Tag Archives: Broker fraud

Dennis Allen Hayes Investors

Investors of Dennis Allen Hayes, recently with Newbridge Securities Corp., should call 1-866-817-0201 for a free and confidential consultation.

In January 2019, the Financial Industry Regulatory Authority (FINRA), the self-regulatory organization policing securities brokerages and brokers, filed suit against Hayes.  That complaint stated Hayes engaged in prolonged fraud in the handling of investor accounts.  In particular, he sold investments that were not approved by his employer and that were not legitimate investments.  Such an action is commonly referred to as “selling away.”

Between March 2010 and June 2016 (the “Selling Away Period”), while he was associated with Newbridge Securities Corporation (BD No. 104065) (“Newbridge” or the “Firm”), Dennis Allen Hayes (“Hayes”) recommended that nine investors, eight of whom were Newbridge customers, invest a total of $2.7 million in five companies. Hayes did not provide any written or any other notification to Newbridge regarding his participation in these private securities transactions. The investors suffered losses of at least $2.3 million, after one of the companies filed for bankruptcy and the other companies ceased operations.

In addition, from June 2011 through June 2016, Hayes used two personal email accounts of his to communicate with four customers about their Firm accounts. Hayes also communicated via text message with one Firm customer about her Firm account between November 2015 and June 2016. The use of private email and text messaging is a common mechanism to perpetrate fraud because it is generally done with the intent of hiding the communications from an employer.

On September 16, 2016, Hayes was permitted to resign because, “first, the Firm has an open internal review regarding a customer complaint that evolved into a[n] arbitration for possible selling away and private securities transactions [and] second [Hayes] had little or no production [other than fraud] in the last 12 months”.

Upon Hayes’ recommendation and with Hayes’ assistance, nine investors purchased securities issued by five privately-held companies without Hayes’ employer’s knowledge. Eight of the investors were customers of Newbridge.

The securities Hayes sold were promissory notes issued by MSLLC and IRLLC, common stock and promissory notes of BTInc, common stock and promissory notes of KIInc (a successor of BTInc) and common stock of FXInc.

The owner of the five companies was a family friend of Hayes’.

These investments are currently lost, but investors have recourse.  The employer of Hayes, Newbridge, had a duty to oversee the transactions of Hayes and to supervise against the sale of investments that Newibridge had not researched or approved.

Sean Kelly Theft

If you were an investor of Sean Kelly, previously of Center Street Securities, Capital Financial Services, and Lion’s Share Financial, please call 1-866-817-0201.  We are currently investigating his theft of investor funds.

Kelly, a Georgia stock broker, is facing criminal and SEC charges alleging that he stole at least $1 million from a dozen clients.  These clients include elderly widows and military veterans.  Kelly stole their savings and used the money for luxuries including Super Bowl tickets and vacations.

Sean Kelly, 49, of Marietta, Ga., and a stockbroker for Center Street Securities Inc., also is accused of falsely presenting himself to clients as both a brokerage firm and an investment advisor, according to the U.S. Securities and Exchange Administration.

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

The financial fraud of Kelly should have been foreseen by his employers.  The record of Kelly shows a broker with significant financial problems.  He has a history of multiple tax liens, a bankruptcy, and what is described as a “continuation of a prior bankruptcy.”

The U.S. Attorney’s Office for the Northern District of Georgia has filed criminal charges against Kelly and placed him under arrest, according to the SEC.

The SEC Complaint indicates that the fraud was fairly simple.  Kelly would have his clients make checks out to Lion’s Share.  The Complaint goes on state that Kelly used Lion’s Share as “his personal piggy bank.”

There has also been a temporary restraining order entered.  Such an order freezes the assets of Kelly.

Kelly, who has been a stockbroker for about 18 years, has been stealing money from clients since at least 2014, using recruiting techniques such as offering free tax preparation services for veterans and holding free retirement planning seminars in assisted living facilities, according to the SEC.

The theft could be well-above the $1 million currently estimated.   The number is reliant upon the documents the SEC has been able to obtain from the investigation of Kelly.  There are likely many more investors who will need to bring actions on their own to obtain recovery of their losses.

Brokerage firms have a duty to investigate and monitor outside business activities such as the activities of Kelly.  Further, FINRA requires securities brokerages to carry fidelity insurance.

Kelly’s use of Lion’s Share was well known to his employers.  Insufficient safeguard’s existed to protect the investors.

George Merhoff Loss Recovery

Investors of George Merhoff, a broker and advisor with Cetera Advisors, can call 1-866-817-0201 for a free initial consultation with an attorney concerning loss recovery.  All consultations are confidential and representations done on a contingent basis, where attorney fees paid from the ultimate settlement or judgment.

Merhoff, a securities broker located in Oregon, has been the subject of approximately 16 lawsuits in the past two years.  These lawsuits concern the recommendation of unsuitable securities.  Merhoff sold a significant amount of oil and gas investments to his investors over the last six years.  Oil and gas investments are inherently speculative.

The sale of unsuitable securities is not only a negligent action, but also a form of fraud.  The payout to the broker/advisor from these investments are generally higher.  This gives the broker or advisor an incentive to omit from the investor the high level of risk that these investments pose.

Suitability violations exist anytime a recommended investment is inconsistent with the wants 7crude-oil-pumps-power-transmission-elementsand needs of an investor.  FINRA, the regulator overseeing financial advisors and securities brokers, prohibits the recommendation of unsuitable securities.  These rules also require that the advisor or broker to “know the customer.”  This means that the advisor or broker must know the wants and needs of his investors, along with that investor’s tolerance for risk and objectives for the account.

Since the oil and gas investments are speculative investments that are inherently volatile, they would not be suitable investors indicating that they can afford to take significant risk with the funds.  The investments would not be suitable for investors looking to receive regular income from their investments or take only moderate risk.

Oil and gas investments of particular interest include Linn Energy (“LINE” or “LNCO”), PennGrowth and Teekay Partners.  Also of interest are investors investing in REITs or utilizing margin loans on the recommendation of Merhoff.

 

James Davis Trent

Investors suffering losses with James Davis Trent may be entitled to recovery from his brokerage employers, AXA, Proequities and Allstate.  Please call 1-866-817-0201 for a free consultation with a private attorney.

investingstockphoto 1Trent entered into a regulatory settlement with FINRA in which Trent was suspended from
association with any FINRA member in all capacities for six months. In light of Trent’s
financial status, no monetary sanction has been imposed. Without admitting or denying
the allegations, Trent consented to the sanction and to the entry of findings that he
engaged in a pattern of recommending unsuitable short-term trading of Class A mutual
fund shares to customers, resulting in the customers (all of whom were retired) incurring
approximately $6,362.50 in unnecessary sales charges, while Trent received approximately
$2,910 as his commission from the sales loads.

Short-term trading of mutual funds is a form of churning, an action where there is very little benefit to the investor but significant commissions to the broker.  Such actions are in violation of FINRA rules and the anti-fraud provisions of state and federal securities laws.

The regulatory findings stated that Trent recommended all of the transactions that were executed in the customers’ accounts at the firm, including short-term trading involving Class A front-end-loaded mutual funds. In the transactions at issue, Trent recommended the purchase of Class A mutual fund shares and, within less than a year, recommended the sale of the positions, resulting in an average holding period for the customers’ accounts of six months. Given the long-term nature of investments in Class A mutual fund shares and the customers’ investment profiles, Trent lacked a reasonable basis to believe that the recommended securities transactions were suitable for the customers.

 

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.