Tag Archives: attorney representation

Attention Investors of Mark Solomon

If you were one of the investors of Mark Solomon please call 1-866-817-0201 for a free and confidential consultation.   We believe that Mr. Solomon, whose office is in Wynnewood, Pennsylvania, inappropriately sold real estate investments and that his employer, M Holdings, inappropriately supervised Solomon and allowed the sales to occur.

Invest photo 2From December 16, 2014 through December 29, 2014, on behalf of a commercial real estate limited partnership, Solomon solicited and sold limited partnership interests (the “offering”) to seven investors for a total of $1,400,000.  However, before soliciting and selling interests in the offering on behalf of the commercial real estate limited partnership, Solomon did not provide to M Holdings the notice required. Solomon first provided written notice of his sales activity to M Holdings on August 31, 2015 after responding to inquiries made by a regulator during an examination of M Holdings.

The financial industry regulator, FINRA, brought an action against Solomon for the sales of the investments.  Solomon entered into a settlement where he agreed to a one year suspension from the securities industry.

M Holdings ultimately is responsible for the sale of the investments.  Brokerage firms are responsible for the supervision of the private securities sales of their brokers even when the sales are away from the firm.  FINRA brought action for the inadequate supervision of Solomon by M Holdings.    M Holdings was censured and agreed to pay a $135,000 fine.

 

Fifth Third Annuity Fraud

If you were recommended the purchase or sale of an annuity by Fifth Third you may have been the victim of fraud.  We represent investors nationwide and are available to discuss whether you are a victim and entitled to compensation.  Please call 1-866-817-0201 for a free and confidential consultation.

Invest photo 2The Financial Industry Regulatory Authority (FINRA) in a statement on May 8, 2018 stated that it has fined Fifth Third Securities $4 million and required the firm to pay approximately $2 million in restitution to customers for failure to accurately consider and describe costs and benefits of variable annuity (VA) exchanges, and for recommending exchanges without a reasonable basis to believe they were suitable for customers.  While the FINRA action focused on variable annuities, the exchange or early liquidation of any annuity is possibly a violation.

Variable annuities are complex and expensive investments commonly marketed and sold to retirees or those saving for retirement. Exchanging one annuity with another involves a comparison of the complex features of each security. Accordingly, annuity exchanges are subject to regulatory requirements to ensure that brokers have a reasonable basis to recommend them, and their supervisors have a reasonable basis to approve the sales.  Failure to do so can cost investors hundreds of thousands of dollars and cause the investor savings to become unnecessarily illiquid.

Brokerage firms, like Fifth Third, have been on notice of this problem and other problems with annuities for years.  FINRA has warned of the limited suitability of these investments and that they should only be sold to limited types of investors and has done so more than once..  In fact, variable annuities and variable life insurance is so prone to fraud, FINRA has specific rules concerning these products.

FINRA found that Fifth Third failed to ensure that its registered representatives obtained and assessed accurate information concerning the recommended annuity exchanges. It also found that the firm’s registered representatives and principals were not adequately trained on how to conduct a comparative analysis and truthfully sell the annuities.

As a result, the firm misstated the costs and benefits of exchanges, making the exchange appear more beneficial to the customer. By reviewing a sample of annuity exchanges that the firm approved from 2013 through 2015, FINRA found that Fifth Third misstated or omitted facts relating to the costs or benefits of the annuity recommendation or exchange in approximately 77 percent of the sample.  For example:

  • Fifth Third overstated the total fees of the existing VA or misstated fees associated with various additional optional benefits, known as riders.
  • Fifth Third failed to disclose that the existing VA had an accrued living benefit value, or understated the living benefit value, which the customer would forfeit upon executing the proposed exchange.
  • Fifth Third represented that a proposed VA had a living benefit rider even though the proposed VA did not, in fact, include a living benefit rider.

FINRA found that the firm’s principals ultimately approved approximately 92 percent of VA exchange applications submitted to them for review. However, in light of the firm’s supervisory deficiencies, the firm did not have a reasonable basis to recommend and approve many of these transactions.

In addition, FINRA found that Fifth Third failed to comply with a term of its 2009 settlement with FINRA. In the 2009 action, FINRA found that, from 2004 to 2006, Fifth Third effected 250 unsuitable annuity exchanges and transactions and had inadequate systems and procedures governing its annuity exchange business. For more than four years following the settlement, the firm failed to fully implement an independent consultant’s recommendation that it develop certain surveillance procedures to monitor VA exchanges by individual registered representatives.

As a result, the firm misstated costs and benefits of VA exchanges — and in some cases omitted critical information altogether — making the exchanges appear more beneficial to customers in 77 percent of the exchanges Finra reviewed for the period of 2013 through 2015. For instance, Fifth Third transgressions included telling customers that the new VA contracts being marketed had living rider benefits guaranteeing minimum payments to customers and their beneficiary when none existed, Finra said.

Recovery of Woodbridge Loss

Landmark

Woodbridge investors believed real estate ensured the safety of their investments.

Investors of Woodbridge may have the ability to recover the losses they sustained.  Please call 1-866-817-0201 or 303-300-5022 for a free consultation with a private attorney concerning potential loss recovery.

Regulators have charged the Woodbridge Group of Companies with operating a Ponzi scam.  This creates liability on the part of those advisors selling Woodbridge.

There were glaring issues in these Woodbridge investments for an extended period of time.    These issues should have been discovered during reasonable due diligence by the brokers and agents selling the Woodbridge investments.  These investments should have been recognized as not being suitable for any investor.

The U.S. Securities and Exchange Commission (SEC) had been investigating Woodbridge since 2016.  Woodbridge, the Sherman Oaks, California-based Woodbridge, which calls itself a leading developer of high-end real estate, had been under the microscope of state regulators even longer.   The focus of these regulators was the possible fraudulent sale of securities.

On December 21, 2017,  the SEC charged the Woodbridge Group of Companies with operating a $1.2 billion Ponzi scheme that targeted thousands of investors nationwide.  “The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money,” per Steven Peikin of the SEC.

Prior to the charge, in January 2017, the SEC served a subpoena on Woodbridge for relevant electronic communications.  Woodbridge failed to respond to this subpoena.  This left the SEC to seek court intervention to compel Woodbridge to produce potentially damaging documentation the SEC believes existed.  The SEC filed its allegation that Woodbridge is a Ponzi scheme within weeks of its access to Woodbridge’s documents.

Through court filings, the SEC states that Woodbridge “has raised more than $1 billion from several thousand investors nationwide” and it “may have been or may be, among other things, making false statements of material fact or failing to disclose material facts to investors and others, concerning, among other things, the use of investor funds, the safety of the investments, the profitability of the investments, the sales fees or other costs associated with the purchase of the investments.”

Shortly after the issuance of the order sought by the SEC Woodbridge declared bankruptcy.  This filing does not extinguish the rights of investors.  These investors have claims against the brokers and advisors selling the investments.

Woodbridge has additionally stated that it has also received inquiries from about 25 state securities regulators concerning the alleged offer and sale of unregistered securities by unregistered agents.

The Woodbridge Group of Companies missed payments on notes sold to investors the week of November 26, 2017, and December 5, 2017 filed chapter 11 bankruptcy.  The company blamed rising legal and compliance costs for its problems.

Woodbridge said it had settled three of the state inquiries and was in advanced talks with authorities in Arizona, Colorado, Idaho and Michigan when it filed for Chapter 11 protection.

The company’s CEO, Robert Shapiro, resigned on December 2  but will continue to be paid a monthly fee of $175,000 for work as a consultant to the firm.

On August 14, 2018, Jerry Raines of HD Vest Investments entered into a regulatory settlement whereby he agreed to a bar from the securities industry to resolve the investigation into his sale of Woodbridge notes.  Raines operated from Kilgore, Texas.  Likewise, Donna Lynn Barnard, agreed to a similar sanction.

Those at Woodbridge are not the only ones responsible for investor losses.  The Colorado Division of Securities is considering sanctions against investment advisor Ronald Caskey of Firestone, Colorado.  Caskey is the host of the Ron Caskey Radio Show.  James Campbell of Campbell Financial Group in Woodland Park, Colorado and Timothy McGuire of Highlands Ranch, Colorado are also the subject of regulatory investigations by the state regulator.  The Colorado Division of Securities has also begun investigating Jerry Kagarise of Security 1st Financial of Colorado Springs.  Another seller of Woodbridge in the Springs area is Carrier Financial.

These and other Colorado investment advisors have raised approximately $57 million from 450 Colorado investors.  Woodbridge continued to solicit investors through these advisors, in addition to radio and online ads, through October 2017, just prior to the bankruptcy filing.

While the regulatory actions will do little to compensate the damaged investors, these actions support private civil actions for recovery by investors.  We are investigating and in the process of bringing suit against Colorado investment advisors selling Woodbridge investments, and would like to share what we have learned with other investors in Colorado and nationwide.

Rueters is the source of some of the information contained herein.

Todd Jones of J.P. Morgan investment fraud

If you have suffered investment losses while investing with J.P. Morgan financial advisor Todd Jones, you may be entitled to a recovery.  Mr. Jones has recently been accused of committing fraud in a large number of his investors’ accounts.  Call 1-866-817-0201 for a free and confidential consultation.

Invest photo 2The regulatory action was initiated by FINRA concerning unauthorized trades by Jones in certain high risk investments.  The FINRA regulatory settlement identifies that in July 2015, while registered with J.P. Morgan, Jones made trades in his investors’ accounts without permission in the accounts of 12 firm customers and mismarked most of the trades as “unsolicited,” which means that the trade was made at the request of the investor.

While many investors believe that their financial advisor or stock broker can make trades as he/she sees fit, regulations require that there must actually be verbal authority from the account owner contemporaneous to the trade.  Absent such verbal authorization, there must written authority.

On July 6 and 7, 2015, Jones exercised discretion to purchase a total of $208,714 of VelocityShares 3x Long Crude Oil (UWTI) in the accounts of 12 firm clients. This investment was not only unauthorized, the investment was also a very risky investment that is designed to multiply the gains or losses of the underlying holdings by three.

None of the 12 clients, had provided Jones with written permission to exercise such trades in their brokerage accounts.  Regulatory rules provides in relevant part that, “No… registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member . . .” .

The trades likely enriched Jones by thousands of dollars while putting his clients in financial jeopardy.

Though Jones appears to be out of the securities industry, FINRA impose a fine and a four-month suspension.  Jones neither confessed or denied the allegations.

 

Losses with Larry Charles Wolfe

Jeffrey Pederson PC assists investors in recovering losses such as those incurred as the result of the misdeeds of brokers, such as the alleged misdeeds of Larry Charles Wolfe.  Currently with Stoever, Glass & Co., Wolfe was previously with Aegis Capital Corp., and Herbert J. Sims & Co. Those suffering losses with this broker are likely entitled to recovery from either Wolfe or his employer.  Call 1-866-817-0201 for a free and confidential consultation.

Invest photo 2FINRA has announced that it has entered into a settlement with Larry Charles Wolfe for making unauthorized transactions in his clients’ accounts.  The allegations are that between November 10, 2015 and November 16,2015, Wolfe inappropriately exercised discretion in the accounts of 39 investors without obtaining prior written authorization from the customers or written approval of the accounts as discretionary from his employing member firm, in violation of numerous state and federal securities laws.

A securities broker must obtain authorization from an investor prior to making a securities transaction in the investor’s account unless that broker has written authorization to make such a trade.

Additionally, MSRB Rule G-17 and FINRA rules require that each broker or dealer in municipal securities to deal fairly with customers and prohibits registered representatives from engaging “in any deceptive, dishonest, or unfair practice.”

The trades are believed to involve municipal bonds and other securities.

In addition to this regulatory action, Wolfe has been sued by investors at least ten (10) times, primarily for allegations of unauthorized, excessive, or unsuitable trades.  Additionally, at least two (2) other investors have threatened suit.  Despite Mr. Wolfe being accused of wide-scale fraud he has not yet lost his license and is still working in the securities industry.

 

Investigation of Harold Stephen Pomeranz

Invest photo 2Harold Stephen Pomeranz of Stifel Nicolaus of New York entered into a regulatory settlement with FINRA regulators to settle charges against him.  Though Pomeranz neither admitted or denied fault, FINRA asserted the following factual findings and assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for three months.

Pomeranz consented to the sanctions and to the entry of findings that he
recommended a number of unsuitable short-term unit investment trust (UIT) transactions
in an elderly customer’s account. The findings stated that the UITs Pomeranz recommended
to the customer had maturity dates of 24 months, and carried initial sales charges ranging
from approximately 2.5 percent to 3.95 percent. Yet the average holding period for the UITs Pomeranz recommended was less than 14 months. Moreover, on numerous occasions,
Pomeranz recommended that the customer use the proceeds from the short-term sale
of a UIT to purchase another UIT with similar or even identical investment objectives.
Pomeranz’s recommendations to purchase and sell UITs on a short-term basis caused the
customer to incur unnecessary sales charges and were unsuitable in view of the frequency,
size and cost of the transactions.

Securities brokers are not allowed to charge commissions and costs that are excessive in relation to the average equity in the portfolio.  So when a broker makes trades in products that have costs of 3 to 4% it only takes a few before those trades become excessive and in violation of the duties owed the investor.

Attention Investors of Voigt Cullen Kempson III

Pederson, PC is investigating the actions of V. Cullen Kempson III currently of American Portfolios and previously of Commonwealth Financial Network.   Kempson has previously settled charges of unauthorized trading in the account of a deceased investor and is currently facing felony weapons charges.  To speak to an attorney for a free and confidential consultation please call 1-866-817-0201.  

A recent settlement agreement Kempson enter into with FINRA regulators agrees to the 30-day suspension for making a large number of unauthorized trades in the account of an investor Kempson knew was deceased.  In the agreement, referred to as an AWC, Kempson neither admits nor denies fault.

The alleged facts are that in February 2007, A Kempson investor opened two investment Invest photo 2advisory accounts with Kempson at the Firm. At the time, the investor signed an agreement with the Firm granting Kempson discretionary trading authority, the ability to make securities trades without first contacting the investor.  A broker must contact an investor prior to the making of trades unless the broker has been granted authority by the investor in writing to make trades in an account.

On June 13, 2015, the investor passed away. Although Kempson was aware of the investor’s death since at least June 29,2015, Kempson did not inform his Firm of the investor’s death and continued to effect trades on a discretionary basis in the accounts.

Between June 29,2015 and April 5, 2016, Kempson effected a total of 40 trades in the deceased individual’s accounts.  FINRA Rule 2010 requires members to observe high standards of commercial honor and just and equitable principles of trade. After the investor passed away, Kempson had no written authority to conduct any trades in the investor’s accounts. FINRA charged that, by effecting 40 trades in a deceased customer’s accounts, Kempson violated FINRA Rule 2010.

Additionally, in February 2017, Kempson was charged on felony weapons charges for the unlawful possession of a weapon.  As stated in his CRD, he case is in front of the New Jersey Superior Court in Essex Vincinage.  He has asserted that he is not guilty.

Investment Professionals, Inc. (IPI)

If you have suffered investment losses with Investment Professionals, Inc. (IPI) and believe that it may be due to mismanagement, please call 1-866-817-0201 for a free and confidential attorney consultation.

Invest photo 2IPI has recently agreed to pay a fine to the Massachusetts Attorney General for violations of the suitability rule.  This rule requires a financial adviser to not recommend investments that are of a higher risk than an investor either wants or is financially able to take.  The allegations were that IPI was recommending risky investments to seniors who could not afford to take such risks. Though the action was brought by Massachusetts, the systemic nature is a good indication that such violations are occurring in other states as well.

IPI’s business model is based upon partnering with community banks so that the bank’s existing depository customers can be used to provide revenue to IPI and additional revenue to the bank. Though IPI is based in San Antonio, Texas, it engages in such partnerships around the country.

Networking agreements between IPI and their bank partners reveal a referral program where bank employees of its partner banks refer bank customers to IPI financial advisers for monetary incentives. In exchange for allowing IPI representatives convenient access to bank customers, IPI’ s bank partners receive “rent,” or commonly referred as a kickback, which is a percentage of the sales that IPI representatives earn from selling products at bank branches.

While IPI and their bank partners profit from their networking arrangements, the pervasive sales culture emphasizing and rewarding the volume of production at the expense of compliance with policies and procedures, suitability, and oversight means that certain senior citizen bank customers have been harmed .

As identified in the regulatory complaint, IPI has partnered with the following. banks and credit union in Massachusetts: Eastern Bank, Mutual Bank, East Boston Savings Bank, Edgartown National Bank, The Cooperative Bank, and Homefield Credit Union.  Between January 2014 and June 2016, the top ten IPI representatives working out of Massachusetts community banks received approximately 2,208 customer referals. Approximately forty-five percent ( 45%) of these bank referrals to IPI financial were referrals of semor citizens, those individuals aged 65 or older. Approximately fourteen percent (14 %) of those referred invested in market-linked certificates of deposit (“MLCDs”) and approximately thirty-nine percent (39%) invested in annuities. Eastern Bank, is IPI’s largest partner in Massachusetts. Eight of the top ten highest producing IPI representatives in the stat work at Eastern Bank branches.

IPI’s aggressive sales contests exist against a backdrop of lax supervision from offices located in Texas and Kentucky that management personal at IPI identified as “not adequate.” Although IPI’s own policies and procedures prohibit “activities that are designed to reward sales for a particular financial product or family of products” and prohibit activities that “would only serve as a luxury” to representatives, in 2016 IPI rewarded the top ten percent of the previous year’s highest-producing representatives with a trip to Turks and Caicos. In 2015, IPI held a sales contest approved by IPI’ s President and CEO whereby representatives who achieved sales of products up to $150,000.  This served as motivation to put seniors in inappropriate investments.

Kris Etter of IMS Securities

If you have suffered investment losses with Kris Etter of IMS Securities, particularly if you suffered losses in UDF, please call 1-866-817-0201 for a free consultation with an attorney.  We have suit filed against IMS and are currently investigating whether other claims may exist.

It is believed that Etter had an undisclosed conflict of interest in his recommendations of UDF.  Upon information and belief, Mr. Kris Etter sold a substantial amount of UDF to his clients and is the son of Todd Etter.  Todd Etter is the Chairman of UDF IV, one of the top officers of the company.  Mr. Todd Etter also serves as Chairman of the general partner of UDF I and UDF II and Executive Vice President of the general partner of UDF III.  This creates a substantial conflict of interest in UDF recommendations by Kris Etter.

Kris Etter and IMS also failed to properly investigate UDF before recommending it, likely because of the Etter conflict and the heightened commission paid by UDF.  IMS is one of the top four leading sellers of UDF IV in the United States.

The bottom fell out for UDF when it was revealed in December 2015 to be a Ponzi scheme. The offices were raided by the FBI, received a Wells notice, unable to release quarterly reports and was ultimately delisted for a time. Reasonable investigation into the investment of other financial firms revealed that the illegitimacy of the investment. Had IMS done sufficient due diligence it would have likewise discovered that the investment was not suitable for any investor. Instead, IMS and Etter turned a blind eye to the problems of UDF and instead focused on the profits that it was receiving from this high commission product.

The individual ultimately in charge of all IMS offices is the CEO of IMS, Jackie Wadsworth.  Ms. Wadsworth has seven customer complaints naming her for insufficient supervision of representatives under her oversight. These complaints largely concern the inappropriate recommendation by her representatives of unsuitable variable annuity and REIT investments, just like the investments sold clients of Kris Etter and IMS.

As reported in Investmentnews.com in August 2016, the balance sheet of IMS is tilted heavily toward high-commission products like variable annuities and non-traded REITs. Approximately 86% of its revenue of IMS in 2015 came from commissions from such products.

Charles Lee Deremo

Cadaret, Grant & Co., Inc. of Syracuse, New York and Stockbroker Charles Lee Deremo of Apple Valley, Minnesota submitted a Letter of Acceptance, Waiver and Consent.

If you invested with either Cadaret or Deremo, please call 1-866-817-0201 for a free consultation with an attorney.

Cadaret was censured and fined $10,000 and Deremo was fined of $5,000,
suspended from association with any FINRA member, which is any stockbrokerage or financial advisory firm, in any capacity for 10 business days.

The firm and Deremo consented to the sanctions and to the entry of findings that the firm failed to enforce its own procedures and conduct an adequate suitability review of Deremo’s recommended investment strategy for a customer.  This is in violation of FINRA rules that require a brokerage firm to review recommendations of brokers to verify that the recommendations are suitable.

The findings, which were neither admitted nor denied, stated that the firm failed to identify that Deremo’s basis for the recommendation of a strategy for the customer may not have been suitable given the customer’s age, his investment objectives, his risk tolerance and the concentration of his investment. Moreover, the customer relied on monthly withdrawals from his variable annuity for living expenses.

The regulatory document giving more details of the underlying facts can be found with the following link.

If you believe you were also sold unsuitable securities, please call the number above for a free consultation on your legal rights and whether you have grounds for recovery.  Regulatory actions such as this can often expose the basis for additional private actions.