Jeffrey Pederson is an attorney licensed in Colorado and located in the Denver Tech Center, who handles cases against Colorado investment professional (stockbroker, financial adviser, portfolio manager, financial planner, hedge fund manager or investment adviser) for fraud, negligence and other investment dispute issues. He was named “Colorado SuperLawyer” by Reuters for the field of securities litigation/arbitration for 2021 and 2022. Call 303-300-5022 for a free consultation.
Claims against licensed investment professionals are routinely resolved through arbitration. The following are Colorado investment professionals who have committed, or are alleged to have committed, regulatory violations in securities sales to Colorado residents.
The companies or brokers with the most recent allegations are listed first. Regulatory violations can serve as the basis of a fraud, negligence or securities law claim by investors in certain circumstances. These are just some of the areas concerning these individuals or firms where Colorado investors may wish to seek legal consultation:
Ann Werts, f/k/a Ann Vanderslice, is fomerly of Cabot Lodge Securities, and located in Lakewood, Colorado. Vanderslice is alleged to have sold large numbers of her clients GWG L Bonds. These GWG “bonds” have been known to be highly risk since their inception in 2012. As such, they are only suitable for only the most aggressive investors. Selling such an investment to either conservative or moderate risk investors is a form of fraud. Werts / Vanderslice did business as “Federal Benefits Made Simple.” Vanderslice is also affiliated with Madison Avenue Securities.
Geneos Wealth Management, Inc. agreed to an Acceptance, Waiver, and Consent (a regulatory settlement) concerning its sales of LJM Preservation & Growth Fund. Geneos is headquartered in Centennial, Colorado. The time period of the allegations is 2016 through 2018. The allegations are that Geneos did not train its brokers on the risks of the investment and lacked supervision in the sale of the investment.
Gregory Hanshew operated in the South Denver Metropolitan area (Littleton, Centennial and Englewood) and worked for Infinity Financial Services since 2014. Regulators accused Hanshew of taking advantage of senior investors, being involved in inappropriate loans, and failing to disclose prior judgments against him. Hanshew failed to adequately dispute the accusation and FINRA, a regulator overseeing securities brokerages, brought action for the surrendered of his license.
Andes Capital Group, LLC: Headquartered in Chicago, Andes failed to supervise and record on its books and records approximately $1.5 million in securities transactions by one of its brokers where the broker worked as the general partner of the target company. This was in contravention of Andes’ own written supervisory procedures, and violated FINRA Rules.
John C. Braddock formerly of Salida and now operating in the Denver area, is facing a multi-month suspension from the securities industry. The accusations are that he offered a private investment in a company that he operates and failed to disclose certain relevant facts concerning the offering. These facts include a recent bankruptcy and incorrect figures concerning the company’s available working capital.
Arthur Obermeier. FINRA suspended Obermeier for 60 days in January 2021and LPL discharged him for making trades without authorization. Obermeier effectuated over $700,000 in trades while a broker for LPL from his office in Boulder without first discussing and obtaining authorization from his clients.
Porter Landreth of Goldman Sachs and United Capital in the Denver Tech Center. We are currently investigating whether Landreth over-concentrated his investors in low quality bonds and other debt instruments. Landreth is believed to systemically invested individuals looking for safe investments and/or retirement income in speculative investments such as AlphaCentric (IOFIX), Deer Park High Yeild Bond Fund (a junk bond fund, AEQIX) and other speculative investments. His affiliation with Goldman Sachs came to an end in June 2020. If you were an investor with Porter Landreth, please call 303-300-5022) for a free and confidential consultation concerning your rights.
CIM Securities: July 30, 2020 – under a regulatory settlement with this Centennial, Colorado firm, FINRA censured, fined $30,000 and ordered to establish and implement policies, procedures and internal controls reasonably designed to address and remediate its failure to establish and maintain supervisory procedures to prevent its agents from making misrepresentations in securities sales. These misrepresentations concern the sale of private securities and were in violation of federal and state securities laws.
Steven D. Rodemer: Rodemer was registered with Stifel as a broker from November 2011 until he was terminated by the firm Jan. 21, 2020, for taking “money from a client account for his personal use without authorization.” He is alleged to have taken over $450,000 from his widowed client to finance his Breckenridge, Colorado vacation home, according to the Securities and Exchange Commission.
First Western Capital Management: Inappropriate private placement sales to non-institutional investors. The SEC asserts that from October 2010 through July 2017 (the “Relevant Period”), FWCM purchased for advisory clients securities that were sold in reliance on Rule 144A under the Securities Act of 1933 (“Securities Act”) without having adequate compliance policies and procedures and without providing investment adviser representatives (“IARs”) training and supervision of Rule 144A securities. As a result, over a seven-year period, certain IARs purchased for 81 FWCM advisory clients a gross total of over $666 million worth of securities sold in reliance on Rule 144A when the clients were not qualified institutional buyers in a Rule 144A transaction. FWCM violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder by failing to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder by the adviser and its supervised persons. In addition, FWCM failed to reasonably supervise its IARs, within the meaning of Section 203(e)(6) of the Advisers Act, with a view to preventing certain of the IARs’ violations of the federal securities laws.
Scott Patrick Kozak, a Cetera advisor operating out of Highlands Ranch, Colorado: On March 18, 2020, a regulatory settlement was issued in which Kozak was assessed a deferred fine of $10,000 and suspended from association with any securities brokerage firm in all capacities for two years. Kozak consented to the sanctions and to the entry of findings that he participated in three sets of private securities transactions without providing prior written notice to his brokerage firm.
The findings stated that Kozak solicited firm investor and other brokers of the firm to invest $1,166,000 in the securities of two companies and also invested his own funds in both of the companies. During an audit, Kozak falsely advised the auditor, and later falsely told his firm’s CCO, that no firm customers had invested in the company that was the subject of the second and third private securities transactions. The findings also stated that Kozak engaged in an outside business activity, without notifying his firm, by forming a company through which he purchased the assets of, and operated, the company that was the subject of the second and third private securities transactions. The prohibition against the sale of unapproved securities is an important one. Brokerage firm approval is necessary to prevent brokers from selling investments that are not legitimate or where the financial are falsified. Kozak had a long history of lawsuits and other misdeeds as a broker.
Jun Zhou of Littleton, Colorado was barred from the securities industry by FINRA on October 4, 2019. Zhou ran an unauthorized real estate investment program with investments in excess of $16 million. Commissions to Zhou were over $160,000. Zhou’s brokerage was the Leaders Group, Inc. The reason such a penalty is that the lack of oversight is usually either a sign that a fraud is occurring which the broker does not want the brokerage to know of, or the lack of oversight commonly leads to fraud. Despite Zhou’s efforts to conceal the investment program from Leaders, we believe that a reasonable audit would have revealed the program to Leaders and, thus, Leaders has liability for losses.
Tyler Tysdal, operating primarily out of the Cherry Creek region of Denver, he is a Lone Tree resident and has agreed to a $1.1 million settlement with the Securities and Exchange Commission for “multiple schemes to defraud investors.” Over 48 individuals were sold over $22,000,000 of the Cobolt and other fraudulent investments. Much of what was sold was sold through the Cherry Creek Family Office.
Cindy Chiellini and Ricky Mantei, are not based in Colorado but work in Lexington, S.C. The Colorado Division of Securities on October 31, 2019 have charged their employer, Centaurus Financial, with failing to supervise these brokers from defrauding Colorado investors. Neither broker even has an active license to sell securities to Colorado Residents. Chiellini currently has more than two dozen customer complaints concerning the fraudulent actions she has taken in the handling of her customer accounts. Mantei has ten such complaints. The investment products appear to be a structured investment. Investors wanting to speak to a lawyer can call 1-866-817-0201.
Tyler James Woodward, on April 9, 2019, a regulatory decision became final in which Woodward was barred from association with any FINRA member, the organization that sets rules and oversees all securities brokerage firms, in all capacities. Woodward failed to contest allegations, and failed to provide documents and information, and to appear for and provide on-the-record testimony requested by FINRA during the course of an investigation concerning serious violations of FINRA rules, including theft. The findings stated that the customer alleged to FINRA that Woodward had persuaded him to transfer more than $117,000 from his brokerage account at Woodward’s employing brokerage firm to a brokerage account at another firm, then to a bank account, and then finally to a company that Woodward created. The investor asserted that Woodward also obtained electronic access to his brokerage account and controlled transactions in that account. The customer alleged that he had made repeated demands to Woodward for the return of his money but that Woodward failed to respond. October 4, 2018, Woodward was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging to appear and provide sworn testimony requested by FINRA for serious violations of FINRA rules, including theft of investor funds. The complaint alleges that Woodward persuaded the investor to transfer more than $117,000 from his account at Woodward’s member firm to a brokerage account at another firm, and then to a bank account, and then finally to a company that Woodward created. Woodward is no longer licensed in the securities industry.
On January 18, 2019, Daniel Todd Levine formerly of Morgan Stanley and First Financial in Greenwood Village, Colorado entered into a settlement with FINRA regulators. Regulators allege Levine engaged in undisclosed outside business activities, solicited a senior Firm customer to borrow funds for an outside business activity, and executed unauthorized trades, FINRA staff sent Levine a request for documents and information pursuant to FINRA Rule 8210. Levine failed to provide information requested by FINRA staff pursuant to Rule 8210. As a result, Levine violated FINRA Rules 8210 and 2010.
October 4, 2018, CIM Securities, LLC of Centennial, Colorado. CIM failed to supervise and enforce securities regulations as to private securities transactions. Private securities are generally defined as securities that are not traded on national exchanges. Brokerages are required to oversee the sale of such securities due to the likelihood of fraud or theft underlying the investments. CIM failed to adequately supervise at least three of its brokers engaging in private securities transactions in the form of sales of an LLC that pooled investor funds. CIM ultimately entered into a settlement with FINRA, the regulator overseeing securities brokerages, where it was fined and censured.
Sept. 11, 2018, George L. McCaffrey III, with NTB Financial of Englewood, Colorado. McCaffrey is suspended for 18 months for inappropriately selling private securities. The investments at issue were in a greenhouse company. This company in turn paid commissions of over $120,000 to McCaffrey through a company owned by his wife. His employer, Neidiger, Tucker, Bruner, Inc., aka NTB Financial Corp., had a duty to supervise such outside business activity but failed to do so.
March 12, 2018, Michael Murphy Hurtgen of Englewood, Colorado. Without admitting or denying the findings, Hurtgen consented to the sanctions and to the entry of findings that he solicited at least 14 individuals, 10 of whom were customers of his member firm, to invest in a private placement offering without providing prior written notice to his employing firm, Raymond James. The findings stated that three of the 14 individuals that Hurtgen solicited invested in that private offering and that Hurtgen participated in each of the transactions, which totaled $75,000. While the firm had approved Hurtgen’s outside business activity with the company, it had not approved his subsequent private placement activities on behalf of it. This type of action, commonly referred to as “selling away,” is serious because it can often be a vehicle for fraud. The investments are often not suitable for any investor and the financials are unknown or fabricated, but the broker sells because of heightened compensation. The employer of the broker is on notice that such actions are common and must take appropriate steps to protect investors from such activities.
January 25, 2018, Stefan Angelo Morelli of Golden, Colorado and previously with Thrivent. An AWC was issued in which Morelli was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for one year. Without admitting or denying the findings, Morelli consented to the sanctions and to the entry of findings that he willfully failed to timely amend his Form U4 to disclose that he was charged with, and then pled guilty to, a felony involving the delivery or possession of a controlled substance. The findings stated that Morelli submitted five annual compliance attestations to his member firm in which he falsely certified that he did not have any felony charges or indictments. As a result, Morelli continued to be associated with the firm for over four years while he was subject to statutory disqualification.
Sept. 5, 2017, Bruce Page Barber of Colorado Springs and a representative of Securities America was barred from the securities industry for failing to cooperate with a regulatory investigation where he was accused of selling firm customers investments away from the firm. This is commonly referred to as “selling away” and is considered a very significant form of fraud. Investors sold such investments away from Securities America may possibly have a significant claim for recovery.
Sept. 5, 2017, Joseph Ira Yanofsky of Franktown. An AWC, which is a regulatory settlement agreement with a securities regulator where the broker neither admits nor denies fault was issued concerning Yanofsky. Yanofsky was fined $10,000 and suspended from association with any securities broker in any capacities for 20 business days. Yanofsky consented to the sanctions and to the entry of findings that he exercised discretion in customer accounts without written authorization to do so. A broker cannot simply make trades at his discretion without contemporaneous authorization unless he has been granted authorization to make such trades in writing. The findings stated that Yanofsky’s exercise of discretion occurred in connection with certain of his member firm’s syndicate equity offerings. Yanofsky’s customers verbally expressed their general desire and authorization to participate in every syndicate offering the firm made available. These customers did not have discretionary accounts, and their verbal authorization to participate in every syndicate offering was never reduced to writing. On certain occasions, however, Yanofsky purchased the syndicate offering shares for these customers without having received the customers’ specific authorization to participate in those offerings.
July 2017, Barbara Endres of Lifetime Wealth Advisors and formerly of Wells Fargo: Colorado Securities Commissioner Gerald Rome has signed an order permanently revoking Barbara Endres’ securities licenses. This order also revokes the license of her firm, Lifetime Wealth Advisors, LLC, located in Palisade, Colorado.
The revocation followed a routine examination conducted by the state regulator in July of 2017. During that examination, the regulator discovered that Endres was utilizing an investment strategy that involved trading between 50 and 100 percent of her clients’ assets in one stock ahead of earnings announcements.
There was also a finding, contained in her U4 disclosure, that Endres recommended unsuitable investments, placed trades in accounts with appropriate authorization, retained fees that were required to be reimbursed to her investors, and made false or misleading statements to investors.
Michael Moses of MIC: Moses and his Moses Investment Company (“MIC”) of Greenwood Village is the subject of an SEC enforcement action filed September 22, 2017. The SEC alleges that from November 2013 through April 2014, Moses and MIC used material misrepresentations and omissions to fraudulently raise approximately $974,741 from investors. Moses and MIC are alleged by the SEC to have misrepresented the following: 1) Moses’ prior work experience as a trader or portfolio manager with large private fund advisers, when in reality he had very little portfolio management experience, 2) the past investment performance obtained through Moses’ investment strategy, 3) the safety of investments in his WAKE Fund, soliciting investors on a lack of a “down-side risk,” promising to set stop limits, with the failure to implement stated risk controls leading to the near collapse of the WAKE Fund, and 4) Moses’ personal investment in WAKE Fund when no such investment was made.
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 to buy several homes and enrich herself during more than a dozen years of lying and forgery.
If you are a victim of Ms. Camarco, 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. The SEC filed charges against the Camarco were filed on or about August 25, 2017 in the United States District Court for the District of Colorado.
Mitchell G. Behm of Lakewood, Colorado. On June 28, 2017, FINRA fined Behm $10,000 and suspended him from association with any FINRA member for seven months. Without admitting or denying the findings, Behm consented to FINRA’s fine and sanctions, and to the entry of findings that Behm financed the purchase of a vacation home from an elderly customer/investor of his employer by taking an $180,000 loan from the customer without prior written permission from or notice to the firm. The findings stated that the elderly firm customer was not a member of Behm’s immediate family, and he was the registered representative assigned to the customer’s accounts. The firm’s written policies prohibited loans with customers. The findings also stated that Behm willfully failed to file an amended Form U4, a form required by regulators when events occur that reflect the broker’s ability to manage others’ funds, disclosing that he filed a Chapter 13 bankruptcy petition.
Behm falsely represented that he did not have any reportable bankruptcies on 24 Form U4 amendments filed from the time of the bankruptcy petition on April 29, 2009, through January 2014. In addition, Behm falsely represented on a firm compliance questionnaire that he had not filed for bankruptcy since his last firm compliance audit.
Most recently, Mitchell Behm’s CRD indicates that he was a broker with Raymond James, and before that Behm was a broker for Edward Jones for approximately 10 years. During his time with these two firms, Behm had three actionable customer complaints and a total of five disclosure events on his CRD. This includes a $45,000 settlement stemming from recommendations made concerning a variable annuity.
Spencer Edwards, Inc., of Centennial, Colorado was fined by FINRA a total of $707,000. The firm was also suspended with respect to accepting for deposit or liquidating previously deposited certificated securities until such time as an independent consultant (not unacceptable to FINRA) determines that the firm has adopted and implemented adequate supervisory procedures. The sanctions were based on findings that the firm facilitated unregistered and nonexempt customer sales of billions of shares of securities. The findings stated that the firm liquidated approximately 4 billion shares of penny stocks in customer accounts at the firm that were not registered with the SEC, nor were the transactions exempt from registration. The shares sold for the firm’s customers yielded total sales proceeds of approximately $2 million and generated over $107,000 in commissions. The firm’s failure to carefully scrutinize the transactions is compounded by numerous red flags that suggested the existence of control or an otherwise collusive relationship between its clients and the issuers, or called into question whether the securities acquisition transactions were arms-length.
Kenneth Alan Balser a stockbroker of Colorado Springs, Colorado, formerly of LPL, Cetera Advisors and Merrill Lynch. Mr. Balser has been expelled from the financial industry by FINRA. The ban concerns the engagement in private securities transactions, transactions that appear to have the blessing of the broker’s firm, but are actually done away from the firm without the firms approval. This can be a serious form of fraud. Despite being done away from the firm, firms are required to have supervision systems in place to detect such activity away from the firm and generally have responsibility to protect its investors from such activity.
Bradley Ross Thompson, securities broker from Fort Collins, Colorado submitted an AWC, a settlement with regulators where fault is neither admitted or denied, in which he was assessed a deferred fine of $5,000 and suspended from association with any FINRA member, which is and stockbrokerage or financial advisory firm, in any capacity for 30 days. Thompson agreed to the sanctions and to the entry of findings that he accepted two separate loans, collectively totaling $60,000, from his member firm’s customers without disclosing or seeking approval from the firm, at any point, for the loans. The findings stated that Thompson subsequently repaid both loans. The taking of loans from investors is considered a violation by regulators because the loans are usually because of a discrepancy in the bargaining power and the inability of the employing firm to regulate whether the funds are repaid. There is not indication whether this did or did not occur with Thompson.
Robert Eugene Heath a financial adviser of Monument, Colorado submitted an AWC in which he was assessed a deferred fine of $5,000, suspended from association with any FINRA member, any stockbroker or financial adviser firm, in any capacity for three months, and ordered to pay $7,500, plus interest, in deferred restitution to a customer. Without admitting or denying the findings, Heath consented to the sanctions and to the entry of findings that he borrowed money from a customer through an undocumented, but orally-agreed-upon loan, when his member firm’s procedures prohibited its registered representatives from borrowing from customers under any circumstances. The findings stated that Heath would make monthly payments to the customer until the loan was repaid. Heath has not repaid the customer any principal since taking the loan, and he has made only one monthly interest payment to the customer, but has not made any additional interest payments. The suspension is in effect from August 15, 2016, through November 14, 2016.
Robert J. Myers a stockbroker of Highlands Ranch, Colorado, a representative of MML Investors Services and Woodbury Financial of Greenwood Village, submitted an AWC with FINRA, the regulator overseeing investment brokerage firms. In this regulatory settlement, he was assessed a deferred fine of $20,000 and suspended from association with any FINRA member in any capacity for one year. Without admitting or denying the findings, Myers consented to the sanctions and to the entry of findings that he received approximately $57,575 in compensation for an outside business activity that was not disclosed to or approved by his member firm. The suspension is in effect from June 20, 2016, through June 19, 2017.
Justin K. Wine of Aspen, CO, a financial adviser (stockbroker) representative of LPL and BCG Securities, was fined $12,500 and suspended from association with any FINRA member in any capacity for two months. Without admitting or denying the findings, Wine consented to the sanctions and to the entry of findings that he participated in a private securities transaction with a company by introducing and recommending an investment in it to customers, one of whom ultimately invested in the company, without providing prior written notice to his member firm. The findings stated that Wine also engaged in outside business activities with another company, in the British Virgin Islands, by assisting it in its attempts to secure a small business loan, also known as micro-loans, or alternative funding without providing prior written notice of his affiliation and activities with it to his firm. As part of those efforts, Wine introduced and recommended certain short-term loans to customers, some of whom ultimately entered into demand notes pursuant to which the customers loaned a total of $125,000 to the company. The findings also stated that Wine failed to timely amend his Form U4 to disclose a short sale and subsequent compromise.
As of June 2016, the following brokers had licenses revoked for failure to pay regulatory fines or costs: Don Richard Iley of Parker, Colorado; Brian Joseph Merrigan of Golden, Colorado (failure to pay arbitration award); James Marvin Mitchell of Greeley, Colorado (failure to pay arbitration award). Christopher Charles Burtraw most recently of JP Turner in Lakewood and Denver agreed to a sanction where he would be barred from the securities industry in May 2016. While the sanction was for the failure to comply with a FINRA investigation, his record shows that he was under investigation for improperly borrowing funds from one of his clients. He also has a record of at least one advertising violation and a prior complaint for the sale of unsuitable securities.
Spencer Edwards, Inc. and Gordon Dihle, of Kiowa and Centennial, Colorado, were named respondents (Defendants) in a FINRA regulatory complaint alleging that Spencer Edwards, acting through registered representatives (stockbrokers), liquidated approximately 4 billion shares of penny stocks in customer accounts at the firm that were not registered with the SEC, nor were the transactions exempt from registration, in contravention of Section 5 of the Securities Act of 1933. The complaint alleges that the activity in each of the customer accounts generally followed the same pattern and should have been seen as red flags. Failing to respond to red flags is generally grounds to find a brokerage negligent or reckless. In some circumstances, the willful ignoring of such notice can be considered fraud.
Several of the customer accounts, some of which were under common control, acted in concert by alternating accounts for liquidating the same penny stocks. Other red flags present for some of the transactions included that the customers deposited recently-issued physical share certificates that lacked restrictive legends, the sales occurred around the time of promotional press releases, and the shares being deposited represented a large percentage of the float. None of the penny stock sales at issue qualified for an exemption under Section 4(1) of the Securities Act of 1933, and the associated safe harbor contained in Rule 144 of the Securities Act of 1933. Likewise, the transactions by the firm did not qualify for the Section 4(4) of the Securities Act of 1933 exemption under the Securities Act of 1933 for brokers’ transactions because the firm failed to conduct adequate due diligence into the circumstances surrounding the sales, including whether the transaction satisfied the conditions of Rule 144. This was the case despite the presence of obvious red flags, many of which were identified by the firm’s own WSPs as indicative of a possible unregistered distribution.
Stephen Marc Biley with Spencer Edwarads, Englewood and Centennial, CO, in another issue concerning Spencer Edwards and penny stocks, submitted an AWC, which is a settlement agreement with FINRA regulators in which fault is neither admitted or denied, in which he was fined $30,000 and suspended from association with any FINRA member in any capacity for 30 business days. Without admitting or denying the findings, Biley consented to the sanctions and to the entry of findings that he participated in the sale of unregistered shares of thinly-traded OTC penny stocks on behalf of customers, in contravention of the Securities Act of 1933. The findings stated that no registration statement was in effect for any of the shares sold and no exemption from registration applied to exempt the transactions from Section 5. Biley did not conduct a sufficient inquiry into the circumstances surrounding the customers’ acquisition and sale of the shares, prior to executing the sales, to ensure the availability of an exemption from registration. These actions could be seen as not only negligent but also fraudulent since in violation of anti-fraud provisions of the relevant securities laws.
The suspension is in effect from December 7, 2015, through January 20, 2016.
Anthony Kerrigone of Cherry Hills Village, an AWC (settlement agreement) with FINRA regulators in which he was fined $10,000 and suspended from association with any FINRA member in any capacity for six months. Without admitting or denying the findings, Kerrigone consented to the sanctions and to the entry of findings that he placed orders to sell short low-priced stocks through his member firm’s proprietary trading account and failed to locate the securities, claiming the market marker exemption to the locate requirements. The firm generated over $158,239 in profits from these short transactions. By doing so, Kerrigone caused his firm to violated Rule 203(b)(1) of Regulation SHO.
Christopher Stephen Scott, Girard Securities, Colorado Springs, submitted an AWC (settlement agreement) in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 15 business days. Without admitting or denying the findings, Scott consented to the sanctions and to the entry of findings that he borrowed money from a customer of his member firm without prior written permission from or notice to his firm. The findings stated that Scott completed an annual compliance questionnaire and falsely stated that he had never loaned money to a customer, borrowed money from a customer or coinvested with a customer.
LPL REIT Violations: The Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), today signed a final Consent Order with LPL Financial LLP in connection with an investigation of LPL’s failure to implement an adequate supervisory system regarding its sale of non-traded REITS and LPL’s failure to enforce its written procedures regarding the sale of non-traded REITS. Under the terms of the order, LPL agreed to remediate losses for all non-traded REITS sold by the firm from January 1, 2008 through December 31, 2013 in violation of prospectus standards, state concentration limits or LPL’s own guidelines. LPL agreed to retain an independent third party to review and verify its executed sales transactions for violations during this period, believed to be more than 2,000 nationwide. LPL will make offers of remediation to affected investors in Colorado upon completion of the third-party review. Additionally, LPL may have responsibility for REITs sold outside the defined time period. The order also requires LPL to pay to Colorado a fine of $40,183.94, representing Colorado’s pro-rata share of a $1.425 million settlement resulting from a multistate investigation of the firm by a task force of state securities regulators formed by the North American Securities Administrators Association (NASAA), of which the Colorado Division of Securities is a member. “This investigation is representative of the important investor protection role the Division of Securities serves in safeguarding investors throughout Colorado,” said Securities Commissioner Gerald Rome. The investigation concluded that LPL, through its agents, sold non-traded REITS in excess of the REIT’s prospectus standards, various state concentration limits or LPL’s Alternative Investment Guidelines. The investigation also found that LPL failed to implement a supervisory system that was reasonably designed to achieve compliance with state law.
Geneos Wealth Management of Centennial, Colorado and Draper, Utah submitted an AWC in which the firm was censured and fined $12,500. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to supervise representatives at a branch office who were participating in the execution of securities transactions, namely investments in the form of limited partnership interests, as part of their disclosed outside advisory activities. The findings stated that the representatives’ participation included, but was not limited to, meeting with and recommending the underlying securities to customers, providing customers with copies of the private placement memorandum and related paperwork, assisting customers with completing the investment paperwork, accepting the completed paperwork and investment funds, and receiving compensation. The firm also failed to record the transactions on its books and records.
Halcyon Cabot Partners and Craig Josephberg, FINRA’s investigation found that Halcyon, Morris and Heineman, along with a previously barred registered representative, Craig Josephberg, agreed to conceal the discount the issuer provided to a venture capital firm when it purchased a private placement in a cancer drug development company. The scheme was effected through a bogus placement fee agreement that was entered into after the venture capital firm had already agreed to purchase the entirety of the offerings. Halcyon did not perform any work, as there was already a buyer in place, but rather returned almost all of its $1.75 million placement fee to the investor through sham consulting agreements. This fraudulent scheme allowed the drug company to conceal that it was selling its shares at a discount.
FINRA also found that Morris falsified Halcyon’s books and records to conceal Josephberg’s sales of securities in states where he was not registered, including Florida, Texas and Colorado. Halcyon also failed to supervise Josephberg, who churned retail customer accounts and effected unauthorized trades.
Robert Hawkes Potter, stockbroker of Farmington, Utah, but with Colorado clients, submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Potter consented to the sanction and to the entry of findings that he failed to provide documents and information FINRA requested during the course of its investigation into allegations that he comingled customer funds with his personal funds. Brian Brock Reid submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Reid consented to the sanction and to the entry of findings that he created fictitious property and casualty insurance policies, for which his member firm’s insurance affiliate paid him commissions that he was not entitled to.
Max Casper Belcher of The Leaders Group, Inc. in Littleton and formerly of Geneos and LPL of Centennial submitted an AWC, a settlement agreement with regulators, in which he was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for six months. Without admitting or denying the findings, Belcher consented to the sanctions and to the entry of findings that he falsified documents in that he cut a customer’s signature from one variable annuity replacement form and pasted it onto another. The findings stated that Belcher maintained four forms in his office files that contained the four different customers’ signatures but were otherwise blank. The supervisory procedures of Belcher’s member firm stated that representatives may not have customers sign blank forms under any circumstance. The findings also stated that on Belcher’s 2013 annual compliance questionnaire, he incorrectly attested that he had not asked customers to sign blank forms, and had reviewed all documents requiring a customer’s signature prior to the customer signing such documents. This type of document falsification is a serious issue because brokers can make, and investors can lose, large sums of money by switching high-commissioned investment products such as variable annuities.
Daniel Heredia-Macias was also suspended from FINRA for failing to cooperated regulators or to keep information current. Facts are still developing as to whether this broker was under investigation by regulators for his own regulatory violations. MetLife and Equity-Indexed Annuities If you have invested in an annuity with MetLife in Colorado Springs, Colorado, we are interested in speaking to you irrespective of the type of annuity.
Jerome Louis Fritsche II (CRD #214946, Registered Representative, Colorado Springs, Colorado) suspended from association with any FINRA member in any capacity for 20 business days. In light of Fritsche’s financial status, no monetary sanctions have been imposed. Without admitting or denying the findings, Fritsche consented to the described sanction and to the entry of findings that he participated in private securities transactions by selling promissory notes for the purpose of raising money for a corporate finance entity that he had created. The findings stated that Fritsche sold the notes to investors, raising a total of $60,000, for which he was anticipated to receive compensation. The investors were not his member firm’s customers. Fritsche failed to provide prior written notification to the firm, and failed to obtain the firm’s prior written permission to participate in these private securities transactions. Fritsche failed to disclose these private securities transactions when completing the firm’s annual compliance questionnaire. http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p446063.pdf
The actions of Fritsche are commonly referred to as “trading away”. Brokerage firms have a duty to verify that they are aware and approve of its brokers’ investment sales even if such sales are away from the brokerage. Failure to do so often entitles an investor to refund of losses for the lack of supervision by the brokerage. We are interested in speaking to those losing money with Mr. Fritsche. Please call 303-300-5022.
Trudy Ann Swint, formerly of Ameriprise, submitted a Letter of Acceptance, Waiver and Consent in which she was fined $5,000 and suspended from association with any FINRA member in any capacity for 60 days. Apparently, Ms. Swint attempted to sell investment products, variable annuities, to a Colorado resident by having one of the brokers she supervised take the required education for licensing for her and then compensated the employee for engaging in the deceptive activity. Further, when she ended her employment, her employer also identified that she had problems with exercising discretion in the accounts of her investors, meaning that she made trades in the accounts without appropriate authority.
However, Swint looks to be out of the security industry and does not appear to be returning.
Shawn Michael Wyatt is the associate broker paid by Swint to complete education classes for Swint, his supervisor. Wyatt submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 31 days. The fine must be paid either immediately upon Wyatt’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Wyatt consented to the described sanctions and to the entry of findings that the State of Colorado requires registered representatives to complete a training course prior to selling, soliciting or negotiating annuities, and he agreed to take the required Colorado annuity training for his supervisor. The findings stated that Wyatt logged onto an insurance continuing education website as his supervisor and took the Colorado annuity training. The supervisor compensated Wyatt for taking the training for her. http://www.finra.org/web/groups/industry/@ip/@enf/@da/documents/disciplinaryactions/p406569.pdf
If you have suffered losses you believe to have been due to the negligence, mismanagement, fraud, securities act violation or other misdeeds of any of these or other Colorado financial professionals, Jeffrey Pederson is an attorney licensed in Colorado who has handled hundreds of investor claims, and is willing to conduct a free evaluation of your matter to determine if you have the right of recovery. Please call 303-300-5022 for a free consultation.
Please keep in mind that many regulatory settlements are without admission of wrongdoing. Such allegations are an indication of possible wrongdoing.
Pederson Law has represented individuals across Colorado and has served including residents of Denver, Boulder, Greenwood Village, Cherry Hills Village, Castle Pines, Centennial, Eagle, Littleton, Englewood, Broomfield, Louisville, Longmont, Superior, Westminster, Vail, Aspen, Basalt, Louisville, Colorado Springs, Pueblo, Salida, Gunnison, Steamboat Springs, Ft. Collins, Greeley, Summit County, Woodland Park, and Grand County.
Brokerages include Merrill Lynch, Vanderslice, Cabot Lodge, Prudential, Morgan Stanley, JP Morgan, MetLife, Maloney, Westpark, Geneos, Andes, Oppenheimer, LPL, Halcyon, Next Financial, and many others.