Tag Archives: class action

Attention Investors of Kyle P. Harrington

Investors of Kyle Patrick Harrington may have recourse for their losses.  Please call 1-866-817-0201 for a free and confidential consultation.

Harrington has been alleged to have committed several forms of deceit in his dealings with investors and regulators in the last eight years.  This includes actions while employed at National Securities (NSC), Bannockburn Partners, Matrix Captial, First Allied, and Robert B. Ausdall.  He is currently a representative of Aurora Capital and also operates under the name of Harrington Capital Management.  Responsibility for the actions of Harrington fall not just on Harrington, but also on his employers.

The types of deceit alleged over the years include churning, creating of falsified documents, theft of investor funds, unsuitable investments, excessive trading, unauthorized purchases made in investor accounts, and other forms of misrepresentations and fraud.

Of all the allegations of deceit, the most recent is a civil suit filed by FINRA.   The FINRA suit involves a series of alleged deceptions by Kyle Harrington with the help of his assistant, Linda Milberger, to conceal Harrington’s alleged theft of customer funds and private securities transactions, securities transactions done outside of his firms’ fraud monitoring to put his investors in questionable investments.

Harrington is also alleged to have created false documents to submit to FINRA to conceal his misconduct not just from his employers, but also from regulators. For her part, Milberger falsified wire request forms which allowed Harrington’s conversion of customer funds, submitted those falsified wire request forms to her firm and another brokerage as if they were authentic records, and knowingly assisted Harrington in providing an altered bank statement to regulators.

In particular, in August 2012, Harrington convinced an investor to authorize a wire transfer to Harrington’s registered investment advisor firm for a purported investment. In fact, after the investor’s funds were wired to Harrington’s business checking account, Harrington took the investor’s funds without her knowledge or consent, and used it to pay his own business expenses.

When difficulties arose completing the $20,000 wire transfer from the investor’s account in August 2012, Harrington’s assistant, Milberger, altered the wire request form that the investor had signed without the investor’s knowledge or consent, on at least two occasions, in order to transfer all available cash out ofLD’s account to Harrington. Milberger submitted the altered wire request forms to her own firm and another broker dealer as iftheywere authentic, thereby causing those firms to maintain inaccurate books and records regarding the wire transfer.

In August 2012 and early 2013, Harrington also engaged in a series of private securities transactions with multiple individuals through which he sold over 300,000 shares of restricted stock he had purportedly received as compensation from a company named Islet Sciences, Inc. for approximately $276,000. Harrington failed to disclose these transactions, including his role as seller of the securities, to his employing firm or seek its prior approval of them.

Harrington not only failed to disclose his private securities transactions in Islet but he actively attempted to conceal them. Specifically, in July 2014, during a firm audit of his business, Harrington submitted falsified records to his firm mischaracterizing payments he had received for the sale of his Islet stock.

Additionally, Harrington has been the subject of nine actual or threatened investor lawsuits, multiple other regulatory investigations and employment terminations.  This information is contained in the CRD of Harrington.

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.

 

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.

Mark Holt Loss Recovery

Mark Holt is a former stock broker currently serving a prison sentence for stealing the funds of his investors and sending false account documents.  The scheme victimized investors in Minnesota and likely elsewhere.  Due to the incarceration, investors seeking recovery will likely need to pursue Holt’s former employers by means of FINRA arbitration for loss recovery.

From August 2005 to February 2007, Holt was a registered representative of Geneos Wealth Management, Inc., which is both a securities brokerage and investment adviser. From February 2007 to November 2013, Holt was a registered representative of Harbour Investments, Inc., which is also a dually registered entity. Holt, 47 years old, is currently incarcerated at the Federal Correctional Institution in Oxford, Wisconsin.

guy in handcuffsDetails of the SEC action can be found in its release.

On August 14, 2014, Holt was sentenced to a prison term of 120 months followed by three years of supervised release and ordered to make restitution in the amount of $2,940,982.75.  The chances of these payments being made is not great considering Holt could be incarcerated for much of the next ten years.

The allegations are that from about September 2005 through Jan. 12, 2014, Holt “knowingly caused an email communication to be transmitted in interstate commerce via servers in Texas to a client in Minnesota that would give the client access to false account statements.”

The SEC and the criminal documents state that Holt “misappropriated [investor] funds by depositing client checks into a bank account he controlled and using these funds to pay for personal and business expenses. In furtherance of his scheme, Holt lulled his clients into believing that he had purchased various investments for them by sending fraudulent Morningstar client summaries and [...] a web-based portal, that displayed fraudulent account balances.”

“Holt made monthly payments to his clients that were intended to appear as interest or annuity payments,” in a classic Ponzi-type scheme.

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.

 

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.

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.

First Financial Equity Corp. Losses

Please call for a free consultation with an attorney if you suffered losses First Financial Equity Corp., particularly if you suffered losses in ETF or annuity investments.

First Financial Equity, a securities brokerage firm headquartered in Scottsdale, Arizona, as identified by FINRA in February 2017, entered in a regulatory settlement with FINRA regulators concerning allegations that financial advisers were receiving excessive commissions and selling unsuitable ETF investments and annuities.  The suit also revealed that systemic problems existed in the supervising of the advisers that would prevent such violations.

A FFEC broker who typifies the problems at FFEC is John Schooler.  This FFEC broker has 26 customer complaints.  Such complaints generally evolve into arbitration lawsuits against the firm.  The complaints against Schooler involve TIC, oil/gas and other inherently aggressive investments.

Under the terms of the Offer of Settlement with FINRA, the firm consented to, without
admitting or denying the same, the entry of the following findings. The findings
stated that First Financial Equity failed to establish, maintain, and enforce an adequate supervisory system, including written procedures, designed to ensure that the firm’s sales of leveraged and inverse ETFs (nontraditional ETFs) complied with applicable securities laws, and
NASD and FINRA rules.

The findings also stated that First Financial Equity failed to establish, maintain,
and enforce an adequate supervisory system and written procedures related to the sale
of multi-share class variable annuities and to maintain records supporting customer
suitability determinations with respect to variable annuity purchases.

Leveraged and inverse ETF are a high risk investment that pays advisers a high commission.  This creates a problem in that it provides motivation for advisers to recommend such investments to investors not seeking high risk.  Such suitability violations are in violation of FINRA rules in addition to the anti-fraud provision of federal and most state securities laws.

 

The firm failed to provide sufficient training to its registered representatives and principals on the sale and supervision of multi-share class variable annuities. The findings also included that the firm failed to implement a reasonable supervisory system and procedures to supervise variable annuity exchanges.

Morgan Stanley ETF Losses

If you have suffered losses with an ETF purchased through Morgan Stanley please call 1-866-817-0201 for a free and confidential consultation with a private attorney concerning your rights. We have reason to believe that Morgan Stanley engaged in systematic wrongdoing in the sale of certain ETFs based upon recent findings of the The Securities and Exchange Commission.

The SEC announced on February 14, 2017 that it has settled with Morgan Stanley for $8 million for inappropriate sales of complex exchange traded funds to advice clients.  More importantly, Morgan Stanley admitted to wrongdoing.

Morgan Stanley failed to obtain a signed client disclosure notice, which stated that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy.  This is important because the number of clients this impacted number in the hundreds.

The investment recommendations were also unsuitable, in violation of the regulatory duties that Morgan Stanley owes its investors.  Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long-term, and many of the clients experienced losses.

The SEC’s order further finds that Morgan Stanley failed to follow through on another key policy and procedure requiring a supervisor to conduct risk reviews to evaluate the suitability of inverse ETFs for each advisory client.  Among other compliance failures, Morgan Stanley did not monitor the single-inverse ETF positions on an ongoing basis and did not ensure that certain financial advisers completed single inverse ETF training.

Morgan Stanley also owes a duty to the investors to follow its own internal regulations.  The SEC’s order finds that Morgan Stanley did not adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs.

“Morgan Stanley recommended securities with unique risks and failed to follow its policies and procedures to ensure they were suitable for all clients,” said Antonia Chion, Associate Director of the SEC Enforcement Division.

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.