Tag Archives: churning

Buckman, Buckman & Reid Loss Recovery

If you suffered investment losses with Buckman, Buckman & Reid (BBR) please call 1-866-817-0201 about potential loss recovery.  BBR has been censured and officer, Chip Buckman, suspended for a culture of insufficient supervision leading brokers to make excessive trades and recommend overly aggressive securities

From January 2013 through April 2017, BBR failed to maintain a supervisory system and enforce written supervisory procedures. In addition, BBR and Chip Buckman—who was the Firm’s designated supervisory principal responsible for conducting suitability reviews failed to reasonably supervise two former registered representatives, who the regulatory documents identify only by initials GK and RI, recommended excessive and unsuitable trades in dozens of investor accounts.

Regulatory rules require securities firms and their brokers to have a reasonable basis to believe that a recommended securities transaction or investment strategy is “suitable” for the customer, based on the information obtained through the reasonable diligence of the firm or associated person to ascertain the customer’s investment profile. A customer’s investment profile includes, but is not limited to, the customer’s age, other investments, financial situation and needs, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance.  Failure to do so is a “suitability” violation.

Unsuitable investment recommendations and excessive trading are forms of fraud.  Both enable a broker to make commissions that significantly above those that would be earned if the broker handled the account in a manner consistent with regulatory obligations.  Both also create unnecessary risks in the portfolios of their investors.

 

BBR was required to maintain procedures to make sure that investment recommendations were suitable BBR’s system failed to monitor its brokers in such a fashion.  No one at BBR reviewed the monthly reports and alerts that could have helped the Firm detect excessive trading and unsuitable concentration levels in customer accounts.

The supervisory failures allowed the fraud to occur.  At least one of the brokers involved had a history of misdeeds when he was first hired by BBR including many complaints for unsuitable securities sales.  Despite this history of fraud, BBR failed to supervise this broker.  Not surprisingly, the broker continued to commit fraud in the accounts of his investors.

We assist investors who lose value in their portfolio when brokers commit misdeeds and brokerages fail to supervise.  Please call for a free and confidential consultation.

 

 

Christopher Duke Bennett Fraud Victims

If you have suffered losses with Christopher Duke Bennett of J.J.B. Hilliard, please call 1-866-817-0201.   Victims may receive a free and confidential consultation with an attorney.  Bennett is accused of participating in systemic fraud of his investors.

Bennett engaged in unauthorized trading, or churning.  This is where a broker makes trades in an account to effectuate commissions for himself without regard for the investor.  Between January 2014 and December 2015, Bennett violated federal and state securities laws by exercising discretionary trading authority in the accounts of several customers without written authorization, in violation of NASD Rule 2510(b) and FINRA Rule 2010.  This was the grounds for a regulatory action filed against Bennett by the Financial Industry Regulatory Authority (FINRA).

Between January 2014 and December 2015, Bennett made unauthorized trades in the accounts of four customers, one of whom was a senior investor, by placing approximately 75 total trades in those accounts. A broker is required to speak to an investor contemporaneously to a trade, or have written authorization that the broker has authority to make a trade at the broker’s discretion.  Bennett did not obtain express authorization from those customers for those trades prior to placing them, did not have written authorization from the customers to exercise discretionary authority in those accounts, and neither sought nor obtained from Hilliard Lyons prior written acceptance of the accounts as discretionary.

To date, at least 10 of Bennett’s former clients have filed suit, via FINRA arbitration, seeking redress.

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 Mark Kaplan of Vanderbilt

We are currently looking to speak to investors of Mark Kaplan of Vanderbilt Securities.  Please call 1-866-817-0201 is you have suffered investment losses.  We believe there is potential for certain investors to recover these losses.

Between March 2011 and March 2015 , Mark Kaplan of Vanderbilt Securities engaged in investment churning and unsuitable excessive trading in the brokerage accounts of a senior customer. We believe that such actions were likely widespread and impacted many of Kaplan’s investors.  Kaplan willfully violated federal securities laws and FINRA regulations by such actions.

Invest photo 2Kaplan has been known for years by Vanderbilt to have problems in his handling of investor accounts.  Morgan Stanley terminated Kaplan in 2011 for his alleged improper activity in Kaplan’s customer accounts.  Additionally, Kaplan has been the subject of seven separate customer lawsuits concerning improper securities transactions.

A recent regulatory action by the Financial Industry Regulatory Authority (“FINRA”) alleges that Kaplan took advantage a 93-year-old retired clothing salesman who had an account with Kaplan.   This investor not only placed his complete reliance in Kaplan but was also in the beginning phases of dimensia.

The investor opened accounts at Vanderbilt Securities with Kaplan during March 2011.  As of Match 31, 2011, the value of the investor’s accounts was approximately $507,544.64. Social Security was the investor’s only source of income during the Relevant Period. Kaplan exercised control over the accounts.  The investor relied on Kaplan to direct investment decisions in his accounts, contacting Kaplan frequently.

The investor was experiencing a decline in his mental health.  In 2015, a court granted an application by the investor’s nephew to act as his legal guardian and manage his financial affairs.

During the Relevant Period, Kaplan effected more than 3,500 transactions in the investor’s accounts, which resulted in approximately $723,000 in trading losses and generated approximately $735,000 in commissions and markups for Kaplan and Vanderbilt. Kaplan never discussed with the investor the extent of his total losses or the amount he paid in sales charges and commissions.

More can be learned about such excessive trading at the warning page for the SEC.

Please call the number above to determine if you have also been taken advantage of and your rights for recovery.

 

Investment Fraud of Marlon Cole, Legend

We are investigating the potential investment fraud actions of Marlon Cole of Legend Securities.  Please call 1-866-817-0201 for a free and confidential consultation with a private attorney specializing in the representation of investors.

Mr. Marlon Cole has also worked for Spartan Capital, Fordham Financial, E.J. Sterling and Blackbook Capital.  He has recently been the subject of scrutiny by securities regulators for actions taken while he was with Legend.  He recently entered into a settlement agreement with FINRA, one of these regulators where Cole neither admitted nor denied the allegations against him.

The allegations against Cole are that from April 2013 through October 2014, while Cole was associated with Legend Securities, FINRA alleges that Cole engaged in excessive trading, unsuitable trading, and unauthorized trading. Specifically, Cole engaged in excessive trading in the investment accounts of six senior citizen investors that had trusted Cole as their broker.

One way to prove that an account was traded excessively is through the cost/equity ratio, the level of costs of an account per year as a percentage of the value of the account.  Turnover, the number of times the account was sold and purchased, also serves to measure illicit activity.  During the Relevant Period, Cole’s trading is alleged to have generated cost-to-equity ratios ranging from 29.82% to 589% and turnover rates ranging from 6.01 to 63.39. Such costs and turnover rates were inconsistent with the objectives of the senior investors, yet likely generated steady commissions for Cole.

Under FINRA Rule 2111, a registered representative must have a reasonable basis to believe, that a recommended securities transaction or investment strategy is suitable for a customer. Relevant to Cole’s trading here, the Rule prohibits excessive trading and trading that lacks a reasonable basis in light of a customer’s investment objectives and risk tolerance.

Rule 2111 also requires that where a representative controls an account, a series of recommended transactions, even if suitable by themselves, be deemed excessive and unsuitable for the customer when taken together in light of the customer’s investment profile.

When the costs in an account are so high that there can be no expectation of a reasonable return, no rational investor would knowingly agree to them.   That is alleged in the present matter.  The six customers here had investment objectives of growth and income or speculation. The sales charges for the six customers were in the form of both commissions and markups and mark-downs.  Both were alleged excessive in light of the profiles.

This is not the first time Cole has been alleged to have engaged in securities fraud.  In 2011, Cole entered into a similar settlement with the Alabama Securities Commission.  That settlement centered on allegations that Cole “engaged in dishonest or unethical practices” including unauthorized trading in a customer account.

 

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.

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.

 

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.