Securities Lawyers Blog
The law offices of Gana Weinstein LLP are currently investigating claims that advisory firm Yellowstone Partners, LLP, of Idaho Falls, and its two principals, David Hansen (Hansen) and Cameron High (High) fraudulently overbilled clients and charged fees for work not performed. According to records kept by The Financial Industry Regulatory Authority (FINRA) High was employed by Crown Capital Securities, L.P. through October 2017. If you have been a victim of Hansen’s and High’s misconduct our firm may be able to assist you in recovering funds.
According to the SEC, Yellowstone overbilled investment advisory clients as part of a fraudulent scheme to inflate the firm’s income. The SEC claims that High participated in the fraudulent scheme by causing the overbilled management fees to be charged to and taken from client accounts. The Defendants are accused and later pled guilty to stealing over $11.8 million from over 120 client accounts by overbilling clients for investment advisory management fees that were never earned.
The SEC alleged that the overbillings were taken from unsuspecting clients to generate additional revenue to cover Yellowstone’s operating expenses and to support Hansen’s lavish lifestyle. The SEC found that the advisors targeted specific accounts in a small number of larger accounts where overbilled fees would be less noticeable. In carrying out their scheme, the advisors allegedly billed client accounts twice for periodic management fees taking double the amount of fees earned during particular periods. In addition, the advisors also failed to maintain current investment advisory agreements for each client and to keep such records easily accessible for a period of five years.
On March 14, 2018, High pled guilty to one count of wire fraud before the United States District Court for the Northern District of Idaho.
Our law firm has significant experience bringing cases on behalf of defrauded victims when their advisors engage in fraudulent activity through selling securities through OBAs like Yellowstone. The sale of investment products through RIAs or other otherwise outside the scope of the broker’s employment – is a practice known in the industry as “selling away” – a serious violation of the securities laws when the firm fails to monitor the activity. 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. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds.
However, federal securities laws and the FINRA rules require firms to 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.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
High entered the securities industry in 2006. From 2006 through October 2017 High was associated with Crown Capital out of the firm’s Idaho Falls, Idaho office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.