Tag Archives: stockbroker

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.

First Financial Equity Corp. Losses

Please call for a free consultation with an attorney if you suffered losses First Financial Equity Corp., particularly if you suffered losses in ETF or annuity investments.

First Financial Equity, a securities brokerage firm headquartered in Scottsdale, Arizona, as identified by FINRA in February 2017, entered in a regulatory settlement with FINRA regulators concerning allegations that financial advisers were receiving excessive commissions and selling unsuitable ETF investments and annuities.  The suit also revealed that systemic problems existed in the supervising of the advisers that would prevent such violations.

A FFEC broker who typifies the problems at FFEC is John Schooler.  This FFEC broker has 26 customer complaints.  Such complaints generally evolve into arbitration lawsuits against the firm.  The complaints against Schooler involve TIC, oil/gas and other inherently aggressive investments.

Under the terms of the Offer of Settlement with FINRA, the firm consented to, without
admitting or denying the same, the entry of the following findings. The findings
stated that First Financial Equity failed to establish, maintain, and enforce an adequate supervisory system, including written procedures, designed to ensure that the firm’s sales of leveraged and inverse ETFs (nontraditional ETFs) complied with applicable securities laws, and
NASD and FINRA rules.

The findings also stated that First Financial Equity failed to establish, maintain,
and enforce an adequate supervisory system and written procedures related to the sale
of multi-share class variable annuities and to maintain records supporting customer
suitability determinations with respect to variable annuity purchases.

Leveraged and inverse ETF are a high risk investment that pays advisers a high commission.  This creates a problem in that it provides motivation for advisers to recommend such investments to investors not seeking high risk.  Such suitability violations are in violation of FINRA rules in addition to the anti-fraud provision of federal and most state securities laws.

 

The firm failed to provide sufficient training to its registered representatives and principals on the sale and supervision of multi-share class variable annuities. The findings also included that the firm failed to implement a reasonable supervisory system and procedures to supervise variable annuity exchanges.

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.

 

Charles Fackrell Fraud

If you were an investor with Charles Fackrell and believe you may be a victim of his fraud, or simply wish to know your rights, please call 1-866-817-0201 for a free consultation with an attorney.

LPLFackrell,  a former LPL adviser based in North Carolina, was sentenced by a federal court to more than five-years in prison for running a $1.4 million Ponzi scheme that operated under the name “Robin Hood.”

The former adviser pleaded guilty to one count of securities fraud in April and was sentenced last week to 63 months in jail.

From May 2012 to December 2014, Fackrell ran his Ponzi fraud, misusing funds from at least 20 investors. He was a registered broker with LPL during that time.

Fackrell “used his position of trust to solicit victim investors and steer them away from legitimate investments to purported investments with” various “Robin Hood” named entities, according to the U.S. Attorney’s office. “These were entities [Mr.] Fackrell controlled and through which he could access the victim’s funds.”

Promising guaranteed annual returns of 5% to 7%, Mr. Fackrell “solicited his victim investors by making false and fraudulent representations, including that the investors’ money would be invested in, or secured by, gold and other precious metals,” according to the U.S. attorney. In fact, Mr. Fackrell spent only a fraction of investor money on such assets, the government claims, and diverted over $700,000 back to his investors in the fashion of a Ponzi scheme.

He used the balance of the money to cover personal expenditures, including hotel expenses, groceries and medical bills, and to make purchases at various retail shops and to make large cash withdrawals.

Information for this post was found at investmentnews.com.

UBS Investor Loss Recovery

UBSIf you are an investor with UBS suffering losses in investments made between 2011 and 2014 you may be entitled to a recovery.  Please call 1-866-817-0201 for a free consultation.

As reported by Rueters, UBS Group AG has agreed to pay more than $15 million to settle U.S. Securities and Exchange Commission (SEC) charges that its failure to properly train brokers led to customers buying hundreds of millions of dollars of unsuitable securities.

The SEC said on Wednesday that UBS from 2011 to 2014 sold about $548 million of “reverse convertible notes,” derivatives tied to individual stocks, to more than 8,700 retail customers who were relatively inexperienced and unsophisticated.

These notes, with mouthfuls of names as Trigger Phoenix Autocall Optimization Securities and Airbag Yield Optimization Securities, were sold to people of modest means, often with low risk tolerances, and included some retirees, the SEC said.

“UBS dropped the ball,” SEC enforcement chief Andrew Ceresney said in a statement.

Gregg Rosenberg, a UBS spokesman, in a statement said the Swiss bank was pleased to settle. It did not admit wrongdoing.

UBS’s payout includes a $6 million civil fine, $8.23 million of improper gains and about $798,000 of interest.

The case is part of a years-long crackdown by the SEC, the Financial Industry Regulatory Authority (FINRA) and other regulators to stop banks and brokerages from selling products that retail and even professional customers may not want, need or understand.

According to the SEC, UBS’s notes were designed to offer attractive yields with a lessened risk of loss.

But Ceresney said on a conference call that UBS’s training focused on describing the “potential upside” from the various products, not their volatility.

David B. Tysk of Ameriprise Investment Loss

If you suffered investment loss with David B. Tysk please call 1-866-817-0201 for a free consultation.

David Tysk, financial advisor for Ameriprise in Eden Prairie, MN, was fined $50,000 and
suspended from association with any FINRA member in any capacity for one year. The
Invest photo 2NAC affirmed the findings in the OHO decision and increased the sanctions. The sanctions
were based on findings that Tysk altered computer notes of customer contacts after the
customer complained about the suitability of a recommendation.

The findings stated that Tysk knew or should have known the importance of customer-related notes in the event of complaints. Tysk’s concealed alterations of his notes did not comply with the clear import of the document-retention policies in his member firm’s code of conduct. Tysk failed toinform the firm of the alterations when he provided a copy of the notes to be produced in discovery during an arbitration proceeding.

The customer became suspicious of the notes and requested further discovery to determine whether the notes had been altered after he lodged his complaint with the firm. Tysk and his firm opposed the requests. In a meeting to prepare for the arbitration hearing, Tysk finally disclosed to the firm that he had altered the notes. At the conclusion of the arbitration hearing, the firm and Tysk were sanctioned for violating arbitration discovery rules.

A copy of the NAC decision can be found at the following link.

Recovery for Jean Walsh-Josephson Losses

If you were an investor of Jean Walsh-Josephson, please call 1-866-877-0201 for a free consultation concerning potential recovery for your losses.

broker in handcuffsJean A. Walsh-Josephson was a financial advisor for Thrivent, formerly Thrivent Financial for Lutherans.  A Winnebago County judge has ordered a two-week trial for this former Oshkosh, Wisconsin financial adviser who accused of stealing $4 million from her mostly elderly investment clients.

The trial for Walsh-Josephson is set for Feb. 20 through March 3, 2017. Judge Thomas Gritton ordered the trial this week, days after victims and their families gathered in court May 13 for what they were led to believe would be a plea and sentencing hearing.

Walsh-Josephson faces 28 counts of theft in a business setting of more than $10,000 each after authorities say she stole more than one million dollars from at least seven clients in Winnebago and Outagamie counties. She also faces felony forgery misdemeanor theft and obstructing an officer charges after authorities say she stole $400 from a client while acting as a third-party intermediary in a property dispute.

If convicted on all charges, she could face a maximum sentence of 287 ½ years in prison.

The question for investors is the question of why Thrivent did not detect this level of theft.  All firms have a duty to take reasonable steps to detect and prevent broker theft.

Jeffrey Pederson has handled numerous cases concerning the theft and outside activity of brokers and have helped investors obtain favorable judgments and settlements.  Please call for a free consultation.