Securities Lawyers Blog
The law offices of Gana Weinstein LLP continue to investigate the Woodbridge Group of Companies and the Woodbridge Mortgage Funds (Woodbridge). The Securities and Exchange Commission (SEC) has alleged that the Woodbridge operated a billion-dollar Ponzi scheme ensnaring about 8,400 investors. Woodbridge solicited hundreds of disreputable insurance agents and investment brokers to sell its false notes that the firm claimed to be backed by mortgages. In plain sight to regulators, Woodbridge engaged in a nationwide investment fraud by offering the sale of unregistered securities.
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) Joel Flaningan (Flaningan) appears to be an agent for Woodbridge fraudulent note sales. Flaningan was formerly associated with NYLife Securities LLC (NYLife Securities) out of the firm’s Fort Wayne, Indiana office location. In April 2018 a customer filed a complaint alleging $65,000 in damages resulting form the sale of Woodbridge promissory notes. Thereafter, NYLife Securities terminated Flaningan in May 2018 stating that he violated the firm’s policies and procedures by engaging in an undisclosed private securities transaction away from the broker dealer without approval.
Federal securities laws and the FINRA rules require firms to monitor and supervise its employees, like Flaningan, 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. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including recommending fraudulent investments.