Securities America Mutual Fund Switching
The Financial Industry Regulatory Authority (FINRA) charged Securities America with allegations of mutual fund switching. Securities America is currently owned by Osaic. Osaic paid $3 million to settle these charges.
Fund switching occurs when a front is exchanged for another such fund. Regulators consider this fraudulent because the sales charges, or load, is so great. The charge is so great that taking on a new load by exchanging the fund rarely makes economic sense. Any recommendation that a mutual fund with a front load be liquidated in the short term raises a red flag.
From at least January 2018 to June 14, 2024, Securities America failed to have a supervisory system designed to achieve compliance with FINRA Rule 2111. This rule requires that brokerage firms only offer strategies that are suitable for their investors. Securities laws also require firms to only offer strategies in the investor’s best interests, which SA lacked.
Class A mutual funds are generally suitable only as long-term investments and not for short-term trading. Class A share funds carry significant sales charges. An investor usually must hold the Class A share for a long enough period of time to recoup the costs associated with the front-end sales charge.
Between January 1, 2018, and June 14, 2024, Securities America effected the purchase of approximately $3.8 billion in Class A mutual funds, which comprised a substantial portion of the firm’s revenue. However, from at least January 2018 to June 14, 2024, Securities America failed to establish, maintain, and enforce a supervisory system.
Jeffrey Pederson represents victims of fund switching. Call for a consultation.
Fraudster David Gentile Pardoned
On November 30, 2025, investors learned the news of a David Gentile pardon. Gentile served less than two weeks of a seven-year sentence. The seven-year sentence is light considering Gentile’s role in a $1.6 billion Ponzi-type scheme that robbed the savings of thousands of investors.
The Department of Justice indicted Gentile in 2018. Gentile, the former CEO and co-founder of GPB Capital, reported to federal prison to begin his sentence on November 14, 2025. He earned this sentence for his part in a scheme to defraud over 10,000 investors in GPB.
As a refresher, Gentile and the company he led perpetrated the following: 1) GPB mislead investors over its assets. Gentile and company represented that a subsidiary had a target of 50% auto dealerships, a lucrative asset. But at that time the subsidiary had zero such dealerships. GPB had not done an auto acquisition since Q2 2015 anywhere in the portfolio and did not appear to have any working toward resolution of acquiring such assets.
2) Gentile used investor funds to prop-up other companies Gentile owned or had significant ownership. Gentile, the co-founder and general manager of GPB, owned positions in several of the companies that GPB has invested. This includes the company Qello. This was a significant conflict of interests.
3) Gentile and GPB utilized a business strategy that made the investment much riskier that represented to investors. GPB shifted to a debt strategy rather than private equity, making high interest rate loans to highly troubled companies, instead of private equity investments.
4) GWG made questionable loans of investor money to “Friends of Gentile.” Loans include a questionable real estate development loan in Florida.
5) GPB obstructed the access to audited financials by those seeking to conduct due diligence on the company. Due diligence is an important investor protection.
6) GPB utilized a type of accounting inconsistent with industry standards. Under industry standards, the company would be showing losses rather than gains.
When such things happen, the only recourse for an investor may be to pursue the advisors who fail to discover the fraud through reasonable diligence. Jeffrey Pederson represents such investors and has been doing so for over 20 years.
James Holmes III
James Holmes settled allegations of FINRA, the Financial Industry Regulatory Authority, that he brazenly falsified documents to allow him to churn an investment account.
Between October and December 2021, Holmes recommended options transactions to an investor with a conservative investment profile. The investor had an income objective and could not afford to lose principal. As such, Holmes made the transactions without having a reasonable basis to conclude that the transactions would be in the customer’s best interest or suitable based on her investment profile. To accomplish this, Holmes inaccurately stated on account opening documents the investor’s financial circumstances, investment experience, and investment objectives.
Holmes also churned the accounts of many of his investors. He made trades without the appropriate permission in at least five customers’ accounts to effect at least 250 trades.
FINRA Rule 2360 prohibits such an action. That rule provides that the option must be suitable for the investor after reasonable inquiry. Section (19) of that rule specifically states, “that the recommended transaction is not unsuitable for such customer” after analysis financial situation and objectives of the investor.
Further, the action is in violation of SEC Regulation BI. That rule requires that the broker put the financial interests of his clients ahead of his own. Here, Holmes made substantial commissions not only by making trades clients never authorized, but by treating the portfolios as more aggressive that authorized. An aggressive portfolio is more lucrative to a broker than a conservative portfolio.
Holmes first entered the securities industry in October 1991 through an association with a FINRA member firm. In August 2019, Holmes registered with FINRA as a General Securities Representative through an association with Wells Fargo.
The settlement is not an admission of wrongdoing but is also not an exoneration of these substantial charges. FINRA suspended Holmes for eight months from the securities brokerage industry and fined him $10,000. Wells Fargo also faces a $500,000 customer dispute concerning such actions of Holmes.
Jeffrey Pederson has successfully represented hundreds of investors in similar actions for over 20 years. Call for a free and confidential consultation if you have suffered loss due to churning or suitability violations.
Adam and Daniel Kaplan Defraud 100 Victims
On November 13, 2025, a federal jury in convicted investment advisors and twin brothers Adam and Daniel Kaplan of wire fraud conspiracy, wire fraud, investment advisor fraud, and money laundering conspiracy.
The jury also found Adam Kaplan guilty of another count of conspiracy to commit wire fraud, bank and wire fraud conspiracy and money laundering. The two also attempted obstruct justice by threatening witnesses and attempting to bribe officials. The federal verdict was after an eight-week trial before United States District Court in Central Islip, NY.
The US Attorney stated, “With today’s verdict, Adam and Daniel Kaplan stand convicted of stealing millions of dollars from […] elderly and disabled [clients], who trusted the [the Kaplans].” The actions were so egregious the prosecutor described them as “ruthless thieves.” Further, “Adam Kaplan is facing additional, very serious consequences for […] attempting to threaten victims and witnesses and bribe Department of Justice officials.”
The crime is especially heinous due to the fiduciary capacity the Kaplans stood in relationship with their clients. Registered investment advisers, such as the Kaplans, are statutory fiduciaries and required to put their clients’ needs above their own.
Jeffrey Pederson represents investors and has been doing so for over 20 years. Call for a free and confidential consultation.
Barry Buchholz Unauthorized Trading
Barry Buchholz is an LPL broker. He accepted a suspension from the Financial Industry Regulatory Authority (FINRA) over allegations of unauthorized trading in multiple accounts. Additional terms of the regulatory settlement are that Buchholz pay a fine and repay $7,480 of commissions received.
The underlying charges stem from allegations of unauthorized trading. In particular, the allegations are that from September to October 2023, Buchholz placed 11 unauthorized mutual fund trades. The principal value of the trades was $590,000. The trades generated in excess of $16,000 in commissions.
The investors were four children of one of Buchholz’ clients who had recently passed. As such, the children each opened a brokerage account at LPL with their respective portions of their father’s estate. The allegations are that Buchholz made unauthorized mutual fund transactions in each of the children’s accounts.
Additionally, Buchholz has a long history of customer disputes and lawsuits. These disputes are not limited to unauthorized transactions but also include the sale of unsuitable securities and insurance products.
FINRA rules require every trade to be authorized. An investor must give written authority to exercise discretion in an investor’s account. Absent such authority, the broker must obtain investor approval just prior to each trade. FINRA sets rules for securities dealers under the oversight of the Securities and Exchange Commission (SEC). FINRA Rule 2111 also requires that every trade recommendation be consistent with the objectives and risk tolerance of the investor.
Buchholz did not admit wrongdoing in the settlement.
Jeffrey Pederson handles cases concerning misdeeds by securities brokers. Please call for a free and confidential initial consultation.
Leveraged ETFs
Leveraged ETFs are speculative investments. Unless you are a speculative investor, an advisor or broker’s recommendation of such investments is likely violating legal duties he has to you.
Unique characteristics of these ETFs make them high risk. First, the investment, whose return mirrors the return of an underlying index, resets daily. This makes a multiple day loss almost insurmountable. As such, most regulators prohibit the holding of such an investment for more than a single day.
FINRA, the regulator overseeing brokerages, takes a similar position. FINRA states, “Because they reset each day, leveraged and inverse ETFs typically are inappropriate as an intermediate or long-term investment.” It goes on to say that only in a sophisticated trading strategy, should the position be held more than “one day.”
Second, when the underlying index starts to fall, the ETFs leveraged by the index accelerate the loss. A downward trend in the index prompts holders of leveraged funds to sell to avoid a heighten loss. These outflows further losses in the index as a whole. This vicious cycle is known as “negative gamma.”
Many advisors have lost their licenses due to recommending such investments.
Call Jeffrey Pederson to learn if you have recourse. Initial consultations are free and confidential.
Unsuitable Crypto Strategies
You may have recourse if you are a moderate investor and your investor recommended unsuitable crypto currency investments or strategies. These investments are speculative and suitable for only the most sophisticated and aggressive investors.
Many crypto strategies suffered substantial losses in 2025. MicroStrategy, also known as Strategy, lost 46% of its value from its height. Similar losses have been incurred by Bitmine Immersion, BMNR, and ETHZilla, ETHZ. These crypto treasury companies were not only known to have exposure to speculative crypto assets but were also known to be overvalued base upon the underlying crypto currency.
Advisors have a duty to act in their investors’ best interests. This includes not only understanding the underlying assets supporting the price of an investment, but also to only invest or recommend investments consistent with an investor’s objectives and risk tolerance. Advisors have a duty to know these things. So it is a form of fraud when they act contrary to these investor characteristics.
Jeffrey Pederson represents investors sold investments not in their best interests. Call for a free initial consultation.
Supreme Alliance Annuity Switching
FINRA alleges, that between September 2019 and May 2022, Supreme Alliance failed to take appropriate actions to prevent annuity “switching fraud.”
Specifically, Supreme failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to supervise recommendations of purchases and exchanges of deferred variable annuities, an action that charges investors high commissions, and supervise the conduct and documentation of investigations into newly hired brokers.
Variable annuities are complex, long-term investments that offer tax-deferred treatment of earnings and contain securities and insurance features. These features may include guaranteed periodic income payments or a guaranteed death benefit. FINRA requires that firms and their associated persons exercise particular care before recommendation of a variable annuity.
Switching or exchanging of annuities is generally suspect. Annuities pay high commissions due to the long-term nature of annuities. An investor incurs a very high cost when that investor sells an existing annuity to purchase a new annuity. Additionally, the investor receives the cash value which does not compensate for the growth of the investment and often includes penalties for the withdrawal. There are very few features in a replacement annuity that can justify such costs.
Jeffrey Pederson represents victims of annuity switching. Please contact him to discuss questionable annuity switching or exchanges.
Bart Harrison Investment Loss
Investors filed four lawsuits in a three-year period concerning investment advice of Bart Harrison. These suits all allege that the recommendations were unsuitable in violation or either the FINRA suitability rule or Regulation BI. Harrison is a representative of Emerson Equity.
At least one of these lawsuits concerning the recommendation of a Delaware Statutory Trust (DST). Emerson Equity, Harrison’s employer, has come under fire recently for recommending investment into certain DSTs the Emerson, allegedly, has not sufficiently researched or vetted.
Failure to conduct sufficient investigation into an investment is a regulatory violation and can constitute negligence on behalf of a broker or brokerage.
Jeffrey Pederson represents investors in such suits and has been doing so for over 20 years. Please call for a consultation.
First Trust Portfolios Inappropriate Payments
Regulators accuse First Trust Portfolios of making inappropriate payments to brokers. FINRA, the Financial Industry Regulatory Authority, alleges First Trust gave numerous excessive gifts in connection with securities brokers selling First Trust investments. This all raises concerns as the conflicts of interest on the part of those selling First Trust investments to investors.
Between at least 2018 and at least February 2024, First Trust provided expensive gifts to stockbrokers and financial advisors for selling First Trust investment company securities. Such gifts were in amounts that significantly exceeded FINRA limits, and in certain instances provided non-cash compensation preconditioned on Client Firm representatives achieving sales targets.
During the same period, First Trust falsified records concerning non-cash compensation provided to stockbrokers and financial advisors, and First Trust sent false information concerning the value, nature, and frequency of non-cash compensation provided to the broker employers. Finally, the Firm failed to establish, maintain, and enforce a system reasonably designed to achieve compliance with non-cash compensation rules and expense-related recordkeeping requirements.
We represent investor who were inappropriately sold investments. Call for a free consultation.