Tag Archives: attorney

Recovering Woodbridge Losses of Peter Holler

If you were an investor with Peter Holler and invested in Woodbridge notes, please call 1-866-817-0201 about options to recover losses.

We believe Holler and his employer have the bulk of responsibility for these losses.  During the relevant period when Holler sold Woodbridge, which coincides with his time working for Securities Services Network (SSN), Holler solicited investors to purchase promissory notes in Woodbridge Mortgage Investment Funds, a purported real-estate investment fund. Ultimately, Holler sold approximately $1.39 million in Woodbridge notes to 19 individuals, nine of whom were SSN customers. He received $49,790 in commission in connection with these transactions.

Woodbridge has been identified as a $1.2 billion Ponzi scheme by the Securities and Exchange Commission (SEC ).  The allegations are that Woodbridge gave notes to investors for funds to be used as hard money loans to be used in the development of real property.  Instead the funds were co-mingled by Woodbridge and used to pay earlier investors.   Woodbridge became insolvent shortly after the SEC brought its action.

LandmarkRecovery from the Woodbridge bankruptcy may be difficult.  Woodbridge and its subsidiaries are in bankruptcy proceedings in federal court in Delaware.  The Woodbridge notes were largely unsecured despite assertions to the contrary by those soliciting the notes.  As a general rule, bankruptcy are where unsolicited claims are extinguished.  Holler and SSN had a duty to know these facts prior to investing an investors and disclosing to the investors this incredibly high risk of loss.

These Woodbridge investments were not properly reported to his employer and his employer either turned a blind eye or failed to do the requisite supervision to monitor against such outside business activity.  As a result, the investments were sold though they were not suitable to be sold to any investor.  This creates potential liability on the part of both Holler and SSN.

The regulator FINRA brought an action against Holler for his sale of Woodbridge.  This regulatory action echos the concern that the Woodbridge investments and their sale were not appropriately vetted.

FINRA rules state, “prior to participating in a private securities transaction, [a broker] shall provide written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction.” FINRA Rule 3280(e) defines a private securities transaction as any securities transaction outside the regular course or scope of an associated person’s employment with a member. FIN RA Rule 20 I 0 requires associated persons, in the conduct or their business, to observe high standards of commercial honor and just and equitable principles of trade.

The record  of Holler indicates that he and his former employer, Securities Services Network, currently facing two investor suits over the sale of Woodbridge notes.   Both suits suits were filed subsequent to the bankruptcy of Woodbridge in December 2017.

Securities Services Network previously terminated Holler in August 2017 for the sale of Woodbridge notes.  BrokerCheck identifies that Holler was terminated because the Woodbridge sales were unapproved by the firm.  Despite this, Securities Services Network

We represent a number of investors across the country in obtaining recovery of Woodbridge losses.  Please call for a free consultation.

 

 

Losses in Inverse VIX ETNs and ETFs

NYSE pic 1

Investments connected to the VIX index were known to be highly speculative.

We are a firm that specializes in investor loss recovery.  Investors of Inverse VIX Exchange Traded Notes (ETNs) and Inverse VIX Exchange Traded Funds (ETFs), including VelocityShares Daily Inverse VIX Short-Terms ETN (XIV), the ProShares Short VIX Short-Term Futures ETF (SVXY), and the LJM Partners’ Preservation and Growth fund (LJMIX and LJMAX) may have grounds for the recovery of their losses.

If you were sold an Inverse VIX ETN please call 1-866-817-0201 for a free and confidential consultation with an attorney.

These investments were suitable for very few investors.   The sale of unsuitable investments is a form of negligence and possibly fraud.   These investments carry such a high level of risk and are so complicated that they were likely not suitable for any retail (non-institutional) investor.   “Unless you were a hedge fund manager you should not have been sold these funds.” If you were recommended such investments as part of a retirement savings portfolio you have grounds to recover your losses.  The makers of these funds have acknowledged that the fund was for hedge fund managers only, and not individual investors.

Starting on February 2 and continuing through February 6, investors saw portfolios implode due to investments in obscure products that tracked market volatility.  Such investments tracked the VIX index.  The VIX index is a complicated monitor of investment market volatility or “investor fear.”  An “inverse VIX” investment is an investment that benefits from stable markets but loses value quickly in times of volatility.  The losses in the inverse VIX investments mounted quickly until NASDAQ halted the trading of these investments on February 6, with some suffering losses of almost all value in just a few days.

For example, VelocityShares XIV plummeted 80 percent in extended trading on February 5, 2018.  This is a security issued by Credit Suisse this tracks the inverse of the VIX index tracking market volatility.  As the market rose and sank the value of XIV dropped sharply.  Such sudden drops have a cascading impact that can lead to margin calls and other losses.

Of particular concern, though any sale of such an investment to a retail investor is concerning, are investors who purchased such shares through the following brokerage firms:  Credit Suisse, Fidelity, Merrill Lynch, and Wells Fargo.

The dramatic losses was foreseeable to securities brokerages, often referred to as securities “broker-dealers.”  The regulator that oversees broker-dealers, FINRA, the Financial Industry Regulatory Authority, issued its latest warning in a string of warnings on October 2017 to broker-dealers about VIX and inverse VIX investments.  FINRA identified such investments speculative and warned the “major losses” could result from such investments from a failure to understand how such investments work.  For example, many are short-term trading vehicles that can degrade over time.

FINRA also warned all financial advisers that VIX ETNs may be unsuitable for non-institutional investors and any investor looking to hold investment as opposed to actively trading the investment.   While this warning occurred in October 2017, similar warnings were issued in 2012.  That same month, FINRA fined Wells Fargo for unsuitable recommendations of similar volatility investingstockphoto 1funds.

FINRA stated in 2012 in a Regulatory Notice, RN 12-03, that heightened supervision is required of any broker who sells such complex investments, and specifically identified the need for brokerage firms to oversee any recommendation of an investment based upon the VIX.

While all short VIX trading is suspect and potentially recoverable, the following investments are of particular concern:  XIV, SVXY, VMIN, EXIV, IVOP, LJMIX, LJMAX, XXV, and ZIV.

FINRA is conducting sweep investigations of all brokerages that sold any and all of these investments to retail investors.  ‘The sweep is part of Finra’s continuing focus on the suitability of sales of complex products, including leveraged and volatile products, to retail customers,’ stated FINRA.

In addition to suitability, there is also concern that due diligence by these brokerages should have revealed that the index was subject to manipulation.  This was recently reported by the Financial Times of London.  A scholarly report from researches at the University of Texas in 2017 identified the mechanism for manipulating the VIX.  FT reports that the Securities and Exchange Commission is currently investigating such allegations.

Investors suffering losses in such investments may have valid claims despite the warnings contained in the prospectus.  These investments should not have been offered to any retail investors.

PedersonLaw has represented investors in similar actions in most of the 50 states either directly or pro hac vice.

Vincent Sciabica Investors

Investors of Vincent Sciabica may have recourse for their losses.  A recent regulatory action has revealed wide-spread negligence and possibly fraud in the accounts Sciabica’s investors.  If you are such an investor please call 1-866-817-0201 for a free and confidential consultation.

Regulators allege that during the period he was employed by Morgan Stanley, Vincent Sciabica engaged in an unsuitable pattern of short-term trading of UITs in approximately 360 customer accounts.  Sciabica entered into a settlement with regulators where he did not deny or confirm these allegations.

UlTs are investment companies that offer shares of a fixed portfolio of securities in a one-time public offering, and terminate on a specified maturity date. As such, they are not designed to be used as trading vehicles. In addition, UlTs typically carry significant upfront charges, and as with mutual funds that carry front-end sales charges, short-term trading of UITs is generally improper.  Trading of these investments is unwise because of the cost, but can unreasonably enrich the broker who recommends such a strategy.

During the period when he was employed by Morgan Stanley, in connection with these customer accounts, Sciabica repeatedly recommended that the customers purchase UlTs and then sell these products before their maturity dates. The majority of the UlTs that Sciabica recommended had maturity dates of at least 24 months and carried sales charges. Nevertheless, Sciabica continually recommended that his customers sell their UIT positions less than a year after purchase.

In addition, on more than 1,000 occasions, Sciabica recommended that his customers use the proceeds from the short-term sale of a UIT to purchase another UIT with similar investment objectives. Sciabica’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.

Sciabica left his employ with Morgan Stanley in 2014 while Morgan Stanley was investigating this wrongdoing.  The investigation of the Financial Industry Regulatory Authority (FINRA) began in November 2017.

 

Loss Recovery from H. Beck

Investors with H. Beck may have grounds for recovery for investment losses in ETFs and other investments.

H. Beck recently consented to a settlement with regulators.  The settlement stated that from at least July 2008 until June 2013, H. Beck failed to properly supervise the sale of nontraditional ETFs and failed to properly supervise the recommendations made by its financial advisors. As a result, H. Beck violated NASD Rules 2310, 3010(a) through (b), and 2110, and FINRA Rules 2111, 3110(a)-(b), and 2010.

Between 2008 and 2011, H. Beck’s financial advisor James Dresselaers recommended to the Firm’s customer, EB, investments in several nontraditional exchange-traded funds (“ETFs”) and stocks issued by companies in the metals and mining sector. These recommendations were unsuitable for EB, a professional athlete with no investment experience, a moderate risk tolerance, and an investment objective of long-term growth. EB suffered losses of more than $1.1 million on these investments.

NASD Rule 3010(a)-(b) and FINRA Rule 3110(a)-(b) require every investment brokerage to establish and maintain a system and procedures to supervise the activities of its financial advisors that is reasonably designed to achieve compliance with securities laws and regulations and applicable NASD/FINRA rules.

FINRA rules require that financial advisors only recommend investments to suitable investors.  So if an investment poses too much risk, or possesses other characteristics that are inconsistent with the wants and needs of the investor, it is a violation to recommend that investment to such an investor.  This is commonly referred to as a “suitability” violation.

This is not the first time H. Beck has been penalized by regulators over non-traditional investments.  In March 2015, H. Beck was censured and fined $425,000 for failing to properly supervise the sale of unit investment trusts (UITs), failing to properly supervise the preparation of account reports sent to investors, and failing to enforce its own written supervisory procedures relating to financial advisors’ outside email accounts, which is a significant protection against fraud. Dresselaers also has a history of customer disputes.   This is concerning since Dresselaers is listed as the top executive at H. Beck.

Such regulatory findings and prior disputes evidence wide-spread supervisory problems at H. Beck and support private claims by investors.

Illinois/Chicago Muni Bond Loss Recovery

Jeffrey Pederson is licensed in the federal courts for the Northern and Central Districts of Illinois, and has aided investors nationwide in the recovery of investment losses, such as muni bond losses.  Please call 1-866-817-0201 for a free and confidential consultation with an attorney.  We are currently investigating the potential recovery for losses in muni bonds issued by both Illinois and Chicago.

The risks of these bonds were foreseeable for years.  Financial professionals have a duty to only recommend investments that are consistent with the level of risk the investor both wants and can withstand.  Those either looking for retirement income or non-speculative investments may possibly have a claim if recommended either the Illinois or Chicago bonds.

Illinois bonds have long been at risk since the state has not had an approved budget in over two years.  The state currently has over $14 billion in unpaid bills.  This comes in the wake of similar financial problems in the territory of Puerto Rico.  In Puerto Rico, financial problems led to bankruptcy and caused thousands of investors to lose their life savings when they were led to believe that they were invested in “safe” municipal bonds.

Chicago is also on the verge of bankruptcy.  For years, the return on Chicago bonds were known to be too good to be true.  In 2014, the city’s debt was downgraded to junk status given the massive debts owed to four of its pension funds. This led to a widespread selloff in Chicago muni bonds.

Chicago Mayor Rahm Emanuel, in response, instituted a record property tax increase for city residents. Bills in 2016 will be, on average, 13% higher. The increased ‘revenue’ to the city is being used to help fix the four pension funds’ large underfunded status.

The Mayor’s plan to fix the $20 billion public pension shortfall was ruled unconstitutional. The restructuring plan was passed by the state legislature in 2014, but was struck down due to the state’s constitution, which has a clause that forbids the reduction of public pensions.

David Lerner Associates REIT Investigation

David Lerner Associates agreed to pay a $650,000 fine for the sale of unsuitable REITs to its investors and other violations.  Very little of the fine will compensate investors for their losses.  Instead, investors suffering losses contact a private attorney.  For a free, confidential consultation, investors can call Jeffrey Pederson at 1-866-817-0201.

LandmarkThe non-traded REITs at issue in the regulatory action were REITs now known as Apple Hospitality REIT investments.  The offerings included are Apple 7, Apple 8 and Apple 9.

Suitability violations are for the recommending of investments that are too risky, complicated or volatile for an investor considering the investors objectives, risk tolerance and investment sophistication.  Non-traded REITs such as Apple are generally only suitable for only a limited slice of the investing public.  Investors, including those looking for either stability, income, low risk, preservation of capital or liquidity from this investment, were likely inappropriately sold this investment.

The agreement to settle the charges was in the form of a consent order entered into with New Jersey regulators.  Of the fine, $100,000 went to pay for costs and $50,000 was to pay for investor education programs.

More information on the fine and the regulatory action can be found at the following link.

Investigation – K.C. Ward, Craig David Dima

FINRA barred former K.C. Ward Financial registered representative Craig David Dima
for making unauthorized and unsuitable trades totaling approximately $15 million in a
73-year-old retiree’s account, and for misrepresenting the reasons for the trades to the
customer.  This was announced in FINRA’s May Disciplinary Report.

NYSE pic 1Susan Schroeder, FINRA Acting Head of Enforcement, said, “There is no place in this industry
for brokers who take advantage of elderly customers. Protecting senior investors from
predatory behavior such as unsuitable and unauthorized trading is part of our core mission
and will always be a priority for FINRA.”

FINRA found that on 11 occasions, Dima sold virtually all of the customer’s Colgate-
Palmolive stock, accumulated over 28 years of employment at the company, without the
customer’s permission. In fact, Dima sold the customer’s shares even after the customer
told Dima not to sell the stock, which she considered a valuable long-term investment
and reliable source of dividends.

When confronted by the customer about the sales, Dima misrepresented to her that they were caused by a “computer glitch” or a technical error. In connection with Dima’s unauthorized sales and subsequent repurchases of Colgate stock, Dima charged the customer more than $375,000 in mark-ups, mark-downs and fees and deprived the customer of substantial dividends had she held the Colgate shares as intended.

FINRA also found that Dima’s trading of the customer’s Colgate shares was unsuitable and
violated FINRA rules prohibiting excessive mark-ups and mark-downs.

Robert “Rusty” Tweed

Jeffrey Pederson PC is interested in speaking to investors of Robert “Rusty” Tweed as part of an investigation into the broker.  Tweed was previously with Cabot Lodge, Concorde Investment Services, and MAM Securities.  Please call 1-866-817-0201 for a free and private consultation with an attorney.  Many issues which may entitle investors to recovery against Tweed’s former employers, have been brought to light by a recent FINRA complaint against Rusty Tweed.  However, time is running on the ability to recover.

FINRA alleges in a complaint that between November 2009 and March 2010, Rusty Tweed obtained more than $ 1.6 million from his retail customers through a false and misleading private placement memorandum (“PPM”) he used to offer and sell interests in his Athenian Fund LP, a pooled investment fund that he both created and controlled.

Tweed drafted and circulated the private placement memo (PPM), a document that is supposed to provide investors with significant information to evaluate the investment, that misrepresented and failed to disclose material information to investors, and twenty three customers invested in the Fund without the benefit of complete and accurate information.

The misrepresentations included: (1) the total potential fees and costs associated with the Fund; (2) Tweed himself; and (3) the entities and individual who would ultimately have immediate control over the money that customers invested.

According to the Complaint, Tweed and the PPM misrepresented or failed to disclose to retail customers the following material facts:

a. First. Tweed and the PPM misrepresented the total potential costs of an investment in the Athenian Fund. opting to disclose certain costs and fees while oniitting others that would reduce any return on investment.

b. Second, Tweed and the PPM also failed to disclose that the omitted fees and costs were added only after Tweed discovered that arbitration (complaints) against him would prohibit him from opening a trading account for the Fund directly and require the use of a more expensive master fund structure.

c. Third, Tweed and the PPM failed to disclose that Tweed had replaced the Fund’s identified master fund with another entity controlled by an undisclosed person (ER). who would now have immediate control over the Fund’s assets. Tweed and the PPM likewise provided no information sufficient for investors to evaluate the risk ofentrusting their capital to ER and his company, such as relevant background. other business activities, and qualifications.

d. Fourth, Tweed and the PPM failed to disclose the additional management fees and perforniance allocations that arose when he granted control to ER and his management company, and Tweed’s own interest in those fees, which would further reduce any return on the retail investors’ capital.

As a result of these material misrepresentations and omissions. Athenian Fund investors could not evaluate the true costs and risks associated with the Fund, including those relating to the individual or the entities with immediate control over their capital.

 

Anne Marie Comcowich Loss Recovery

Anne Marie Comcowich, a Scranton, Pennsylvania area securities broker, has agreed to a sanction to resolve a FINRA investigation.  The underlying investigation concerned the unauthorized withdraw of funds, theft, from investor accounts.  Ms. Comcowich was previously with Prudential.

In 2017, while being investigated in connection with unauthorized withdrawals, Comcowich, through her lawyer, informed FINRA staff that she would not produce information and documents requested pursuant to FINRA Rule 8210. Comcowich thereby violated FINRA Rules 8210 and 2010.

By failing to participate in the regulatory action, Comcowhich received a bar from FINRA which Bull pictureprohibits her from working with any other securities brokerage.

Details of the FINRA action can be found in its AWC.  In the AWC, Comcowich neither admits nor denies the allegations.

Comcowich was suspected of processing 13 unauthorized withdrawals from customer accounts. In an email and follow up telephone call with FINRA staff on April 3, 2017, and by this agreement, Comcowich acknowledges that she received FINRA’s requests and will not produce the information and documents requested.  The actions of Comcowich are in violation FINRA Rule 2010 provides that “[a] member in the conduct of its business shall observe high standards of commercial honor and just and equitable principles of trade.” A violation of FINRA Rule 8210 is also a violation of FINRA Rule 2010.

Jeffrey Pederson is an attorney who has represented investors similarly victimized.  A limited number of attorneys have such experience in front of FINRA, where such cases would need to be brought.  Please call for a free and confidential consultation.

 

Invement losses with John Blakezuniga

John Blakezuniga, formerly of Vanguard Capital, recently entered into a settlement agreement with FINRA regulators, where he agreed to a fine but did not admit or deny fault, concerning alleged fraudulent activity in the portfolios of his investors.  Blakezuniga sometimes goes by the name of John Blake, sometimes by the name John Zuniga, and sometimes by John Blake-Zuniga.

Jeffrey Pederson, PC helps investors recover such losses.  For a free and confidential consultation with a lawyer, please call 1-866-817-0201.

As identified in the FINRA regulatory settlement, referred to as an AWC, between 2007 and 2013, Blakezuniga borrowed $775,000 (which he has not fully repaid) from two firm customers Invest photo 2in violation of the firm’s policy. As a result, Blakezuniga violated NASD Rules 2370 and 21 10 and FINRA Rules 3240 and 2010.

Blakezuniga separately violated FINRA Rule 2010 by falsely answering “no” to a question on the firm’s 2013 annual compliance questionnaire that asked if he had ever borrowed money from a customer.

In addition, from 2010 to 2014, Blakezuniga recommended approximately 1,280 transactions in inverse and inverse leveragedExchange Traded Funds (“nontraditional ETFs”) in 85 customer accounts without a reasonable basis for the recommendations. By doing so, Blakezuniga violated NASD Rule 2310 and FINRA Rules 2111 and 2010.

Borrowing funds from an investor/customer is fraudulent because of the discrepancy in the bargaining power between broker and investor.  The prohibition is codified in NASD and FINRA rules.  NASD Rule 2370 and FINRA Rule 3240′ generally prohibit registered representatives from borrowing money from any customer subject to limited exceptions and in accordance with firm procedures.

Likewise, lacking a reasonable basis for the recommendation of an investment is violative. NASD Rule 2310 and FINRA Rule 21113 require registered representatives to have reasonable grounds for believing that a recommendation is suitable for a customer based upon the customer’s disclosed security holdings and financial situation and needs. A violation ofthese rules also constitutes a violation of FINRA Rule 2010.