was a Stifel buy recommended security that went bankrupt and the broker made no personal contribution to the settlement.

FINRA Sanctions Broker Darrin Farrow Over Private Securities Transactions

October 18, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Royal Alliance Associates, Inc. (Royal Alliance) and the regulatory action filed by FINRA involving broker Darrin Farrow (Farrow). According to BrokerCheck records Farrow has been subject to one customer complaint, one employment separation for cause, and two regulatory actions.

According to Royal Alliance, the firm terminated Farrow after alleging Farrow received information that he was involved in an outside business activity not approved by the firm. Thereafter, in June 2016, FINRA suspended Farrow after alleging he participated in two undisclosed outside business activities (OBAs) without disclosing his involvement to his firm. (FINRA No. 2015045751101). FINRA found that Farrow founded an unincorporated entity that provides consulting services to the cannabis industry and also cultivates, produces, and manufactures cannabis and he also formed a Delaware limited-liability company that grows cannabis and supplies it to dispensaries throughout Oregon. According to FINRA Farrow participated in undisclosed private securities transactions with firm customers involving the sale of $1 million of membership interests.

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”. According to brokercheck records Farrow has disclosed OBAs listed as including MonsterShares LLC – an investment related business, Mad Farmaceuticals, DBF Properties, LLC, Adviceware, and MM Herndon LLC. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.

Gana LLP Investigation: APX Energy Oil and Gas Private Placements

October 18, 2016 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are investigating the potential unsuitable sales of securities sponsored by APX Energy. APX Energy claims on its website that it is an independent oil and gas exploration company focusing on the Illinois Basin and other areas in the southern United States. The firm claims over 25 years of experience in the oil and gas industry. The company sponsors several oil and gas private placements.

Our firm has represented many clients in these types of products. All of these investments come with high costs and historically have underperformed even safe benchmarks, like U.S. treasury bonds. Alternative investments are only appropriate for a narrow band of investors under certain conditions due to their high costs, illiquidity, and huge redemption charges – if they can be redeemed. However, due to the high commissions brokers earn on these products they sell them to investors who cannot profit from them. Further, investor often fail to understand that they have lost money until many years after agreeing to the investment. 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.

Investors often do not understand the substantial risks of oil and gas limited partnerships and private placements. As recently reported in Reuters, when offerings by Atlas Energy LP, another issuer of oil and gas private placements were analyzed, investors only get to see 65-70% of their capital actually put to work on oil and gas projects. Further, the returns on these projects had more in common with running profitable casinos than investments. Reuters found that slightly more than half of 43 private placements Atlas issued over the past three decades investors lost money or just broke even. While investors lost in more than half of the deals in 29 or 67% of those deals, Atlas actually out-performed their own investors.

Ameriprise Financial Advisor Kim Isaacson Subject to Fraud Complaints

October 17, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Kim Isaacson (Isaacson). According to BrokerCheck records Isaacson has been subject to at least four customer complaints, one employment termination, and one regulatory investigation. The customer complaints against Isaacson allege securities law violations that including unsuitable investments and misrepresentations among other claims.

In April 2016, FINRA opened an investigation for potential violations of industry rules for making verbal misrepresentations to a firm customer about the customer’s account values and performance.

In February 2016 a customer filed a complaint alleging unsuitable investments and misrepresentations with respect to equity investments in account and providing inaccurate information about the accounts performance from 2008 through 2014.

Financial Advisor Rabinder “Ravi” Deshmukh Has Customer Complaints

October 4, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Rabinder “Ravi” Deshmukh (Deshmukh). According to BrokerCheck records Deshmukh has been subject to at least four customer complaints. The customer complaints against Deshmukh allege securities law violations that including unsuitable investments and excessive margin among other claims.

The most recent claim was filed in June March 2016 and alleges that from 2008 to 2015, the customer was recommended and sold unsuitable, highly concentrated positions in speculative securities. In addition, the customer also alleged that they were recommended to trade on margin and seek compensatory and punitive damages in the amount of $9 million. The complaint 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.

Customers File Complaints Against Allegis Investment Advisors Concerning Unsuitable Trading

October 2, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Allegis Investment Services, LLC and its affiliated investment advisory firm Allegis Investment Advisors, LLC (Allegis) concerning unsuitable trading involving options. According to the brokercheck records of one of the firms representatives, Peter Klaass (Klaass), the firm has been subject to at least six complaints through this advisor since October 2015. Klaass lists his D/B/A as the Bowen Group.

The customer complaints against Klaass allege securities law violations that including unsuitable investments among other claims. The most recent claim was filed in June 2016 and alleges that in the role of supervisor, Klaass failed to meet the standard of care and in August 2015 client suffered a loss of $400,000. The claim is currently pending. In another arbitration filed in April 2016, the customer alleged that the Advisory firm recommended a trading strategy without regard to the client’s age, investment experience, and risk tolerance. The customer is seeking $660,300 in damages. 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.

Woodbury Financial Terminates Broker David Ross Over Private Securities Transactions

September 22, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Woodbury Financial Services, Inc. (Woodbury Financial) involving broker David Ross (Ross). According to BrokerCheck records Ross is subject to one customer complaint, one employment separation for cause, and six judgment or liens.

According to Woodbury Financial, the firm terminated Ross after alleging Ross failed to disclose an outside business activity (OBA) and accepted loans form a client in addition to violating other firm policies and procedures. Often times such filings indicate that the broker is engaging potentially in private securities transactions, promissory notes, or loans away from the firm. 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”.

At this time it unclear the scope of Ross’ OBAs and/or private securities transactions. According to brokercheck records Ross has disclosed OBAs listed as including Ross Financial Planning, Inc., Belmont University, and First Shot Foundation. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.

Broker Investigation: Advisor Bassam Salem

September 21, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Bassam Salem (Salem). According to BrokerCheck records Salem has been subject to at least two customer complaints. The customer complaints against Salem allege securities law violations that including unsuitable investments, unauthorized trading, and breach of fiduciary duty among other claims. The most recent claim involves allegations over oil and gas investments and UITs and was filed in May 2016 seeking $281,000 in damages.

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.

Salem entered the securities industry in 1986. From 1992 through January 2011 Salem was registered with UBS Financial Services, Inc. Finally, from January 2011 until August 2016 Salem was associated with Wunderlich Securities, Inc. out of the firm’s Birmingham, Michigan office location.