Craig Scott Capital

Broker Investigation: Churning Claims Against Aegis Broker Michael Venturino

January 22, 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 Michael Venturino (Venturino). According to BrokerCheck records there are at least 2 customer complaints against Venturino. The customer complaints against Venturino allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and churning (excessive trading) among other claims. The most recent customer complaint filed in June 2014 alleged excessive mark-ups or commissions claiming $125,000 in damages. The claim is still pending. In March 2014, another client filed a complaint alleging unsuitable investments, unauthorized trading, and churning among other claims claiming damages of $140,368. The claim is still pending.

As a background, 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.

The number of customer complaints against Venturino 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.

Recovery Options For Investors of Zachary Bader’s Churning and Unsuitable VIX Trading

December 30, 2015 | by Staff Attorney

The securities fraud attorneys of Gana Weinstein LLP are investigating potential recovery options for investors with broker Zachary Bader (Bader). Recently The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 20130363873) which resulted in a permanent bar form the securities industry. The complaint alleged that from February 2012 through July 2013, Bader engaged in excessive trading (churning) in three customer accounts with a reckless disregard for the interests of those customers. FINRA also alleged that from March 2012 through January 2013, Bader made unsuitable recommendations of a complex Exchange Traded Note (ETN), the iPath S&P 500 VIX Short Term Futures ETN (VXX) to 21 customers without a reasonable basis to believe that the ETN was suitable for at least some investors.

Bader entered the securities industry in 2011 with brokerage firm Brookstone Securities, Inc. From February 2012 until August 2013, Bader was associated with Craig Scott Capital, LLC. Thereafter, from August 2013 until August 2013, Bader was associated with National Securities Corporation out of the firm’s Melville, New York office location.

As a background, when brokers engage in 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 Investigation: Claims Against Broker John Stapleton

November 2, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Stapleton (Stapleton) has been the subject of at least 2 customer complaints, 1 regulatory action, and 6 judgements or liens. Customers have filed complaints against Stapleton alleging securities law violations including misrepresentations of investments among other claims.

In 2005 the NASD brought action against Stapleton alleging that the broker committed securities fraud and made unsuitable investments while exercising control over the purchases and sales in a client’s account. The NASD found that Stapleton did not have a reasonable basis to believe that the purchases and sales in the account were suitable for the customer given the size and frequency of the transactions and the customer’s circumstances.

In addition, Stapleton has had difficulty managing his own finances and on April 16, 2014, disclosed a tax lien of $105,7191, on December 6, 2013, disclosed a tax lien of $12,478, on April 23, 2012, disclosed a tax lien of $1,592, on January 25, 2012, disclosed a tax lien of $9,642, on August 10, 2010, disclosed a tax lien of $121,506, and on March 27, 2009, disclosed a tax lien of $11,180. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Broker Investigation: Claims Against Broker Glen Delaney

October 31, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Glen Delaney (Delaney) has been the subject of at least 2 customer complaints and 3 judgements or liens. Customers have filed complaints against Delaney alleging securities law violations including unauthorized trades, breach of fiduciary duty, and unsuitable investments among other claims. In addition, Delaney has had difficulty managing his own finances and on August 13, 2015, disclosed a civil judgment of $50,225, on November 19, 2010, disclosed a civil judgement of $9,720, and in 2006 had a civil judgement of $600. Judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Delaney entered the securities industry in 2005. Since 2008 Delaney has been registered with Pointe Capital, Inc., until June 2009. From June 2009, until October 2010, Delaney was registered with Global Arena Capital Corp. Thereafter, from October 2010, until April 2012, Delaney was associated with Brookstone Securities, Inc. From April 2012, until June 2015, Delaney was a registered representative of Rockwell Global Capital LLC. From June 2015, until August 2015, Delaney was registered with Primary Capital, LLC. Finally, since August 2015, Delaney has been associated with Craig Scott Capital, LLC out of the firm’s Uniondale, New York office location.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

FINRA Investigates Broker Craig Taddonio Over Supervision and Churning

October 29, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Craig Taddonio (Taddonio) has been the subject of at least three customer complaints, three judgements or liens, and one regulatory investigation. The Customer complaints against Taddonio alleges securities law violations that claim churning and excessive trading, unsuitable investments, securities fraud, and excessive commissions among other claims. The most recent complaint filed in April 2015, alleges losses of $900,000. In addition, in May 2015, a customer was awarded $338,454 in an arbitration claim including Taddonio where the panel assessed $107,944, $9,871, and $220,639 in compensatory damages against Taddonio and others jointly and severally and also a finding of punitive damages against Taddonio and others jointly and severally under New York law.

In addition to customer complaints Porges is subject to several liens including a massive $574,055 tax lien in February 2015, a $57,735 tax lien in September 2014, and a $48,607 tax lien in September 2014. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, the brokercheck record also states that on September 29, 2015, FINRA initiated an investigation into Taddonio conduct. The investigation relates to false statements and testimony, violations of FINRA’s supervisory rules and churning.

FINRA Investigates Broker Brent Porges Over Supervision and Churning

October 28, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Brent Porges (Porges) has been the subject of at least four customer complaints, six judgements or liens, and one regulatory investigation. The Customer complaints against Porges alleges securities law violations that claim churning and excessive trading, unsuitable investments, securities fraud, and excessive commissions among other claims. The most recent complaint filed alleges losses of $900,000. In addition, in May 2015, a customer was awarded $338,454 in an arbitration claim including Porges where the panel assessed $107,944 against Porges and others jointly and severally and also a finding of punitive damages against Porges and others jointly and severally under New York law.

In addition to customer complaints Porges is subject to numerous liens including a $7,500 tax lien in March 2015, a $9,000 tax lien in February 2014, a $64,000 tax lien in August 2013, a $5,200 tax lien in December 2012, among other liens. Tax liens and judgements are often a sign that the broker cannot manage their own personal finances and may be tempted to recommend high commission products or strategies to clients in order to satisfy debts.

Finally, the brokercheck record also states that on September 29, 2015, FINRA initiated an investigation into Porges conduct. The investigation relates to false statements and testimony, violations of FINRA’s supervisory rules and churning.