Unauthorized Trading

Broker Spotlight: Ameriprise Financial Broker Michael Lipscomb

October 12, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Lipscomb (Lipscomb) has been the subject of at least four customer complaints and two criminal matters over the course of his career. Customers have filed complaints against Lipscomb alleging securities law violations including that the broker made unsuitable investments, negligence, unauthorized trading, and excessive trading among other claims.

Lipscomb entered the securities industry in 1992. From March 2007 until August 2014, Lipscomb was associated with Wunderlich Securities, Inc. Lipscomb is currently registered with Ameriprise Financial Services, Inc. out of the firm’s Orlando, Florida office.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Customers File Claims Against Broker David Page

October 9, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker David Page (Page) has been the subject of at least three customer complaints over the course of his career. Customers have filed complaints against Page alleging securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, negligence, unauthorized trading, misrepresentations, and failure to follow instructions among other claims.

An examination of Page’s employment history reveals that the broker 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 Page’s 18 year career he has worked at eight different firms. Since May 2005 until April 2008, Page was associated with Investors Capital Corp. Thereafter, from April 2008, until May 2013, Page was a registered representative with John Thomas Financial. From May 2013, until March 2015, Page was associated with Brookville Capital Partners. After that Page was associated for only one month with Tryco Securities, Inc. Finally, Page is currently registered with Legend Securities, Inc.

Several the firms Page has been associated with have been expelled by FINRA including John Thomas Financial which was run by Anastasios “Tommy” Belesis who recently agreed to be banned from the securities industry when the SEC accused him of defrauding investors in two hedge funds. In addition, John Thomas faced allegations of penny-stock fraud by FINRA after the firm reaped more than $100 million in commissions over its six-year history before it closed in July. According to new sources trainees at the firm earned as little as $300 a week to pitch stocks with memorized scripts.

Customers File Complaints Against Former National Securities Corporation Broker William Gillis

October 7, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker William Gillis (Gillis) has been hit with at least 11 customer complaints over his career of which three have been filed in 2015 alone. Customers have filed complaints against Gillis alleging securities law violations including that the broker made unsuitable investments, poor investment advice and recommendations, failure to follow instructions, negligence, unauthorized trading, and misrepresentations among other claims. The claims against Gillis primarily involve his advice concerning equity securities. In addition, two of the claims resulted in arbitration panels awarding damages to customers.

Gillis entered the securities industry in 1986. From 2002, until August 2008, Gillis was associated with Wachovia Securities, LLC. Thereafter, from August 2008 until June 2015, Gillis was associated with brokerage firm National Securities Corporation (National Securities). Gillis does business through his DBA company Gillis Wealth Management Services in Seattle, Washington.

All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

Customers File Complaints Against Advisor Newbridge Securities Broker Anil Jethmal

October 3, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Anil Jethmal (Jethmal) has been hit with a large number of customer complaints. Jethmal’s record reveals a total of 5 customer complaints. However, 1996, the state of Georgia revoked Jethmal’s securities license in the state stating that approximately 27 customer’s had filed complaints against Jethmal up until that time. Customers have filed complaints against Jethmal alleging securities law violations including that the broker made unsuitable investments, churning, unauthorized trading, unauthorized use of margin, and misrepresentations among other claims.

Jethmal entered the securities industry in 1988. An examination of Jethmal’s employment history reveals that Jethmal 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 Jethmal’s 26 year career he has worked at 12 different firms. Since 2008 Jethmal has been registered with Westrock Advisors, Inc. and Summit Brokerage Services, Inc. Since March 2011, Jethmal has been associated with Newbridge Securities Corporation located in Boca Raton, Florida.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. 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. 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.

FINRA Bars Former Stifel, Nicolaus Broker Kenneth Hornyak Over Short Term Trading

September 15, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned and barred broker Kenneth Hornyak (Hornyak) (Case No. 2013038511901) alleging that the broker failed to respond the regulator’s requests for documents and information. FINRA’s investigation appeared to focus on claims that Hornyak engaged in potential discretionary trading, unauthorized trading, and unsuitable short-term trading in Unit Investment Trusts (UITs). On May 11, 2015, Hornyak informed FINRA that he would not appear for questioning and the regulator subsequently barred the broker.

According to the BrokerCheck records kept by FINRA Hornyak has been the subject of at least four customer complaints, one regulatory action, and two employment terminations for cause. Customers have filed complaints against Hornyak alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, churning, and excessive sales charges among other claims.

Hornyak entered the securities industry in 1998 with Morgan Stanley. From March 2006, until January 2014, Hornyak was associated with Stifel, Nicolaus & Company, Incorporated. In January 2014, Stifel, Nicolaus terminated Hornyak for cause alleging that Hornyak was terminated because of violation of firm policies regarding exercising discretion without written authorization.

FINRA Bars Thomas Hogle Over Investigation Into Unsuitable Trades in a 101 Year Old’s Account

September 13, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred (Case No. 20150443048) broker Thomas Hogle (Hogle) after the broker failed to respond to a letter from the regulator requesting information. While the BrokerCheck records kept by FINRA do not disclose all the facts being investigated by the regulatory inquiry, FINRA sent Hogle a request for documents in connection with their investigation that unsuitable investment recommendations were made in an account of a 101 year-old customer. On April 15, 2015, Hogle acknowledged FINRA’s requests but refused to produce documents or information resulting in the bar from the securities industry.

According to the BrokerCheck records Hogle has been the subject of at least one customer complaint and three financial matters and liens. The customer complaints against Hogle allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

Hogle entered the securities industry in 1998. From April 2008, until September 2011, Hogle was associated with Nelsonreid, Inc. Thereafter, from October 2011, until May 2015, Hogle was a registered representative of B.B. Graham & Company, Inc.

Broker Spotlight: Claims Against Former AXA Advisors Broker Dennis Lee

September 11, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Dennis Lee (Lee) has been the subject of one customer complaint, four financial disclosures, and one employment separation. The customer complaint against Lee alleges that the broker made unsuitable investments, transferred funds to a new account without the client’s knowledge or consent, engaged in unauthorized trading, and submitted forged documents. The client alleges over $1,000,000 in damages due to the misconduct. Approximately two months after disclosing the customer complaint AXA Advisors, LLC (AXA) terminated Lee. The termination was for cause and stated that Lee was discharged for failing to disclose financial issues that required the broker to file a U4 amendment, mismarking trade tickets, and placing securities trades away from the firm, otherwise referred to as “selling away.”

Lee entered the securities industry in 1993 and since that time Lee has been associated with AXA until his termination in April 2015.

Advisers have an obligation to deal fairly with investors and that obligation includes making suitable investment recommendations. In order to make suitable recommendations the broker must have a reasonable basis for recommending the product or security based upon the broker’s investigation of the investments properties including its costs, benefits, risks, tax consequences, and other relevant factors. In addition, the broker must also understand the customer’s specific investment objectives to determine whether or not the specific product or security being recommended is appropriate for the customer based upon their needs.

FINRA Bars Former Cetera Advisors Broker Bruce Sabourin

September 9, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) barred former Cetera Advisors LLC (Cetera) broker Bruce Sabourin (Sabourin) after the broker failed to respond to a letter from the regulator requesting information. While the BrokerCheck records kept by FINRA do not disclose the nature of the regulatory inquiry, in May 2014, Sabourin was terminated by Cetera for cause stating that the broker was terminated for excessive trading in client accounts and potential exercise of discretionary authority without written authorization.

According to the BrokerCheck records Sabourin has been the subject of at least four customer complaints, one employment separation, one regulatory action, and one criminal matter. The customer complaints against Sabourin allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading) among other claims.

Sabourin entered the securities industry in 1994. From August 2001, until September 2009, Sabourin was associated with Investors Capital Corp. Thereafter, from September 2009, until February 2011, Sabourin was registered as a broker with MetLife Securities Inc. Thereafter, Sabourin was associated with Sterne Agee Financial Services, Inc. from February 2011, until December 2012. Finally, Sabourin was associated with Cetera from November 2012, until May 2014.

FINRA Sanctions Five Brokers Affiliated with HFP Capital Markets

September 3, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned five brokers formerly associated with now expelled brokerage firm HFP Capital Markets LLC (HFP Capital) (Case No. 2010024522103) including brokers Jonah Engler (Engler), Brett Friedberg (Friedberg), Jonathan Sheklow (Sheklow), Joshua Turney (Turney), and Hector Perez (a/k/a Bruce Johnson) (Perez) concerning allegations that between December 2009, and February 2011, the five brokers fraudulently sold a total of nearly $3 million worth of Senior Secured Zero Coupon Notes (MMM Notes) issued by Metals, Milling and Mining LLC in a private placement offering to 59 customers.

FINRA alleged that the brokers misrepresented material facts about the offering by promising to pay a return of 100 percent in one year by purportedly extracting precious metals from materials left over from mining operations. In reality, FINRA determined that the investors lost all of the money that they invested in the MMM Notes, with the exception of three investors who were repaid with funds from new investors in a Ponzi scheme like fashion. FINRA determined that the brokers also recklessly failed to conduct a reasonable investigation, or due diligence, of the viability and legitimacy of company in the face of numerous red flags that it was a fraud.

In addition, FINRA alleged that the brokers recklessly misrepresented to customers that: (a) the MMM Notes were collateralized by certain barrels of ore concentrate; and (b) the collateral ore concentrate was of sufficient value to secure the investment in the MMM Notes. In fact, FINRA found that there was no collateral for the MMM Notes because the company did not own any ore concentrate. FINRA determined that the broker’s representations concerning the MMM Notes were recklessly and misrepresented material facts regarding the MMM Notes in willful violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 (the anti-fraud provision) as well as several industry rules. In sum, the brokers failed to obtain even basic information about the company necessary to the due diligence process in order to understand an investment in the company and therefore lacked a reasonable basis to recommend the MMM Notes to investors.

Customers File Complaints Against National Securities Corporation Broker Michael Fasciglione

September 2, 2015 | by Staff Attorney

According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker Michael Fasciglione (Fasciglione) has been the subject of at least 11 customer complaints and two regulatory actions. The customer complaints against Fasciglione allege a number of securities law violations including that the broker made unsuitable investments, unauthorized trading, and churning (excessive trading), breach of contract, breach of fiduciary duty, negligence, fraud, misrepresentation, and failure to supervise among other claims. The customer complaints stem from 1995 through 2014 and total allegations of investor losses of multiple millions of dollars.

Fasciglione’s first regulatory action occurred in 2004, when the NYSE initiated an action for alleging that Fasciglione failed to supervise the activities of an employee related to the business of his employer; failing to supervise accounts serviced by a registered representative under his control; failing to ensure proper authorization of account designation changes, along with several other allegations. As a result, of the complaint Fasciglione was suspended for two months and required to re-take any qualifying exams before undertaking any securities supervisory positions.

Fasciglione’s latest regulatory complaint alleges that in or about March 2010, while the IRS filed a $354,752 tax lien against Fasciglione for the tax years 2007 and 2008. An amended Form U4 was filed on November 26, 2012, but FINRA found that this filing was untimely.