securities fraud attorney

FINRA Bars Former NYLife Broker Jonathan Williams Over Outside Business Activities

September 29, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Jonathan Williams (Williams) (FINRA No. 20150452689) resulting in a bar from the securities industry alleging that Williams failed to provide FINRA staff with information and documents requested. The failure to provide those documents and information to FINRA resulted in an automatic bar from the industry. FINRA’s document requests related to the regulators investigation into claims the Williams falsified certain bank records and potentially commingled client funds in a bank account under his control.

FINRA’s investigation appears to stem from Williams’ termination from NYLife Securities LLC (NYLife) in March 2015. At that time NYLife filed a Form U5 termination notice with FINRA stating in part that the firm discharged Williams under circumstances where there was allegations that Williams commingled client funds. It is unclear the nature of the outside business activities from publicly available information at this time. However, from the three customer complaints filed against Williams potentially relating to these activities, the clients allege that Williams sold those customers CDs that were issued by Mid-Atlantic Financial and that the funds used to purchase these CDs were withdrawn from accounts with NYLife.

Williams entered the securities industry in 2000. From February 2006, until April 2015, Williams was associated with NYLife out of the firm’s Timonium, Maryland office.

FINRA Bars Richard Adams Over Churning Customer Accounts

September 28, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) brought and enforcement action against broker Rasheed a/k/a Richard Adams (Adams) (FINRA No. 2015045911001) resulting in a bar from the securities industry alleging that between July 2013, and June 2014, Adams engaged in unsuitable excessive trading and churning in two of his customers’ accounts. In addition, FINRA alleged that Adams willfully failed to amend his Uniform Application for Securities Industry Registration and Transfer (Form U4) to disclose 12 unsatisfied judgments and liens.

Adams first became associated with a FINRA member in 1997. From May 2002, until August 2010, Adams was associated with E1 Asset Management, Inc. Thereafter, from August 2010, until June 2011, Adams was associated with PHD Capital, Finally, from June 2011, until May 2015, Adams was associated with Caldwell International Securities out of their New York, New York office location. In 2010, Adams created and was the 100% owner of Adams Wealth Management, Inc. (AWM).

According to FINRA, from July 2013, to June 2014, Adams exercised de facto control over two customers’ accounts referred to by the initials “AD” and “PV”. FINRA found that Adams excessively and unsuitably traded and churned AD’s account and PV’s account in a manner that was inconsistent with those customers’ investment objectives, financial situations, and needs. Specifically, FINRA found Adams’ trading activity was inappropriate because it resulted in a turnover rate in AD’s account of 16.14, and a cost-to-equity ratio of 70.99% while in PV’s account the turnover ratio was 19.16 and the cost-to-equity ratio was 91.96%. FINRA found that the improper trading activity in these two accounts resulted in losses of approximately $37,000 and generated commissions of approximately $57,000.

FINRA Sanctions Broker Gregory Gassoso Over Unauthorized Trades

September 25, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned (FINRA AWC No. 2013039506601) broker Gregory Gassoso (Gassoso) on allegations that in April 2013, Gassoso effected three unauthorized transactions in a customer’s account, resulting in a loss of approximately $1,500. In addition to FINRA’s recent action Gassoso has been the subject of at least five customer complaints and two other regulatory matters over the course of his career. Customers have filed complaints against Gassoso alleging securities law violations including that the broker made unsuitable investments, unauthorized trades, and poor investment advice among other claims.

Gassoso entered the securities industry in 1997. From September 2001, until June 2012, Gassoso was a registered representative with DPEC Capital, Inc. (DPEC). From August 2012, until January 2015, Gassoso was associated with National Securities Corporation. Finally, from February 2015 until September 2015, Gassoso was again associated with DPEC out of its New York, New York office location.

Gassoso has a disciplinary history including prior regulatory claims of unauthorized trading. Gassoso has been the subject of two prior FINRA disciplinary actions for unauthorized activity including a May 2003, action where he was fined $5,000 and suspended from association with a FINRA for ten days for opening accounts for customers without their knowledge or authorization. In another incident in June 2005, Gassoso was fined $6,000 and suspended for 60 days from association with a FINRA member for unauthorized trading in customer accounts.

Gana LLP Investigates Investor Losses In Star Scientific / Rock Creek Pharmaceuticals (RCPI)

July 22, 2015 | by Staff Attorney

The law offices of Gana Weinstein LLP are investigating investor losses in Star Scientific, Inc. / Rock Creek Pharmaceuticals (Star Scientific) on the heels of a Financial Industry Regulatory Authority (FINRA) investigation into alleged false and misleading research reports issued by Oits Bradley (Bradley) presumably made about the company. Although FINRA only refers to Star Scientific in its complaint against Bradley as the “Pharmaceutical Company” we believe that the referenced report citations refer to Star Scientific.

According to FINRA, Bradley was an equity research analyst with Gilford Securities, Inc. (Gilford), who authored eight research reports containing false, misleading and unwarranted statements concerning Star Scientific. During the relevant time period Bradley was associated with Gilford from February 2012 until his termination from the firm in October 2014. FINRA alleged that Bradley’s research reports on the Star Scientific were distributed to Gilford’s brokers as well as various financial media outlets, investment research firms, firm clients and others.

FINRA found that Bradley falsely claimed that a prominent medical research university was conducting clinical trials on humans to study the effects of one of the Star Scientific’s dietary supplements on thyroid disorders. Additionally, FINRA alleged that Bradley made unwarranted and misleading statements concerning Star Scientific’s financial prospects based on his inaccurate claim that the university was conducting clinical trials on humans, and made false, misleading and unwarranted claims regarding the company’s announcement of preliminary results of its clinical trials on humans.

Gana LLP Investigation: George Montgomery’s Sales of Twin Peak Investment

July 13, 2015 | by Staff Attorney

According to news reports, broker George Montgomery (Montgomery) committed suicide but questions surrounding the death left many believing that foul play was involved. Montgomery, a former ASU running back, before injuries took him off the field.

Montgomery became a registered broker in 1998. From 2005 until October 2011, Montgomery was associated with United Planners’ Financial Services of America (United Planners). Thereafter, from January 2012 until July 2013, Montgomery was associated Fortune Financial Services, Inc. (Fortune Financial).

Montgomery was found July 31, 2014, submerged in Wet Beaver Creek by two hikers with a handgun next to the dead man. When police inspected the scene, investigators found that there were four gunshot wounds and two had penetrated the Montgomery’s chest while there were also a hand wound and one leg also wound.

Why Professional Athletes are Common Victims of Investment Fraud

June 29, 2015 | by Staff Attorney

Certain groups have been particularly vulnerable to advisors who engage in investment fraud. Among those groups well known are senior citizens who may have diminished capacity. Another group that serves as a common target are affinity frauds. In an affinity fraud the scammer preys upon members of a group or community such as members of certain religions or ethnic communities.

However, lessor known common victims of investment fraud schemes are professional athletes. Athletes are often preyed upon by bad advisors because they possess attributes that tend to allow the advisor to take advantage of their client. Athletes tend to be unsophisticated in the area of securities and investing often never having previous investment experience prior to going pro. In addition, athletes have busy schedules and demands on their time that do not allow the athlete to closely monitor or investigate each recommendation being made to them. Accordingly, athletes tend to place their trust in their professional advisor that they know what they are doing. Finally, athletes represent large, multi-million dollar opportunities to fraudsters.

In a recent OnWallStreet article, the unfortunate tales of several athletes were told. Among those athletes whose story were mentioned was Doug Mirabelli who recently won his arbitration dispute with Merrill Lynch where the firm was ordered to pay more than $1.2 million. The award came after Mirabelli and his wife claimed that their income portfolio, comprised of equities pledged against Merrill Lynch-owned mortgages, suffered losses that caused a liquidation. Their financial advisor Phil Scott was accused of providing “inappropriate investment advice” for securities including investments in Alliance Resource Partners, Apollo Investment Corp. and Copano Energy LLC.

LPL Financial Broker David Hackney Accused by Regulator of Churning Customer Accounts

June 22, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Hackney (Hackney) has recently been permanently barred by the agency for failing to respond to requests for documents and information. In addition, the broker has been under investigation by the Illinois Securities Department concerning allegations that Hackney churned – a type of securities fraud – at least three accounts.

Hackney entered the securities industry in 1993. From March 2006 until February 2014, Hackney was associated with LPL Financial LLC (LPL). In February 2014, LPL discharged Hackney alleging that the broker conducted discretionary, otherwise known as unauthorized trades, in customers’ accounts that were excessive.

Investment churning is trading activity characterized by the purchasing and selling of securities including stocks, bonds, mutual funds, and options that is excessive and serves no practical purpose for the investor. Brokers engage in churning solely to generate commissions without regard for the client’s interests. In order to establish a churning claim the investor must show that the trading was first excessive and second that the broker had control over the investment strategy. 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 Michael Gates Alleged to Have Made Unauthorized Trades in Client Accounts

June 17, 2015 | by Staff Attorney

According to broker Michael Gates (Gates) Financial Industry Regulatory Authority (FINRA) BrokerCheck records the representative was recently sanctioned concerning allegations that from January 2011, through October 2011, he effected approximately 22 discretionary transactions for two firm customers without written authorization from the customers or approval from the firm.

Gates first entered the securities industry in September 1997. Thereafter, in April 2004, Gates became registered with Wells Fargo Advisors, LLC (Wells Fargo). In March 2012, Wells Fargo terminated Gates alleging that the broker may have entered mutual fund sales without authorization of his clients. After termination of his registration with Wells Fargo, Gates became registered with Morgan Stanley where he is currently registered. In addition, at least two customers have filed complaints against Gates alleging unsuitable investments, and excessive trading (churning).

NASD Rule 2510 prohibits brokers from exercising any discretionary power in a customer’s account unless there is written authorization and the account has been accepted by the member. FINRA alleged that Gates was not approved by his firm to exercise discretion in the customers accounts but nonetheless effected 22 discretionary transactions for two customers.

Wells Fargo Broker Aaron Parthemer Barred Over Private Securities Sales

May 19, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred broker Aaron Parthemer (Parthemer) concerning allegations that Parthemer engaged in private securities transactions – also known as “selling away.” FINRA alleged that from June 2009, through March 2013, Parthemer engaged in several undisclosed outside business activities, loaned nearly $400,000 to three firm customers without permission from his firm, presented an undisclosed private securities transaction through which eight firm customers invested more than $3 million, and provided false information and false documents to Morgan Stanley, Wells Fargo, and FINRA.

In October 1994 Parthemer first became registered with FINRA firm. From June 2009, through October 21, 2011, he was registered through Morgan Stanley Smith Barney LLC (Morgan Stanley). On November 4, 2011, Morgan Stanley filed a filed a termination notice stating that Parthemer’s termination from the firm was voluntary. From October 21, 2011, until May 2015, Parthemer was registered with Wells Fargo Advisors, LLC (Wells Fargo).

FINRA found that from approximately July 2009, through February 2012, Parthemer participated in a private securities transaction regarding a company referred to by the initials “GVC”, a startup internet branding company managed by a friend of Parthemers referred to by the initials “GH”. FINRA alleged that Parthemer referred several of his NFL and NBA clients to his friend for the purpose of investing in GVC. Subsequently, approximately eight of Parthemer’s clients purchased approximately $3.08 million of preferred GVC stock. FINRA found that Parthemer facilitated the transactions by hosting a presentation for investors conducted by GH at Parthemer’s home, sending PowerPoint presentations and other information concerning GVC to potential investors, and forwarding and retrieving required documentation to and from investors.

Former RBS Securities Advisor Matthew Katke Plead Guilty For RMBS and CLO Fraud

April 25, 2015 | by Staff Attorney

According to the Department of Justice (DOJ), Matthew Katke (Katke) recently waived his right to indictment and pleaded guilty today in Hartford federal court to participating in a multimillion securities fraud scheme. Katke was registered with RBS Securities, Inc. (RBS Securities), during the time of the DOJ’s investigation. Currently, Katke is associated with Nomura Securities International, Inc. and has been since August 2013.

According to the DOJ, Katke also entered into an agreement to cooperate in the government’s ongoing investigation. Allegedly, between April 2008 and August 2013, Katke was a managing director at RBS Securities, a global securities firm with headquarters in Stamford, Connecticut. Katke and other members of RBS’s Asset Backed Products division traded fixed income investment securities in residential mortgage-backed securities (RMBS) and collateralized loan obligations (CLOs) through RBS trading floor. Katke admitted in his guilty plea that he and others conspired to increase RBS’s profits on CLO bond trades at the expense of their own customers by, among other things, making misrepresentations to induce customers to pay inflated prices and selling customers to accept deflated prices for CLO bonds. Katke misrepresented the CLO seller’s asking price to the buyer and kept the difference between the price paid by the buyer and the price paid to the seller for RBS. In another device used by Katke he misrepresented to the CLO buyer that bonds were held in RBS’s inventory were being offered for sale by a fictitious third-party seller invented by Katke allowing Katke to charge extra commission.

The DOJ’s investigation revealed many fraudulent transactions that cost at least 20 victim millions of dollars. In a statement U.S. Attorney Deirdre M. Daly of the District of Connecticut said that “Broker-dealers, and the people who work for them, need to understand that a market practice that is at odds with the securities law is a crime that carries serious repercussions. We urge others to follow Mr. Katke’s example and cooperate with investigators. We want to thank SIGTARP and the FBI for their efforts to date in this continuing investigation. Additionally, we acknowledge our other partners at the Department of Labor Office of the Inspector General, the Federal Housing Finance Administration Office of Inspector General and the Fraud Section of the Department of Justice for their hard work in the numerous ongoing investigations into this market.”