Selling Away

Broker Joseph Giordano of Capital Investment Group Sanctioned Over Empire Debenture Sales

December 19, 2013 | by Staff Attorney

Broker Joseph Anthony Giordano (Giordano) was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that he participated in the distribution of unregistered debentures issued by Empire Corporation, a Maryland corporation (Empire Debentures) to customers of Capital Investment Group, Inc. (CIG). FINRA alleged that Giordano violated FINRA Rules by soliciting the sales of the Empire Debentures. In addition, FINRA found Giordano’s Empire Debentures sales to customers were without a reasonable basis for making such recommendation. Finally, FINRA found that Giordano engaged in securities fraud by making intentionally false and misleading statements in connection with the sales of the Empire Debentures to customers.

Giordano was registered with Capital Investment Group from September 1992 until his termination on June 20, 2012. Giordano’s U5 states that he was terminated for “selling away” and making false and misleading statements to the firm. On July 2, 2012, Giordano became registered with Meyers Associates, L.P. (Meyers) until his registration was terminated by Meyers on July 10, 2013. Giordano’s BrokerCheck states that he is the general manager of Giordano Asset Management LLC and treasurer of Giordano Holding Corporation.

FINRA found that Giordano sold approximately $3.1 million of the Empire Debentures to at least 45 customers of CIG. The Empire Debentures had varying maturities but the majority had a five-year maturity and promised interest at an annual compounded rate of ten percent paid at maturity. FINRA alleged that the Empire Debentures were speculative investments considering their high-yield, lack of credit analyses or an effective registration statement, and the complete absence of a secondary market. The sale of the Empire Debentures was in contravention of Section 5 of the Securities Act of 1933 requiring the registration of securities. The securities were also not registered with the State of Maryland. In addition, FINRA alleged that Giordano failed to conduct adequate due diligence regarding the registration status of the Empire Debentures prior to recommending and selling the debentures to customers.

FINRA Bars Gevorg Daldumyan of Transamerica Over Allegations Concerning Condominium Cooperative Investments

December 16, 2013 | by Staff Attorney

Gevorg Daldumyan was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that he failed to appear for testimony concerning condominium cooperative investments.

Daldumyan was registered with World Group Securities, Inc. (WGS) from 2002 through January 2012. Thereafter, Daldumyan was associated with Transamerica Financial Advisors, Inc. (Transamerica) or its predecessor. On June 19, 2012, Transamerica filed a Form U5 with FINRA stating that Daldumyan had voluntarily resigned on May 21, 2012, during an internal review by the firm arising from “information that the registered representative made investments in a condominium cooperative in Arnienia which appear not to have been disclosed to the firm.” Daldumyan is no longer associated with any FINRA member.

Due to the U5 Form filing, FINRA sent requests to Daldumyan for more information concerning the outside investments. By letter dated May 20, 2013, FlNRA staff requested that Daldumyan appear for on-the-record testimony. In response to the letter, Daldumyan stated that he would not appear for testimony at any time. Consequently, Daldumyan violated FINRA Rule 8210 by refusing to appear and provide testimony and was barred from association with any FINRA member firm.

FINRA Bars Broker Mark Hotton Alleging Numerous Fraudulent Activities in Client Accounts

November 4, 2013 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) has permanently barred broker Mark Christopher Hotton (Hotton) alleging that the broker engaged in numerous and repeated frauds including forgery, falsification of documents, conversion, misuse of funds, manipulating account records, churning, unauthorized trading, false testimony, and providing false information and documents to FINRA.

FINRA alleged that starting from at least 2006, Hotton engaged in numerous fraudulent investment schemes to steal at least $5,932,000 from his brokerage customers. FINRA admitted that due to the complexity of the fraud that it had not been able to track down Hotton’s entire use and receipt of ill-gotten funds. According to FINRA, Hotton converted funds from his customers by using his control over the bank accounts of various corporate entities to divert funds that his customers believed were being invested in legitimate businesses.

Fom November 2002 until November 2005, Hotton was associated with Ladenburg, Thalmann & Co., Inc., From November 2005 until February 2009, Hotton was associated with Oppenheimer & Co., Inc. (Oppenheimer). While at Oppenheimer, Hotton focused on clients with an average net worth of between $1,000,000 and $20,000,000. Thereafter, Hotton was a registered representative of American Capital Partners, LLC until August 2010. From September 2010 until March 2012, Hotton was associated with Alexander Capital, L.P. Finally, from February 2012 until May 2012, Hutton was associated with Obsidian Financial Group, LLC. Obsidian terminated Hotton’s registration on May 31, 2012.

Gana LLP Investigates Silver Oak Leasing and Alberto Neira

September 4, 2013 | by Staff Attorney

Gana Weinstein LLP is investigating claims against LPL Financial (LPL) on behalf of former customers of Alberto Neira who invested in Silver Oak Leasing (Silver Oak). In November 2012, Neira executed a letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) concerning his sale of investments in Silver Oak. According to the AWC, “[b]eginning in 2006, [Neira] became engaged with an outside business activity at Silver Oak Leasing, Inc. (“Silver Oak”), a California corporation purportedly involved in providing automobile financing and leasing services. [Neira] failed to fully disclose his involvement in the outside business activity, including that he was acting as a director of Silver Oak. [Neira] thereby violated NASD Rules 3030 and 2110 and FINRA Rules 32701 and 2010. Between July 1, 2008, and January 18, 2011 (the relevant period), [Neira] also recommended investments in Silver Oak to 14 customers. He did so without disclosure to his firm, [LPL Financial,] in violation of NASD Rules 3040 and 2110 and FINRA Rule 2010.2. Finally, during the course of this investigation, [Neira] failed to timely respond to staff requests for information and testimony. As a result, [Neira] violated FINRA Rules 8210 and 2010.” Neira was barred from the securities industry.

From February 2002 through January 2011, Neira was registered with LPL and operated out of Santa Ana, California. Under FINRA Rule 3010, LPL was obligated to properly supervise the activities of Neira during the time he was registered with the brokerage firm. Accordingly, we believe LPL may be liable for failing to supervise Neira’s activities while registered at the firm, and that it could be held responsible for compensating customers of Neira for their losses.

Former customers of Neira who invested in Silver Oak are encouraged to contact Gana Weinstein LLP to explore their legal rights and options.