Tag Archives: FINRA

Pagartanis Loss Recovery

If you were a victim of Steven Pagartanis please call 1-866-817-0201.  The Law Offices of Jeffrey Pederson, PC is a firm that specializes in suits concerning securities brokers.

Pagartanis, the former Lombard and Cadaret broker from Long Island, N.Y., pleaded guilty Monday, December 10, 2018, in federal court to conspiracy to commit mail and wire fraud for running a Ponzi scheme over 18 years

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

Steven Pagartanis victims invested over $13 million and saw actual losses of more than $9 million,  according to the U.S. Attorney’s office.

This former licensed securities broker solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded companies and an international hotel conglomerate, according to the Department of Justice. Pagartanis promised his investors returns consistent with conservative investments-that their principal would be secure and earn a fixed return of 4.5% to 8% annually.

The victims wrote checks payable to an entity secretly controlled by Mr. Pagartanis at his direction, according to the government. He utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the phony interest or dividend payments to other victims, according to the Department of Justice. He faces up to 20 years in prison.

Recovery of these losses will focus on the employers of Pagartanis.  These employers are required to have supervisory safeguards in place to prevent such actions.  FINRA, the Financial Industry Regulatory Authority, has rules that require licensed brokerages to take steps to monitor and detect private securities transactions away from the firm.  Consequently, liability exists even if such actions were not taking place right under the nose of the firms.  FINRA offers an arbitration forum to recover such losses.

The SEC also filed a civil suit concerning this matter in May 2018.

Jeffrey Pederson is an attorney who helps investors recover losses from brokerage firms through the FINRA arbitration process.

DAVID FAGENSON LOSS RECOVERY

Call 1-866-817-0201 to learn about potential loss recovery for investors of David Fagenson.  Mr. Fagenson was previously with Newbridge, Merrill Lynch and UBS Financial.  Initial consultations are free and most representations are done on a contingency basis.

FINRA, the regulator that oversees securities brokers, alleged that Fagenson engaged in churning and unsuitable trading in the accounts of three senior customers during the period of January 2012 and September 2016.

We believe that the problem could be more widespread.  Churning is rarely restricted to just aInvest photo 2 small percentage of a broker’s clients.  An average broker usually has over 100 investors in that broker’s book of business.

Also, Fagenson has a long history of actions that question his veracity and ability to hand the savings of others.  In addition to a felony charge in 2010, Fagenson has been the subject of eight investor lawsuits/complaints, three regulatory actions, a termination of brokerage employment for cause, and one bankruptcy.

The history of Fagenson raises questions of how he was supervised and whether he should have ever been hired by the aforementioned brokerages.  UBS has acknowledged his issues and that he Fegenson required heightened supervision.  However, even that was not enough in light of the many red flags that existed.

Jeffrey Pederson is a private attorney handling FINRA arbitration cases for investors to obtain loss recovery.

 

 

 

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.

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

Stephen Hurtuk investors

Please call 1-866-817-0201 if you were an investor of Stephen Hurtuk.  Mr. Hurtuk has recently surrendered his license instead of attempting to defend claims that he inappropriately recommended unsuitable investments to a significant number of his investors.  Hurtuk was previously with both Citigroup and Stifel, Nicolaus.

Invest photo 2On June 27, 2017, FINRA, the regulatory authority that oversees securities brokerages, sent a request to Hurtuk for on-the-record testimony. The request was sent in connection with FINRA’s investigation into potentially unsuitable recommendations by Hurtuk to eight customers, between May 2015 and September 2016. Instead of responding to the request, Hurtuk chose not to defend though the failure to defend would mean the revocation of his license.

An unsuitable investment is any investment that is not consistent with either the objectives, sophistication, or risk tolerance of an investor.  For example, a conservative investor reliant upon his or her savings who loses more than 15% of a portfolio in a year was likely sold an unsuitable investment.  This is because the risk of loss was greater than the investor was willing to assume.

The regulatory action only addressed 16 months during 2015 and 2016.  However, we believe offending investment recommendations extend beyond this period.  We are interested in those recommended unsuitable investments from 2011 onward.

Consistent with this, the employers of Mr Hurtuk, Stifel and Citigroup, have defended six filed or threatened legal suits concerning the unsuitable recommendations of Stephen Thomas Hurtuk.  These suits extend from 2007 through the present.  Five of these suits have settled.

His affiliation with Citigroup was in Canfield, Ohio and lasted from 2001 to 2007.  Stifel was his employer from 2007 until 2017 and he operated out of Boardman, Ohio.

We help investors such as the victims of Mr. Hurtuk.  Cases are generally handled on a contingency basis, where attorney fees are paid by a percentage of the settlement or judgment obtained.  Cases against securities brokerages are subject to binding arbitration through FINRA.  Jeffrey Pederson has handled such arbitration cases across the country.   Please call for a free and confidential consultation and see if your losses are recoverable.

Attention Investors of John Maccoll

John C. Maccoll, who was a registered representative of UBS Financial Services and an investment advisor, is charged both criminally and civilly with defrauding at least 15 of his brokerage clients, most of them elderly and retired, in a scheme that lasted for at least a decade.  If you were an investor with Maccoll please call 1-866-817-0201 for a free and confidential consultation.  Representation will be on a contingency fee basis.

Maccoll’s career goes back 40 years.  Prior to being with UBS he spent years working as a brokerguy in handcuffs for Morgan Stanley.  We believe that he used his scheme not only at UBS but also at Morgan Stanley.

According to the SEC, he used high-pressure sales tactics to convince his brokerage customers to invest in what he described as a “highly sought after” private fund investment. The victims were convinced to sell their retirement accounts or borrow against them and make out checks to Maccoll.

The actions of Macoll are commonly referred to as “selling away.”  This is common.  A broker will either try to sell an investment of a confidant who will pay him a premium, or sometimes make up the investment completely.  Brokerage firms are required to have mechanisms in place to detect and stop such trading practices.

One customer’ defrauded invested her life savings and money from her deceased husband’s life insurance payout, which she intended to use to pay for college expenses for her three children, adding that Maccoll knew that the funds invested in his customers’ accounts were for retirement or college expenses.

Charles Bloom of Chelsea Financial

Please call 1-866-817-0201 if you were an investor with Charles Bloom of Chelsea Financial.  Bloom operated primarily in the West Palm and Royal Palm areas of Florida, but likely has investors nationwide.  We have reason to believe that Bloom engaged in a pattern of inappropriate behavior in the portfolios of his investors.

In October 2017, FINRA, the regulator that oversees securities brokers, commenced an investigation into allegations that Bloom engaged in an unsuitable pattern of trading in at least three customer accounts.

All securities brokers are required to know their investors and only recommend investments Invest photo 2that are consistent, or suitable, with the investors risk tolerance and investment objectives, among other things.  Brokers have many incentives to recommend investments that are too risky or otherwise unsuitable for investors.  This motivation can lead to large losses by an investor.  As such, the recommendation of unsuitable investments is considered to be a form of fraud.

In connection with the FINRA investigation, on June 21, 2018, FINRA sent a request to Bloom for on-the-record testimony. Brokers are required to cooperate with FINRA investigations into misconduct.  As stated in a phone call with FINRA staff on July 3, 2018, Bloom acknowledges that he received FINRA’s request and would not cooperate.

Ultimately, Bloom surrendered his license and accepted a bar from the securities industry as a result of the allegation.  However, this allegation is just the latest in a long list of allegations.  The record  of Bloom shows prior regulatory actions, a 20-day suspension, and two customer suits.  This raises the question of why Bloom was hired and why he was not given appropriate supervision in light of his history.

We represent investors in securities industry arbitration proceedings across the country.  Please call for a free and confidential consultation.

 

Recovery of CLO Losses

CLO (Collateralized Loan Obligation) investors may have recovery avenues for their losses.  These complex investments are only suitable for the most sophisticated investors willing to assume the high risk of these investments.  Investors who are less sophisticated or who seek only investments or looking for only moderate risk investments cannot legally be sold these investments.  For a consultation, please call 1-866-817-0201.

The financial industry is governed by rules concerning whether certain investments can be sold to investors.  One such limitation is that securities broker, financial advisors and investment advisors may only sell investments that are suitable, or investments that are consistent with an investors level of sophistication, investment objectives and tolerance for risk.  Complex investments that carry a high risk potential are unsuitable for your average investor looking for growth or income with a tolerance for moderate risk.

investingstockphoto 1As identified by FINRA, the Financial Industry Regulatory Authority, a CLO is very complex and risky investment.   A CLO is a security made up of loans to corporations that usually have relatively lower credit ratings. Leveraged buyouts, in which a private equity firm typically borrows money to purchase a controlling stake in a company, are a common for CLO loans. After the loans are made, they’re sold off to a manager, who bundles them together and then manages the consolidations, buying and selling loans as he or she sees fit.

A CLO manager raises money to buy the loans by selling debt and equity stakes to outside investors in slices of the total collection according to risk level.

FINRA gives an example to demonstrate how tranches work.  Think of everyone who owns a piece of the loan pool as standing in a long line. Those at the front of the line would get repaid first if any of the loans in the pool go into default, but they receive lower interest payments than those at the back of the line. The people further back are paid more for taking a greater risk that they would not be repaid in the event of losses in the underlying loan pool.

Typically, a CLO includes both debt tranches and equity tranches. The debt tranches are similar to bonds – they have credit ratings and offer regular coupon payments for a period of several years. Interest rates may be set or “floating,” meaning they vary with prevailing interest rates.

Debt tranches have first dibs on payments from the underlying loans, though here again, there are important differences within the group. Senior tranches have a higher-priority claim to payments (and receive lower interest payments) than junior tranches (which receive higher interest payments).

Equity tranches are the riskiest piece of the CLO puzzle. They have no credit ratings, are last in line for payment, and thus are the first to suffer losses if the underlying loan portfolio falters. Though equity tranche investors are simply paid whatever cash is left over after the debt investors have received their interest payments, they typically earn a higher return than debt tranche investors do.

FINRA is not alone.  The Wall Street Journal has also identified these investments as risky and complex.  The Journal points out that the race to provide higher returns has led to an even greater sales of such investments, and that such investments hit a record in 2017.

Unless you are a very sophisticated investor willing to speculate the money invested in CLOs, you should seek legal representation for losses sustained.

Attention Investors of Mark Solomon

If you were one of the investors of Mark Solomon please call 1-866-817-0201 for a free and confidential consultation.   We believe that Mr. Solomon, whose office is in Wynnewood, Pennsylvania, inappropriately sold real estate investments and that his employer, M Holdings, inappropriately supervised Solomon and allowed the sales to occur.

Invest photo 2From December 16, 2014 through December 29, 2014, on behalf of a commercial real estate limited partnership, Solomon solicited and sold limited partnership interests (the “offering”) to seven investors for a total of $1,400,000.  However, before soliciting and selling interests in the offering on behalf of the commercial real estate limited partnership, Solomon did not provide to M Holdings the notice required. Solomon first provided written notice of his sales activity to M Holdings on August 31, 2015 after responding to inquiries made by a regulator during an examination of M Holdings.

The financial industry regulator, FINRA, brought an action against Solomon for the sales of the investments.  Solomon entered into a settlement where he agreed to a one year suspension from the securities industry.

M Holdings ultimately is responsible for the sale of the investments.  Brokerage firms are responsible for the supervision of the private securities sales of their brokers even when the sales are away from the firm.  FINRA brought action for the inadequate supervision of Solomon by M Holdings.    M Holdings was censured and agreed to pay a $135,000 fine.

 

Steve Knuttila investor recovery

If you were an investor with Steve Knuttila please call 1-866-817-0201 to discuss your options for investment loss recovery.  Jeffrey Pederson represents investors nationwide in issues of investment mismanagement and investment fraud.

Mr. Knuttila has recently lost his securities license and has come under the scrutiny of Minnesota securities regulators after a long history of defrauding investors and mismanaging the life savings of people.  FINRA, the Financial Industry Regulatory Authority, discloses the number of “disclosure events” a broker receives.  Such events include regulatory investigations, investor lawsuits and written investor complaints concerning a broker.  Four such disclosure events require a brokerage to give a broker heightened supervision or terminate a broker.  In the case of Mr. Knutilla, he has over 20 such disclosure events.

Knuttila has previously worked with a Questar and Capital Financial Services.  Both these firms have potential liability for the actions of Knuttila.  The history of disclosure events made the hiring and continued employment of Knuttia questionable.

Invest photo 2The beginning of the end for Knuttila was in 2017.  In November 2017, FINRA, the regulator overseeing stockbrokers nationwide, began an investigation into allegations that Knuttila made unsuitable recommendations to customers. The sale of unsuitable investors is a form of negligence and can be a form of fraud.  On May 10, 2018, FINRA staff sent a request to Knuttila for on-the-record testimony pursuant to FINRA Rule 8210. As stated in his phone call with FINRA staff on May 21, 2018, and by this agreement, Knuttila acknowledges that he received FINRA’s request and will not appear for on-the-record testimony at any time.  FINRA barred Knuttila from the securities industry.

On April 2, 2018, the Minnesota Department of Commerce issued a Consent Order permanently barring Knuttila from engaging in the sale or offering of securities and any related securities activity in the State of Minnesota, revoking his insurance producer’s license, and fining Knuttila $40,000, of which $30,000 was stayed, based upon findings that Knuttila made misrepresentations and omissions of fact, breached his fiduciary duties, and made unsuitable recommendations in connection with the sale of securities.

 

Tags:  Knutilla, Knutttila, CFS, Minnesota, Minot, North Dakota, Perham.