investment management lawyer

SEC Claims Advisory Firm Atlantic Asset Management Hid Conflicts of Interests From Clients

January 16, 2016 | by Staff Attorney

The Securities and Exchange Commission (SEC) announced fraud charges against a Stamford, Connecticut based investment advisory firm Atlantic Asset Management LLC (AAM) and accused the firm of investing clients in certain Native American tribal corporation bonds with a hidden financial benefit to a broker-dealer affiliated with the firm. The SEC alleged that AAM invested more than $43 million of client funds in the illiquid bonds without disclosing the conflict of interest that the bond sales generated a private placement fee for the broker-dealer.

According to the SEC, AAM committed securities fraud in August 2014 and in April 2015 by investing client funds in debt securities without telling its clients that the investments would benefit individuals affiliated with one of AAM’s owners, BFG Socially Responsible Investments Ltd. (BFG), which holds a significant ownership interest in AAM’s parent holding company due to an undisclosed investment in AAM. AAM never disclosed BFG’s capital contribution to and indirect ownership in AAM to its clients or in its filings with the SEC in violation of the federal securities laws. The SEC stated that these dicsloures were not made even after BFG’s principal representative was charged by the SEC and criminally in an unrelated securities fraud.

The SEC alleged that BFG has used its undisclosed ownership interest in AAM to dictate AAM’s investment of its clients’ funds in ways that benefited BFG and its principals and affiliates. The SEC alleged that clients’ funds were invested in dubious, illiquid bonds issued by a Native American tribal corporation at the behest of individuals associated with BFG.

Broker Garland Benton Terminated For Private Securities Transactions

January 14, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Garland Benton (Benton). There are at least 3 customer complaints against Benton, one of which appears to be filed in connection with the solicitation of private securities transactions. In addition, there is one employment separations disclosed. One customer complaint alleges that Benton caused $946,670 in damages by failing to conduct due diligence on an investment while the firm has responded that the Benton was not a representative of the customer. In April 2015, Reef Securities Inc. (Reef) terminated Benton stating that the broker was permitted to resign after allegations were made that Benton failed to follow firm policies and procedures regarding private securities transactions from 2008. The conduct allegedly engaged in by Benton is also referred to as “selling away” in the industry.

Benton entered the securities industry in 2002. Between October 2002 and April 2015, Benton was associated with Reef.

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.

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.