investment advisor fraud

Broker Investigation: Advisor Dennis Riordan

January 7, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Dennis Riordan (Riordan). According to Riordan’s BrokerCheck records there are at least 3 customer complaints against Riordan, 1 judgment or lien, and 2 criminal matters. The customer complaints against Riordan allege a number of securities law violations including that the broker made unsuitable investments, excessive trading, and failure to follow instructions among other claims.

The most recent disclosure filed in February 2015 concerns a tax lien for $33,287. 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. The most recent complaint against Riordan was filed in December 2013 and alleges an unsuitable recommendation in a private placement security.

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.

Gana LLP Investigation: Excessive Trading Complaints Against Broker James Bernthal

January 5, 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 James Bernthal (Bernthal). According to BrokerCheck records there are at least 4 customer complaints against Bernthal and 1 judgments or liens. The customer complaints against Bernthal allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, excessive trading, and unauthorized trading, among other claims.

According to the disclosures, the most recent customer complaint against Bernthal was filed in February 2013 and alleged $100,000 in damages due to unsuitable trades and excessive transactions. The case was resolved for $50,000.

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.

Gana LLP Investigates Regulatory and Investor Complaints Against Broker Glenn King

January 4, 2016 | by Staff Attorney

The securities fraud attorneys of Gana Weinstein LLP are investigating potential recovery options for investors with broker Glenn King (King). Recently The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2015044444801). In addition, to the FINRA complaint, King’s BrokerCheck disclosures reveal an astonishing number of reported incidents including 1 investigation, 19 customer complaints, 1 firm termination, 2 financial disclosures – which includes a bankruptcy filing, and 1 judgement or lien.

The FINRA complaint alleges that from April 2008 through March 2011, while King was associated with brokerage firm Royal Alliance Associates, Inc. (Royal Alliance), King made fraudulent misrepresentations and omissions to seven Royal Alliance customers in connection with the sale of Unit Investment Trusts (UITs). FINRA found that King misrepresented to the customers that he would use their investment funds to purchase safe, no-risk bonds, and that King would not charge fees or commissions for the transactions. ln reality, King was alleged to have purchased 44 UITs that resulted in approximately $17,000 in realized losses to the customers, approximately $43,000 in unrealized losses, and approximately $38,000 in commissions to King.

FINRA also alleged that from January 2013 through December 2014, while King was associated with Buckman, Buckman & Reid (BBR), King engaged in a pattern of short-term trading in long-term investment products in the accounts of four customers. FINRA alleged that the pattern of trading was excessive and unsuitable, and resulted in approximately $163,000 in losses to the customers while profiting King by generating commissions of approximately $210,000.

Broker Investigation: Wells Fargo Advisor Robert Giusti

January 3, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Robert Giusti (Giusti). There are at least 4 customer complaints against Giusti and one civil action. The customer complaints against Giusti allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and excessive trading among other claims.

The most recent complaint was filed in April 2015 and alleged unsuitable investments and excessive trading among other claims for investments made between 2010 through June 2015 causing the investor $1,326,374 in damages. A civil judgment was filed against Giusti in April 2015 for $1,100,000. Another complaint filed in January 2012 alleged unsuitable investments and unauthorized use of margin funds causing $45,000.

Giusti entered the securities industry in 1995. From November 2006 through June 2009, Giusti was associated with Citigroup Global Markets Inc. Thereafter, from June 2009 through September 2009, Giusti was briefly associated with Morgan Stanley Smith Barney. From August 2009 until December 2013, Giusti was associated with Merrill Lynch, Pierce, Fenner & Smith Incorporated. Finally, since December 2013, Giusti has been registered with Wells Fargo Advisors, LLC out of the firm’s New York, New York office location.

Broker Investigation: TIC Complaints Against Sigma Financial Broker Tomas Velken

December 28, 2015 | by Staff Attorney

The investment attorneys at Gana Weinstein LLP are interested in speaking with investors of broker Tomas Velken (Velken). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Velken has been the subject of at least 14 customer complaints. The customer complaints against Velken allege securities law violations that including unsuitable investments, misrepresentations, and breach of fiduciary duty among other claims. Many of the complaints appear to be in connection with in connection with the sales of tenants-in-common (TICs).

The most recent complaint was filed in September 2015, and alleged $115,000 in losses due to a recommendation to invest in a real estate security transaction purchased in 2007. Another investor in April 2015, claimed $1,777,484 in damages due to a real estate security transactions purchased from 2005 through 2007. In March 2015, another investor alleged that in 2010 the broker made misrepresentations concerning an investment’s performance and claimed damages of $592,600.

As a background, TICs largely been sold unfairly as tax advantaged products that allow customers to defer capital gains taxes on appreciated real estate. TICs are private placements that have no secondary trading market and are therefore illiquid investments. In a typical TIC, the investor receives a fractional interest in the property along with other stakeholders and the profits are generated mostly through the efforts of the sponsor and the management company that manages and leases the property. The sponsor typically structures the TIC investment with up-front fees and expenses charged to the TIC and negotiates the sale price and loan for the acquired property. Because these fees are often higher than 15%, there is often no way for the investment to be profitable for the investor.

Broker Investigation: H. Beck’s Advisor Michael Child

December 22, 2015 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Michael Child (Child). There are at least 2 customer complaints against Child. In addition, there is one regulatory complaint and three employment separations disclosed. The customer complaints against Child allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and unauthorized trading among other claims. One of the claims involves allegations around the recommendation of a variable annuity.

The regulatory action was initiated by the state of Utah in March 2012 and alleged that certain information on a suitability form was not current resulting in a fine and a 12 month probation. In 2008, Child’s brokerage firm, GunnAllen Financial, Inc. alleged that Child allowed a statutorily disqualified person to represent himself as being associated with the branch office.

Child entered the securities industry in March 1998. Since March 2008, Child has been registered with H. Beck, Inc. out of the firm’s Salt Lake City, Utah office location.

FINRA Sanctions Morgan Stanley Broker Clarence Mark Tingle Over Unauthorized Trades

December 17, 2015 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints against broker Clarence Mark Tingle (Tingle). In addition, The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2014042951501) against Tingle. There are at least 2 customer complaints against Tingle and 1 regulatory action. The customer complaints against Tingle allege a number of securities law violations including that the broker made unauthorized trading, excessively traded accounts, and failed to follow instructions among other claims.

The most recent customer complaint was filed in October 2014 and alleges excessive trading from September 2011 through July 2014 causing $40,954 in damages.

In a FINRA regulatory action against Tingle, the agency alleged that between August 2009 and June 2014, Tingle at times exercised discretion in the accounts of six customers without first obtaining the customers’ written authorization. Although the customers orally authorized the use of discretion Tingle failed to obtain their written authorization in violation of industry rules.

Broker Investigation: VSR Financial Services Advisor Robert Hinz

December 16, 2015 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Robert Hinz Jr. (Hinz). There are at least 7 customer complaints against Hinz. The customer complaints against Hinz allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, fraud, breach of fiduciary duty, and unauthorized trading among other claims. One of the claims involves the purchase of oil and gas private placement Reef Oil & Gas Income and Development Fund III.

The most recent complaint was filed in February 2013 and alleged fraud and negligence from activities that occurred from July 2007 until December 2009 and resulted in $240,000 in damages. Another complaint filed in January 2012 alleged dissatisfied performance with respect to investments and asked for $34,680. The case was closed with no action.

Hinz entered the securities industry in January 1982. Since August 1994, Hinz has been registered with VSR Financial Services, Inc. out of the firm’s Seattle, Washington office location.

Broker Investigation: Customer Complaints Against Jeremy Monte

December 10, 2015 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints against Jeremy Monte (Monte). According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) Monte has been the subject of at least 3 customer complaints and 3 judgment or liens. The customer complaints against Monte allege a number of securities law violations including that the broker made unsuitable investments among other claims.

The most recent customer complaint was filed in April 2015 and alleges unsuitable investments in non-traded real estate investment trusts (Non-Traded REITs) and variable annuities by charging advisory fees on these investments in addition to commissions. Another complaint filed in February 2013 alleges unsuitable recommendations from 2005 through 2009 leading to $61,000 in damages.

Monte also has three liens listed. In March 2013, a tax lien of $83,199 was filed. In May 2012, a tax lien of $13,999 was filed. Finally, in April 2010, a tax lien of $24,394 was filed against the broker. A broker with large liens are an important consideration for investors to weigh when dealing with a financial advisor. An advisor may be conflicted to offer high commission investments to customers in order to satisfy liens and debts that may not be in the client’s best interests.

FINRA Sanctions Braymen, Lambert and Noel Securities and Shannon Braymen Over Private Placement Supervisory Failures

December 9, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2011025610501) against brokerage firm Braymen, Lambert and Noel Securities, Ltd. (BLNS) and the firm’s Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Compliance Officer (CCO) Shannon Braymen (Braymen) resulting in a monetary sanction. FINRA’s allegations were that from April 2007 to November 2011 BLNS, acting through Braymen, failed to supervise its private placement securities business and the activities of brokers located in two offices. The firm was also accused of failing to register those two branch office locations. In addition, FINRA found that BLNS failed to conduct or to adequately document branch office inspections, and had inadequate supervisory systems and written supervisory procedures for non-branch office locations. Finally, FINRA found that BLNS and Braymen failed to capture and retain certain email correspondence.

BLNS is a member of FINRA and registered as a broker-dealer since March 2003, as a full-service broker-dealer. BLNS currently employs approximately 24 brokers and operates out of 4 branch offices. The firm conducts a securities business in corporate debt securities, over-the-counter equity securities, US government securities, mutual funds, options, private placements and variable contracts. BLNS is also authorized to underwrite corporate securities, proprietary trading and investment advisory services. Braymen entered the securities industry in February 1995. During Braymen’s career she has obtained various securities licenses and had supervisory responsibility for each of the supervisory areas complained of by FINRA.

FINRA’s findings highlighted supervisory deficiencies in a number of areas. One of FINRA’s findings was that BLNS and two brokers located in an unregistered branch office in San Antonio, Texas participated in nine private placement offerings. BLNS and Braymen were accused of failing to adequately supervise the firm’s participation in these nine offerings. FINRA found that the firm had no documentation of principal review and approval of any of the private placement documents, no documentation that a principal of the firm had conducted due diligence, and no documentation of principal review and approval of customer subscription documents. Review of subscription documents are required to determine the suitability of the investments for customers.