Morgan Stanley

Morgan Stanley Terminates Broker Robert Beck Over Outside Business Activities

September 20, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Morgan Stanley involving broker Robert Beck (Beck). According to BrokerCheck records Beck is subject to three customer complaints and one employment separation for cause.

According to Morgan Stanley, the firm terminated Beck after raising concerns relating to employee’s disclosures relating to outside activities. Often times such filings indicate that the broker is engaging potentially in private securities transactions, promissory notes, or loans away from 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 unclear the nature and scope of Beck’s OBAs and/or private securities transactions. According to BrokerCheck records Beck disclosed that he is involved in outside business activities including rental property in Philadelphia. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.

Broker Christopher Cowans Subject to Multiple Churning Complaints

September 14, 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 Christopher Cowans (Cowans). According to BrokerCheck records Cowans has been the subject of at least nine customer complaints and one regulatory action. The customer complaints against Cowans allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

In December 2014, the State of Massachusetts required Cowans brokerage firm, Arthur W. Wood Company, Inc. (Arthur W. Wood), to agree to a heightened supervision plan for Cowans in light of the fact that Cowans “has been the subject of twelve customer complaints…alleging…making excessive trades…”

The most recent complaint was filed in December 2015 alleging that Cowans engaged in excessive trading from March 2011 until December 2013 causing $600,000. The complaint is still pending.

Customers File Complaints Against Broker Charles Correal Over Unsuitable Oil and Gas Investments

May 21, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). According to Brokercheck records, Charles Correal (Correal) formerly with Morgan Stanley operating from their offices in Upper St. Clair, Pennsylvania has recently received at least several customer complaints with similar allegations that the broker overconcentrated them in oil and gas related investments.

One of the most popular energy related investments that have become increasingly popular in the brokerage industry in recent years are MLPs. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

Morgan Stanley Broker Edward Barger has Four Customer Complaints

May 17, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against broker Edward Barger (Barger). According to BrokerCheck records Barger has been subject to at least four customer complaints, two regulatory action, and one criminal matter. The customer complaints against Barger allege securities law violations that including unsuitable investments among other claims.

In April 2016, a customer complained that Barger made unsuitable investments in his account from August 2011 until December 2015. In May 2015, another customer alleged that Barger made unsuitable investments in the account from February 2011 until December 2014 causing damages of $300,000.

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.

Andrew Yocum Customers Complaint About Unsuitable Oil and Gas Investments

March 20, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating investor claims of unsuitable investments in oil and gas related products. Our firm is currently representing a number of investors who lost substantial savings due to poor advice to concentrate holdings in speculative commodities investments like master limited partnerships (MLPs). According to Brokercheck records, Andrew Yocum (Yocum) formerly with Morgan Stanley operating from their offices in The Villages, Florida has recently received at least 12 customer complaints with similar allegations that the broker overconcentrated them in oil and gas equities. Eight complaints have been filed against Yocum in 2016 alone.

One of the most popular energy related investments that have become increasingly popular in the brokerage industry in recent years are MLPs. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. There are about 130 MLPs trading on major exchanges that focus on energy related industries and natural resources.

Wall Street loves MLPs because they provide high yields to investors and require companies to pay Wall Street in order to continue to grow. In 2013 banks earned fees of $890.3 million from MLP issuance. Bloomberg quoted an analyst stating that “MLPs are Wall Street’s dream,” because “[t]hey’re fee machines.” Naturally, in order to entice investors to continue to invest in MLPs Wall Street pumps up MLPs every chance they get. According to Bloomberg, in May 2014 “[a]nalysts predict that 93 of the 114 MLPs in existence will rise in value in the next year…” Astonishingly, “all but five MLPs are recommended by the majority of the analysts who cover them.” At that time professionals without conflicts called MLPs “the next great investment debacle” and warned that “many MLP shareholders…may not understand what they’ve gotten into.”

Wells Fargo Financial Advisor Charles Lynch Accused of Unsuitable Energy Related Investments

January 24, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating a number of customer complaints involving Wells Fargo Advisors, LLC (Wells Fargo) brokers, including financial advisor Charles Lynch (Lynch), concerning allegations that the investors have been recommended or their advisory accounts have been mismanaged to hold high concentrations of energy related investments. According to Lynch’s publicly available records, there are 11 customer complaints with 9 of those complaints being filed in 2015 all related to energy investments. The customer complaints against Lynch allege securities law violations that including unsuitable investments among other claims.

Our firm is investigating potential securities claims against brokerage firms over sales practices related to the recommendations of oil & gas and commodities products such as exchange traded notes (ETNs), structured notes, private placements, master limited partnerships (MLPs), leveraged ETFs, mutual funds, and individual stocks. Our firm has written numerous articles concerning the dangers of MLP investments. MLPs are publicly traded partnerships. About 86% of the total MLP securities market, a $490 billion sector, can be attributed to energy and natural resource companies. However, most of these companies are heavily reliant on high oil prices to sustain their business models.

Before recommending investments in oil and gas and commodities related investments, brokers and advisors must ensure that the investment is appropriate for the investor and conduct due diligence on the company in order to understand the risks and prospects of the company. Many of these companies relied upon high energy prices in order to sustain their operations. As reported by the Wall Street Journal the drop in oil and energy prices and the industry downturn has made it difficult for many companies to refinance their debts.

Morgan Stanley Broker Lance Slater Terminated After Allegations Of Personal Loans and Excessive Trading

January 18, 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 Lance Slater (Slater). According to BrokerCheck records there are at least 2 customer complaints against Slater and one employment separation. The most recent customer complaint against Slater alleges that from 2013 Slater borrowed $210,000 from the client and then tried to hide that fact from her children and has not since then paid the client back. The client also alleges that Slater engaged in unsuitable investments and excessive trading.

Shortly thereafter Morgan Stanley discharged Slater making allegations Slater failed to adhere to the firm’s guidance regarding certain sales activity and possible involvement in an unreported loan from a customer while at a prior firm.

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.

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.

Recovery Options for Third Avenue Focused Credit Fund Investors

December 27, 2015 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating potential recovery options for investors in the Third Avenue Focused Credit Fund (TFCIX) managed by Third Avenue Management LLC. According to the Wall Street Journal, the mutual fund halted redemptions and announced plans to liquidate effectively freezing investor’s $789 million in investment assets that was supposed to provide mom and pop investors with easy access to their cash. Now investors in the Third Avenue Focused Credit Fund may not receive all their money back for months, if not longer while the fund liquidates.

According to Third Avenue’s Chief Executive David Barse the fund took the unprecedented step of halting redemptions because it needed to act quickly to preserve remaining assets. Third Avenue blamed poor bond-market trading conditions that made it almost impossible to raise sufficient cash to meet redemption demands from investors without a fire sale of remaining assets. As the Third Avenue fund began to collapse traders at hedge funds shorted and bet against the mutual fund’s holdings adding pressure to Third Avenue’s investor withdrawals and forcing the sale its holdings. The fund was down 27% this year through mid-December.

As regulators and industry analysts conduct the postmortem on the fund, it appears that a large part of the reason the Third Avenue fund ran into deep problems is because it purchased illiquid and difficult to trade investments that have been steadily losing value as investors fled energy and other kinds of riskier debt. According to Reuters, the fund, when compared with other junk bond funds, carried an elevated amount of risk. For instance the fund disclosed that 20 percent of the assets it carried were hard to value and trade. This amount was higher than any other U.S. junk bond fund with at least $500 million in assets.

Constellation Wealth Advisors Terminates Brandon Gioffre After Customers Complain about TMG Energy Systems Investment

December 25, 2015 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Brandon Gioffre (Gioffre). There are at least 3 customer complaints against Gioffre. In addition, there is one employment separations disclosed. The most recent customer complaint alleged that three individuals sent a letter to the firm on July 15, 2015 alleging that Gioffre, acting on behalf of the firm, solicited investments in TMG Energy Systems and they suffered damages of $881,657 through the investments. According to Constellation Wealth Advisors LLC (Constellation Wealth Advisors), the firm neither offered the investment nor approved of the private securities transaction or outside business activity engaged in by Gioffre. The conduct allegedly engaged in by Gioffre is also referred to as “selling away” in the industry.

Gioffre entered the securities industry in 1998. Between June 2009 and June 2014, Gioffre was associated with Morgan Stanley. From July 2014 until August 2015, Gioffre was associated with brokerage firm Constellation Wealth Advisors until he was discharged from the firm.

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.