Securities Lawyers Blog

Former H. Beck Broker Richard Poston Under FINRA Investigation Over Sales Practices

September 8, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints and regulatory actions filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Richard Poston (Poston). According to BrokerCheck records, Poston has spent 20 years in the securities industry and was most recently registered with H. Beck, Inc. (H. Beck) in Plano, Texas. Poston is currently not licensed to act as a broker or an investment adviser. Over his career, Poston has been the subject of at least four customer complaints, one regulatory investigation, one employment separation for cause, and one bankruptcy.

The most recent regulatory investigation was filed in December 2015 by FINRA alleging potential violations of FINRA Rules 2010, 2150, 3240, and 8210. These rules revolve around standards of commercial honor and equitable principles of trade, improper use of customers’ securities or funds, the borrowing or lending money from or to any customer without written approval.

The most recent complaint was filed in March 2016 while employed at H. Beck alleging that Poston, from October 2007, until September 2015 made unsuitable concentrated and illiquid investments in non-traded REIT’s. The claim is currently pending.

Broker Spotlight: Customers File Complaints Against Aegis Capital Broker Nicholas Tsikitas

September 7, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints against broker Nicholas Tsikitas (Tsikitas). According to BrokerCheck records Tsikitas has been subject to at least five customer complaints and three regulatory sanctions. The customer complaints against Tsikitas allege securities law violations that including unsuitable investments, churning, overconcentration of investments, negligence, and failure to supervise among other claims.

The most recent complaint was filed in October 2014, and alleged $851,988 in damages due to claims that the broker, from 2008 through 2010 made unsuitable investments and recommendations to the client.

In 2011 the State of Connecticut censured Nicholas Tsikitas following allegations he caused the filing of certain documents “that were materially false or misleading.”

James Noto’s Variable Annuity Sales Practices Lead to Customer Disputes

September 6, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker James Noto (Noto). According to BrokerCheck records Noto is subject to at least one regulatory sanction and seven customer complaints. The customer complaints against Noto allege securities law violations that claim unsuitable investments and lack of due diligence among other claims. Many of the more recent claims involve the sale of Variable Annuity products.

The most recent complaint was filed in March 2016, and alleged that James Noto, while employed at Summit Brokerage Services (Summit), recommended an unsuitable investment in a variable annuity. In 2015, another customer filed a complaint alleging that Noto made unsuitable investment recommendations.

Variable annuities are complex financial and insurance products. In fact, recently the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

Investors File Unsuitable Gold and Commodities Related Investment Complaints Against Advisor Bradley Ross

September 6, 2016 | by Staff Attorney

The law offices of Gana Weinstein LLP continue to report on investor related losses and potential legal remedies due to recommendations to investor in oil and gas and commodities related investments. Customers have recently filed about five complaints with the Financial Industry Regulatory Authority’s (FINRA) against broker Bradley Ross (Ross), a registered representative with UBS Financial Services Inc. (UBS) out of the firm’s Fort Lauderdale, Florida office location since 2011.

The customer complaints against Ross allege a number of securities law violations including that the broker made unsuitable investments and overcenoncetrated clients in gold and commodities related investments among other claims. The most recent complaint was filed in May 2016 and alleged over-concentration and unauthorized trading with respect to certain securities. The customer is seeking $99,000 in damages in the pending complaint. In April 2015, a customer alleged that Ross refused to follow client’s directives, breached his fiduciary duty, executed unauthorized trades, and sold unsuitable investments. The complaint settled in December 2015 for $35,000.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Oil and gas and commodities related investments have been recommended by brokers under the assumption that commodities prices would continue to go up. However, brokers who sell oil and gas and commodities products are obligated to understand the risks of these investments and convey them to clients.

FINRA Bars Thomas Stamborski Over Outside Business Activity Disclosures

September 5, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Thomas Stamborski (Stamborski) working out of Palatine, Illinois alleging that the broker failed to disclose certain changes to an outside business activity. According to the FINRA regulatory action (FINRA No. 2015044783401) Stamborski consented sanctions in the form of a permanent bar because he failed to provide documents and information requested by FINRA during the course their investigation into allegations concerning his resignation from his member firm, LaSalle St Securities, LLC (LaSalle St). LaSalle St allowed Stamborski to resign after it was alleged that he failed to update an Outside Business Activity with his firm when a material change occurred.

As a background, the providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible outside business activities and private securities transactions – a practice known in the industry as “selling away”. At this time it unclear the nature and scope of Stamborski outside business activities. However, according to Stamborski’s public records his outside business activities includes Axis Financial Corporation. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance agents to clients of those side practices.

Stamborski entered the securities industry in 1984. From September 2005 until December 2015, Stamborski was associated with LaSalle St.

FINRA Bars Lizabeth Yy Over Investigation Into Promissory Note Sales to Customers

September 4, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Lizabeth Ty (Ty). According to BrokerCheck records Ty is subject to three pending customer complaints, while registered with Park Avenue Securities LLC (Park Avenue) in Houston, Texas. The regulatory also filed a complaint against Ty attempting to investigate the circumstances of the sale of claimed unregistered securities. (FINRA No. 20160493150-01). When Ty refused to cooperate with the investigation, FINRA automatically barred Ty from the industry.

According to BrokerCheck records Ty has three customer complaints pending concerning the sales of promissory notes. 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 nature and scope of Ty’s outside business activities and private securities transactions. However, according to Ty’s public records her outside business activities include a real estate license in Texas. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Ty was associated with brokerage firm Park Avenue from January 2006 until July 2015.

Department of Justice Alleges that Corrupt Brokers Richard Brown, Gerry Cocuzzo, Nick Khan, Maroof Miyana, and Pranav Patel Were Involved in A $131 Million Stock Promotion Scheme Involving ForceField Energy

September 4, 2016 | by Staff Attorney

In May 2016 the Department of Justice (DOJ) filed a five-count indictment in New York against nine defendants including Jared Mitchell, the Managing Partner of Mitchell & Sullivan Capital LLC; Richard Brown, a registered broker with Chelsea Financial Services; Christopher Castaldo, the Chief Executive Officer of Stock Traders Press Inc. and the President of Wall Street Buy Sell Hold Inc.; Gerald Cocuzzo, also known as “Gerry,” a registered broker formerly with Newbridge Securities Corporation; Naveed Khan, also known as “Nick,” a registered broker formerly with Meyers Associates, L.P.; Herschel Knippa III, also known as “Tres,” the owner and Head Trader at Kenai Capital Management LLC; Maroof Miyana, a registered broker formerly with Legend Securities; Pranav Patel, a registered broker formerly with Dawson James Securities; and Louis Petrossi, the founder and Chief Executive Officer of the Wealth Research Institute.

The DOJ’s charges involve the unlawful sale and activity related to stock ForceField Energy Inc. (ForceField), a publicly-traded company under the ticker symbol “FNRG.” The charges include securities fraud, conspiracy to commit securities fraud, wire fraud, money laundering and making a false statement to law enforcement officials in connection with the fraudulent market manipulation of the stock.

The DOJ alleged that the defendants employed of scheme together with dishonest registered brokers to perpetrate an elaborate but fraudulent scheme built on lies, kickbacks and manipulated trading activity. The defendants essentially used a company with no business operations and little revenue and deceived the market and their clients into believing it was worth hundreds of millions of dollars through unauthorized trades and deceptive promotions.

The Difference Between Arbitration and Mediation in a Divorce

August 2, 2016 | by Staff Attorney

GUEST POST By Steven Madel

As you already know, it can get ugly fast during a divorce. Or, on occasion, the married couple holds no animosity toward one another and is ready to split amicably.

Depending on your particular situation, you may consider arbitration, mediation, or hiring divorce attorneys for a typical divorce.

Customers File Complaints Against Meyers Associates Broker Matthew Silato

July 30, 2016 | 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 Matthew Silato (Silato). According to BrokerCheck records there are at least six customer complaints, two financial disclosures, and one criminal matter involving Silato. The most recent customer complaints against Silato allege a number of securities law violations including breach of fiduciary duty and suitability among other claims. The most recent claim alleging $250,627 filed in June 2016 is currently pending. In December 2015, a customer filed a complaint alleging unsuitable investments and claiming $522,941 in damages. That case 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.

The number of customer complaints against Silato is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Broker Investigation: Meyers Associates Advisor Craig Langweiler

July 26, 2016 | 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 Craig Langweiler (Langweiler). According to BrokerCheck records there are at least 36 disclosures on Langweiler’s record including customer complaints, multiple regulatory actions, multiple judgments or liens, and a criminal matter. The most recent customer complaints against Langweiler alleges a number of securities law violations including excessive commissions, churning, unauthorized trading, and suitability among other claims.

The most recent regulatory action against Langweiler by FINRA alleges that he willfully failed to amend his Form U4 to timely disclose federal tax liens, totaling approximately $143,000, and civil judgments, totaling approximately $56,700. FINRA alleged that Langweiler also provided inaccurate and incomplete responses regarding liens and judgments to his employer and he provided inaccurate responses to FINRA.

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.