Tag Archives: lawyer

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.

Losses with First Financial Equity (FFEC)

If you have suffered investment losses with First Financial Equity Corp. (“FFEC”) please call for a free consultation with an attorney at 1-866-817-0201.  Recent actions of FINRA, the financial industry regulator, indicate that investors may have been harmed by the actions of this firm.

FFEC and its chief compliance officer entered into a settlement with FINRA regulators  on March 8, 2017 concerning the lapses in supervision.  The alleged lapses allowed a variety of different fraudulent activity to occur throughout FFEC and in particular the Scottsdale, Arizona branch.  FINRA asserted that the chief supervisor of FFEC, the chief compliance officer, had not adequately supervised and that the firm did not have adequate supervisory procedures.

The most obvious result of the lack of supervision is the 26 customer complaints of broker John Schooler.  These complaints, many of which evolved into arbitration lawsuits, involved his inappropriate trades in oil & gas investments and TIC investments.

One issue alleged to be a result of the inadequate supervision is the sale of unsuitable ETFs.  Unsuitable securities are those which are not consistent with the wants and needs of an investor.  Usually, an investment is unsuitable if it puts at risk funds not earmarked for risk, or otherwise is inconsistent with who the client is as an investor.

In the case of FFEC, its brokers recommended and invested its customers in aggressive ETFs, including leveraged and inverse ETFs.  Such investments are known to be high risk, yet the brokers recommended the investments to individuals who did not express a desire for high risk investments.  Worse, many of these investments were purchased by the FFEC brokers for accounts where the brokers were given discretion and not given the required supervisory review.

To ensure suitability, FFEC brokers were required to obtain sufficient information about their investors to evaluate the investments that would be suitable.  The settlement states that this was not done.

Another issue alleged to have been caused by the lack of supervision is churning/excessive trading.  This occurs any time trades are made which the costs and fees are of an amount that the trades benefit the adviser more than the investor.

Austin Morton

The Financial Industry Regulatory Authority charged Austin Morton, a former Edward Jones broker located in eastern Oklahoma, with the theft of $36,000 from an 83-year-old man with dementia.  It is alleged that this theft was motivated by outstanding gambling debts of Morton.

Wall Street photo 2Morton is alleged to have taken more than $22,000 that the elderly investor left in Morton’s car after the investor liquidated his retirement account.  The FINRA complaint asserts that in September 2016 the investor was in the car of Morton after having lunch with Morton.

A month later the Edward Jones broker filled out a signed blank check from the customer for another $22,000.  Morton defended the action saying that the transfer of funds to him was a loan and that the investor was a personal friend.  Part of the funds were asserted by the broker to be for medical expenses which are alleged to have never occurred.

The FINRA complaint states, “[I]n 2016 Morton incurred close to $130,000 in losses from Online [gambling site], the primary online horse racing wagering facility with which he placed bets at the time.”  The complaint goes on to say, “[I]n September 2016 alone, the month in which he committed his first act of conversion, Morton made 38 separate deposits into his Online [gambling] account, totaling more than $17,300.”

Finra charged Morton with both conversion of funds and an unrelated charge of engaging in undisclosed outside business activity. These are substantial charges that could result in a bar from the securities industry.

On his FINRA BrokerCheck record, a form of his CRD record, Morton denied his employer’s termination charges stating, “gentleman [the alleged victim] [is] a long time family friend,” and that the investor “was no longer a client,” the broker wrote.

A copy of the complaint can be found at the following link.

Joseph Henry Murphy, B. C. Zeigler, RBC

On February 16, 2017, Wisconsin broker Joseph Henry Murphy of B. C. Ziegler and Company and formerly of RBC entered into an AWC settlement with FINRA Regulators.

As identified in FINRA regulatory findings, on February 11, 2015 Murphy exercised discretion in 27 non-discretionary accounts of his customers, placing a total of 80 transactions.  In the days leading up to the trades, Murphy had conversations concerning these transactions with his clients and the clients gave the broker express verbal approval for these trades and his proposed strategy, but Murphy did not receive authorization from these customers on the same day that he executed the transactions.  This is in violation of FINRA rules that require contemporaneous authorization for trades in non-discretionary accounts.

On October 27, 2015 he then again exercised discretion in 20 non-discretionary accounts, placing a total of 32 trades. Once again, in the days leading up to the trades, Murphy discussed these transactions with the clients and they gave Murphy express verbal approval for these trades and his proposed strategy, but he did not receive authorization from these customers on the same day that he executed the transactions.

On December 22, 2015 Murphy made 11 mutual fund transactions for a single customer after a short telephonic discussion with that customer. In that discussion neither the specific mutual funds nor the specific amounts that would be invested were expressly identified, and Murphy used his discretion to make those transactions. Murphy did not obtain written authorization, which is required for an account to be discretionary, from any of the 48 customers to exercise discretion in their accounts and RBC, the employer of Murphy at the time, did not approve these accounts for discretionary trading.

For these actions, Murphy received a 10-day suspension and a $5000 fine.

A link to the AWC of FINRA is found here.

Kelly Clayton Althar

Kelly Clayton Althar has been barred from the securities industry for excessive trades and recommending and purchasing investments that were too high of a risk for the broker’s investors.

The allegations to which Althar consented, without admitting or denying fault, are that between April 2011 and March 2014 the broker made unsuitable recommendations and engaged in excessive trading in two accounts held by an elderly customer.  Althar engaged in high volume trading to generate commissions and over concentrated a client’s accounts in risky securities, despite the fact that the client was close to retirement and wanted only low risk investments. Althar’s trading decimated the client’s accounts, which constituted the bulk of her net worth and retirement savings.

During the Relevant Period, Althar often purchased, sold, and subsequently repurchased the same security in CN’s accounts within a short period oftime. For example, on December 26, 2012, Althar purchased 696 shares of American Capital Agency Corp. (“AGNC”), a REIT, for $21,559.09 and sold those shares, at a loss, two months later on February 28,2013, for $21,298.50. He then re-purchased 782 shares of AGNC two months later after the price had risen, for $26,756.36. and then sold those shares, at a significant loss, six weeks later for $18,619.03. On those four trades, on which CN lost over $8,000 in a matter ofmonths, Althar generated over $3,000 in commissions.

A link to the AWC can be found at the following link.

Althar had previous pled no contest to a charge for felony grand theft and was sentenced to a 30-day work program and 36 months probation.

 

Losses with Matthew David Niederbaumer

Please call if you suffered losses with Matthew David Niederbaumer of Huron, South Dakota and employed by Thrivent Investment Management.

Mr. Niederbaumer submitted an AWC, a settlement agreement where a securities broker neither admits but cannot deny fault, in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 10 business days.

Without admitting or denying the findings, Niederbaumer consented to the sanctions and to the entry of findings that he exercised discretion in executing transactions in connection with the sale and purchase of exchange-traded notes and funds in five of his customer’s accounts. The findings stated that while the customers consented to the transactions, Niederbaumer did not obtain the customers’ prior written authorization to exercise discretion in the accounts, and his member firm did not approve the accounts for discretionary trading.

Part of the concern in this matter is the fact that the trades involved exchange traded notes (ETN).  ETN investments carry a high commission and are high risk.  The possibility for abuse and improper intent is much more likely when such trades result in a commission higher than normal, and the chance that a customer would reject a recommended investment with such a high commission if consulted is greater.

The record of Mr. Niederbaumer’s compiled by FINRA can be found at the following link.

Losses with Maczko of Wells Fargo

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

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

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

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

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

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

John Burns, Ameriprise, UBS Loss Recovery

John Burns of St. Charles, MO, and formerly of Ameriprise, UBS, Edward Jones and Sagepoint, submitted an agreement settling a regulatory suit in which he was assessed a deferred fine of and suspended from association with any FINRA member in any capacity for 14 months.  Such regulatory actions rarely work to compensate injured investors and injured investors should speak to an attorney concerning their losses.  If you believe that you have suffered losses, or believe the offer to settle your matter is too low, call 1-866-817-0201 for a free initial consultation with an attorney.

Without admitting or denying the findings, Burns consented to the sanctions and to the entry of findings that he engaged in a pattern of unauthorized trading in customer accounts and made unsuitable, risky investments for a senior couple. The findings stated that Burns did not have written discretionary authority to place trades in any of these customer accounts. In some of UBSthe customer accounts, Burns executed the trades without any authorization, while in other customer accounts, Burns had some verbal authorization to exercise discretion generally, but exceeded that verbal authorization by executing trades in excess of the available funds in the account. The findings also stated that Burns made unsuitable and unauthorized investments over a twoyear period in the account of a senior retired couple, both of whom were over 65 years old. These transactions involved repeated high-risk investments in small drug company stocks which were unsuitable for the customers’ moderate risk tolerance and investment profile. The customers sustained losses in all but one of these investments in an aggregate amount exceeding $50,000.

Burns has also been the subject of five lawsuits in recent years filed by investors concerning the mishandling of their accounts.

Dougherty & Company Investment Losses

 

The Financial Industry Regulatory Authority (FINRA) announced in January 2017 that it resolved a regulatory action against Dougherty & Company LLC, headquartered in Minneapolis, Minnesota.  We believe that this action exposed supervisory problems within Dougherty and may entitle investors of certain investments recovery for investment losses.  Please call 1-866-817-0201 for a free consultation with an attorney

Dougherty entered into a settlement agreement with FINRA regulators, where Dougherty did not did not admit or deny fault, but agreed to a censure, a fine of $140,000, and required to pay $78,910 in restitution to a customer.  The action stems from the allegation that for more than four years, Dougherty did not adequately supervise a securities broker who initiated hundreds of trades for elderly customers without contacting them, thus lacking appropriate authorization, and unsuitably recommended dozens of transactions to those customers. Unsuitable recommendations are investment recommendations that were of higher risk than the investor agreed to assume.

The settlement agreement contained certain findings of fact, and those findings stated that Dougherty assigned the primary responsibility for supervising broker trading activity to a supervisor who was also responsible for supervising numerous other brokers and handling his own customers’ accounts. The supervisor’s supervision of the broker in question was not subject to adequate firm oversight or specific direction. Instead, Dougherty inappropriately relied on the supervisor’s discretion and judgment, which the supervisor did not exercise appropriately.

The findings also stated that the firm did not have supervisory tools that were reasonably designed to detect financial adviser or broker misconduct.  FINRA stated that while the supervisor received daily trade blotters and certain monthly exception reports, data generated by a brokerage firm that identifies the investments recommended by a broker and warns of potentially inappropriate investment recommendations, the firm did not provide exception reports addressing short-term trading or margin usage by the financial adviser to the supervisor.

Additionally, the firm’s exception reports designed to identify inappropriate recommendations to elderly customers excluded accounts in the name of a trust, regardless of the age of the settlor or trustee.  Such shortcomings are important because the broker’s trading activity in two of the accounts at issue did not appear on those exception reports because of the existence of a trust.

The findings also included that the firm failed to respond appropriately to warning signs about the broker’s business, such as a dramatic increase in his commissions without a commensurate change in the number of accounts that he handled or the type of products that he sold. In sum, the firm’s system of supervision was not reasonably designed under the circumstances to prevent violations of securities laws and rules, including rules governing trading without customers’ approval and unsuitable recommendations.

The full AWC can be found at the following link.

Jeffrey Pederson PC is a private law firm that has helped hundreds of investors successfully recover similar losses.

 

Tobin Joseph Senefeld

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

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

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

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

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

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