FINRA arbitration

FINRA Suspends Mason Gann for Unauthorized Trades at Berthel Fisher

August 23, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP are currently investigating previously registered broker Mason Gann (Gann). According to BrokerCheck Records, Gann has been subject to a regulatory matter in which the Financial Industry Regulatory Authority (FINRA) sanctioned Gann for violations of the securities laws concerning unauthorized trading. In addition, Gann has been subject to three customer disputes, two of which are still pending. Gann has also been subject to termination from employment and a tax lien.

In February 2018, Gann was terminated from Berthel Fisher & Company Financial Services, Inc. (Berthel Fisher) for allegedly violating the firm’s conditions involving heightened supervision.

Subsequently, in April 2018, FINRA found that Gann had exercised discretionary power in 6 non-discretionary customer accounts without the customer’s prior written approval. By doing so, Gann was in violation of NASD ConductRule 2510 (b) and FINRA Rule 2010. Gann executed a total of 500 discretionary trades at previous firm of employment Berthel Fisher, where all discretionary trades were prohibited. Without admitting or denying the findings, Gann consented to the sanctions and to the entry of findings. Consequently, FINRA imposed a $5,000 fine and 20 day suspension.

FINRA Bars Matthew Singer for Alleged Unsuitable Option Investments

August 23, 2018 | by Staff Attorney

Investment attorneys with our offices are currently investigating previously registered broker Matthew Singer (Singer). According to BrokerCheck Records, in March 2018, Singer was barred from the financial industry for failing to appear at an on-the-record testimony concerning allegations that he was recommending unsuitable investments to customers while employed at Morgan Stanley. According to the Financial Industry Regulatory Authority (FINRA), Singer consented to the sanction and bar due to the fact that he refused to appear to the testimony. For failing to appear for testimony, Singer was in violation of FINRA Rules 8210 and 2010 and automatically barred.

In addition, Singer has been subject to multiple customer complaints. In December 2016, a customer alleged that from May 2015, to January 2016, Singer misrepresented investments and executed unauthorized trades in the customer account regarding option investments. The case was settled at $60,000.

In February 2016, a customer alleged that Singer recommended unsuitable options to the customer. The customer requested $381,929 in damages. In October 2015, a customer alleged that from June 2015, Singer recommended highly risky and unsuitable investments to the customer.

Matthew Kerby Barred by FINRA Over Allegations of Converting Customer Funds

July 30, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP have been investigating previously registered broker Matthew Kerby (Kerby). According to BrokerCheck Records, in January 2018, Kerby was barred from the financial industry by the Financial Industry Regulative Authority (FINRA) for withholding crucial documents from FINRA involving a prior investigation in which Kerby allegedly converted elderly customer funds. Kerby consents to the sanctions that he received FINRA’s request and failed to produce documents. By refusing to provide requested documents, Kerby violated FINRA Rules 8210 and 2010. At this time it is unclear the extent and nature of the appropriation that occurred.

In addition, Kerby has been subject to termination from employment. Kerby’s employer, Edward Jones, terminated Kerby in November 2017 alleging that Kirby misappropriated and converted customer funds to utilize them for personal benefit.

Kerby has also been subject to a customer complaint. In November 2017, a customer alleged that Kerby misappropriated the customer’s funds by taking the money out of the account and converting the funds without customer authorization. The dispute was settled at $78,985.80.

Charles Dixon Barred By Regulator Over Unauthorized Trade Allegations

July 27, 2018 | by Staff Attorney

Investment fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Charles Dixon (Dixon). According to BrokerCheck Records kept by The Financial Industry Regulatory Authority (FINRA), in January 2018, Dixon was barred from the financial industry for failing to appear at an on-the-record testimony concerning allegations that he was exercising discretion without prior written authorization. According to FINRA, Dixon consented to the sanction and bar due to the fact that he refused to appear to the testimony. At this time it is unclear the extent and nature of the unauthorized trading that occurred.

FINRA’s investigation was in connection with Dixon’s termination from Morgan Stanley. In March 2017, Dixon’s employer, Morgan Stanley, terminated Dixon due to a customer allegation that Dixon was exercising discretionary power in a customer’s non-discretionary account without prior customer written approval.

In addition, Dixon has been subject to two customer disputes concerning unauthorized trading and churning. In October 2016, a customer alleged that from June 2013 to July 2016, Dixon was executing unauthorized trades in the customer account. This dispute settled for $225,000.

Timothy Gibbons Suspended by FINRA for Unsuitable Investments in Energy Stocks

July 24, 2018 | by Staff Attorney

The security fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Timothy Gibbons (Gibbons).

According to BrokerCheck records, in November 2017, the Financial Industry Regulative Authority (FINRA) suspended Gibbons for recommending unsuitable investments to 5 elderly customers and over-concentrating the accounts from 65% to 79% into a highly risky energy sector security. Gibbons recommendations were not appropriate for the customer in consideration of the customer’s age, risk tolerance, financial needs, and investment objectives. Without admitting or denying the findings, Gibbons consented to the sanctions and to the entry of findings. As a result of the violation, FINRA imposed a suspension of 18 months, a $20,000 fine and a restitution fee of $716,749.78 to remedy the customer losses.

In addition, Gibbons has also been subject to two pending customer disputes involving unsuitable investments in energy securities. In May 2018, a customer alleged that from 2012 to 2015, Gibbons was recommending unsuitable shares of energy stock to the customer.

FINRA Suspends Charles Lundell for Unauthorized Trading

July 16, 2018 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Charles Lundell (Lundell). According to BrokerCheck records, Lundell was suspended by FINRA in November 2017 for executing unauthorized trades in customers’ non-discretionary accounts. In addition, Lundell has been subject to two customer disputes, a regulatory action sanctioned by the New York Stock Exchange (NYSE), and two discharges from member firms.

In November 2017, FINRA found that Lundell violated the NASD Conduct Rule 2510(b) and FINRA Rule 2010 by executing unauthorized transactions in five of his customers’ non-discretionary accounts. From January to February 2017, Lundell exercised discretion of $252,912 of four equity securities in his customers’ accounts and sold $65,788 of one of the equity securities without customer or firm approval. FINRA fined Lundell $5,000 and suspended him for 30 days.

In addition, in March 2017, Lundell was discharged from First Allied Securities, Inc. for violating the firm policy regarding the execution of unauthorized transactions without the firm’s required approval.

Hiring a FINRA Attorney

November 21, 2017 | by Staff Attorney

Are you hiring the a FINRA securities attorney to help you recover investment losses? This article will help you make the right choice when selecting a FINRA attorney by outlining the most important things to look out for. Consider these five questions to ensure you are hiring the best:

Is the attorney reputable?

It is imperative to hire a reputable attorney for FINRA arbitration who has the necessary educational background, training, and results-oriented experience. To ensure you are hiring the best securities attorney, look at the attorney’s practice areas, case experience, and client reviews.

Is FINRA Ready to Get Serious About Arbitration Discovery Abuse? Part I

December 1, 2014 | by Staff Attorney

Many securities arbitration attorneys would agree that discovery abuse in FINRA arbitration is a problem under certain circumstances. A client has a seemingly great and compelling case. Then the brokerage firm produces its “discovery” but something doesn’t seem right. Documents recording decisions on key dates are missing, there are unexpected gaps in the email record, and in the worst cases your client has produced documents that the firm should have a copy of but for some reason does not. How often discovery abuse happens in FINRA arbitration is unknowable.

However, what is known is that system likely fosters discovery abuse. A recent Reuters article highlighted that arbitrators do indeed go easy on brokerage firm discovery abuse. Why does this happen? The first line of defense against discovery abuse is the arbitrators themselves. But most arbitrators simply expect the parties to comply with their discovery obligations without their input. Moreover, arbitrators loath ordering parties to produce documents against their will and prefer the parties to resolve their own disputes. While these goals are noble they also invite abuse.

So how does an investor ultimately get awarded discovery abuse sanctions if a brokerage firm fails to produce documents? First, the client must move to compel the documents and win the motion over the brokerage firm’s objections. Second, the firm must refuse to comply with the order. Usually the firm will interpret the scope of the order as not encompassing the discovery that was actually ordered or will otherwise declaw the order through claims of “privilege” or “confidentiality.” This leads to a second motion to compel and request for sanctions. Again the investor will have to argue the relevance of the initial request as if the panel never ruled that these documents had been ordered to be produced and the brokerage firm gets a second bite of the apple to throw out the discovery.

FINRA Sanctions B. C. Ziegler and Company For Failure to Supervise Church Bond Sales (Part II)

September 12, 2014 | by Staff Attorney

This post picks up on our first article on The Financial Industry Regulatory Authority (FINRA) sanctioning brokerage firm B. C. Ziegler and Company (B. C. Ziegler) and ordering the brokerage firm to pay $150,000 on allegations that the firm failed to implement a supervisory system reasonably designed to ensure that material economic information regarding Church Bonds was disclosed to the firm’s brokers, trading desk, and customers.

FINRA found that while the firm maintained a Credit Watch List to check for delinquent and missed Church Bond payments, this list was only produced periodically and not every time a Church Bond issuer fell five weeks behind on its sinking fund payments. Accordingly, FINRA found that B. C. Ziegler violated NASD Rule 3010 by failing to establish and maintain a supervisory system reasonably designed to ensure that material economic information, such as delinquent sinking fund payments, was disclosed to the firm’s brokers and customers who were sold Church Bonds in secondary market transactions.

FINRA found that prior to September 2010, B. C. Ziegler did not inform its brokers, trading desk, or customers when an issuer was more than 30 days behind on its sinking fund payments, an indicator of financial distress. Further, it was alleged that from September 2010, through at least May 2012, B. C. Ziegler’s registered representatives and trading desk were informed only periodically when a Church Bond issuer fell five weeks behind on its sinking fund payments through the Credit Watch List causing B.C. Ziegler’s supervisory system to not be reasonably designed to consider material economic information in the pricing of Church Bonds in secondary market transactions. The result, FINRA found, was that the firm had similar pricing for secondary market trades in Church Bonds that were current and delinquent with sinking fund payments.

Former Sterne Agee Broker Dean Mustaphalli Alleged to Have Wrongfully Run $6 Million Hedge Fund

July 15, 2014 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating claims that former Sterne Agee Financial Services Inc. (Sterne Agee) broker Dean Mustaphalli (Mustaphalli) solicited millions of dollars from investors running to run a $6 million hedge fund on the side without formerly disclosing the activity to his brokerage firm. As reported by InvestmentNews, the Financial Industry Regulatory Authority (FINRA) charged Mustaphalli for founding and receiving commissions from a hedge fund he created called Mustaphalli Capital Partners in or about 2011 without informing his. Mustaphalli sold the investment through his registered investment advisory firm, Mustaphalli Advisory Group.

According to allegations made, Mustaphalli solicited money for the fund from at least 25 investors over six months during 2011. The fund invested in publicly traded equity and debt securities has since declined by approximately 90% according to investors. At least some of Mustaphalli’s clients were direct customers of Sterne Agee as well. According to FINRA, Mustaphalli was not cooperating with the agencies requests to provide account statements for the hedge fund. Typically in these cases if a broker does not cooperate with FINRA’s department of enforcement and the agency proves he withheld information the broker would be barred from the securities industry among other remedies that could be imposed.

Mustaphalli disclosed the existence of the Mustaphalli Advisory to Sterne Agee but did not disclose that he was managing the hedge fund through the firm according to FINRA. However, under the FINRA rules, brokers must fully disclose hedge funds for approval to their member firm and be supervised by the firm under Rule 3040.