Securities America

John Davenport Subject to Regulatory and Customer Complaints Over Sales Practices

May 4, 2020 | by Staff Attorney

According to BrokerCheck records financial advisor John Davenport (Davenport), currently employed by Liberty Partners Financial Services, LLC (Liberty Partners) has been subject to three customer complaints, one regulatory action, one employment termination for cause, one bankruptcy, and two judgement or tax liens during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the customer complaints against Davenport concern allegations over variable annuity sales practices.

In January 2019 FINRA alleged that Davenport consented to the sanctions and to findings that he placed two securities transactions for a registered representative of another firm and split the commissions generated from the transactions with that representative, without the knowledge or consent of either firm. FINRA determined that Davenport paid the registered representative from the other firm approximately $50,000 on the variable annuity transactions ostensibly as a referral fee causing his firm’s books and records to be inaccurate. FINRA further made findings that Davenport permitted his assistant to use a personal email address to communicate with securities customers concerning business-related matters, which was not approved by the firm, causing the firm to fail to retain the emails among its books and records.

Variable annuities are complex financial and insurance products. In fact, the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know encouraging investors to ask questions about the variable annuity before investing. Essentially, a variable annuity is a contract with an insurance company under which the insurer agrees to make periodic payments to you. The investor chooses the investments made in the annuity and value of your variable annuity will vary depending on the performance of the investment options chosen. The primary benefits of variable annuities are the death benefit and tax deferment of investment gains.

Advisor Jamie Westenbarger Barred by Regulator Over Borrowing Customer Funds

December 18, 2019 | by Staff Attorney

The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Jamie Westenbarger (Westenbarger), formerly employed by Securities America, Inc. (Securities America) has been subject to at least five customer complaints, two employment termination for cause, and one regulatory action during the course of his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), Westenbarger’s customer complaint alleges that Westenbarger recommended unsuitable investments in a variety of investment products including alternative investments, non-traded REITs, variable annuities, corporate notes, and UITs among other allegations of misconduct relating to the handling of their accounts.

In August 2019 Westenbarger’s employer, Securities America, discharged Westenbarger alleging that the representative was discharged for violating firm policies and procedures regarding borrowing funds from clients.

Thereafter, FINRA investigated the allegations and in October 2019 barred Westenbarger after alleging that he consented to the sanction and to the entry of findings that he failed to provide documents requested by FINRA during the course of an investigation concerning information disclosed by Securities America. FINRA found that Westenbarger intentionally provided a partial response, but did not substantially comply with all aspects of FINRA’s request.

In October 2019 a customer complained that Westenbarger violated the securities laws by alleging that Westenbarger convinced them to purchase a corporate note and instead used the funds for his own purposes, that in June 2018, Westenbarger convinced them to replace a variable annuity for no apparent reason, and that in July 2019 Westenbarger made an unauthorized purchase of a UIT, which was unsuitable. The claim alleges $212,000 in damages and is currently pending.

Advisor Bobby Coburn Barred by Regulator Over Private Securities Dealings

November 23, 2019 | by Staff Attorney

The law offices of Gana Weinstein LLP are currently investigating claims that advisor Bobby Coburn (Coburn) engaged in undisclosed outside business activities (OBAs) and private securities transactions that were not approved by the brokerage firm. Coburn, formerly registered with Securities America, Inc. (Securities America) was subject to a regulatory investigation and barred form the industry according to records kept by The Financial Industry Regulatory Authority (FINRA). In addition, Coburn disclosed one employment termaintion for cause and two customer complaints.

In August 2019, FINRA alleged that Coburn accepted a bar from the financial industry, after consenting to sanctions and to the entry of findings that he refused to provide FINRA with requested information and documents. FINRA stated that Coburn’s member firm had terminated his association and stated on his Form U5 that he was involved in the solicitation of multiple clients to invest in an unapproved private securities transaction and engaged in the settlement of a related customer’s complaint without the firm’s knowledge or consent.

In March 2019 Securities America discharged Coburn and accused him of misconduct.

At this time it is unclear what the activity was that was the focus of FINRA’s investigation or the scope of Coburn’s activities. Coburn’s publicly available BrokerCheck information discloses one OBA called Born to Retire which appears to be an insurance sales business. It is unknown whether the activity investigated by FINRA involves any of these entities.

Securities America Broker Andrew Burdsall Has Investment Complaints

May 7, 2019 | by Staff Attorney

According to BrokerCheck records financial advisor Andrew Burdsall (Burdsall), currently employed by Securities America, Inc. (Securities America) has been subject to at least five customer complaints. According to records kept by The Financial Industry Regulatory Authority (FINRA), most of Burdsall’s customer complaints allege that Burdsall invested them in a fraudulent private placement security or made unsuitable investments.

In January 2019 a customer filed a complaint alleging that Burdsall violated the securities laws including that after briefly discussing the possibility of generating a monthly income plan, Burdsall placed unauthorized trades within the client’s account which resulted in a loss to his portfolio. The customer alleges $106,202.16 in damages. The claim is currently pending.

There are also four claims against Burdsall concerning the sale of fraudulent private placements including Provident Shale and Medical Capital.

Advisor Michael Heath Subject to Regulator Complaint and Employment Terminations

December 31, 2018 | by Staff Attorney

According to BrokerCheck records financial advisor Michael Heath (Heath), currently employed by Infinity Financial Services (Infinity Financial) has been subject to one regulatory action, two employment terminations for cause, and one civil lien during his career. According to records kept by The Financial Industry Regulatory Authority (FINRA), the regulatory action against Heath concern allegations of unsupervised record activity.

In October 2018 FINRA alleged that Heath consented to the sanctions and findings that he regularly communicated with his customers through an unapproved personal email account about member firm business and circumvented the firm’s supervision. FINRA found that in these emails Heath sent account documents, discussed account performances, and discussed specific investments with his customers. FINRA further found that the firm’s supervisory procedures required electronic business-related correspondence to be sent through firm issued or firm approved email accounts so that the firm could monitor such communications for recordkeeping and compliance purposes. FINRA determined that by using unapproved personal email account Heath caused his firm to fail to maintain all business-related communications. In addition, FINRA also found that Heath failed to comply with FINRA rules on communications with the public in that he created account performance summaries that he used in meetings with clients that failed to provide a sound basis for customers to evaluate the facts.

In March 2016 Heath was discharged by Securities America, Inc. (Securities America) on allegations that he failed to disclose internal investigation with previous broker dealer on his CRD update.

That disclosure followed Heath’s termination from First Allied Securities, Inc. (First Allied) where the firm terminated him for failing to comply with the firm’s email policies.

Broker Randy Scott Schneider Subject to Various Complaints over Alternative Investments

September 6, 2018 | by Staff Attorney

The securities attorneys at Gana Weinstein LLP are currently investigating Securities America, Inc. (Securities America) broker Randy Schneider (Schneider). According to BrokerCheck Records kept by the Financial Industry Regulative Authority (FINRA), Schneider has been subject to nine customer disputes. The majority of these customer disputes revolve around the unsuitable recommendation of alternative investments, annuities and REITs.

Most recently, in February 2015, a customer alleged that Schneider stole and misappropriated funds in the customer account and also misrepresented the nature of the AXA annuities by providing misleading information. The customer requested $160,000 in damages.

In June 2013, a customer alleged that from November 2007 to June 2008, Schneider misrepresented the nature of certain alternative investments that were unsuitable for the customer. The case was settled at $250,000.

In September 2011, a customer alleged that Schneider unsuitably recommended an alternative investment and misrepresented the facts of the investment. This dispute was settled at $38,750.

Advisor Howard Utz Under FBI and SEC Investigation Over Securities Dealings

July 22, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Howard Utz (Utz), formerly associated with Hazard & Siegel, Inc. (Hazard & Siegel) in Mars, Pennsylvania was terminated by his firm concerning allegations that Utz’s failed to report outside business activities, engaged in private securities transactions, and accepted checks from clients made personally payable to Utz and subsequent conversion to personal use.

In addition, in May 2018 the Federal Bureau of Investigation opened an investigation into Utz but have not disclosed any details of the investigation. Similarly, in January 2018 the Securities and Exchange Commission (SEC) opened an investigation into Utz’s activities but again there are no disclosures concerning the nature of the investigation.

At this time, the selling away claims against Utz are unclear as to the exact nature and extent of the activity. Utz has outside business disclosures including Noble and Utz Enterprises – a rental property business. In addition, Utz discloses Utz Financial Services – his investment d/b/a among other disclosures.

Is Hector May Your Financial Advisor? – Investor Recovery Options

June 24, 2018 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Hector May (May), formerly associated with Securities America, Inc. (Securities America) in New York, New York is under criminal investigation by the U.S. Department of Justice (DOJ) for investment fraud. At the same time, May was terminated by Securities America on concerns that the advisor misappropriated client assets.

Investors who have come forward concerning May’s fraud claim that he sold what now appear to be fake tax-free corporate bonds. It is doubtful that these investments ever existed. Instead, the allegations claim that May most likely pocketed client funds and paid other clients funds with the proceeds from other investors – a classic Ponzi-scheme. As with all Ponzi schemes this one collapsed when May could not make promised payments.

It appears that May conducted his alleged scheme through a disclosed outside business activity called Executive Compensation Planners, Inc. May may have used this company to handle client investments and distribute fake returns to investors. Outside business activities such as Executive Compensation Planners should have caused concern at May’s brokerage firm because these separate corporate entities are frequently used by unscrupulous advisors to conceal and commit frauds. According to news sources, Executive Compensation Planners’ website in 2016 stated the firm was registered to sell securities and insurance but has since been taken down. Further, May disclosed to clients in a brochure from Executive Compensation Planners that the firm handled more than $18 million in assets.

Advisor Bruce Barber Barred By FINRA After Engaging in Private Securities Transactions

October 15, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Bruce Barber (Barber), in September 2017, was accused by FINRA of engaging in an undisclosed outside business activity by serving as an advisor to the Board of Directors for ABC, LLC (ABC) and being compensated by the company with warrants. According to FINRA, Barber solicited 15 clients to invest in ABC’s private securities offering. At this time it unknown the full extent and scope of Barber’s outside business activities.

In February 2017, Barber’s then employer Securities America, Inc. (Securities America) terminated him stating Barber solicited customers to purchase an unapproved securities product and participated in an unapproved outside business activity.

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”.

Susan Welo Sanctioned By the State of North Dakota Over Securities Advice

October 12, 2017 | by Staff Attorney

Former Cetera Advisor Networks LLC (Cetera) broker Susan Welo (Welo) has been subject to nine customer complaints, one employment separation for cause, and one regulatory action. According to a BrokerCheck report Welo was terminated by Cetera after the firm alleged that Welo failed to disclose to firm that Welo provided a loan to a client while at a prior broker-dealer. In addition, Cetera claimed that Welo violated firm policies by accepting blank signed forms from clients and permitting assistant to sign representative’s name to various documents.

In addition, the State of North Dakota alleged that Welo acted as an unregistered securities agent by handling client funds and make investment recommendations.

Many of the complaints concern alternative investments, private placements, and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs). Our firm has experience handling investor losses caused by these products.