Tag Archives: Chicago

Losses with Stuart Pearl of Ameriprise

If you have been the victim of unauthorized securities trades or been recommended unsuitable securities by your financial advisor, please call 1-866-817-0201.  We are interested to investors suffering losses with Stuart Pearl.  Mr. Pearl has recently entered into a regulatory settlement where he neither admits or denies the following:

investingstockphoto 1On May 14, 2015, Stuart Pearl used discretion to liquidate positions in six different securities with a total principal amount of approximately $20,000, on behalf of a senior investor. Although the investor had authorized Pearl to execute these liquidations in discussions that took place prior to May 14, 2015, Pearl failed to speak with the investor again on May 14, 2015, to confirm the investor’s authorization to make these sales.

Pearl’s use of discretion as described was without prior written authorization from the investor, and without prior written acceptance of the account as discretionary from his firm, Ameriprise. By virtue of the foregoing, Pearl violated NASD and FINRA rules.

In June 2010, two other customers of Pearl, who were retired and both in their 70s, opened a joint brokerage account with him at Ameriprise. The new account documentation provided that securities could be purchased on margin, a process or lending money to buy securities that involves a great deal of risk.

At the time they opened their account, the investors had an investment objective of “growth and income,” a risk tolerance of”conservative/moderate” and limited experience with trading on margin. They also had a combined annual income of $30,000, a liquid net worth of$500,000 and investable funds of $400,000.

Between September 2011 and March 2012, Pearl recommended that the investors purchase four securities valued at approximately $122,000 on margin. Prior to making those purchases, the customers bad no margin debt balance in their account. As a result of those investments, the investors experienced a significant increase in their margin debt balances in relation to their available funds and their account was subject to seven margin calls during the relevant period, where the parties must deposit funds into their account to pay the outstanding loan or risk liquidation of their portfolio.  The recommendation to purchase such investments utilizing margin was unsuitable and in violation of FINRA and NASD rules prohibiting unsuitable recommendations.

Ameriprise had a duty to oversee the transactions of Pearl and should be responsible for the lack of supervision given Pearl.

More information on this matter can be found in the October 10, 2017 issue of InvestmentNews.

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.

William P. Carlson of Elhert

On February 21, 2017, he Securities and Exchange Commission charged William P. Carlson, Jr., a Deerfield, IL investment advisor with misappropriating more than $900,000 from a client’s account through more than 40 unauthorized transactions.  Deerfield is in the Chicago-area.

The SEC alleges that Carlson, an investment advisor representative associated with the Ehlert Group in Lincolnshire, forged a client’s signature on checks and journal requests and caused checks to be issued from the client’s account to a third party who gave the proceeds to Carlson.

Carlson had discretionary authority to place trades in the victim’s accounts. Such trades, involving the purchase and sale of mutual fund shares, were supposed to be made pursuant to a model asset allocation portfolio selected by the client based on advice from Carlson. When requested by the client, Carlson could direct disbursement of funds held in the accounts to the client. In order to disburse funds held in the accounts for the benefit of a third party, the Broker-Dealer holding the funds required a written request signed by the client.

On at least sixteen different occasions from November 2012 to April 2014, Carlson directed that a check made payable to the client be issued from the client’s account, purportedly based on instructions Carlson had received from the client. The check amounts ranged from $6,500 to as much as $97,000, and collectively totaled $437,000.

In approximately June 2014, Carlson changed his method of making unauthorized withdrawals from the client’s account. Carlson began forging the vicitm’s signature on “Check and Journal Request” forms that directed the Broker-Dealer to make disbursements of funds held in the client’s account to a third party who was a friend of Carlson’s.

In March 2015, Carlson forged the vicitm’s signature on a letter of authorization and a notarized signature sample letter permitting the firm holding the funds to issue checks from the victim’s account to Carlson’s same friend, without the need for further check and journal requests that required additional client signatures.

Between approximately June 2014 and December 2016, through the use of these forged authorizations, Carlson caused at least 25 checks—ranging in amount from $10,000 to $35,000 and collectively totaling $474,000—to be issued from the client’s account to Carlson’s friend, who in turn gave the proceeds to Carlson.

The Complaint of the SEC can be found at the following link.

Losses with Maczko of Wells Fargo

If you invested with Matthew Maczko, a broker with Wells Fargo Advisors in Oak Brook, Illinois and suffered losses that you question, please call 1-866-817-0201 for a free and private consultation with an attorney concerning your rights.

Wells FargoMaczko was suspended from the securities industry last week, the week of February 7, 2017, for alleged excessive trading in the brokerage accounts of a 93-year-old customer, according to a FINRA. Maczko effectively controlled the customer’s accounts, which had an average aggregate value of $3 million.

Maczko’s trading  generated more than 2800 transactions resulting in $582,000 in commissions, $84,270 in fees and approximately $397,000 in trading losses for the account in question. Such trading activity was not only churning but was also unsuitable for Maczko’s victim given the customer’s age, risk tolerance and income needs.

Maczko also intentionally mislead FINRA regulators and investigators by telling them during testimony that he had not spoken to  other senior customers after his termination from Wells Fargo, when in fact he had spoken with them several times.

Securities brokers are required to follow the rules of FINRA.  FINRA requires that investments not only be suitable in terms of the nature of the investment, but also that the investments be quantitatively suitable.  This means that the number of trades cannot be excessive in light of the wants and needs of the customer.  Above a certain level, the trades can be seen as not being for the benefit of the customer, but for the broker.

The trades of Maczko went well beyond the acceptable number of trades.

Tobin Joseph Senefeld

FINRA  has announced that  Tobin Joseph Senefeld, formerly of PIN Financial, a Carmel, Indiana brokerage firm owned by Veros Partners, has been barred from associating with any FINRA member institution, according to its monthly disciplinary report released last week. The sanction is related to a Securities and Exchange Commission suit that claimed Senefeld and two others operated a multimillion-dollar Ponzi scheme involving farm loans.

FINRAThe SEC case claimed the three raised $15 million from 80 investors in 2013 and 2014 to fund farm loans. New investor funds were used to pay older investors when the loans went bad.

Senefeld has a long history of misconduct.  The FINRA and SEC actions are just the latest of his legal problems.  The record of Senefeld contained on FINRA’s BrockerCheck indicates that Senefeld has 27 disclosure events dating back to 1997.

The prior misconduct of Senefeld, also known as “disclosure events,” include a substantial number of state regulatory actions, including the revocation of his license by Michigan in 2000 and other regulatory punishment by 16 other jurisdictions around the same time.  Senefeld also had a long history of tax liens, terminations, and civil suits initiated against him by other investors.

Co-defendants in the present SEC matter, Matthew D. Haab and Jeffrey B. Risinger, both have settled the civil suit for about $184,000 and $100,000, respectively. Senefeld and the SEC failed to reach a settlement at an in-person meeting Oct. 28, according to court filings, so Senefeld’s case remains on course for trial.

Senefeld, PIN and Risinger have all received lifetime bans from the securities industry by FINRA.