Tag Archives: arbitration

Attention Dennis Mehringer Investors

If you were an investor with Dennis Mehringer call 1-866-817-0201 for a free and confidential consultation with a private attorney.

On October 18, 2019, the Financial Industry Regulatory Authority (FINRA) barred Mr. Mehringer from the securities industry when he failed to defend charges that he handled his investor accounts inappropriately.

Mehringer was previously named a defendant in a FINRA regulatory complaint, a legal action brought by the national regulatory body overseeing securities brokers, alleging that he made unsuitable recommendations that caused a customer to engage in excessively expensive short-term trading and intra-day switching of mutual fund Class A shares.   

“Unsuitable” recommendations are recommendations of securities transactions or purchase of strategies that are inconsistent with the risk tolerance or investment objectives of an investor.  They can also be when a broker makes trades with the objectives of increasing the broker’s commission.  That is what happens with short-trading of mutual funds.  The high commissions of mutual funds are repeatedly charged so that there is little to no chance for the investments to make a reasonable return.  This is sometimes referred to as churning.  

The FINRA complaint alleges that Mehringer repeatedly recommended, and caused the investor to engage in, short-term purchases and sales of 84 mutual fund Class A positions (involving the sale of shares within a year of purchasing them) in five of the customer’s accounts.

In 47 of the 84 purchase transactions, investors paid front-end sales loads ranging from four to five percent. All but 17 of these 84 mutual fund positions were held for less than six months, and approximately 35 of them were held for less than three months. Mehringer received $169,735 in commissions from the transactions. Mehringer recommended the short-term mutual fund trading and the intra-day mutual fund switching alleged above without reasonable grounds to believe that the recommendations were suitable for the investor.

Given the long-term nature of Class A mutual fund share investments, along with the costs and commissions incurred in connection with frequent trading and switching between the mutual funds and mutual fund families, Mehringer’s short-term trading was unsuitable for any customer. The complaint also alleges that Mehringer exercised discretion in the same customer’s accounts without obtaining the customer’s written authorization and his member firm’s approval to do so. 

The actions of Mehringer are currently the subject of eleven arbitration suits brought by his investors against either him or his former employers.

Jimmy Booth Investment Fraud

If you were with James “Jimmy” Booth, and question whether you are a victim of investment fraud, please call 1-866-817-0201.  Booth has previously been a broker for LPL, Invest Financial, and Cadaret, Grant & Co.  He did business for these firms under the name “Booth Financial Associates.”

In May 2019, FINRA, the regulator overseeing securities brokers, began an investigation into the Booth matter after receiving information from Booth’s former employer, LPL, following an internal investigation. During the Relevant Period, multiple customers of Booth gave him their savings totaling at least approximately $1,000,000 to invest on their behalf.

Booth, however, deposited the funds into an account he controlled and, instead of using the funds for investment purposes, used them for his own personal use. FINRA rules provides that “[n]o member or person associated with a member shall make improper use of a customer’s securities or funds” and that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade. ”

FINRA barred Booth from ever serving as a securities broker as part of the settlement of the regulatory matter.

LPL has sent letters to some of the impacted investors to ask them if they authorized the withdrawals in their accounts.  For full recovery, investors should speak to an attorney.

Booth primarily worked in the Norwalk, CT area but it is believed that he had investors nationwide.

Booth has a history of customer disputes going back to 2004.

Recover Nina Jessee Investment Losses

Nina S. Jesse, formerly of National Capital Corp. and Cetera Advisors, has been sued over 20 times for her improper recommendation of unsuitable investments.  Her former employers are responsible for failing to supervise Jessee.  Please call 1-866-817-0201 for a free and confidential consultation with an attorney if you have suffered losses you believe were too aggressive or not appropriately investigated by Jessee or her employers.

Ms. Jesse is permanently barred from the securities industry.  FINRA, the regulatory body that oversees securities brokerage firms, investigated Jessee.  The focus of the investigation was the large number of complaints that Nina Jesse sold unsuitable investments.  The sale of unsuitable investments is a form of fraud.  A broker motivated by commission or other payment recommends investments that are overly risky or otherwise inconsistent with an investor’s objectives or tolerance for risk.  The investors then suffers losses as the result of the broker’s greed.

The bar of Nina Jessee was issued when Jessee failed to provide documents or otherwise contest the regulator’s allegations.  Her attorney acknowledged that she received the regulatory action but declined to participate.

Another subject of the investigation was undisclosed outside business activity of Jessee.  The reason that disclosure of such activity is important is that brokers will commonly use their access to investors to direct investment toward their own business or the business of a friend.  This is done despite the lack of oversight by the broker’s employer or verification that the business is worthy of anyone’s investment.

Suits concerning losses with investors such as Nina Jessee are largely handled through an arbitration process.  Investors suffering losses should speak to an attorney knowledgeable with the investment arbitration process.  Please call the number above to discuss Nina Jesse and the recovery process.

Pagartanis Fraud

If you were a victim of Steven Pagartanis please call 1-866-817-0201.  The Law Offices of Jeffrey Pederson, PC is a firm that specializes in suits concerning securities brokers.

Pagartanis, the former Lombard and Cadaret broker from Long Island, N.Y., pleaded guilty Monday, December 10, 2018, in federal court to conspiracy to commit mail and wire fraud for running a Ponzi scheme over 18 years

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

Steven Pagartanis victims invested over $13 million and saw actual losses of more than $9 million,  according to the U.S. Attorney’s office.

This former licensed securities broker solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded companies and an international hotel conglomerate, according to the Department of Justice. Pagartanis promised his investors returns consistent with conservative investments-that their principal would be secure and earn a fixed return of 4.5% to 8% annually.

The victims wrote checks payable to an entity secretly controlled by Mr. Pagartanis at his direction, according to the government. He utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the phony interest or dividend payments to other victims, according to the Department of Justice. He faces up to 20 years in prison.

Recovery of these losses will focus on the employers of Pagartanis.  These employers are required to have supervisory safeguards in place to prevent such actions.  FINRA, the Financial Industry Regulatory Authority, has rules that require licensed brokerages to take steps to monitor and detect private securities transactions away from the firm.  Consequently, liability exists even if such actions were not taking place right under the nose of the firms.  FINRA offers an arbitration forum to recover such losses.

The SEC also filed a civil suit concerning this matter in May 2018.

On June 26, 2019, a FINRA arbitration panel awarded an investor a judgment in the amount of $1.46 million against Pagartanis for his role iin the multi-million dollar Ponzi scheme.

Jeffrey Pederson is an attorney who helps investors recover losses from brokerage firms through the FINRA arbitration process.  This is just one of the 17 customer complaint disclosures on his record.

Ami Forte Investigation

If you suffered losses with Ami Forte, please call 1-866-817-0201 for a free and confidential consultation.  Jeffrey Pederson, PC handles claims against securities brokerages nationwide for unsuitable securities and unauthorized trading violations.

The Financial Industry Regulatory Authority (FINRA) announced on October 3, 2018 that it was widening the investigation of Ami Forte.  FINRA is the national regulatory agency that oversees securities brokerages.  It does so with the oversight of the SEC.

The October 3 notice advises Forte that the regulator will include additional potential violations of rules tied to conflicts of interest and fraud. Other violations included in the October 3 notice relates to rules tied to suitability, municipal securities advisory activities and books and records.

Forte, once Morgan Stanley’s most celebrated and prominent financial advisor with $2 billion in assets under management, lost her job at Morgan Stanley when an FINRA arbitration panel entered a substantial judgment against her.  The panel ordered her, her branch manager and Morgan Stanley to pay $34 million to the estate of Home Shopping Network co-founder Roy Speer in 2016. Lynnda Speer, Roy Speer’s widow, argued that the estate had been harmed by unauthorized trading, churning and elder abuse.

The initial investigation began in January 2018.  FINRA had made a preliminary determination concerning violations of multiple FINRA rules.  These rules concerning inappropriate exercises of discretion in an account and inappropriate recommendation of direct participation investments.

Forte had recently begun a career resurrection of sorts. In March 2018, Pinnacle Investments announced Forte as its chief business development officer.

This was short-lived.  BrokerCheck records indicate that the employment with Pinnacle ended Oct. 17,

Jeffrey Pederson has represented hundreds of investors over the past 15 years in FINRA arbitrations nationwide.  Time limitations may exist.  Investors suspecting wrongdoing should call at their earliest convenience

John Simoncic Investment Fraud

The Financial Industry Regulatory Authority (“FINRA”) barred John Scott Simoncic from the securities industry.  Mr. Simoncic had most recently been a broker for Financial West Group.  Please call 1-866-817-0201 for a free consultation if you were an investor of Mr. Simoncic.

There are multiple allegations concerning multiple investors against Mr. Simoncic.  They include the unauthorized and excessive trading in client accounts.  Allegations also include the sale of unsuitable investments.  This is the sale investments to an investor that are inconsistent with the risk an investor was willing to assume.

Between August 2014 and March 2016, Simoncic executed 54 of the 97 trades in a single customer account in inverse and/or leveraged Exchange Traded Funds (ETFs), an investment vehicle somewhat similar to a mutual fund.  The investor did not have an understanding of the ETFs Simoncic traded in her account; she did not understand how inverse and leveraged ETFs worked, the risks associated with the extended time Simoncic held the ETF positions in her account, or that her account was concentrated in one particular volatility ETF, the ProShares Ultra VIX Short-Term Futures ETF (UVXY), for over nine months.

Such ETFs are especially dangerous.  Although leveraged and/or inverse ETFs seek daily investment results, Simoncic held the ETF positions in the investor’s account for multiple trading sessions. For example, Simoncic executed 37 transactions in shares of the ProShares UltraShort S&P 500 (SDS), an inverse double-leveraged ETF, with holding periods generally ranging from four to 97 days. These transactions in the SDS resulted in an overall loss of more than $15,000. Simoncic also concentrated 93 percent of the investor’s portfolio in shares of UVWY, the ProShares Ultra VIX Short-Term Futures—a risky, double-leveraged and speculative ETF—for 295 days, that resulted in losses that exceeded $20,000. Thus, approximately $35,000 of the investor’s total losses of approximately $60,000 related to ETF trading.

Mr. Simoncic has previous regulatory actions and customer complaints that should have alerted his employer.  We believe that the former employers of Mr. Simoncic are responsible for investors losses.

 

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.

Charles Bloom of Chelsea Financial

Please call 1-866-817-0201 if you were an investor with Charles Bloom of Chelsea Financial.  Bloom operated primarily in the West Palm and Royal Palm areas of Florida, but likely has investors nationwide.  We have reason to believe that Bloom engaged in a pattern of inappropriate behavior in the portfolios of his investors.

In October 2017, FINRA, the regulator that oversees securities brokers, commenced an investigation into allegations that Bloom engaged in an unsuitable pattern of trading in at least three customer accounts.

All securities brokers are required to know their investors and only recommend investments Invest photo 2that are consistent, or suitable, with the investors risk tolerance and investment objectives, among other things.  Brokers have many incentives to recommend investments that are too risky or otherwise unsuitable for investors.  This motivation can lead to large losses by an investor.  As such, the recommendation of unsuitable investments is considered to be a form of fraud.

In connection with the FINRA investigation, on June 21, 2018, FINRA sent a request to Bloom for on-the-record testimony. Brokers are required to cooperate with FINRA investigations into misconduct.  As stated in a phone call with FINRA staff on July 3, 2018, Bloom acknowledges that he received FINRA’s request and would not cooperate.

Ultimately, Bloom surrendered his license and accepted a bar from the securities industry as a result of the allegation.  However, this allegation is just the latest in a long list of allegations.  The record  of Bloom shows prior regulatory actions, a 20-day suspension, and two customer suits.  This raises the question of why Bloom was hired and why he was not given appropriate supervision in light of his history.

We represent investors in securities industry arbitration proceedings across the country.  Please call for a free and confidential consultation.

 

Recovery of CLO Losses

CLO (Collateralized Loan Obligation) investors may have recovery avenues for their losses.  These complex investments are only suitable for the most sophisticated investors willing to assume the high risk of these investments.  Investors who are less sophisticated or who seek only investments or looking for only moderate risk investments cannot legally be sold these investments.  For a consultation, please call 1-866-817-0201.

The financial industry is governed by rules concerning whether certain investments can be sold to investors.  One such limitation is that securities broker, financial advisors and investment advisors may only sell investments that are suitable, or investments that are consistent with an investors level of sophistication, investment objectives and tolerance for risk.  Complex investments that carry a high risk potential are unsuitable for your average investor looking for growth or income with a tolerance for moderate risk.

investingstockphoto 1As identified by FINRA, the Financial Industry Regulatory Authority, a CLO is very complex and risky investment.   A CLO is a security made up of loans to corporations that usually have relatively lower credit ratings. Leveraged buyouts, in which a private equity firm typically borrows money to purchase a controlling stake in a company, are a common for CLO loans. After the loans are made, they’re sold off to a manager, who bundles them together and then manages the consolidations, buying and selling loans as he or she sees fit.

A CLO manager raises money to buy the loans by selling debt and equity stakes to outside investors in slices of the total collection according to risk level.

FINRA gives an example to demonstrate how tranches work.  Think of everyone who owns a piece of the loan pool as standing in a long line. Those at the front of the line would get repaid first if any of the loans in the pool go into default, but they receive lower interest payments than those at the back of the line. The people further back are paid more for taking a greater risk that they would not be repaid in the event of losses in the underlying loan pool.

Typically, a CLO includes both debt tranches and equity tranches. The debt tranches are similar to bonds – they have credit ratings and offer regular coupon payments for a period of several years. Interest rates may be set or “floating,” meaning they vary with prevailing interest rates.

Debt tranches have first dibs on payments from the underlying loans, though here again, there are important differences within the group. Senior tranches have a higher-priority claim to payments (and receive lower interest payments) than junior tranches (which receive higher interest payments).

Equity tranches are the riskiest piece of the CLO puzzle. They have no credit ratings, are last in line for payment, and thus are the first to suffer losses if the underlying loan portfolio falters. Though equity tranche investors are simply paid whatever cash is left over after the debt investors have received their interest payments, they typically earn a higher return than debt tranche investors do.

FINRA is not alone.  The Wall Street Journal has also identified these investments as risky and complex.  The Journal points out that the race to provide higher returns has led to an even greater sales of such investments, and that such investments hit a record in 2017.

Unless you are a very sophisticated investor willing to speculate the money invested in CLOs, you should seek legal representation for losses sustained.