Articles Tagged with securities attorney

shutterstock_164637593-300x199The investment lawyers of Gana Weinstein LLP are investigating regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Christopher Stephen Jorgensen (Jorgensen). Jorgensen allegedly refused to appear for on-the-record testimony requested by FINRA resulting in a ban from the securities industry.

In April 2017, Jorgensen was terminated from his position at Summit Brokerage Services after “the firm received a verbal complaint from a customer who alleged that [he] instructed her not to respond to a FINRA inquiry.”

In 2012, he was terminated from his position at Raymond James Financial Services “due to client complaint and settlement relating to unauthorized discretion.”

shutterstock_113872627-300x300The financial advisor rating firm Paladin Research & Registry assembled a list of the top 10 investment scams investors are facing today. If you are involved in any of these potential scams, the investment attorneys at Gana Weinstein LLP may be able to help you.

1. Ponzi Schemes

Ponzi schemes came in first-place for having stolen more money than any other type of scam. A Ponzi scheme is a fraudulent investment scam where the scammer promises a high rate of return with little or no risk to investors. Ponzi schemes generate returns for investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. The Ponzi scheme unravels when no more new investors are willing to invest and older investors demand the return of their money. The nature of Ponzi schemes (or pyramid schemes) requires investors (who believe they have a strong investment) to tell friends, family and associates about the investments. The influx of new investors provides scam operators with the assets needed to meet the withdrawal requests of the early investors.

shutterstock_173849111-227x300The Financial Industry Regulatory Authority (FINRA) has ordered Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC to pay more than $3.4 million in restitution to customers for alleged unsuitable recommendations of volatility-linked exchange-traded products (ETPs) and supervisory failures, according to InvestmentNews.

FINRA found that between July 1, 2010, and May 1. 2012, “certain Wells Fargo reps recommended volatility-linked ETFs and ETNs without fully understanding their risks and features.”

According to FINRA, “certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions in the event of a market downturn. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.”

shutterstock_183011084-199x300According to BrokerCheck records Todd Ryman (Ryman), now associated with SunTrust Investment Services, Inc. (SunTrust), has been subject to six customer complaints and one regulatory action in his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA) Ryman has been accused by customers of unsuitable investment advice in a variety of securities including equities, private equity investment funds, and other types of investment vehicles.  Some customers have also alleged unauthorized trading, misrepresentations and failure to follow instructions, among other claims.

One customer complaint filed in November 2016 alleged an unsuitable investment in a private equity fund resulting in $250,000 in damages.  The claim was settled for $205,193.

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.

shutterstock_181783781-200x300In June 2016, Next Financial Group, Inc. (Next Financial) broker Dion Padilla (Padilla) was subject to a regulatory action brought by The Financial Industry Regulatory Authority (FINRA) alleging Padilla effected an unauthorized purchase of a variable annuity for a customer and misrepresented that the investment was not a variable annuity. According to FINRA, the customer stressed to Padilla that they did not want any of their funds invested in a variable annuity due to the high fees associated with variable annuities and because of their desire for liquidity.  But instead of following the customer’s instructions, FINRA found that Padilla presented a variable annuity application to the customer and assured him that the application was not for a variable annuity.  In addition, FINRA found that Padilla caused the customer to invest an additional $558,889 into the variable annuity by falsely claiming that the investment purchased was not a variable annuity.  FINRA found these statements to be misrepresentations that were all false and misleading.

In addition to the FINRA sanctions, Padilla has been subject to four customer complaints – many of which involve claims concerning variable annuity investments.  The law offices of Gana Weinstein LLP are currently investigating customer complaints concerning this broker.

Variable annuities are complex financial and insurance products.  In fact, recently 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.

shutterstock_1081038-300x200According to BrokerCheck records Kevin Curry (Curry) has been sanctioned by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker exercised discretion in a customer’s account without obtaining written authorization or written approval of the account as discretionary from his brokerage firm.  FINRA found that Curry and spoke to the customer and agreed upon investments but that Curry exercised time and price discretion in executing transactions on dates when he had not spoken with the customer in violation of the rules.

In addition, to the FINRA sanctions, two customers have lodged complaints against Curry alleging a number of securities law violations including that the broker made engaged in churning (excessive trading), unauthorized trading, and fraud among other claims.

In June 2014, a customer complaint was filed alleging churning, unauthorized trading, fraud, and failure to supervise claiming $400,000 in damages.  The claim was settled.

shutterstock_95643673-300x300Since the beginning of 2010 broker John Hudson (Hudson), currently employed by Next Financial Group, Inc. (Next Financial), racked up eight total tax liens and other debts.  Some of these tax liens are quite large including on in September 2010 for $1,492,190.  According to BrokerCheck this tax lien is still active and hasn’t been satisfied.  While no customer complaints have been filed against Hudson and the presence of large liens does not necessarily mean that the broker will engage in risky behavior it is an important red flag for investors to consider.  The risk is that the broker will be influenced to recommend high commission products or trading strategies to satisfy the liens at investors’ expense.  In extreme cases brokers have even misappropriated funds or asked clients for loans to satisfy their personal debts.  There is no indication that any wrongdoing has occurred in Hudson’s case.

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.

According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015.  Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.  However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher.  Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

shutterstock_94127350-300x205In March 2017, Broker Richard Lucker (Lucker) was subject to a massive complaint alleging $14,447,501 in damages.  Lucker is currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo).  According BrokerCheck the customer complained that there was a failure to supervise with respect to Lucker’s management of her account from 2011 to 2013.  There are no other details provided as to which products or the type of trading activity that occurred that caused the losses complained of.  The complaint is currently pending.  The securities lawyers of Gana Weinstein LLP continue to investigate the customer complaint against Lucker.

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.

According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015.  Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters.  However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher.  Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.

shutterstock_177577832-300x300The securities lawyers of Gana Weinstein LLP are investigating customer complaints and a FINRA enforcement action with The Financial Industry Regulatory Authority’s (FINRA) against broker Henry Watson (Watson). According to BrokerCheck records, Watson has been subject to three customer complaints and one FINRA action. The customer complaints against Watson allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, portfolio mismanagement, and excessive trading among other claims.

The most recent claim was filed in October 2016 alleging Watson purchased shares of a security from without authorization seeking $13,017.  Subsequently in January 2017 FINRA barred Watson for failing to appear to testify concerning an arbitration claim.  FINRA claimed that the testimony was requested in connection with an inquiry into an arbitration claim filed by a customer against Watson.  FINRA alleged that Watson acknowledges that he received FINRA’s request but would not appear for on-the-record testimony at any time resulting in the bar.

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.

shutterstock_114775264-300x200The securities lawyers of Gana Weinstein LLP are investigating customer and regulatory complaints filed against broker Jeffrey Hill (Hill). According to BrokerCheck records, Hill has been subject to three regulatory actions, eight customer complaints, and one termination for cause disclosures. The most recent customer complaint against Hill alleged that between 2003 and 2014 the customer’s account was subject to churning, unauthorized trading, unsuitability and breach of fiduciary duty.  The claim alleged damages of $1,600,000 and settled.

On November 22, 2016 Wells Fargo Advisors (Wells Fargo) terminated Hill based on activity alleged to have happened at his prior firm when the broker entered into an AWC with FINRA agreeing to a fifteen month suspension from the industry.

In FINRA’s complaint settled in November 2016, Hill consented to sanctions and findings that he initiated hundreds of trades for two elderly customers without contacting them and recommended or engaged in dozens of transactions that were qualitatively or quantitatively unsuitable or lacked a reasonable basis in corporate and municipal bonds. FINRA also found that neither of those customers explicitly permitted Hill to use discretion in their accounts.  FINRA found that Hill would recommend that one of the customers sell bonds shortly after buying them.  FINRA determined that there was no justification for the trading as neither changes in the bonds’ prices, interest that accrued, changes in the issuers’ condition, nor any other factors appeared to effect the short-term trading.

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