securities fraud attorney

Broker Investigation: Customer Complaints Against Broker Stanley Keyes

February 8, 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 Stanley Keyes (Keyes). According to BrokerCheck records Keyes is subject to 5 customer complaints, 1 regulatory action, and 2 employment separations. The customer complaints against Keyes allege securities law violations that including unsuitable investments, unauthorized trading, misrepresentations, and breach of fiduciary duty among other claims.

The most recent regulatory action was filed by FINRA in November 2010 and alleged that Keyes borrowed a total of $214,000 from customers and used that money to meet personal financial obligations. FINRA alleged that Keyes failed to disclose the existence of these loans to his firm. FINRA fined Keyes $5,000 and suspended the broker for three months. Prior to that FSC Securities Corporation terminated Keyes alleging that the broker had borrowed money from firm customers in violation of the firm’s policies.

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.

LPL Financial Broker Alfred Talens Accused of Selling Unregistered Securities

February 5, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating customer complaints and the termination by LPL Financial, LLC (LPL) of broker Alfred Talens (Talens). There is at least one customer complaint against Talens alleging that the broker made unsuitable investments in connection with the sale of a variable annuity. The customer also alleges that the broker sold an unregistered security and claimed damages of $500,000. The conduct allegedly engaged in by Talens is also referred to as “selling away” in the industry. It is unclear from public disclosures the nature of the outside business but Talens public disclosures disclose that the broker has outside business activities including Ascension Wealth Management, a DBA for insurance and tax preparation, and AWM Consulting.

In addition, there is one employment separation disclosed. LPL alleged that Talens violated firm policy regarding outside business activities and borrowed money from clients. Thereafter, FINRA sent Talens a request for documents and information which the broker refused to respond to. Accordingly, FINRA automatically barred Talens from the securities industry on July 7, 2015.

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.

FINRA Bars Broker Ricardo Fancois During Investigation Into Sales Practices

February 3, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating the termination by The Financial Industry Regulatory Authority (FINRA) of broker Ricardo Fancois (Fancois). According to BrokerCheck records Fancois is subject to one regulatory action, one investigation, and two judgement or lien.

FINRA terminated Fancois after the broker failed to respond to a letter request for information in July 2015. Prior to that time, in March 2015, FINRA opened an investigation into Fancois alleging potential willful violations of the securities fraud laws and FINRA rules. Because FINRA terminated Fancois due to the broker’s failure to respond to the regulator’s requests for information, there is no additional information listed with specifics of Fancois’ alleged wrongdoing. Prior to that time Fancois was subject to over $3,000 in liens.

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.

FINRA Bars Broker James Starks During Investigation Into Sales Practices

February 1, 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 James Starks (Starks). According to BrokerCheck records Starks is subject to one regulatory action, two investigations, and one criminal matter.

FINRA terminated Starks after the broker failed to respond to a letter request for information in July 2015. Prior to that time, in January 2015, FINRA opened an investigation into Starks alleging potential willful violations of the FINRA rules. Prior to that time, in March 2014, FINRA opened another investigation into Starks alleging potential willful violations of securities fraud laws and FINRA rules.

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 National Securities Corporation Broker James Eichner

January 30, 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 James Eichner (Eichner). According to BrokerCheck records there are at least 3 customer complaints that have been filed against Eichner. The customer complaints against Eichner allege a number of securities law violations including that the broker was negligent, breached a fiduciary duty, and churning (excessive trading) among other claims. The most recent customer complaint against Eichner filed in June 2015 alleges that Eichner breached his fiduciary duty and was negligent in the handling of the customer’s account leading to $500,000 in damages. The claim is currently pending.

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.

The number of customer complaints against Eichner 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.

Pharmaceutical Company Zafgen (ZFGN) Investors Suffer Massive Losses After Key Drug Placed on Hold

January 30, 2016 | by Staff Attorney

The investment fraud attorneys of Gana Weinstein LLP are investigating potential legal remedies due to recommendations to investors to buy speculative pharmaceutical company stocks. One such company is Zafgen, Inc. (Zafgen) (Stock Symbol: ZFGN). The stock was trading in the mid $40s just last September but now has plunged to under $6 a share, a staggering loss of shareholder value.

According to Bloomberg, Zafgen announced that its trial of an experimental drug to fight obesity was placed on hold by regulators after a second patient died taking the drug. The trial involves patients with a rare genetic disease called Prader-Willi syndrome that causes overeating. The trial was being studied to for the purposes of having the U.S. Food and Drug Administration approve the drug for those patients. Zafgen had finished one part of the trial that compared the drug to a placebo and then continued to a study where all patients took the drug. However, the FDA has now ordered a complete clinical hold on studies. The news sent the company’s shares down 61% when announced.

Before recommending investments in pharmaceutical 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. Pharmaceutical companies are notoriously risky investments. While investments in big name pharmaceuticals with diversified portfolios of established drugs and products offer greater stability some brokers recommend small bio-technology companies that have only one or two unproven drugs in clinical trials or development. The entire value of the company’s stock for these companies are often tied to the perceived success or failure of the drug. Even slightly downbeat news can send such stocks into a tailspin. However, brokers who recommend risky pharmaceutical companies are obligated to understand the risks of these investments and convey them to clients.

Broker Investigation: 13 Customer Complaints Against Aegis Capital Broker Keith Connolly

January 27, 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 Keith Connolly (Connolly). According to BrokerCheck records there are at least 13 customer complaints against Connolly. The customer complaints against Connolly allege a number of securities law violations including that the broker made unsuitable investments, misrepresentations, failure to supervise, unauthorized trading, and churning (excessive trading) among other claims. The most recent customer complaint filed in October 2014 alleged churning, negligence, unsuitability, overconcentration resulting in damages of $187,855 in damages. The claim is still pending. In August 2014, another client filed a complaint alleging administering the customer’s brokerage accounts claiming damages of 776,326. The claim was resolved settling for $450,000.

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 Connolly 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.

Voyager Financial Group, LLC Investor Recovery Options

January 26, 2016 | by Staff Attorney

The securities lawyers of Gana Weinstein LLP are investigating investors that were recommended to invest in Voyager Financial Group, LLC, (VFG), a Delaware limited liability company. VFG maintained a website which claimed that Voyager “is a national distributor, broker, and consulting firm for a diverse array of products, services, and contracts in the financial services arena.” Voyager claimed to “specializes in the factored income stream market, working to satisfy the needs both of individuals and entities receiving structured payments and those wishing to take advantage of the stability and return on investment that these products can bring.”

However, several state regulators have found that brokers and financial advisors have been selling VFG investments under false and misleading statements. Advisors accused by state regulators of misleading investors include Sidney Evans with Equity Advisors LLC and Erryn Barkett with LPL Financial. Some states, such as California, have ordered VFG to cease doing business in their state.

State regulators and investors claim that VFG offers securities in the form of investment contracts called “Veterans Benefits’ Contracts.” VFG structured and promoted investment transactions between investors and sellers who typically are veterans who receive structured payments such as a military pension or disability benefits from the United States government. VFG then identified potential sellers and persuaded them to sell to investors a portion of their future government payments for a lump sum.

Broker Investigation: Churning Claims Against Broker Kerry Raheb (a/k/a Patrick Raheb)

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 Kerry Raheb (a/k/a Patrick Raheb) (Raheb). According to BrokerCheck records there are at least 5 customer complaints, two judgments or liens, and one criminal matter involving Raheb. The customer complaints against Raheb 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 December 2015 alleged unsuitable investments resulting in losses of $199,001. The claim is still pending. In April 2014, another client filed a complaint alleging unauthorized trading claiming damages of $300,000. The broker has denied the allegations in the complaint and the claim is still pending.

In addition, Raheb has two judgements. One tax lien filed in January 2014 for $64,518 and one civil judgement for $12,024 recorded in February 2013. 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.

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: 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.