Tag Archives: Colorado

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

GPB Loss Recovery

Investors of GPB or any GPB Capital investments, please call 1-866-817-0201 about potential loss recovery.  Initial consultations are free and confidential.  Jeffrey Pederson is a private attorney who has successfully represented investors nationwide in obtaining settlements or judgments for investment losses.

Information exists to support that GPB Capital was inappropriately sold by independent brokerage firms across the country.  These investments are now illiquid and essentially worthless.  These brokerages are liable for the losses of their investors.

Brokerages have duties to investors in the sale of investments such as GPB.  These investments were high-risk, and brokerage were only allowed to recommend the investments to

On August 17, 2018, the firm halted sales to review accounting.  The purported reason was to “integrate the high volume of recent acquisitions.”

On August 24, 2018, GPB announced that the fund will restate its 2015 and 2016 financial statements.  The adjustments were due to errors in income and the source of such income that came to light in audits done on the investments.

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Many GPB investors thought they were getting a safe investment.

On September 12, 2018, Massachusetts top securities regulator William Galvin started an investigation into the sales practices of independent stock brokerage firms in connection with the recommending of investments in GPB Capital Holdings.

GPB investments were always known to be very high risk.  As such, the investments were not suitable for a large portion of the investing public.  Brokers have a legal obligation to only recommend suitable investments.   The motivation for selling such risky investments to moderate investors is likely the result of the excessive commissions that were paid the brokers for such sales – commissions much higher than would be paid for the sale of suitable investments.

The Massachusetts Securities Division has information about one independent stock brokerage firm’s sales practices in connection with GPB sales, coming in the wake of GPB’s announcement that GPB has temporarily stopped bringing in new funds.  It has also suspended redemptions while it concentrates on accounting and financial reporting.

In addition, there is an issue with the failure to file financials.  Such a failure should have been discovered by any brokerage firm selling the investments and should have been a red flag of the extreme risk in the recommendation of the investments.  Two private GBP investments that are required because of their size to file financial statements with the Securities and Exchange Commission failed to meet filing deadlines.

These matters have led to a sweep by regulators of 63 broker-dealers that sell GPB, with the regulators requesting data on the extent of sales activity in Massachusetts, disclosure and marketing documents that the firms provide to investors on the solicitations and data on investor suitability.

“While my Securities Division’s investigation is in the very nascent stages, recent activity within GPB raises red flags of potential problems. These red flags, coupled with the fact that sales of private placements by independent broker-dealers have been an ongoing source of investor harm, have led to this investigation,” Galvin, the lead regulator, stated.

Galvin goes on to state, “I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt.”

Investor Losses with Cadaret Grant

Investors suffering losses with Cadaret Grant may have recourse.  Please call 1-866-817-0201 for a free and confidential consultation.

Cadaret entered into a regulatory settlement with the Financial Industry Regulatory Authority on September 11, 2018.   Cadaret agreed to pay an $800,000 fine.  It also agreed to a censure and to review and change its policies to detect inappropriate sales practices by its brokers.  One focus was on the sale and exchanges of variable annuities.

Invest photo 2Cadaret failed to employ sufficient compliance personnel to adequately supervise its brokers.  Brokers have many incentives to recommend investments that are too aggressive or otherwise unsuitable for an investor.  Sufficient compliance personnel are needed and required by regulators to protect investors from this known risk.

All licensed securities brokers have a legal obligation to recommend only suitable investments.  Investments are all known to have a certain range of risk when recommended.  Certain investments are known to have higher risks than others.  Investments that can increase sharply in value can sometimes decrease equally as fast.  Investments can only be recommended when the risk the investment poses is consistent with the risk consistent with the investor.  For example, a retired individual should only be recommended investments with little to no risk.  So when such an individual loses 20% or more of portfolio value in a year, the portfolio was likely unsuitable when first recommended.

As a result of its insufficient compliance, Cadaret had only three compliance people overlooking weekly trades, or “blotter reviews.”  Such reviews are needed to detect over-concentration of portfolios, such as portfolios being invested too heavily in either one investment, a single industry, or being too heavily weighted in a single investment vehicle, such as stocks or annuities.  Such concentration is unsuitable because it greatly increases the level of risk in the portfolio.

The blotter review also protected investors from broker churning.  This is an action where a broker puts his/her own interest ahead of the investor.   Excessive trades are made that work more to generate commissions for the broker than to protect the interests of the investor.

Churning depends on the cost of the exchange.  With products such as variable annuities, churning can happen with a single exchange.  One of the issues faced by Cadaret is from the replacement of one variable annuity with another.  There are very few circumstances where variable annuity exchanges are justified.

Cadaret’s supervisory procedures also required examiners in the compliance department to conduct periodic inspections of branch offices to detect and prevent violations by registered representatives in those locations. However, Cadaret employed an insufficient number of compliance examiners for this purpose. For instance, in 2014, the Firm tasked three compliance examiners with inspecting over 400 geographically-disperse branches. As a result, these inspections were conducted in a manner not reasonably designed to identify violative activity.

Jeffrey Pederson has represented investors across the United States in suitability suits.  These suits are largely handled through FINRA arbitration.  Please call for consultation.

Eric Sampson Loss Recovery

We have filed suit and we are actively pursuing actions to recover losses incurred by victims of Eric Sampson.  Victims are primarily investors of Sampson’s My Investment Advisor (“My IA”).  If you are a victim, please call 1-866-817-0201 for a free and confidential initial consultation.

Sampson operated at different times out of St. George, UT, Washington, UT, Greenwood Village, CO and Colorado Springs, CO.  Investments sold by Sampson that are considered fraudulent include Golden Assets, LLC, Shooks Run, LLC, The Hills at Santa Clara, and Wright Indoor Comfort.

At all relevant times, Sampson was a licensed securities broker, working first for Girard Stock handcuffsSecurties and subsequently World Choice Securities.  The practice of Sampson was a hybrid brokerage investment advisory practice that he controlled and that was made aware to his employers.  In such a situation, the investment advisory is required by pay the brokerage for supervision.  The brokerage, in turn, is charged with ensuring that the advisory is not selling investments fraudulently.

Federal criminal charges are currently pending against Sampson.  There is also currently a case against Sampson and My IA by Utah regulators.

As stated in the Federal criminal action, “It was the object of [Sampson's] scheme and artifice to defraud for defendant Sampson to fraudulently obtain money from his MY IA clients through false statements, misrepresentations, deception, fraudulent conduct, and omissions of material facts, and thereafter cause the money to be diverted for defendant SAMPSON’s personal use and benefit.”

Attention Investors of Western International

If you lost money investing with Western International, please call 1-866-817-0201.  The initial consultation with an attorney is free.  Jeffrey Pederson represents investors nationwide in securities brokerage disputes.

NYSE pic 2Western recently entered into a regulatory settlement where it neither admitted not denied the following facts.  Those facts are that from January 1, 2011 to November 5, 2015 (the “Relevant Period”), Western failed to establish, maintain and enforce a supervisory system to ensure that representatives’ recommendations regarding certain ETFs (exchange traded funds) and also failed to comply with certain securities laws in the sale of these ETFs.

In addition, Western allowed its representatives to (1) recommend Non-Traditional ETFs without performing reasonable diligence, the required level of investigation into the investments, to understand the risks and features associated with the investments, and (2) recommend NonTraditional ETFs that were unsuitable, either due to the known high level of risk in the investments or inherent complexity, for certain customers based on their ages, investment objectives and financial situations.

Non-Traditional ETF’s, such as the ETFs that were sold by Western, are designed to return a multiple of an underlying index or benchmark, such as the VIX or S&P, the inverse of that index or benchmark, or both, over the course of a day. As a result, the performance of Non-Traditional ETFs over periods of time longer than u single trading session “can differ significantly from the performance of their underlying index or benchmark during the same period or time.” Because of these risks and the inherent complexity of these products, FINRA has advised broker-dealers and their representatives that Non-Traditional ETIls “are typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.”

We have spoken to a number of investors who have suffered similar losses and believe that such investments were intended for highly sophisticated investors only, such as hedge fund managers, and could not be legitimately sold to retail investors.  So if your were investing for retirement and were sold such investments, you likely have grounds for recovery.

Losses in Inverse VIX ETNs and ETFs

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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.

Recovery of Woodbridge Loss

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Woodbridge investors believed real estate ensured the safety of their investments.

Investors of Woodbridge may have the ability to recover the losses they sustained.  Please call 1-866-817-0201 or 303-300-5022 for a free consultation with a private attorney concerning potential loss recovery.

Regulators have charged the Woodbridge Group of Companies with operating a Ponzi scam.  This creates liability on the part of those advisors selling Woodbridge.

There were glaring issues in these Woodbridge investments for an extended period of time.    These issues should have been discovered during reasonable due diligence by the brokers and agents selling the Woodbridge investments.  These investments should have been recognized as not being suitable for any investor.

The U.S. Securities and Exchange Commission (SEC) had been investigating Woodbridge since 2016.  Woodbridge, the Sherman Oaks, California-based Woodbridge, which calls itself a leading developer of high-end real estate, had been under the microscope of state regulators even longer.   The focus of these regulators was the possible fraudulent sale of securities.

On December 21, 2017,  the SEC charged the Woodbridge Group of Companies with operating a $1.2 billion Ponzi scheme that targeted thousands of investors nationwide.  “The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money,” per Steven Peikin of the SEC.

Prior to the charge, in January 2017, the SEC served a subpoena on Woodbridge for relevant electronic communications.  Woodbridge failed to respond to this subpoena.  This left the SEC to seek court intervention to compel Woodbridge to produce potentially damaging documentation the SEC believes existed.  The SEC filed its allegation that Woodbridge is a Ponzi scheme within weeks of its access to Woodbridge’s documents.

Through court filings, the SEC states that Woodbridge “has raised more than $1 billion from several thousand investors nationwide” and it “may have been or may be, among other things, making false statements of material fact or failing to disclose material facts to investors and others, concerning, among other things, the use of investor funds, the safety of the investments, the profitability of the investments, the sales fees or other costs associated with the purchase of the investments.”

Shortly after the issuance of the order sought by the SEC Woodbridge declared bankruptcy.  This filing does not extinguish the rights of investors.  These investors have claims against the brokers and advisors selling the investments.

Woodbridge has additionally stated that it has also received inquiries from about 25 state securities regulators concerning the alleged offer and sale of unregistered securities by unregistered agents.

The Woodbridge Group of Companies missed payments on notes sold to investors the week of November 26, 2017, and December 5, 2017 filed chapter 11 bankruptcy.  The company blamed rising legal and compliance costs for its problems.

Woodbridge said it had settled three of the state inquiries and was in advanced talks with authorities in Arizona, Colorado, Idaho and Michigan when it filed for Chapter 11 protection.

The company’s CEO, Robert Shapiro, resigned on December 2  but will continue to be paid a monthly fee of $175,000 for work as a consultant to the firm.

On August 14, 2018, Jerry Raines of HD Vest Investments entered into a regulatory settlement whereby he agreed to a bar from the securities industry to resolve the investigation into his sale of Woodbridge notes.  Raines operated from Kilgore, Texas.  Likewise, Donna Lynn Barnard, agreed to a similar sanction.

David Ferwerda likewise entered into a regulatory settlement concerning his sale of Woodbridge.  Ferwerda did not contest the charge and FINRA simply stripped him of his license.  This, however, does not exonerate either Ferwerda or his former employer, Signator Investors, of civil liability for losses.

Those at Woodbridge are not the only ones responsible for investor losses.  The Colorado Division of Securities is considering sanctions against investment advisor Ronald Caskey of Firestone, Colorado.  Caskey is the host of the Ron Caskey Radio Show.  James Campbell of Campbell Financial Group in Woodland Park, Colorado and Timothy McGuire of Highlands Ranch, Colorado are also the subject of regulatory investigations by the state regulator.  The Colorado Division of Securities has also begun investigating Jerry Kagarise of Security 1st Financial of Colorado Springs.  Another seller of Woodbridge in the Springs area is Carrier Financial.

These and other Colorado investment advisors have raised approximately $57 million from 450 Colorado investors.  Woodbridge continued to solicit investors through these advisors, in addition to radio and online ads, through October 2017, just prior to the bankruptcy filing.

While the regulatory actions will do little to compensate the damaged investors, these actions support private civil actions for recovery by investors.  We are investigating and in the process of bringing suit against Colorado investment advisors selling Woodbridge investments, and would like to share what we have learned with other investors in Colorado and nationwide.

Rueters is the source of some of the information contained herein.

Wells Fargo Losses

If you suffered losses with Wells Fargo in ETP investments or other investments that you understood to have only low to moderate risk, please call 1-866-817-0201 for a free and confidential consultation with an attorney.

Wells FargoFINRA, the regulator that oversees securities brokerages, ordered Wells Fargo on Monday to pay investors $3.4 million after its advisers recommended “unsuitable” investments known as volatility-linked products that were “highly likely to lose value over time.”

Wells Fargo pushed its investors into these investments, volatility-linked ETPs, as hedges, to protect against a market downturn. In fact, these investments are unsuitable for such a strategy.  The investment are, in reality, “short-term trading products that degrade significantly over time,” regulators said, and “should not be used as part of a long-term buy-and-hold” strategy.  The recommendation of such unsuitable investments is a form of negligence, and could be seen as reckless enough to be considered fraud.

Volatility-linked ETPs are complex products that most investors do not understand and, as such, they rely upon their adviser, who should be a trained professional, to understand.   Certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions to help safeguard against a downturn in the market. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.

FINRA issued Regulatory Notice 17-32 shortly after announcing the settlement with Wells Fargo to remind firms of their sales practice obligations relating to these products. Wells Fargo had previously been on notice to provide heightened supervision of complex products such as ETPs in Regulatory Notice 12-03, and were advised, along with all other brokerages, to assess the reasonableness of their own practices and supervision of these products.

FINRA found, “Wells Fargo failed to implement a reasonable system to supervise solicited sales of these products during the relevant time period.”  The complete news release of the FINRA action can be found at the following link.

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.

Kris Etter of IMS Securities

If you have suffered investment losses with Kris Etter of IMS Securities, particularly if you suffered losses in UDF, please call 1-866-817-0201 for a free consultation with an attorney.  We have suit filed against IMS and are currently investigating whether other claims may exist.

It is believed that Etter had an undisclosed conflict of interest in his recommendations of UDF.  Upon information and belief, Mr. Kris Etter sold a substantial amount of UDF to his clients and is the son of Todd Etter.  Todd Etter is the Chairman of UDF IV, one of the top officers of the company.  Mr. Todd Etter also serves as Chairman of the general partner of UDF I and UDF II and Executive Vice President of the general partner of UDF III.  This creates a substantial conflict of interest in UDF recommendations by Kris Etter.

Kris Etter and IMS also failed to properly investigate UDF before recommending it, likely because of the Etter conflict and the heightened commission paid by UDF.  IMS is one of the top four leading sellers of UDF IV in the United States.

The bottom fell out for UDF when it was revealed in December 2015 to be a Ponzi scheme. The offices were raided by the FBI, received a Wells notice, unable to release quarterly reports and was ultimately delisted for a time. Reasonable investigation into the investment of other financial firms revealed that the illegitimacy of the investment. Had IMS done sufficient due diligence it would have likewise discovered that the investment was not suitable for any investor. Instead, IMS and Etter turned a blind eye to the problems of UDF and instead focused on the profits that it was receiving from this high commission product.

The individual ultimately in charge of all IMS offices is the CEO of IMS, Jackie Wadsworth.  Ms. Wadsworth has seven customer complaints naming her for insufficient supervision of representatives under her oversight. These complaints largely concern the inappropriate recommendation by her representatives of unsuitable variable annuity and REIT investments, just like the investments sold clients of Kris Etter and IMS.

As reported in Investmentnews.com in August 2016, the balance sheet of IMS is tilted heavily toward high-commission products like variable annuities and non-traded REITs. Approximately 86% of its revenue of IMS in 2015 came from commissions from such products.