John Thomas Financial

FINRA Bars Broker Honetta Kao During Investigation Into Sales Practices

February 2, 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 Honetta Kao (Kao). According to BrokerCheck records Kao is subject to two customer complaints, one regulatory action, onr investigation, and one financial matter.

FINRA terminated Kao after the broker failed to respond to a letter request for information in August 2015. Prior to that time, in January 2015, FINRA opened an investigation into Kao alleging potential willful violations of securities fraud laws and FINRA rules. In addition, in April 2015, a customer filed a complaint alleging that Kao mishandled the account and provided bad advice. The complaint is pending. Another client alleged in May 2013, that Kao engaged in unsuitable recommendations and unauthorized trading.

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.

Broker Spotlight: Customer Complaints Against PHX Financial Broker Johnathan McHale

January 28, 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 Johnathan McHale (McHale). According to BrokerCheck records there are at least 6 customer complaints, one employment separation for cause, and 6 judgments or liens that have been filed against McHale. The most recent customer complaint against McHale filed in April 2014 alleges that McHale breached his fiduciary duty, negligence, and misrepresentations in the handling of the customer’s account leading to $108,000 in damages. The claim was settled for $14,995. In August 2012, another client alleged that McHale engaged in unsuitable investments leading to $43,000 in damages. The claim was denied.

In May 2014, National Securities Corporation terminated McHale alleging that he violated the firm’s policy by using his personal email address for business correspondence. In addition, McHale has 6 judgements. One tax lien filed in March 2011 for $34,598. Substantial judgements and liens on a broker’s record can reveal a financial incentive for the broker to recommend high commission products or services. A broker’s inability to handle their personal finances has also been found to be relevant in helping investors determine if they should allow the broker to handle their finances

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.

Broker Investigation: Churning Claims Against Aegis Broker Steven Luftschein

January 22, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Steven Luftschein (Luftschein). According to BrokerCheck records there are at least 12 customer complaints against Luftschein. The customer complaints against Luftschein allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, negligence, and churning (excessive trading) among other claims. The most recent customer complaint filed in July 2015 alleged unsuitable investments, failure to supervise, unauthorized trading, breach of fiduciary duty, and misrepresentations from March 2010 until September 2011. The case is still pending.

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.

The number of customer complaints against Luftschein is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

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.

Regulators Sanction Broker Edward Segur Over False Statements

October 30, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Edward Segur (Segur) has been the subject of at least 2 customer complaints, 3 judgements or liens, 1 criminal matter, and 2 regulatory actions. Customers have filed complaints against Segur alleging securities law violations including excessive commissions and unauthorized trades among other claims. In addition, Segur has had difficulty managing his own finances and had a tax lien of $125,687 imposed in February 2015. 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.

Finally, two state regulators have brought actions against Segur. The state of Arkansas alleged that in January 2013, Segur cold called a resident of the state to recommend the purchase of Sandridge Energy, Inc. (Sandridge). At that time Sandridge was trading at about $7 per share and that Segur stated that he had information that the stock would rise to $12 in less than three months because a new chief executive officer would take over Sandridge causing the stock price to increase. The state of Arkansas found that such statements were unjustified and violated the state’s securities laws. In addition, the state of New Hampshire alleged that Segur cold called one of its residents even though the resident was on the state’s do not call list.

Segur entered the securities industry in 1998. An examination of Segur’s employment history reveals that Segur moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Segur’s 16 year career he has switched firms 22 times even returning to several firms on different occasions. Many of the firms have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

Customers File Claims Against Broker David Page

October 9, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Page (Page) has been the subject of at least three customer complaints over the course of his career. Customers have filed complaints against Page alleging securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, negligence, unauthorized trading, misrepresentations, and failure to follow instructions among other claims.

An examination of Page’s employment history reveals that the broker moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Page’s 18 year career he has worked at eight different firms. Since May 2005 until April 2008, Page was associated with Investors Capital Corp. Thereafter, from April 2008, until May 2013, Page was a registered representative with John Thomas Financial. From May 2013, until March 2015, Page was associated with Brookville Capital Partners. After that Page was associated for only one month with Tryco Securities, Inc. Finally, Page is currently registered with Legend Securities, Inc.

Several the firms Page has been associated with have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

Churning Claims Against Rockwell Global Broker Michael Capolongo

September 23, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Capolongo (Capolongo) has been the subject of at least two customer complaints and one criminal matter over the course of his career. Customers have filed complaints against Capolongo alleging securities law violations including that the broker made unsuitable investments and churning among other claims.

An examination of Capolongo’s employment history reveals that Capolongo moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Capolongo’s six year career he has worked at eight different firms returning to one firm on three separate occasions. Many of the firms have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

Since 2009 Capolongo has been registered with John Thomas Financial, New Castle Financial Services LLC, EKN Financial Services Inc., National Securities Corporation, and Laidlaw & Company (UK) LTD. Since September 2014, Capolongo has been associated with Rockwell Global Capital LLC out of their Melville, New York office.

Regulators File Complaints Against Christopher Veale Concerning His Securities Practices

June 8, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Christopher Veale (Veale) has been the subject of at least 12 customer complaints, six judgment and lien of over $1,000,000 and five separate regulatory actions, two investigations by state regulators and one criminal matter involving a felony over the course of his career. Customers have filed complaints against Veale alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, churning, and fraud, among other claims. Many of the claims involve recommendations in penny stocks and other speculative securities.

An examination of Veale’s employment history reveals that Veale moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Veale’s 18 year career he has worked at 18 different firms.

Since 2008 Veale has been registered with Maximum Financial Investment Group, Franklin Christopher Investment Bankers, Inc., Brookville Capital Partners, Blackwall Capital Markets, Inc., Meyers Associates, L.P., John Thomas Financial, and Legend Securities, Inc., until February 2015.

Broker Investigation: Thomas Tedeschi’s Sales Practices

April 14, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Thomas Tedeschi (Tedeschi) has been the subject of at least 6 customer complaints, one judgment and lien over the course of his career. Customers have filed complaints against Tedeschi alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, and churning, among other claims. The claims involve different investment recommendations including claims involving warrants, penny stocks, and Exchange Traded Notes, among other speculative securities.

An examination of Tedeschi’s employment history reveals that Tedeschi moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Tedeschi’s 20 year career he has worked at 17 different firms.

Since 2008 alone Tedeschi has been registered with Westrock Advisors, Inc., Obsidian Financial Group, LLC, John Thomas Financial, Prestige Financial Center, Inc., Blackbook Capital LLC, and Aegis Capital Corp.

Broker Investigation: Salvatore Gioe’s Sales Practices

April 6, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Salvatore Gioe (Gioe) has been the subject of at least 11 customer complaints, one judgment and lien of over $197,000, and one regulatory action over the course of his career. Customers have filed complaints against Gioe alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, churning, margin fraud, among other claims. Many of the claims involve recommendations in penny stocks and other speculative securities.

Gioe was also suspended by the state of Arkansas for one year concerning allegation that in 2013, Gioe contacted an Arkansas resident through a cold call solicitation and recommended the purchase of Uni-Pixel, Inc. However, unfortunately for Gioe the cold caller turned out to be a securities examiner with the state of Arkansas. The examiner then sat and listed as Gioe allegedly told the examiner that he had information suggesting the price of Uni-Pixel would rise from its current price of $15.65 to about $25. The examiner asked Gioe if Uni-Pixel stock was a sure thing and Gioe allegedly responded saying that he did. However, according to Arkansas Uni-Pixel was a distressed company and this information was never disclosed to the examiner on the call.

An examination of Gioe’s employment history reveals that Gioe moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Gioe’s 14 year career he has worked at 13 different firms.