Rita Mansour Lawsuits
Investors accuse Rita Mansour of McDonald Partners of inappropriately recommending alternative investments not appropriately suitable or researched. Investors suffering losses in private investments recommended by Mansour should contact us about a potential action for negligence or fraud.
Rita Mansour is a financial advisor with over 30 years of experience. In the period starting in February 2019 to March 2022, her investors brought four separate suits and the Securities Exchange Commission brought a regulatory suit against her. All these proceedings concern the sale of private placement securities.
The Securities and Exchange Commission found Mansour’s arose from the sales of securities in connection with private securities offerings in the form of pooled investments. McDonald Partners advised the sale of these pooled investment private securities. The investments offered and sold securities to raise bridge funding for the construction of a resort in Montenegro.
Between September 2013 and continuing through January 2017, Mansour’s employer offered and sold more than $14 million in securities issued by the investment to investors located in the United States, including both McDonald’s brokerage customers and its advisory clients.
In October 2016, Mansour’s employer became aware of allegations that their point-person at the Montenegrin entity had misappropriated $488,331 of investor funds. The point-person did this by misusing a debit card belonging to that entity to pay for certain personal expenses. After being confronted with the allegations that this individual had misappropriated funds from the Montenegrin entity, he conceded that he was not entitled to certain of the funds alleged to have been misappropriated. Accordingly, after negotiation, the individual agreed to repay approximately $335,000 that he had allocated to personal expenses.
Neither Rita Mansour nor McDonald disclosed the misappropriation to existing investors in October 2016. In early 2017, Mansour’s employer then raised approximately $1.5 million in additional funds. These sales of securities issued by PIV2 to both existing security holders and new investors. These included brokerage customers and advisory clients and without disclosing the misappropriation to those investors.
Doug McKelvey Accused of Misappropriation
Doug McKelvey is accused of misappropriation of client funds. Regulators barred this ex-Morgan Stanley broker from the securities industry in August 2022. Call 1-844-253-5858 toll-free nationwide if you were an investor of McKelvey.
Morgan Stanley terminated McKelvey in April 2022 for his “unauthorized activity and misappropriation of funds from client accounts, which were held by relatives of the representative.” This means that his employer believed that he was making unauthorized transactions, which often include churning. This was in addition to stealing funds investor accounts.
Lawsuits followed the allegations. Morgan Stanley settled one of the lawsuits for $1.2 million. The second suit is still pending. These lawsuits were filed as arbitrations with FINRA. Morgan Stanley, like all FINRA members, has a mandatory arbitration clause in its investor contracts. Criminal charges have not yet been filed but may be pending.
McKelvey refused to defend himself when given the opportunity to do so. FINRA, the Financial Industry Regulatory Authority, then barred him from the securities industry for failing to cooperate in the FINRA investigation.
McKelvey operated primarily in the Dallas / Ft. Worth Metroplex and did so for approximately 20 years. He worked with UBS and Citi Group prior to his employment with Morgan Stanley.
Morgan Stanley stated, “McKelvey was terminated following an internal review regarding allegations that he engaged in unauthorized activity and misappropriation of funds from accounts held by a small number of his relatives.”
We are a firm representing investors and recovering lost or stolen funds. Since 2002 we have represented hundreds of investors across the country seeking to hold investment professionals responsible for misdeeds.
Mismarked “short” sales as “long”
If your short sale investments have been mismarked as long, or vice versa, by your securities brokerage please call for a free consultation. Our toll-free number is 1-844-253-5858. We represent investors nationwide concerning losses due to brokerage negligence and fraud.
Brokerage mismarking of trades is common and preventable. Trading systems can be structured to detect and prevent the routing of inaccurately marked short or long trades. Failing to institute such safeguards is a breach of industry standards in addition to the violation state and federal securities regulations.
We believe such system failures have existed at least three periods in the past and likely many more times. Goldman Sachs had such failures, where options were mismarked, from October 2015 to April 2018, and again in October 2019. TD Ameritrade had such failures in February and March 2021.
InvestmentNews.com reports that Goldman Sachs paid a $3 million penalty in April 2023 for such failures. The identified reason was a missing line of code in the automated trading system. The Financial Industry Regulatory Authority cited this failing as a violation to keep accurate books and records. Further, FINRA found that Goldman could have prevented the problem had it maintained a “supervisory system reasonably designed” to comply with FINRA rules.
Likewise, we have reason to believe similar issues existed at TD Ameritrade in 2021. In February and March of that year, trades were mismarked as short or long due to a system failure. The problems that this can cause include forced margin maintenance sales and inappropriate loss sales.
Trading options is a difficult process for investors. Options being mismarked causes the effort to be lost. It also causes the portfolio to be put in jeopardy by betting against the research by taking a position opposite of the position intended.
For the last 20 years, we have represented investors suffering losses due to brokerage wrongdoing. Please call for a free initial consultation.
Recovery of FIP Loss
Investors suffering FIP, future income payments, loss may be entitled to recovery including losses from the scheme of Scott Kohn.
We are a firm focused on obtaining recovery for investors, such as those sustaining loss from FIP investments. FINRA, the Financial Industry Regulatory Authority, recently entered into a settlement with the brokerage firm Hornor Townsend & Kent (HTK) concerning the sale of FIPs. Investment News reports that the settlement stems from the supervision of a cohort of Scott Kohn, the notorious Ponzi scam ringleader.
The regulatory settlement states that from July 2013 to March 2016, HTK failed to reasonably supervise its representative’s disclosed, but unapproved, activity involving the sale of FIP securities, including to HTK’s customers. In July 2013, the HTK representative submitted an outside business activity, OBA, request for approval to sell interests in FIP. In his request, the representative described the OBA as “Structured Cash Settlement[s]” that were “investment related,” and involved the purchase of “a fixed income from a source such as a lotery [sic] winner or a retiree.” The representative informed HTK that he anticipated approximately $50,000 a year in commissions and fees from these FIP sales. The representative also informed HTK that he intended to commence the OBA on July 20, 2013, at his HTK branch office.
HTK did not approve but apparently failed to inform the representative. The representative assisted Scott Kohn, who was sentenced to 10 years in prison last year for organizing a Ponzi scheme.
We believe investors who were clients of HTK or believed that HTK had approved the FIP sale should contact us about recovery of their losses. Our firm represents investors and has been doing so for the last 20 years.
Selling Away by Kevin Hobbs of PFS
PFS Investments broker Kevin Hobbs inappropriately invested clients in accounts away from PFS, a selling away violation. This is the allegation of regulators in a suit that resulted in Hobbs being barred from the securities industry. PFS may also have exposure because brokerage firms are required to supervise their broker’s investment activities, even activities away from the firm.
The regulatory matter originated from allegations in a customer suit disclosed by PFS in a regulatory disclosure. FINRA Rule 8210(a)(1) states that FINRA, a regulator overseeing brokers, may require a broker to provide information in writing with respect to any matter involved in a FINRA regulatory investigation. Providing false information to FINRA in connection to with an investigation violates FINRA Rules.
On October 18, 2022, in connection with FINRA’s investigation into the selling away, the regulator asked him to identify all individuals for whom he had effected a securities transaction in an account other than at PFS Investments. Hobbs provided an inaccurate response to the FINRA request that failed to identify at least one other individual whose account he had traded away from PFS Investments. This false response was enough to warrant a resolution where Hobbs would be barred from the securities industry.
The more serious charge of selling away was not resolved due to the settlement on the lesser issue. FINRA Rule 3280(b) prohibits a broker from selling investments away from the broker’s employing firm. A broker may not participate in any manner in a private securities transaction unless, prior to participating, the broker provides notice to his employing firm describing the trade. FINRA Rule 3280(e)
From April 2020 to at least November 2020, Hobbs participated in private securities transactions “away” from PFS when he effected numerous trades in at least three individuals’ third-party brokerage accounts. Hobbs never sought nor received PFS’s permission to participate in any of these private securities transactions.
Even without the approval of PFS, PFS can still be held responsible for failing to detect trades its broker made away from the firm. As a controlling entity PFS is responsible for the securities law violations of those individuals that in directly or indirectly control. The duty that brokerage firms have to supervise the actions of their representatives who invest away is well-established. The NASD first discussed the issue in NASD NTM 94-44 and later elaborated in NASD NTM 96-33. The NASD and now FINRA have held that this duty creates the obligation to review trades, conduct surprise examinations and take other reasonable supervisory steps to protect the investments of the clients. The broker-dealer must supervise the participation of its representatives and associate persons in the advisory “as if the transaction were executed on behalf of the [broker-dealer].” NASD NTM 96-33.
The brokerage firms have the ability to control all actions of their representatives, including off-book or selling away transactions, and they are required to have specific supervisory procedures to prevent selling away. Martin v. Shearson Lehman Hutton, 986 F.2d 242 (5th Cir. 1993); Stat-Tech Liquidating Trust v. Fenster, 981 F. Supp. 1325 (D. Colo. 1997). They also have the right to discipline the representative for violations of the supervisory provisions. Id.
Selling away is fraud against the investor. A broker chooses to sell away as a way to circumvent supervision into his trades. There is little reason to sell away other than to commit fraud. As such, selling away is considered to be a highly suspect and fraudulent act.
Hobbs had a history of these actions and this gave notice of his fraud. He had multiple suits alleging wrongdoing going back to 2002. Selling away complaints go back at least to 2021.
We have significant experience in the handling of selling away cases. Please contact us for more information.
Morgan Stanley’s Fernando Silva Barred
Regulators barred Morgan Stanley broker Fernando Silva from the securities industry on December 6, 2022. FINRA, the Financial Industry Regulatory Authority, the regulatory agency that oversees securities brokerages, entered into a settlement with Mr. Silva to reach this punishment. The FINRA investigation started after Morgan Stanley reported to the regulator that Silva had misappropriated client funds. FINRA filed suit against Silva, an Arizona securities broker in 2022.
This settlement happened after Silva’s relatively short relationship with Morgan Stanley. Though the relationship was short, Morgan Stanley is ultimately responsible for losses occurring due to Silva’s actions.
From August 2021 through September 2022, Silva was registered with FINRA as a General Securities Representative (“securities broker”) through an association with Morgan Stanley. On September 23, 2022, Morgan Stanley filed a
Uniform Termination Notice for Securities Industry Registration (Form U5). A Form U5 is the form a brokerage is required to file with regulators when one of its brokers is discharged. The Form U5, written and submitted by Morgan Stanley, stated that Morgan Stanley had “concerns that Silva had misappropriated client funds.”
FINRA Rule 8210(a)(1) states that FINRA shall have the right to require a “[securities broker] to provide information orally, in writing, or electronically . . . with respect to any matter involved in [a FINRA] investigation.” FINRA Rule 8210(c) provides that “[n]o [securities broker or brokerage] shall fail to provide information . . . or to permit an inspection and copying of books, records, or accounts pursuant to this Rule.”
A violation of FINRA Rule 8210 is also a violation of FINRA Rule 2010, which requires securities brokers to “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business.
On October 14, 2022, FINRA sent a request to Silva for the production of information and documents pursuant to FINRA Rule 8210. Silva failed to provide a response to that request. On November 1, 2022, FINRA sent a second request to Silva for the production of information and documents. As stated in email correspondence to FINRA on November 14, 2022, and by this agreement, Silva acknowledges that he received FINRA’s requests and will not produce the information or documents requested. By refusing to produce the information or documents as requested pursuant to FINRA Rule 8210, Silva violated FINRA Rules 8210 and 2010.
Please contact us if you have information or have suffered losses due to Fernando Silva.
Paulson Investments and Steepener Notes
Please call 303-300-5022 or toll-free at 844-253-5858 if you were a Paulson Investment client a sold a steepener or other variable interest rate investment. Our firm handles complaints concerning such unsuitable investments. We were previously featured in Bloomberg concerning the issue.
Paulson Investments recently entered into a regulatory settlement with the Financial Industry Regulatory Authority (FINRA). FINRA is the regulatory organization under the oversight of the Securities and Exchange Commission (SEC) that regulates securities brokerages. FINRA brought a claim and ultimately settled with Paulson over the inappropriate sale of variable interest rate structured products (VSRPs). The investments were sold to moderate risk and growth investors despite the investment being a high-risk, speculative investment. The settlement included a fine and a censor.
As stated in FINRA’s announcement, VRSPs are a category of complex structured products that initially pay interest at a fixed rate. The rate is an above-market “teaser” rate for a short period of time, typically one year. Then it switches to a floating interest rate that is based on a reference index (like the S&P 500). VRSPs typically have long maturities, generally between 10 and 30 years.
A “steepener” is one type of VRSP that pays a high teaser interest rate, usually between
8% and 10% for the first year, and then resets to a floating interest rate the steepness of the yield curve. The “Yield Curve” is the spread between two indexes. Commonly the spread between the 30-Year Constant Maturity Swap (CMS) rate and 2-Year CMS rate are used. Because the spread between longer- and shorter-term interest rates can become equal or inverse, referred to as “flattening”, investors holding steepeners can earn little or zero interest for years and the value of the investment plummets.
Federal regulations require that securities brokers only recommend suitable investments to their investors. This means that investments identified as speculative investments cannot be recommended to investors looking for income, growth, moderate or conservative risk.
If your were sold such a VSRP investment, such as a steepener or similar product, please call for a free and confidential consultation. We represent investors in such disputes nationwide.
GWG L Bond Inappropriate for Investors
The SEC, the Securities and Exchange Commission, states that broker sales of the GWG L Bond are inappropriate for most investors in a recently filed complaint. Regulation Best Interest (BI) and/or the FINRA suitability rule require that financial advisors recommend this high-risk investment only to the most seasoned investors.
Both rules also require that the advisor not make overly aggressive recommendations. Likewise, both prohibit recommendations based upon the advisor’s self interests. If your financial advisor recommended GWG L Bond you may be entitled to recovery of your losses. Please call 303-300-5022.
The SEC identified the L Bonds are inappropriate for the average investor in its 2022 complaint. The Complaint states, “L Bonds were corporate bonds offered […] were high risk, illiquid, and only suitable for customers with substantial financial resources.”
The SEC states that the sale of L Bonds violated federal securities laws in many instances. “These recommendations violated Regulation Best Interest in several ways. Regulation Best Interest requires that a [financial advisor] act in the best interest of a retail customer when making a recommendation of a securities transaction (“Reg BI’s Best Interest Obligation”).”
Western International Securities is the focus of the current SEC investigation. The brokerage, however, is just one of many brokerages across the country that sold the GWG L Bond. Many Western brokers sold GWG, but one with the highest number of complaints is Linda Wimsatt. There are currently eight pending suits concerning Wimsatt’s inappropriate sale of GWG L Bonds. Steven Graham of Western is alleged to have not only sold GWG inappropriately but is also under investigation by the SEC for selling GWG inappropriately. Another broker routinely selling GWG was Scot Barringer of Westpark.
Federal regulations prohibit sales to investors who are not retired and looking to speculate. Regulation BI, under the SEC’s analysis, greatly limits who an advisor can recommend the L Bonds.
The SEC reiterates this in the Complaint. Advisors cannot recommend L Bonds to investors with “moderate-conservative or moderate risk tolerances, investment objectives that did not include speculation, limited investment experience, limited liquid net worth, and/or they were retired.”
Financial Advisors knew that the L Bond were inappropriate. The relatively large commissions offered for the sale of the L Bonds made many financial advisors sell the L Bonds anyway.
Regulations require advisors understand the risks of the L Bond. Regulation BI requires the performing of due diligence to understand the risks of an investment. Advisors stating that they did not know of the risk have no excuse.
We represent numerous individuals concerning the GWG L Bonds. Please call for and free and confidential consultation.
Retirement saving is hard enough without negligence and fraud.
IFP Inappropriate Sale of GWG Bonds
We are interested in speaking to investors of IFP that were sold GWG bonds for potentially inappropriate reasons. The SEC has opened an investigation of IFP’s sales of GWG’s L-Bond in light of the SEC’s Regulation Best Interest. Call 303-300-5022.
Advisors recommending investments that are high risk due to heightened commission is a violation of securities laws. GWG bonds are and have always been a highly risky investment. Additionally, alternative investments such as GWG pay an advisor a very high commission to recommend and sell the investment. This creates an inappropriate incentive to advisors to sell the GWG bonds.
A firm has a duty to evaluate the risk of the investments it sells. The investigation also concerns the research into the risk, which should have disclosed at all relevant times that GWG was a highly speculative investment.
IFP asserts that the questions raised by the SEC are true not just for IFP but also a large number of other brokerage and advisory firms. However, the SEC seems to be keenly focused on the sale of GWG by IFP.
It’s not clear how much in GWG bonds IFP advisers sold. GWG Holdings issued $1.6 billion of L bonds, which are backed by life settlements, and more than 140 broker-dealers had agreements to sell the bonds. It’s also unclear what the bonds are worth, but we strongly believe that the bonds are worthless.
The Law Offices of Jeffrey Pederson represents multiple investors concerning losses with GWG. Please call for a free and confidential consultation.
ETFs from Pursche Kaplan Sterling
Please call 303-300-5022 if you have been sold a leveraged or inverse ETFs by brokers at Pursche Kaplan Sterling.
Leveraged ETFs are ETFs with returns based upon some underlying multiplier of a commodity or index (2x S&P, 3x Gold, 2x Russell 2000, etc.). Inverse ETFs are ETFs with returns inverse to a commodity or index. Both are unsuitable for almost all retail investors. Regulators have prohibited the holding of such investments for more than one day even for those sophisticated investors such products are suitable. This is because the investment resets each evening and this can cause extreme volatility in the investments.
One brokerage firm accused of selling these inappropriate ETFs to retail investors is Pursche Kaplan Sterling (“PKS”). Massachusetts regulators recently brought civil claims against PKS.
The regulator alleges PKS failed to review the suitability of thousands of leveraged exchange-traded fund (“leveraged ETF”) transactions. PKS brokers executed the transactions in the accounts of their investors. Investors often holding leveraged ETF positions for periods in excess of one-year experienced significant losses.
PKS brokers also did this in a fiduciary capacity. These brokers were not just securities brokers but registered investment adviser representatives (“RIAs”). RIAs have heightened fiduciary responsibilities beyond those of securities brokers.
PKS had a duty to supervise the advisors at the higher fiduciary level. Once a brokerage like PKS approves a agent to act as a dually-registered RIAs, the brokerage has specific supervisory requirements it must fulfill. In particular, a brokerage must record private securities transactions of these dually registered RIAs on its books and records and supervise activity in the affected accounts as if it were the broker’s own. The brokerage must also follow other fiduciary requirements. This includes full disclosure and warning investors to exit an investment.
Investors should call for a free and confidential evaluation to learn if they are entitled to recovery for the sale of unsuitable investments. Jeffrey Pederson has helped investors across the country recover losses in unsuitable investments for 20 years. Most representations done on a contingency basis.