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Losses from Vanguard Website Freeze

If you suffered losses from the inability to access the Vanguard website on October 10, 2018, please call 1-866-817-0201.  Initial consultation with a private attorney is free.

On October 10, 2018, the Dow Jones industrial average lost more than 800 points, over 3%, in the course of the trading day.  Certain Vanguard investors were unable to take action to protect themselves.  This is because the website access that so many Vanguard investors rely upon to protect their savings malfunctioned.  The investors were left helpless to watch the dramatic decline with the inability to take action.

In statements from Vanguard, a “network connectivity issue” denying clients to access Vanguard “via the web or phone.”

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Investors unable to access markets via Vanguard as brokerage lets down investors for second time this year.

Website access issues started at 6 am Eastern on Wednesday, October 10, 2018, and were “intermittent and periodic.” Vanguard says it is “working as quickly as we can to restore full access and will provide updates as they become available,” and it apologized for the inconvenience.  However the apologies do not compensate those relying on the site and Vanguard’s competence in managing the site.

This is not the first time this has happened to Vanguard.  In fact, it is not the first time this year that the brokerage failed to properly maintain connectivity with its clients.  On February 4, 2018,  the Dow suffered a similar drop.  Investors lost the ability to protect themselves, in addition to missing on buying opportunities.

The notice to Vanguard from the earlier incident should have put it on notice of the problems with its system.  While other brokerages were able to make sufficient changes, Vanguard was not.

Andrew Todd Yocum Loss Recovery

Investors of Andrew Todd Yocum may be entitled to recovery of their losses.  Mr. Yocum is a former broker of Morgan Stanley and Summit Brokerage.  He has entered into regulatory settlements with both the Financial Industry Regulatory Authority (“FINRA”) and Florida regulators.   If you have suffered investment losses as a result of investing with Yocum please call 1-866-817-0201 for a free and confidential consultation with a private attorney.

In 2015, FINRA, the national regulatory agency that oversees securities brokers and brokerages, commenced an investigation into Yocum.  It alleged the he effected unauthorized securities transactions, exercised discretion over portfolios without written authorization, and recommended unsuitable concentrated purchases of energy sector securities to senior investors.

Unsuitable investments are investments that are either too risky or otherwise do not fit the investor’s profile.  Such investments generally enrich the broker at the expense of the investor.

Yocum did not contest the charge by FINRA. Ultimately, FINRA barred him from practicing as a securities broker.

On May 4, 2017, Yocum was found by Florida regulators to have committed similar offenses.  Those offenses being the failure to get appropriate authorization from his clients and the recommendation of unsuitable securities.  Yocum neither admitted, nor did he deny, the findings.

Yocum entered the securities industry in September 2002 when he became associated with a FINRA member firm.  All securities brokerage firms in the United States must be members of FINRA.  FINRA is a self-regulatory organization that the Securities and Exchange Commission has empowered to oversee securities brokerages.

The former employers of Yocum have been sued over 30 times for their failure to supervise the portfolios of investors and ensure protection from the securities violations described above.

Yocum first became registered with FINRA through that firm on November 28,2002. YocumNYSE pic 1 remained registered with FINRA through an association with two member firms between 2002 and 2009.  Neither of these firm from that time period were identified in the FINRA investigation.

On June 1, 2009, Yocum became a broker with Morgan Stanley. On October 6, 2015, Morgan Stanley filed a Uniform Termination Notice for Securities Industry Registration. The reason for Yocum’s termination from Morgan Stanley was listed as “[a]llegations concerning acting on verbal discretion.”

Subsequent to his termination with Morgan Stanley, Yocum became affiliated with Summit.  On March 3, 2016, that firm filed a Form with FINRA noticing the regulator that it was terminating Yocum’s association as of March 1, 2016. Since March 1, 2016, Yocum did not re-associate with another FINRA member firm.

Please call the number above to speak to an attorney who handles investment disputes against brokerages such as Morgan Stanley and brokers such as Yocum.

Rhino Capital Loss Recovery

Please call 1-866-817-0201 if you invested in either Rhino Capital, Global Credit Recovery, Delmarva Capital, DeVille Asset Management, or Riverwalk Financial.  We are currently investigating potential recovery avenues for investors.   Initial consultations are free.  Representations are done on a contingency basis.

The Securities and Exchange Commission said Wednesday that it has filed a complaint and obtained a court order concerning the aforementioned financial entities, halting an ongoing “Ponzi-like” scheme that raised more than $345 million from over 230 investors.

From at least 2013 to present, operators of Rhino and the other Defendants operated this Ponzi-like scheme that involved, among other things, securities offerings rife with misrepresentations, fake debt, forged signatures, fabricated wire transfers, the movement of millions of dollars into personal accounts, and an elaborate scheme wherein Defendants offered and sold investments in the same (and often fictitious) debt and/or debt portfolios, to multiple victims

The SEC alleges that Kevin B. Merrill, Jay B. Ledford and Cameron Jezierski attracted investors to their scheme by promising significant profits from the purchase and resale of consumer debt portfolios.  Merrill, 53, is from Towson, Maryland; Ledford, 54, lives in Westlake, Texas and Las Vegas; and Jezierski, 28, lives in Fort Worth, Texas.

Of the $345 million raised, more than $90 million was invested by over 200 individual investors; approximately $52 million by family offices; and nearly $203 million by feeder funds, largely made up of groups of individuals.

Many of these investments came in by the way of “feeder” funds.  The operators of these funds had duties to conduct adequate due diligence to verify the veracity of the representations of the investment offer.  Investment professionals have duties to their investors.  Among these are an obligation that an investment is suitable for any investor.

GPB Loss Recovery

Investors of GPB or any GPB Capital investments, please call 1-866-817-0201 about potential loss recovery.  Initial consultations are free and confidential.  Jeffrey Pederson is a private attorney who has successfully represented investors nationwide in obtaining settlements or judgments for investment losses.

Information exists to support that GPB Capital was inappropriately sold by independent brokerage firms across the country.  These investments are now illiquid and essentially worthless.  These brokerages are liable for the losses of their investors.

Brokerages have duties to investors in the sale of investments such as GPB.  These investments were high-risk, and brokerage were only allowed to recommend the investments to

On August 17, 2018, the firm halted sales to review accounting.  The purported reason was to “integrate the high volume of recent acquisitions.”

On August 24, 2018, GPB announced that the fund will restate its 2015 and 2016 financial statements.  The adjustments were due to errors in income and the source of such income that came to light in audits done on the investments.

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Many GPB investors thought they were getting a safe investment.

On September 12, 2018, Massachusetts top securities regulator William Galvin started an investigation into the sales practices of independent stock brokerage firms in connection with the recommending of investments in GPB Capital Holdings.

GPB investments were always known to be very high risk.  As such, the investments were not suitable for a large portion of the investing public.  Brokers have a legal obligation to only recommend suitable investments.   The motivation for selling such risky investments to moderate investors is likely the result of the excessive commissions that were paid the brokers for such sales – commissions much higher than would be paid for the sale of suitable investments.

The Massachusetts Securities Division has information about one independent stock brokerage firm’s sales practices in connection with GPB sales, coming in the wake of GPB’s announcement that GPB has temporarily stopped bringing in new funds.  It has also suspended redemptions while it concentrates on accounting and financial reporting.

In addition, there is an issue with the failure to file financials.  Such a failure should have been discovered by any brokerage firm selling the investments and should have been a red flag of the extreme risk in the recommendation of the investments.  Two private GBP investments that are required because of their size to file financial statements with the Securities and Exchange Commission failed to meet filing deadlines.

These matters have led to a sweep by regulators of 63 broker-dealers that sell GPB, with the regulators requesting data on the extent of sales activity in Massachusetts, disclosure and marketing documents that the firms provide to investors on the solicitations and data on investor suitability.

“While my Securities Division’s investigation is in the very nascent stages, recent activity within GPB raises red flags of potential problems. These red flags, coupled with the fact that sales of private placements by independent broker-dealers have been an ongoing source of investor harm, have led to this investigation,” Galvin, the lead regulator, stated.

Galvin goes on to state, “I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt.”

Investor Losses with Cadaret Grant

Investors suffering losses with Cadaret Grant may have recourse.  Please call 1-866-817-0201 for a free and confidential consultation.

Cadaret entered into a regulatory settlement with the Financial Industry Regulatory Authority on September 11, 2018.   Cadaret agreed to pay an $800,000 fine.  It also agreed to a censure and to review and change its policies to detect inappropriate sales practices by its brokers.  One focus was on the sale and exchanges of variable annuities.

Invest photo 2Cadaret failed to employ sufficient compliance personnel to adequately supervise its brokers.  Brokers have many incentives to recommend investments that are too aggressive or otherwise unsuitable for an investor.  Sufficient compliance personnel are needed and required by regulators to protect investors from this known risk.

All licensed securities brokers have a legal obligation to recommend only suitable investments.  Investments are all known to have a certain range of risk when recommended.  Certain investments are known to have higher risks than others.  Investments that can increase sharply in value can sometimes decrease equally as fast.  Investments can only be recommended when the risk the investment poses is consistent with the risk consistent with the investor.  For example, a retired individual should only be recommended investments with little to no risk.  So when such an individual loses 20% or more of portfolio value in a year, the portfolio was likely unsuitable when first recommended.

As a result of its insufficient compliance, Cadaret had only three compliance people overlooking weekly trades, or “blotter reviews.”  Such reviews are needed to detect over-concentration of portfolios, such as portfolios being invested too heavily in either one investment, a single industry, or being too heavily weighted in a single investment vehicle, such as stocks or annuities.  Such concentration is unsuitable because it greatly increases the level of risk in the portfolio.

The blotter review also protected investors from broker churning.  This is an action where a broker puts his/her own interest ahead of the investor.   Excessive trades are made that work more to generate commissions for the broker than to protect the interests of the investor.

Churning depends on the cost of the exchange.  With products such as variable annuities, churning can happen with a single exchange.  One of the issues faced by Cadaret is from the replacement of one variable annuity with another.  There are very few circumstances where variable annuity exchanges are justified.

Cadaret’s supervisory procedures also required examiners in the compliance department to conduct periodic inspections of branch offices to detect and prevent violations by registered representatives in those locations. However, Cadaret employed an insufficient number of compliance examiners for this purpose. For instance, in 2014, the Firm tasked three compliance examiners with inspecting over 400 geographically-disperse branches. As a result, these inspections were conducted in a manner not reasonably designed to identify violative activity.

Jeffrey Pederson has represented investors across the United States in suitability suits.  These suits are largely handled through FINRA arbitration.  Please call for consultation.

Stephen Hurtuk investors

Please call 1-866-817-0201 if you were an investor of Stephen Hurtuk.  Mr. Hurtuk has recently surrendered his license instead of attempting to defend claims that he inappropriately recommended unsuitable investments to a significant number of his investors.  Hurtuk was previously with both Citigroup and Stifel, Nicolaus.

Invest photo 2On June 27, 2017, FINRA, the regulatory authority that oversees securities brokerages, sent a request to Hurtuk for on-the-record testimony. The request was sent in connection with FINRA’s investigation into potentially unsuitable recommendations by Hurtuk to eight customers, between May 2015 and September 2016. Instead of responding to the request, Hurtuk chose not to defend though the failure to defend would mean the revocation of his license.

An unsuitable investment is any investment that is not consistent with either the objectives, sophistication, or risk tolerance of an investor.  For example, a conservative investor reliant upon his or her savings who loses more than 15% of a portfolio in a year was likely sold an unsuitable investment.  This is because the risk of loss was greater than the investor was willing to assume.

The regulatory action only addressed 16 months during 2015 and 2016.  However, we believe offending investment recommendations extend beyond this period.  We are interested in those recommended unsuitable investments from 2011 onward.

Consistent with this, the employers of Mr Hurtuk, Stifel and Citigroup, have defended six filed or threatened legal suits concerning the unsuitable recommendations of Stephen Thomas Hurtuk.  These suits extend from 2007 through the present.  Five of these suits have settled.

His affiliation with Citigroup was in Canfield, Ohio and lasted from 2001 to 2007.  Stifel was his employer from 2007 until 2017 and he operated out of Boardman, Ohio.

We help investors such as the victims of Mr. Hurtuk.  Cases are generally handled on a contingency basis, where attorney fees are paid by a percentage of the settlement or judgment obtained.  Cases against securities brokerages are subject to binding arbitration through FINRA.  Jeffrey Pederson has handled such arbitration cases across the country.   Please call for a free and confidential consultation and see if your losses are recoverable.

Attention Matthew Eckstein investors

Investors of Matthew Eckstein please call 1-866-817-0201.  Mr. Eckstein was previously employed by Sisk Investment Services and Gould, Ambroson & Associates.   Initial consultations are free and confidential.

The Financial Industry Regulatory Authority (FINRA) recently expelled Eckstein when he failed to appear at a regulatory hearing to contest allegations of severe misdeeds in his handling of securities portfolios.

Stock handcuffsEckstein engaged in a practice referred to as “selling away.”  A form of fraud, this is a practice where a securities broker sells a private security without the approval of a licensed securities firm.  This prevents the firm from vetting the investment to determine legitimacy and that the funds received actually are used to purchase the investment.

In a selling away situation, the investment is commonly of a company that the broker either owns, has an interest or that a friend or relative owns.  This is a common form of fraud and one in which his employing firm should have had supervisory mechanisms in place to detect and prevent.

The investments at issue in the present matter were investments in Conmac Capital and Conmac Funding.

In recommending that his customers make the Conmac investment, Eckstein knowingly, or at a minimum, recklessly, made false and misleading statements regarding the investment—saying, for example, that it was “fully guaranteed,” when it was not, and describing it as comparable to a certificate of deposit with a bank (“CD”), when it was not.

Eckstein, the Respondent in the FINRA suit, also persuaded one of his customers to liquidate close to $300,000 in mutual fund holdings in order to invest in the Issuer, representing that the investment would be sufficient to fund her retirement while the mutual fund investments would not. He had no basis, however, for urging the customer to replace her mutual funds with an investment in the Issuer. He had conducted no due diligence on the investment. Moreover, he never disclosed to his customers his lack of a basis for his representations and recommendations, and his lack of due diligence—material information to any reasonable investor.

“Respondent also failed to disclose financial connections to investors that would have caused a reasonable investor to question Respondent’s objectivity and the safety of his or her money.” He did not disclose that nearly all of the money that his customers gave him to invest in the Issuer was deposited into a bank account in the name of an affiliate of the Issuer, and that Respondent had access to those investor funds as a signatory on the bank account. “Respondent also did not disclose that KB had given him over $100,000.”

Eckstein and his employer are currently defendants in multiple suits concerning the his fraud.  These suits are largely being handled through the FINRA arbitration process.  Investors waive certain rights to bring claims in court when signing account opening documents with FINRA-licensed securities brokerages.

Investors of Charla Kabana

Investors of Charla Kabana, previously of Sagepoint and LPL Financial, and currently of Kabana Financial in California, please call 1-866-817-0201 for a free and confidential consultation.

Wall Street photo 2On August 21, 2018, Charla Kabana finalized a settlement agreement with the Financial Industry Regulatory Authority (FINRA).   Conditions include barring her from serving as a securities broker.  FINRA sought to investigate questionable variable annuity sales and other issues of Kabana.

Kabana refused to cooperate with FINRA, despite licensing requirements to the contrary.  The consequence of the failure to provide information in the investigation was the loss of her securities license.

The FINRA regulatory action came about due to the termination of Kabana by LPL.  LPL investigated Kabana and ultimately  terminated Kabana on July 11, 2016 due to “[c]oncerns regarding [Kabana's] practices in respect to variable annuity business and related responses to Compliance.”

She subsequently was able to serve as a representative of Sagepoint Financial until losing her license in August 2018.

FINRA requested financial documents and testimony on the record.  The focus being the LPLreasons for the LPL termination and the alleged irregularities in the securities sales.  Kabana refused to do so.

The record of Kabana, known as her CRD, also shows other disclosure events which should serve as a “red flag” for employers and other supervisors.  This creates potential liability for those employers and supervisors for the losses incurred by investors.

Attention Investors of John Maccoll

John C. Maccoll, who was a registered representative of UBS Financial Services and an investment advisor, is charged both criminally and civilly with defrauding at least 15 of his brokerage clients, most of them elderly and retired, in a scheme that lasted for at least a decade.  If you were an investor with Maccoll please call 1-866-817-0201 for a free and confidential consultation.  Representation will be on a contingency fee basis.

Maccoll’s career goes back 40 years.  Prior to being with UBS he spent years working as a brokerguy in handcuffs for Morgan Stanley.  We believe that he used his scheme not only at UBS but also at Morgan Stanley.

According to the SEC, he used high-pressure sales tactics to convince his brokerage customers to invest in what he described as a “highly sought after” private fund investment. The victims were convinced to sell their retirement accounts or borrow against them and make out checks to Maccoll.

The actions of Macoll are commonly referred to as “selling away.”  This is common.  A broker will either try to sell an investment of a confidant who will pay him a premium, or sometimes make up the investment completely.  Brokerage firms are required to have mechanisms in place to detect and stop such trading practices.

One customer’ defrauded invested her life savings and money from her deceased husband’s life insurance payout, which she intended to use to pay for college expenses for her three children, adding that Maccoll knew that the funds invested in his customers’ accounts were for retirement or college expenses.

Attention Investors of Chris Hibbard

A former Merrill Lynch advisor, Chris Hibbard, of the Louisville, Ky., area, fired after Merrill concluded he had allegedly stolen money from clients, is facing more allegations of theft.  Call 1-866-817-0201 for a free consultation if you were a client of Mr. Hibbard.  Representations are handled on a contingency basis.

The record of Hibbard shows that his former employers are currently defending eight lawsuits concerning Hibbard misappropriation of funds.  These suits are all in the FINRA arbitration process.

Stock handcuffsMerrill Lynch fired Hibbard in February following an internal investigation which also found he had made unauthorized transactions, according to the publication. FINRA has barred Hibbard.

Since then, more accusations have been lobbed against the former Merrill Lynch representative, including in March, April and May.

And last month, a lawyer on behalf of a client accused Hibbard of alleged theft, misappropriation of funds, misrepresentation and making unsuitable recommendations, according to Finra, Louisville Business First writes.

The former broker had been with Merrill Lynch since July 2010, and one of the complaints alleges misappropriation of funds in 2009 and 2010, when Hibbard had been with Morgan Keegan & Co., which is now part of Raymond James, Louisville Business First writes.  Hibbard first started in the securities industry at A.G. Edwards in 1999.

Meanwhile, the U.S. Attorney’s Office for the Western District of Kentucky is also investigating Hibbard, according to Finra documents cited by Louisville Business First, although the publication’s search of court records didn’t find any charges filed thus far.