Tag Archives: New York

Investors of Mark Kaplan of Vanderbilt

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

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

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

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

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

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

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

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

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

 

Vincent Sciabica Investors

Investors of Vincent Sciabica may have recourse for their losses.  A recent regulatory action has revealed wide-spread negligence and possibly fraud in the accounts Sciabica’s investors.  If you are such an investor please call 1-866-817-0201 for a free and confidential consultation.

Regulators allege that during the period he was employed by Morgan Stanley, Vincent Sciabica engaged in an unsuitable pattern of short-term trading of UITs in approximately 360 customer accounts.  Sciabica entered into a settlement with regulators where he did not deny or confirm these allegations.

UlTs are investment companies that offer shares of a fixed portfolio of securities in a one-time public offering, and terminate on a specified maturity date. As such, they are not designed to be used as trading vehicles. In addition, UlTs typically carry significant upfront charges, and as with mutual funds that carry front-end sales charges, short-term trading of UITs is generally improper.  Trading of these investments is unwise because of the cost, but can unreasonably enrich the broker who recommends such a strategy.

During the period when he was employed by Morgan Stanley, in connection with these customer accounts, Sciabica repeatedly recommended that the customers purchase UlTs and then sell these products before their maturity dates. The majority of the UlTs that Sciabica recommended had maturity dates of at least 24 months and carried sales charges. Nevertheless, Sciabica continually recommended that his customers sell their UIT positions less than a year after purchase.

In addition, on more than 1,000 occasions, Sciabica recommended that his customers use the proceeds from the short-term sale of a UIT to purchase another UIT with similar investment objectives. Sciabica’s recommendations caused the customers to incur unnecessary sales charges, and were unsuitable in view of the frequency and cost of the transactions.

Sciabica left his employ with Morgan Stanley in 2014 while Morgan Stanley was investigating this wrongdoing.  The investigation of the Financial Industry Regulatory Authority (FINRA) began in November 2017.

 

Network 1 Financial ETF Losses

From August 2010 to September 2015 Network 1 Financial failed to establish and enforce a supervisory system reasonably designed to supervise advisor sales of complex investments such as leveraged, inverse, and inverse-leveraged exchange-traded funds (ETFs).  These are the regulatory findings that Network 1 neither denies or admits.  This issue has impacted over one hundreds securities accounts at Network 1.  If you are a Network 1 investor please call 1-866-817-0201 for a free and confidential consultation.

Non-Traditional ETFs are complicated investment vehicles suitable for only a small section of the investing public.  Such ETFs are designed to return a multiple of an underlying index, Such as the Russell 2000, S&P 500 or VIX, the inverse of that benchmark, or both, over the course of a day.

The performance of such ETFs over periods of time longer than a single trading session be very volatile and be substantially risky.  The results, as FINRA states, “can differ significantly from the performance . . . of their underlying index or benchmark during the same period of time.”

FINRA, the regulator of securities brokerages in the United States, has warn brokerages and their advisors that NonTraditional ETFs “are typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.”

Approximately 29 Network 1 financial advisors/brokers traded such ETFs in 167 customer accounts. These representatives executed 645 ETF transactions totaling approximately $48 million in possibly unsuitable trades.

Transactions in Non-Traditional ETFs during the referenced period, Network 1 Financial had inadequate supervisory procedures regarding the suitability and supervision of Non-Traditional ETFs transactions.

 

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.

Platinum Partners

We are currently investigating losses suffered by investors in Platinum Partners.  If you have suffered losses please call 1-866-817-0201 for a free consultation with an attorney.

As reported on December 19, 2016 in the Wall Street Journal, top executives of hedge fund Platinum Partners were arrested Monday morning and will be charged with defrauding investors in one of the biggest such cases since Bernard L. Madoff’s Ponzi scheme.  The level of fraud is anticipated to approach or top $1 billion.

guy in handcuffsPlatinum previously reported more than $1 billion in assets under management.  This includes holdings scattered in eclectic investments like loans to bankrupt companies and thinly-traded pharmaceutical stocks. In form of a true Ponzi-type operation, Platinum boasted a performance track record with no down years for its funds.

The scheme targeted members of the Jewish community in New York, New Jersey, Florida and Texas.

The indictment unsealed Monday in federal court in Brooklyn charges Platinum founder and Chief Investment Officer Mark Nordlicht, co-chief investment officer David Levy, and former president Uri Landesman with counts of securities fraud, investment adviser fraud and conspiracy.

Authorities in New York said these Platinum executives and others falsely inflated the value of Platinum’s assets, allowing Platinum Partnersthe firm to collect a hefty cut of all investment gains and project a veneer of financial stability. In actuality, the firm’s investments were worth far less, and Platinum’s executives knowingly faked the performance figures, authorities said.

Steepener Note Losses, Investors Capital or Trident Partners

FINRAInvestors Capital Corp., a Cetera subsidiary, agreed to pay $1.1 million to settle Finra charges that it recommended unsuitable short-term trades in complex products to clients including steepener notes.  Trident has agreed to pay a $50,000 fine.

For more information, call 1-866-817-0201.  Initial consultation with an attorney is free and confidential.  Jeffrey Pederson was recently quoted in Bloomberg concerning the sale of Steepener notes to retail investors.

Letters are currently being sent to investors asking them to settle for a small amount of money.  Investors should speak to an attorney before doing this action because the amount may be too small and the accepting of the settlement may waive rights for additional funds.

Financial advisers are required to sell only suitable investments to their investors.  A suitable investment is not only one that is consistent with the objectives and risk tolerance of an investor, but is also investments that are not so complex that the investor cannot appreciate the risk.

Finra’s complaint against Investors Capital revolved around recommendations for unsuitable investment trusts and steepener notes in the accounts of 74 clients.

Two Investors Capital representatives recommended short-term unit investment trust transactions with upfront sales charges ranging from 250 to 350 basis points in the customers’ accounts, according to a Finra letter of acceptance released on Monday.

Finra also charged that Investors Capital lacked adequate supervisory policies.  Brokerage firms are required to have supervisory procedures to ensure the sale of only suitable investments.  However, at Investors Capital the representatives’ behavior as to the recommendation of only suitable investments went unchecked from June 2010 to September 2015.

The clients involved in unsuitable UIT trading lost more than $240,000, according to Finra.

Finra notes that one 58-year-old client with a long-term growth account objective purchased and sold nearly 65 of the unit investment trusts, almost all of which had two-year maturity dates, in a 2.5 year period with an average holding period of three months. On at least 58 occasions, proceeds of the sale of one unit investment trust in this client’s account were used to purchase another, resulting in a loss of $50,728 in that client’s account.

Between April 2011 and December 2012, FINRA alleges that Investors Capital representatives also recommended short-term trades of “steepener” notes, which are long-term bets on the shape of the yield curve, in an unsuitable manner. The recommendations led to 63 customers suffering about $126,000 in losses.

Details of this settlement were described in the October 6, 2016 edition of Financial Adviser Magazine.

Current economic conditions caused the value of hundreds of millions of dollars worth of debt held by Steepener investors — often held by retail investors — to evaporate.

Holders of ‘‘steepener’’ securities are facing a bleak outlook. These structured products were issued in droves in recent years by Wall Street banks. Frequently marketed by brokers, they pay a high introductory fixed rate that switches to a floating coupon linked to the gap between short- and long-term U.S. interest rates.

Jeffrey Pederson is a private attorney who represents investors in suits concerning securities brokers and securities brokerage firms.

Kenneth J. Daley of Merrill Lynch Improper Conduct

Kenneth James Daley with Merrill Lynch in Glenwood Landing, NY entered into a settlement agreement with FINRA in August 2016.  Pursuant to the terms of this agreement, he was barred from association with any FINRA member, which is any brokerage firm, in any capacity. Without
admitting or denying the findings, Daley consented to the sanction and to the entry of
findings that he concealed his improper receipt of funds from a customer.  The funds were paid
in connection with purported profits in an account of his member firm. The findings stated
that the customer contacted Daley about providing him with money to allow him to benefit
by sharing in the profits in her account with Daley’s firm. The customer wrote Daley a check
for $2,500 drawn from her cash management account with the firm. Daley immediately
contacted the customer because he was concerned that his firm would learn of the deposit,
which he knew to be prohibited. In order to avoid detection by the firm, Daley instead
provided the customer with his personal banking account details for an account he held at another financial institution and informed her that she could directly deposit funds related
to purported profits in her account with the firm to his personal checking account. As a
result, the customer deposited to Daley’s personal bank account eight additional checks,
each of which was drawn off of her non-firm bank account. In total, the customer gave
Daley $29,000 in connection with purported profits in her account, all of which Daley used
for personal expenses. Throughout this time period, Daley knew he was prohibited from
accepting such payments.

The findings also stated that Daley used his personal cell phone to text message customers.
Daley was prohibited from text messaging with customers unless done through an
approved firm platform. The findings also included that Daley submitted an annual firm
attestation falsely attesting that in the prior 12 months he had not used text messaging
with any customer. As a result, Daley prevented the firm from discharging its supervisory
responsibilities with respect to the review of his electronic communications and caused the
firm to fail to maintain such communications as required under FINRA and Securities and
Exchange Commission (SEC) rules.

FINRA found that Daley recommended that the customer purchase units of a non-traditional, leveraged crude oil exchange-traded fund (ETF) without having a reasonable basis to do so. On Daley’s recommendation, the customer purchased 5,000 units for a principal amount of $41,850. Daley did not liquidate the position until after the customer had experienced losses.

The AWC can be found at the following link.

Oil or Gas Investment Losses

Oil Stock IIJeffrey Pederson, P.C. helps investors determine if they have a right to recover investment losses in oil, gas or other investments.  Please call 1-866-817-0201 toll-free for a free consultation.

In 2016, oil dropped to a price below $30 a barrel.  Many investors simply ignore their losses, believing that the loss is simply due to the market, without knowing that they may be entitled to a recovery.  Such individuals unnecessarily let their plans for retirement or other future plans go unfulfilled because of the financial loss they sustained.

Since late 2014, countless oil, gas and other energy companies have filed for bankruptcy.  Many investors in these companies were illegally sold these investments by brokerage firms motivated by commissions paid by the investments.  Such investments can take many forms including, but not limited to, Master Limited Partnerships (MLPs), common stock, notes, bonds, mutual funds, and Exchange Traded Funds (ETFs).

We are currently investigating investments into the following energy companies:Oil Stock

American Eagle, BPZ, Buccaneer, Climax Energy, Duer Wagner, Hart Resources, Hercules Offshore, Linn Energy, Milagro Oil and Gas, Petrobras, Quicksilver Resources, Sabine, Samson Resources, Sandridge Energy, Southern Pacific, Walter Energy and WBH Energy.

Oil and gas limited partnership losses can do more than take away the hard earned principal of investors, it can also create tax liabilities that the investor was not expecting.  The result is that the investor could lose more than invested.  The following link discusses the risks that in more detail.

Jeffrey Pederson has represented investors in Alabama, Arizona, Arkansas, California, Colorado, Connecticut , Florida, Hawaii, Massachusetts, Montana, New Jersey, New Mexico, New York, North Carolina, Minnesota, Missouri, North Dakota, Rhode Island, Texas, Utah, and Wyoming, in FINRA arbitration actions against securities brokerage firms for unsuitable investments.  Please call for a confidential and free consultation.