unauthorized trades

Michael Bell Suspended Over Misleading Private Placement Emails

June 25, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Bell (Bell) has been the subject of at least 8 customer complaints, two financial disclosures, two firm terminations, and two regulatory actions. Customers have filed complaints against Bell alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, churning, and fraud, among other claims. Some of these claims involve recommendations in penny stocks, private placements, and other speculative securities.

An examination of Bell’s employment history reveals that Bell moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Bell’s 25 year career he has worked at 18 different firms.

Since 2008 Bell has been registered with Brewer Financial Services, LLC, Herbert J. Sims & Co. Inc., and most recently Westpark Capital, Inc. (Westpark) until July 2014.

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.

Regulators File Complaints Against Christopher Veale Concerning His Securities Practices

June 8, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Christopher Veale (Veale) has been the subject of at least 12 customer complaints, six judgment and lien of over $1,000,000 and five separate regulatory actions, two investigations by state regulators and one criminal matter involving a felony over the course of his career. Customers have filed complaints against Veale alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, churning, and fraud, among other claims. Many of the claims involve recommendations in penny stocks and other speculative securities.

An examination of Veale’s employment history reveals that Veale moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Veale’s 18 year career he has worked at 18 different firms.

Since 2008 Veale has been registered with Maximum Financial Investment Group, Franklin Christopher Investment Bankers, Inc., Brookville Capital Partners, Blackwall Capital Markets, Inc., Meyers Associates, L.P., John Thomas Financial, and Legend Securities, Inc., until February 2015.

Broker Investigation: Patrick McGrath Former Oppenheimer & Co. Advisor

May 31, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Patrick McGrath (McGrath) has been the subject of at least four customer complaints, two regulatory actions, and one termination over the course of his career. Customers have filed complaints against McGrath alleging a litany of securities law violations including that the broker received loans and failed to pay the client timely, made unsuitable investments, and unauthorized trades, among other claims.

McGrath entered the securities industry in 1984 with brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated. Thereafter, from July 2003, until April 2009, 2007 through June 2009, McGrath was associated with brokerage firm Wachoiva Securities, LLC. Then, from April 2009 until January 2014, McGrath was a representative with Oppenheimer & Co. Inc. (Oppenheimer). Finally since February 2014, McGrath has been registered with Northeast Securities, Inc.

McGrath was permitted to resign from Oppenheimer in January 2014 due to his failure to finalize arrangements to repay money he borrowed from an Oppenheimer customer. There are also two regulatory actions against McGrath. One is a 30 day suspension and a $10,000 fine by the Florida Office of Financial Regulation based on allegations that McGrath engaged in prohibited business practices. FINRA also suspended McGrath for four months and fined him $10,000 concerning allegations that he borrowed money from a client contrary to Oppenheimer’s compliance policies that bar loan arrangements.

National Securities Broker Vito Balsamo Under FINRA Investigation Over V.W. Industries Sales

May 6, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) has filed a complaint against broker Vito Balsamo (Balsamo) concerning allegations that Balsamo engaged in private securities transactions – also known as “selling away” – in ownership interests in a limited liability company called V.W. Industries, LLC (VWI) without first receiving written approval from his member firm. FINRA also alleged that Balsamo failed to provide testimony requested by FINRA staff.

According to the BrokerCheck records kept by FINRA Balsamo has been the subject of at least 4 customer complaints, 2 criminal matters, one regulatory action, and one judgment and lien over the course of his career. Customers have filed complaints against Balsamo alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, and churning, among other claims. The claims involve different investment recommendations including claims involving equity securities among other speculative securities.

Balsamo entered the securities industry in 1991. From 1999 until May 2008, Balsamo was associated with Joseph Stevens & Company, Inc. Thereafter, from April 2008, until February 2012, Balsamo was associated with National Securities Corporation (National Securities).

Broker Investigation: Brian Decker Churning Claims

May 5, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Brian Decker (Decker) has been the subject of at least 10 customer complaints and 2 judgments and liens over the course of his career. Customers have filed complaints against Decker alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, and churning, among other claims. The claims involve different investment recommendations including claims involving equity securities among other speculative securities.

Decker entered the securities industry in 2006 with brokerage firm J.P. Turner & Company, L.L.C. Thereafter, in January 2007 through June 2009, Decker was associated with brokerage firm vFinance Investments, Inc. Finally since September 2009, Decker has been registered with Legend Securities, Inc. in Trinton Falls, New Jersey.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. When brokers engage in churning the investment trading activity in the client’s account serves no reasonable purpose for the investor and is transacted to profit the broker through the generation of commission payments. The elements to establish a churning claim, which is considered a species of securities fraud, 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.

Broker Investigation: Thomas Tedeschi’s Sales Practices

April 14, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Thomas Tedeschi (Tedeschi) has been the subject of at least 6 customer complaints, one judgment and lien over the course of his career. Customers have filed complaints against Tedeschi alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, and churning, among other claims. The claims involve different investment recommendations including claims involving warrants, penny stocks, and Exchange Traded Notes, among other speculative securities.

An examination of Tedeschi’s employment history reveals that Tedeschi moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Tedeschi’s 20 year career he has worked at 17 different firms.

Since 2008 alone Tedeschi has been registered with Westrock Advisors, Inc., Obsidian Financial Group, LLC, John Thomas Financial, Prestige Financial Center, Inc., Blackbook Capital LLC, and Aegis Capital Corp.

Broker Investigation: Salvatore Gioe’s Sales Practices

April 6, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Salvatore Gioe (Gioe) has been the subject of at least 11 customer complaints, one judgment and lien of over $197,000, and one regulatory action over the course of his career. Customers have filed complaints against Gioe alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, churning, margin fraud, among other claims. Many of the claims involve recommendations in penny stocks and other speculative securities.

Gioe was also suspended by the state of Arkansas for one year concerning allegation that in 2013, Gioe contacted an Arkansas resident through a cold call solicitation and recommended the purchase of Uni-Pixel, Inc. However, unfortunately for Gioe the cold caller turned out to be a securities examiner with the state of Arkansas. The examiner then sat and listed as Gioe allegedly told the examiner that he had information suggesting the price of Uni-Pixel would rise from its current price of $15.65 to about $25. The examiner asked Gioe if Uni-Pixel stock was a sure thing and Gioe allegedly responded saying that he did. However, according to Arkansas Uni-Pixel was a distressed company and this information was never disclosed to the examiner on the call.

An examination of Gioe’s employment history reveals that Gioe moves from troubled firm to troubled firm. The pattern of brokers moving in this way is sometimes called “cockroaching” within the industry. See More Than 5,000 Stockbrokers From Expelled Firms Still Selling Securities, The Wall Street Journal, (Oct. 4, 2013). In Gioe’s 14 year career he has worked at 13 different firms.