Tag Archives: SEC

Colo. Attorney for Sonya Camarco Victims

Sonya Camarco is an LPL Financial advisor based in Colorado Springs who stole approximately $2.8 million from her investors/clients.  Camarco then used the stolen funds for personal expenses such as buying several homes.

If you are a victim, please call the Law Offices of Jeffrey Pederson at 1-866-817-0201 for a free consultation on your rights.  Jeffrey Pederson is an attorney licensed in Colorado who has helped hundreds of victims of financial advisor fraud and theft from across the country.

The Securities and Exchange Commission charged Sonya D. Camarco with five counts of fraud charges and has frozen her assets after SEC investigators said she used third-party checks and other means to forward client funds toward personal expenses like mortgage and credit card payments.  Federal authorities filed charges against Comarco on or about August 27, 2017 in the United States District Court for the District of Colorado.

broker in handcuffs

Camarco forged clients’ signatures on at least 129 first- and third-party checks, having them sent to a post office box and signing them over to an entity she controlled, an entity named “C Investments,” according to the SEC. Camarco bilked one widow victim for more than $1 million, investigators say.

These actions not only raise questions on the actions of Camarco, but also raises question as to the LPL supervisors charged with overseeing Camarco.  Reasonable supervision is designed to detect and stop these types of actions.  There are also money laundering issues on the part of those who helped Camarco commit her crimes.

Prior to working for LPL, Camarco had worked from both Morgan Stanley and Merrill Lynch.

Jeffrey Pederson, from his offices in the Denver Tech Center, has handled cases in the past with similar facts and has experience in this type of advisor scheme where an advisor uses similar mechanisms to gain control of the investor’s funds.   Consequently, he knows the documents to seek in discovery from defendants or to subpoena from non-defendants, and additional avenues of recovery to allow victims to increase their level of repayment.

Robert “Rusty” Tweed

Jeffrey Pederson PC is interested in speaking to investors of Robert “Rusty” Tweed as part of an investigation into the broker.  Tweed was previously with Cabot Lodge, Concorde Investment Services, and MAM Securities.  Please call 1-866-817-0201 for a free and private consultation with an attorney.  Many issues which may entitle investors to recovery against Tweed’s former employers, have been brought to light by a recent FINRA complaint against Rusty Tweed.  However, time is running on the ability to recover.

FINRA alleges in a complaint that between November 2009 and March 2010, Rusty Tweed obtained more than $ 1.6 million from his retail customers through a false and misleading private placement memorandum (“PPM”) he used to offer and sell interests in his Athenian Fund LP, a pooled investment fund that he both created and controlled.

Tweed drafted and circulated the private placement memo (PPM), a document that is supposed to provide investors with significant information to evaluate the investment, that misrepresented and failed to disclose material information to investors, and twenty three customers invested in the Fund without the benefit of complete and accurate information.

The misrepresentations included: (1) the total potential fees and costs associated with the Fund; (2) Tweed himself; and (3) the entities and individual who would ultimately have immediate control over the money that customers invested.

According to the Complaint, Tweed and the PPM misrepresented or failed to disclose to retail customers the following material facts:

a. First. Tweed and the PPM misrepresented the total potential costs of an investment in the Athenian Fund. opting to disclose certain costs and fees while oniitting others that would reduce any return on investment.

b. Second, Tweed and the PPM also failed to disclose that the omitted fees and costs were added only after Tweed discovered that arbitration (complaints) against him would prohibit him from opening a trading account for the Fund directly and require the use of a more expensive master fund structure.

c. Third, Tweed and the PPM failed to disclose that Tweed had replaced the Fund’s identified master fund with another entity controlled by an undisclosed person (ER). who would now have immediate control over the Fund’s assets. Tweed and the PPM likewise provided no information sufficient for investors to evaluate the risk ofentrusting their capital to ER and his company, such as relevant background. other business activities, and qualifications.

d. Fourth, Tweed and the PPM failed to disclose the additional management fees and perforniance allocations that arose when he granted control to ER and his management company, and Tweed’s own interest in those fees, which would further reduce any return on the retail investors’ capital.

As a result of these material misrepresentations and omissions. Athenian Fund investors could not evaluate the true costs and risks associated with the Fund, including those relating to the individual or the entities with immediate control over their capital.

 

Demitrios Hallas investment loss

Hallas, a former stockbroker representative at a number of New York City broker-dealers, including PHX Financial, Santander, and Forefront Capital, is alleged by the SEC to have violated the multiple federal securities laws.  Investors should speak to a private attorney about their rights. We at PedersonLaw are currently investigating this matter.  Please call 1-866-817-0201.

The allegations contained in the SEC complaint are as follows:

First, Hallas is alleged to have purchased and sold daily leveraged Exchange-Traded Funds and Notes (ETFs and ETNs) in his customers’ accounts, knowingly or recklessly disregarding that these products were unsuitable for such customers.  Hallas had no reasonable basis for recommending daily leveraged ETFs and ETNs.  This constitutes a violation of the suitability requirement that a broker must only recommend investments that are suitable in light of an investors risk tolerance, objectives and that are within an investors level of sophistication.

Second, Hallas is alleged to have stolen funds from investors.  Under the guise of soliciting funds from one of his customers for investment purposes, misappropriated a total of $170,750 from that customer.

The products in which Hallas invested his customers’ hard-earned savings were daily leveraged ETFs and ETNs, and are characterized by a significant degree of volatility and risk. As alleged in the SEC complaint, these products were unsuitable, and Hallas had no reasonable basis for these recommendations.

ETFs are investment companies and ETNs are unsecured notes. Daily leveraged ETFs and ETNs seek to deliver a multiple, the inverse, or a multiple of the inverse of the performance of an underlying index or benchmark over the course of a single trading day. To accomplish their investment objectives, daily leveraged ETFs and ETNs pursue a range of investment strategies, though the strategies are mostly speculative, and only appropriate for investors willing to take the highest level of risk.

The strategies include swaps, futures contracts, and other derivative instruments. These products are inherently risky, complex and volatile, and are only appropriate for sophisticated, high-risk investors.

Unfortunately, Hallas’s customers were unsophisticated and not suitable for such investments. The investors had limited or no investing experience and their incomes, net worth levels, and assets were modest. “The risk and volatility in daily leveraged ETFs and ETNs was inconsistent with the investment profiles of Hallas’s customers, yet Hallas purchased and sold a total of 179 daily leveraged ETF and ETN positions in their accounts from September 2014 to October 2015.”

Hallas’s investors paid a total of approximately $128,000 in commissions and fees in connection with the purchase and sale of these 179 positions. The net loss across these 179 positions was approximately $150,000.

Hallas purchased and sold 22 different daily leveraged ETFs and ETNs in his customer accounts. These products sought to double or triple the performance, or the inverse of 2 Case 1:17-cv-02999 Document 1 Filed 04/25/17 Page 3 of 17 the performance, of over a dozen different underlying indices, including the S&P 500 VIX ShortTerm Futures Index, an investment based upon a volatility index, as well as certain gold mining, oil and gas and Russian, Chinese and Brazilian stock indices.

Finally, in a what the SEC has described as a “brazen and fraudulent scheme,” Hallas misappropriated $170,750 from an unsophisticated investor, who the SEC describes as “a truck driver with no trading or finance experience and no retirement resources outside of the funds that he provided to Hallas.”  The investor transferred funds to Hallas with the understanding that Hallas would make investments on his behalf; instead, Hallas spent Customer’s A’s funds on personal expenditures – a fact that he concealed from the investor.

A comprehensive article on the deeds of Mr. Hallas can be found in Investmentnews.com.

To speak to a private attorney about the recovery of losses with Mr. Hallas, call 1-866-817-0201 for a free and confidential initial consultation.

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.

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.

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.

Southeast Investments, N.C. and Frank Black

We represent investors and have successfully pursued Southeast Investments and Frank Black to judgment.  The arbitration resulted in a nearly full award of investment losses plus an award of attorney fees.  To speak to a lawyer for a free and confidential consultation about losses with Southeast or Black please call 1-866-817-0201.

Black and Southeast are in trouble again.   This time by FINRA regulators.  FINRA’s Department of Enforcement alleges that Respondent Southeast Investments, acting through Respondent Frank Harmon Black, and Black violated FINRA Rules 8210, 4511, and 2010 in the provision of false documents to FINRA and giving false testimony in a regulatory interview during an investigation into whether the Firm had conducted required inspections of branch offices.

One of the false documents was a list of 43 branch inspections Black claimed he performed, including the dates he purportedly conducted the inspections. Respondents also provided five false branch office inspection checklists that Black claimed he completed during the inspections. Enforcement also alleges that for more than five years Respondents failed to ensure that Southeast preserved all business-related emails by permitting registered representatives to use private email providers.

Under an “honor system” set up by Respondents, registered representatives were obligated to send copies of their emails to the Firm to review and retain. For this conduct, Southeast is charged by FINRA regulators, pursuant to FINRA documents, with willfully violating Section 17(a) ofthe Securities Exchange Act of 1934 and Exchange Act Rule 17a-4. Southeast and Black are also charged with violating NASD Rule 3110 and FINRA Rules 4511 and 2010.

The resulting penalty was just short of a quarter million dollars.  Frank Black was expelled from the securities industry.

The FINRA order can be found at the following link.

Jeffrey Pederson is a private attorney representing investors, having represented investors in FINRA arbitrations across the country.  Please call for a consultation if you have lost funds as a result of actions you suspect may be inappropriate.

 

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.

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.

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.