investment advisor fraud

Yellowstone Advisors David Hansen and Cameron High Fraudulently Bill Clients Out of $11.8 Million – Investor Recovery Options

February 14, 2021 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisory firm Yellowstone Partners, LLP, of Idaho Falls, and its two principals, David Hansen (Hansen) and Cameron High (High) fraudulently overbilled clients and charged fees for work not performed. According to records kept by The Financial Industry Regulatory Authority (FINRA) High was employed by Crown Capital Securities, L.P. through October 2017. If you have been a victim of Hansen’s and High’s misconduct our firm may be able to assist you in recovering funds.

According to the SEC, Yellowstone overbilled investment advisory clients as part of a fraudulent scheme to inflate the firm’s income. The SEC claims that High participated in the fraudulent scheme by causing the overbilled management fees to be charged to and taken from client accounts. The Defendants are accused and later pled guilty to stealing over $11.8 million from over 120 client accounts by overbilling clients for investment advisory management fees that were never earned.

The SEC alleged that the overbillings were taken from unsuspecting clients to generate additional revenue to cover Yellowstone’s operating expenses and to support Hansen’s lavish lifestyle. The SEC found that the advisors targeted specific accounts in a small number of larger accounts where overbilled fees would be less noticeable. In carrying out their scheme, the advisors allegedly billed client accounts twice for periodic management fees taking double the amount of fees earned during particular periods. In addition, the advisors also failed to maintain current investment advisory agreements for each client and to keep such records easily accessible for a period of five years.

On March 14, 2018, High pled guilty to one count of wire fraud before the United States District Court for the Northern District of Idaho.

Advisor Dudley Stephens Accused of Churning and Unapproved Product Sales

February 23, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Dudley Stephens (Stephens), formerly associated with Coastal Equities, Inc. (Coastal Equities), in September 2018, was san ctioned and barred from the securities industry by FINRA due to failures to provide documents and information requested by the regulator. In addition, Stephens has three customer complaints, one termination, and one additional regulatory complaint.

In July 2018 Stephens was terminated by Coastal Equities on grounds that he was being reviewed over suspicious letters of authorization for third party wires. Thereafter, FINRA barred Stephens.

In December 2018 a customer filed a complaint alleging that excessive and unauthorized commissions were charged of approximately $50,000 per year for 2.5 years in her advisory account. The client also alleged that $100,000 was invested in an unauthorized private securities transaction was a sham. The claim alleges $250,000 in damages and is currently pending.

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”.

Advisor Noel Carino Barred by Regulator Over Unapproved Products

January 12, 2019 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Noel Carino (Carino), formerly associated with General Securities Corp., in November 2018, was sanctioned and barred from the securities industry by FINRA over accusations of potentially selling unapproved products.

In November 2018 FINRA alleged that Carino consented to the sanction and bar from the industry after he refused to provide documents and information requested by FINRA in connection with its investigation into whether he engaged in outside business activities without written notice to his member firm, whether he engaged in private securities transactions without written notice to or approval from the firm, and whether he reported all outside brokerage accounts in which he had an interest 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 Carino’s activities. Carino’s disclosures include outside business activities (OBAs) including B & N Investments, LLC and Fidelity Wealth Management LLC. At this time it is unclear whether the unapproved products involve any of these entities.

Morgan Stanley Broker Barry Garapedian Has Numerous Customer Complaints

October 25, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP have been investigating Morgan Stanley broker Barry Garapedian (Garapedian). According to BrokerCheck Records, Garapedian has been subject to 14 customer disputes, two of which are still pending. The majority of these disputes concern unsuitable investment recommendations.

Most recently, in April 2018, a customer alleged that Garapedian recommended investments that were unsuitable and over-concentrated the customers funds into the investments. The customer also alleged that the account had excessive fees. The customer has requested $713,000 in damages. This dispute is currently still pending.

In March 2018, another customer similarly alleged that from 2013 to 2015, Garapedian was recommending unsuitable investments that didn’t align with the customer’s needs and goals. This dispute is currently still pending.

In March 2018, a customer alleged that from March 2013 to December 2017, Garapedian was recommending unsuitable investments that didn’t align with the customer’s investment objectives. The customer requested $106,178 in damages.

In March 2008, a customer alleged that Garapedian’s recommendation of Auction Rate Securities (ARS) was unsuitable to the customer’s investment needs and falsely represented. The case was settled at $125,000.

Auction Rate Securities are debt securities sold through a dutch auction at an interest rate that will clear the market at the lowest possible yield in order to ensure that all bidders receive the same yield. Since 2008, most auctions have failed and the market has largely collapsed – leaving many investors with illiquid investments that have long-term maturities. Continue Reading

Temenos Advisory, Inc. and Its CEO Accused of Peddling $19 Million in Risky Investments – Investor Recovery Options

September 6, 2018 | by Staff Attorney

The attorneys at Gana Weinstein LLP are reviewing court documents and complaints related to The Securities and Exchange Commission’s (SEC) charge a Connecticut investment advisory firm Temenos Advisory, Inc. (Temenos) and its principal, George L. Taylor (Taylor) put $19 million of investor money, including elderly investors’ retirement savings and pension plans, in risky investments and all the while secretly pocketing large commissions.

The SEC alleged that from 2014 through 2017, Temenos and Taylor defrauded their advisory clients and by steering the clients into unsuitable investments and by hiding commissions and other financial incentives that Temenos and Taylor were pocketing on top of the advisory fees clients paid. In addition, the SEC found that Temenos and Taylor repeatedly downplayed and concealed risks, and overstated potential gains with the illiquid private placements

The SEC accused Temenos and Taylor of violating their fiduciary duty that every investment adviser owes to its clients that requires firms to put client interests first, to deal with clients with the utmost honesty, to disclose all conflicts or potential conflicts of interest, and to use reasonable care in providing investment advice.

FINRA Bars Sanders Spangler for Alleged Unauthorized Trades

July 30, 2018 | by Staff Attorney

The investment fraud attorneys at Gana Weinstein LLP have been investigating previously registered broker Sanders Spangler (Spangler). According to BrokerCheck Records kept by the Financial Industry Regulative Authority (FINRA), In February 2017, LPL Financial LLC (LPL Financial) terminated Spangler for executing unauthorized trades in non-discretionary customer accounts. Shortly after, in March 2018, FINRA barred Spangler from financial industry due to Spangler’s failure to appear to an on-the-record testimony regarding the unauthorized trade allegations against Spangler at LPL Financial. By failing to appear to the testimony, Spangler was in violation of FINRA Rules 8210 and 2010. Without admitting or denying the findings, Spangler consented to the sanction and to the entry of findings. However, the extent of which Spangler executed unauthorized trades is still unclear.

Spangler has also been subject to six customer disputes within the past two years. Two of these disputes are still pending.

In March 2018, Spangler’s ex-wife alleged that Spangler was forging her account documents. This dispute is currently still pending.

Samuel Rankin Subject to Two Pending Customer Disputes for Mismanaging Funds

July 12, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are investigating claims against UBS Financial Services Inc. (UBS Financial) broker Samuel Rankin (Rankin). According to BrokerCheck records, Rankin has been subject to eight customer complaints, two of which are still pending. The majority of these complaints concern the misallocation of customers’ funds into unsuitable investments.

Most recently, in September 2017, a customer alleged that from 2015 to 2016, Rankin misallocated funds into highly risky investments which were unsuitable to the customer’s needs. The customer is requesting $849,221 for damages. This dispute is still pending.

In August 2017, a customer alleged that from 2009 to 2017, Rankin misallocated retirement funds into aggressive investments that were unsuitable to the customers’ needs and violated their written agreement to placement in only moderate-risk investments. This dispute is still pending.

FINRA Sanctions Broker Kevin Murphy Over Selling Away Allegations

March 9, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2015043159501) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Kevin Murphy (Murphy). FINRA alleged that in or about November 2013, Murphy sold $1.2 million of shares and warrants in a private placement to four individuals and one limited partnership without his firm’s knowledge.

According to FINRA, in August and September, 2013, Murphy made a $1.2 million investment in a private placement for which TGP Securities, Inc. (TGP), Murphy’s brokerage firm, was providing brokerage services. In return for his investment, FINRA found that Murphy received two stock certificates totaling 600,000 Series F shares and two warrants exercisable for 300,000 common shares. On November 29, 2013, FINRA alleged that Murphy resold the Series F shares and the warrants to four individuals and one limited partnership for $1.2 million without the permission of TGP.

In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.

FINRA Sanctions Broker James Nixon Over Promissory Note Sales

March 7, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 1013038289101) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Nixon (Nixon). FINRA alleged that Nixon failed to provide prior written notice to Bridge Capital Associates, Inc. (Bridge Capital), his then employing brokerage firm, before selling $600,000 of convertible promissory notes – practice referred to as “selling away” in the industry. FINRA found that Nixon provided detailed written notice to Bridge Capital only after he had already disseminated investor presentations to approximately 40 potential investors and completed sales to three accredited investor. In addition, FINRA alleged that Nixon provided investor presentations that contained exaggerated and misleading statements about the issuer of the promissory notes, by the initials BRT, and failed to include a meaningful risk disclosure.

Nixon entered the securities industry in 1987. Nixon was registered with Bridge Capital Associates since December 2007 until September 2013, when Bridge Capital discharged Nixon in connection with the conduct concerning FINRA’s allegations. Shortly after Bridge Capital terminated his registrations Nixon became registered with a different firm, Source Capital Group, Inc. out of the firm’s Westport, Connecticut office location.

FINRA found that the promissory notes were offered without a PPM and that instead the notes were offered through an investor PowerPoint presentation that Nixon prepared in conjunction with the issuer. FINRA found that the investor presentation was devoid of any cautionary language specific to the promissory notes and that the prospects for notes were presented in very optimistic terms and stated financial projections at aggressive multiples without sources or support for such representations. FINRA found these representations to violate its communications rules.

FINRA Sanctions Broker Carlos Benavidez Jr Over Unauthorized Trades in 80 Customer Accounts

March 7, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating the regulatory action filed (Disciplinary Action No. 2014043025701) by The Financial Industry Regulatory Authority’s (FINRA) against broker Carlos Benavidez Jr (Benavidez). According to the allegations, between January 2013 and January 2015, Benavidez exercised discretion in 80 customer accounts without obtaining prior written authorization from the customers while with brokerage firm Waddell & Reed.

FINRA found that beginning in or about December 2009, Benavidez and two other representatives registered with Waddell & Reed, formed RBR Group and shared a customer base for their securities business. Between January 2013 and January 2015, FINRA found that Benavidez exercised discretion in effecting hundreds of securities transactions in approximately 80 customer accounts without obtaining written authorization from his customers or Waddell & Reed’s approval.

Also according to FINRA, Benavidez tried to hide the evidence of unauthorized trading by falsifying documents. FINRA found that on or about September 9, 2014, Benavidez and another individual with the firm backdated approximately 26 customer notes that had been created in the firm’s computer program in order to falsely reflect that Benavidez or another member of the RBR Group had conversed with those customers on before the trades were effected when, in fact, it was not until six days later when Benavidez or another individual talked with the 26 customers about the trades that had been effected in their accounts.