Arizona Stockbroker Fraud and Negligence Lawyer

Jeffrey Pederson is a lawyer handling cases of Arizona stockbroker fraud and negligence.  The following are Arizona stockbrokers (also referred to as financial advisors) or brokerage firms having committed, or are alleged to have committed, regulatory violations in securities sales to Arizona residents.

Arizona stockbroker fraud  is often revealed through regulatory violations These violations reveal fraud, negligence or securities law violations suffered investors investors.  Call 1-844-253-5858 toll-free for a free and confidential consultation with an attorney. These are just some of the individuals or firms where investors may with to seek legal consultation:

Arque Capital of Scottsdale, Arizona failed to be adequately capitalized.  This is in violation of the Securities and Exchange Act of 1934 that requires a brokerage to maintain a minimum net capital.  Arque entered into a settlement with regulators over the issue in July 2023.  

Todd Ray Anderson of Tucson, Arizona accepted a settlement and agreed to be fined $5,000 and was suspended.  Regulators alleged that Anderson heightened his commissions by recommending investors in too many different families of mutual funds.  This caused the investors to miss break-point discounts, paying more and increasing payouts to the brokers.  Anderson has been with Cetera and Benchmark Investments.  This is not the first disclosure on his record, a record that contains numerous financial liens and other customer complaints.  

Ronald Diaz of Oro Valley, Arizona.  FINRA suspended for failure to to provide information or keep information current.

Virginia Jamka of Sierra Vista, Arizona.  This PNC advisor is alleged by a customer of misrepresenting a variable annuity and causing losses in the $80,000 annuity as stated in a complaint to state regulators.  This is the fourth complaint lodged against Jamka over the sale of variable annuities.  Industry practice dictates that she should be given heightened supervision by her employer because of the number of complaints.  

William Torriente of Tempe, Arizona.  Wealthsource Partners and Comerica previously employed Torriente.  His employer agreed to pay $10 million to settle allegations of unauthorized discretion and breach of fiduciary duties.  Torriente is permanently barred from the securities industry.  

Steven Netzel of Sun Lakes and Chandler, Arizona is a former financial advisor with Kalos and Madison Avenue Securities. From 2015 through 2018, and possibly longer, Netzel is accused of altering documents to justify sales of high commissioned, alternative investments to his investors.  This includes verifications of net worth and concentration of such assets as a percentage of net worth, which has legal limits.  Regulators have also asserted that such sales were unsuitable and constitute a suitability violation – a form of fraud.  His employers have face eight suits for failing to supervise Netzel because of these and similar issues.  FINRA fined Netzel $10,000.

David Thomas Hixon of Scottsdale, AZ is a former Morgan Stanley broker.  Regulators barred him when he failed to cooperate into a regulatory investigation against him concerning soliciting loans and barrowing funds from investment customers of Morgan Stanley.  Allegations also existed concerning an improper annuity exchange.

David Volpe:  of LPL, National Planning Corp. and First Financial Equity in Scottsdale, AZ has been barred from the financial industry after failing to contest allegations concerning the sale of unapproved, private securities.  The regulatory investigation came after two of his previous employers terminated his employment for engaging in such activity.  Brokers are required to only sell products that have been research and approved by their brokerages.  Securities are often misrepresented or non-existent when such oversight is absent.

Daniel Kittner of Ameritas in Mesa, AZ.  From June 2015 to September 2017 (the “Relevant Period”), Kittner exercised over 700 unauthorized  trades in the accounts of his clients.  This allowed Kittner to receive compensation from his clients without the permission of his clients.  This is commonly referred to as “churning” when a broker effectuates trades that are for his own benefit and at the expense of his client.  His discretion in the accounts of customers without written authorization from the customers and without acceptance of the accounts as discretionary by his FINRA member firm, thereby violating NASD Rule 2510(b) and FINRA Rule 2010. Kittner also violated FINRA Rules 4511 and 2010 by failing to mark the order tickets for these trades to reflect that they were discretionary, thereby causing his firm’s books and records to be inaccurate.

Jerry Lou Guttman of Scottsdale – Guttman, formerly of United Planners Financial, was barred from association with any FINRA member, which means that he was barred from associating with any securities brokerage, in all capacities. Without admitting or denying the findings,
Guttman consented to the sanction and to the entry of findings that he sold more
than $7,000,000 worth of membership interests in at least six different limited liability
companies to 31 customers of his member firm, and seven non-customers, without
first disclosing the sales to the firm.  This is an action that is commonly referred to as “selling away” and is fraudulent because it is done to avoid the employers investigation into the investment.

The findings stated that Guttman participated in the sales of these membership interests by soliciting the membership interests to investors; communicating with investors about their investments; drafting, distributing and collecting the investment agreements from each investor; collecting and depositing investors’ checks into the companies’ bank accounts; and managing the companies as one of only two managing members.

Lona Marie Nanna of Phoenix, Arizona and Lawson Financial.  On June 22, 2017, Nanna was named a respondent in a FINRA complaint alleging that she failed to timely update the Form U4 of her member firm’s CEO to disclose outside business activities. The complaint alleges that Nanna was responsible for filing Form U4 amendments on behalf of the firm’s registered persons. Nanna knew about outside business activities in which the CEO was engaged; however, she made the filings years late and only after FINRA began an investigation into fraudulent activity that involved the outside business activities.

Scottsdale Capital Advisors, Scottsdale, Arizona, Darrel Michael Cruz, Scottsdale, Arizona, Timothy Brian DiBlasi, Surprise, Arizona, Paradise Valley, Arizona entered into a settlement with FINRA investigators. The firm was fined $1,500,000. Cruz was fined $50,000 and suspended from association with any FINRA member in all capacities for two years. DiBlasi was fined $50,000 and suspended from association with any FINRA member in all capacities for two years. Hurry was barred from association with any FINRA member in all capacities.

The sanctions were based on findings that the firm engaged and participated in sales of
securities that were not registered with the SEC, and in transactions that were not exempt
from registration, in contravention of Section 5 of the Securities Act of 1933. The findings
stated that Hurry, the firm’s owner, also acted in contravention of Section 5 by being a
necessary participant and substantial factor in the sales of unregistered securities. Hurry
established a Cayman Island broker-dealer as an attractive intermediary for individuals
engaged in the high-risk microcap stock liquidation business though foreign financial
institutions. Hurry, through his control of the firm, its clearing firm and the Cayman Island
broker-dealer, allowed suspect microcap stock liquidations to be facilitated without the
scrutiny that the transactions demanded.

Hurry also intentionally and unreasonably delegated supervisory responsibility for the Cayman Island broker-dealer’s high-risk microcap stock liquidation business to an individual who did not have any prior securities industry experience. Hurry thereby engaged in activities designed to enable the unlawful transactions and evade regulatory scrutiny. The firm also failed to address the red flags signaling unlawful distributions. These red flags should have been investigated and appropriately resolved before the securities could be sold. The firm, however, blinded itself
to the multiple red flags signaling that the transactions were unlawful public distributions
of securities, and did not conduct the required searching inquiry. The firm sold the
securities without a reasonable basis for an SEC Rule 144 exemption.

The findings also stated that the firm, through its CCO DiBlasi, failed to establish and
maintain a supervisory system, including WSPs, reasonably designed to achieve compliance
with Section 5 for sales of unregistered shares of microcap stocks. The WSPs provided
insufficient guidance on identifying the true beneficial owners of microcap stocks sold
for customers introduced through foreign financial institutions. In addition, the firm’s
procedures for conducting a reasonable inquiry of the circumstances surrounding deposits
and sales of microcap stocks for such customers relied too heavily on information obtained
from interested parties, and also failed to require that the inquiry include appropriate
independent due diligence and analysis of the claimed registration exemptions.
The findings also included that the firm, through Cruz, its president, failed to conduct
reasonable inquiries into the circumstances surrounding the illegal sales of stock by
the firm for another broker-dealer. Cruz performed inadequate inquiries on the claimed
registration exemptions for sales of the microcap stocks, despite the presence of numerous
red flags suggesting that the sales were, or could be, illegal distributions of unregistered stocks.

Although Cruz collected some documents and information on the deposits
and sales, he failed to adequately and meaningfully analyze the collected documents
and information, some of which were inconsistent and incomplete, and also failed to
independently verify the provided information.

Ryan Wallace of Gilbert, Arizona and formerly of Merrill Lynch was
assessed a deferred fine of $10,000 and suspended from association with any FINRA
member in all capacities for five months. Without admitting or denying the findings,
Wallace consented to the sanctions and to the entry of findings that he took home
documents that contained non-public customer personal information as that term is
defined under SEC Regulation S-P of the Securities Exchange Act of 1934, and caused his
member firm to violate Regulation S-P by improperly taking non-public personal customer
information. The findings stated that at all relevant times, Wallace understood that he was
not allowed to take or possess the firm’s non-public information outside of the scope of his
employment at the firm.

The findings also stated that Wallace aggravated his misconduct after he left the firm, and
while no longer employed in the securities industry, when he offered to sell to a registered
representative at another FINRA-registered broker-dealer for $10,000, the firm documents
and list of non-public personal information he had taken from the firm regarding his
customers. To entice the representative to make the purchase, Wallace emailed to the
representative a one-page firm document containing non-public personal information of
42 of his former firm customers’ accounts.

First Financial Equity Corporation of Scottsdale, Arizona submitted an Offer
of Settlement with regulators in which the stock brokerage firm was censured, fined $230,000. Without admitting or denying the allegations, FFEC consented to the sanctions and
to the entry of findings that it failed to establish and maintain procedures regarding the
appropriateness of fee-based accounts for firm customers. Further, FFEC failed to have
either a system in place to ensure that advisory products were
appropriate for customers (investors) and that charges for such services were reasonable. The firm also failed to implement a supervisory system to adequately supervise customer account
activity in an Office of Supervisory Jurisdiction (OSJ), including monitoring for potential
churning and excessive trading, and monitoring discretionary accounts. Additionally, the
firm failed to maintain and enforce a supervisory system, including written procedures,
related to the supervision of its options business conducted at the office of supervisory jurisdiction.

Donald Andrew Bartelt, a stockbroker from Cave Creek, Arizona,  fined $250,000, less any amounts that he can demonstrate he has paid in restitution; barred from association with any FINRA member, which is an stockbroker or financial adviser firm, in any capacity; and ordered
to pay $200,330.66, plus interest, in restitution to customers.
The sanctions were based on findings that Bartelt recommended unsuitable trading, sometimes referred to as churning, in customer accounts. The findings stated that the
trading activity in all of the accounts at issue was excessive and inconsistent with the
customers’ financial circumstances and investment objectives. The findings also stated that
the benefits to Bartelt from the trading far outstripped any likely return to the investors, making it clear that Bartelt was effectuating trades for his own benefit without regard to his customers’ (investors) interests.

 

Disclosure:  Actions against any Arizona stockbroker or brokerage firms is generally required to be arbitrated as opposed to litigated.  Arbitration is a form of alternative dispute resolution.  Jeffrey Pederson is a lawyer who has handled hundreds of similar securities arbitration cases.  Attorneys from outside Arizona regularly handling such arbitrations and are permitted to arbitrate cases in Arizona pursuant to ER 5.5(c)(3).  While this posting is intended for informational purposes, some jurisdictions may consider it advertising material.  See JPedersonlaw.com for information on physical locations and other contact information.