Tag Archives: California

Robert “Rusty” Tweed

Jeffrey Pederson PC is interested in speaking to investors of Robert “Rusty” Tweed as part of an investigation into the broker.  Tweed was previously with Cabot Lodge, Concorde Investment Services, and MAM Securities.  Please call 1-866-817-0201 for a free and private consultation with an attorney.  Many issues which may entitle investors to recovery against Tweed’s former employers, have been brought to light by a recent FINRA complaint against Rusty Tweed.  However, time is running on the ability to recover.

FINRA alleges in a complaint that between November 2009 and March 2010, Rusty Tweed obtained more than $ 1.6 million from his retail customers through a false and misleading private placement memorandum (“PPM”) he used to offer and sell interests in his Athenian Fund LP, a pooled investment fund that he both created and controlled.

Tweed drafted and circulated the private placement memo (PPM), a document that is supposed to provide investors with significant information to evaluate the investment, that misrepresented and failed to disclose material information to investors, and twenty three customers invested in the Fund without the benefit of complete and accurate information.

The misrepresentations included: (1) the total potential fees and costs associated with the Fund; (2) Tweed himself; and (3) the entities and individual who would ultimately have immediate control over the money that customers invested.

According to the Complaint, Tweed and the PPM misrepresented or failed to disclose to retail customers the following material facts:

a. First. Tweed and the PPM misrepresented the total potential costs of an investment in the Athenian Fund. opting to disclose certain costs and fees while oniitting others that would reduce any return on investment.

b. Second, Tweed and the PPM also failed to disclose that the omitted fees and costs were added only after Tweed discovered that arbitration (complaints) against him would prohibit him from opening a trading account for the Fund directly and require the use of a more expensive master fund structure.

c. Third, Tweed and the PPM failed to disclose that Tweed had replaced the Fund’s identified master fund with another entity controlled by an undisclosed person (ER). who would now have immediate control over the Fund’s assets. Tweed and the PPM likewise provided no information sufficient for investors to evaluate the risk ofentrusting their capital to ER and his company, such as relevant background. other business activities, and qualifications.

d. Fourth, Tweed and the PPM failed to disclose the additional management fees and perforniance allocations that arose when he granted control to ER and his management company, and Tweed’s own interest in those fees, which would further reduce any return on the retail investors’ capital.

As a result of these material misrepresentations and omissions. Athenian Fund investors could not evaluate the true costs and risks associated with the Fund, including those relating to the individual or the entities with immediate control over their capital.

 

Invement losses with John Blakezuniga

John Blakezuniga, formerly of Vanguard Capital, recently entered into a settlement agreement with FINRA regulators, where he agreed to a fine but did not admit or deny fault, concerning alleged fraudulent activity in the portfolios of his investors.  Blakezuniga sometimes goes by the name of John Blake, sometimes by the name John Zuniga, and sometimes by John Blake-Zuniga.

Jeffrey Pederson, PC helps investors recover such losses.  For a free and confidential consultation with a lawyer, please call 1-866-817-0201.

As identified in the FINRA regulatory settlement, referred to as an AWC, between 2007 and 2013, Blakezuniga borrowed $775,000 (which he has not fully repaid) from two firm customers Invest photo 2in violation of the firm’s policy. As a result, Blakezuniga violated NASD Rules 2370 and 21 10 and FINRA Rules 3240 and 2010.

Blakezuniga separately violated FINRA Rule 2010 by falsely answering “no” to a question on the firm’s 2013 annual compliance questionnaire that asked if he had ever borrowed money from a customer.

In addition, from 2010 to 2014, Blakezuniga recommended approximately 1,280 transactions in inverse and inverse leveragedExchange Traded Funds (“nontraditional ETFs”) in 85 customer accounts without a reasonable basis for the recommendations. By doing so, Blakezuniga violated NASD Rule 2310 and FINRA Rules 2111 and 2010.

Borrowing funds from an investor/customer is fraudulent because of the discrepancy in the bargaining power between broker and investor.  The prohibition is codified in NASD and FINRA rules.  NASD Rule 2370 and FINRA Rule 3240′ generally prohibit registered representatives from borrowing money from any customer subject to limited exceptions and in accordance with firm procedures.

Likewise, lacking a reasonable basis for the recommendation of an investment is violative. NASD Rule 2310 and FINRA Rule 21113 require registered representatives to have reasonable grounds for believing that a recommendation is suitable for a customer based upon the customer’s disclosed security holdings and financial situation and needs. A violation ofthese rules also constitutes a violation of FINRA Rule 2010.

Oil / Gas Investment and Tax Loss

Some Energy, Oil and Gas investments can only legally be sold to a limited section of the investing public.  If you suffered losses we may be able to  help.  Contact us at 303-300-5022 or 1-866-817-0201 (toll-free) for a free consultation.

Oil and gas investors do not have to sit and watch their life savings diminish.  These investors have rights though many are unaware of the recourse they have for such losses.

Many investors have received high pressure sales of oil and gas investments.  Brokers and other investment pNYSE pic 1rofessionals like to sell these types of investments because they usually pay a very high commission.  These commissions can be 10 to 20 times higher than the commission on your average stock sale.

The high commissions will often cause these individuals to ignore the rules in the sale of such investments. The two rules that are usually ignored are those concerning accreditation and suitability.

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Many investors were led to believe energy investments were safe, only to have their savings left adrift.

Oil and gas limited partnerships can generally only be sold to “accredited” investors.  Such investors are individuals whose liquid net worth, their net worth excluding their home, is in excess of $1 million.

The second rule that is commonly violated in the sale of such investments is the suitability rule.  Oil and gas investments are known by investment professionals to generally be very high risk investments.  Investments need to be consistent with the level of risk that an investor is willing or able to take.  For example, a person approaching or in retirement or who cannot otherwise afford to take high levels of risk with their investments could not legally be offered an oil and gas investment.

Likewise, an individual who expresses a desire for conservative or moderate investments would not be a suitable investor. There are many other rules that can potentially be violated in the sale of oil and gas investments.

FINRA, which acts under the oversight of the SEC to regulate securities brokers, confirms that oil and gas securities, such as oil and gas exchange traded products, are only suitable for highly sophisticated investors.  On May 18, 2020, FINRA released a notice that such exchange traded products cannot be sold to average investors unless the investor has been adequately warned and consented to the high level of risk associated with the investment.  This means a broker is liable for an investor’s losses when such investments are inappropriately sold to an average investor.

The greatest losses exist with oil and gas master limited partnerships, or MLPs.  The SEC has warned about such investments.  This includes not only rules which favor the sponsor of the MLP over the investor, but also includes concentration risk of the venture being entirely invested in a risky industry, and tax risk that comes with limited partnership investing.

As limited partnerships for federal tax purposes, MLPs generally do not pay federal taxes.  Instead, investors report on their tax returns their share of the MLP’s income, gains, losses, and deductions, and are taxed at their individual tax rates.  Each limited partner receives annually a Schedule K-1 showing its share of the MLP’s income, gains, losses, and deductions.   So when debt forgiveness is given the MLP the amount forgiven is treated as income of the investors.  The investors are then taxed on such income, which means they could owe, and thus lose, more than the investment is worth.  

Such investment losses also exist with leveraged and inverse ETFs tied to the price of oil and gas.  These investments, such as Direxion GUSH and DRIP, were intended to be held by for a very short period of time.  While the investments were meant to be held for a matter of hours, many brokers negligently held for months.

Problems exist not just with the investment losses, but also with the tax consequence of investing in these companies.  This tax consequence is referred to as CODI.  A detailed description is found in the following Link to Forbes.   In short, these investments are partnerships.  When debt is defaulted upon by a partnership, and the lender “writes off” the debt, the write off means that the owners (the investors) are taxed as if they received the amount written off as income.  Considering some limited partnerships defaulted on billions in loans, the tax obligation of investors is substantial.

Oil StockIf you have any questions, please feel free to give us a call.  These rules apply no matter if you invest in individual oil or gas investments or invest through a mutual fund or master limited partnership (MLP).

Common oil and gas investments we see recoverable losses include Linn Energy (“LINE” or “LNCO”) and more information can be found at www.jpedersonlaw.com/blog/linn-energy-losses/, Williams Companies (“WMB”), Penn West Petroleum (“PWE”), BP Prudhoe Bay Royalty Trust (“BPT”), Breitburn Energy Partners, LP (“BBEP”), Hawthorne, SandRidge Energy, Williams Ridgewood Energy, Apco, Atlas Energy, Midstates Petroleum, Peabody Energy, Resolute Energy, XXI Energy, Nobel, Permian Basin, Pioneer Energy, W&T Offshore, and Breitling Energy.  Some of these losses may be recoverable by class action while others may require individual FINRA arbitration suits.

More information on SandRidge can be found at this link.

Oil Stock II

Some oil investments are barely worth the paper they are written upon.

Jeffrey Pederson is an attorney who works with investors to recover losses in FINRA arbitration and has represented investors in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut , Florida, Hawaii, Illinois, Indiana, Massachusetts, Montana, New Jersey, New Mexico, New York, North Carolina, Maryland, Minnesota, Missouri, Montana, North Dakota, Rhode Island, Texas, Utah, and Wyoming, in FINRA arbitration actions against securities brokerage firms for unsuitable investments.

Please call for a confidential and free consultation.

Vincent Bee Payne

On February 2, 2017, Vincent Bee Payne entered into an AWC with FINRA, the Financial Industry Regulatory Authority.  FINRA is the regulator that oversees financial advisers.

The FINRA allegations, which Payne neither admits or denies, are that he falsified signatures without permission on certain insurance documents and subscription agreements.  The actions took place in July and August 2014.

The actions were motivated, as alleged in the AWC, by an attempt to secure commissions and to prevent his employer from reassigning the accounts.  The signatures were for three different customers and were done without the consent of his customers.

Payne entered the securities industry in May 2012 as an Investment Company Products/ Variable Contracts Representative at Farmers Financial Solutions, LLC (“Farmers Financial”), where he remained registered until his termination in March 2015.

From January 2011 through March 2015, Payne also was appointed as an insurance agent with Farmers Insurance Group of Companies (“Farmers Insurance”), a Farmers Financial affiliate. Payne obtained his Series 6 (Investment Company and Variable Contracts Products Representative) and Series 63 (Uniform Securities Agent State Law) licenses on June 25,2012 and July 9,2012, respectively.

FINRA Rule 2010 requires that an advisor, such as Payne, in the conduct of his business, “shall observe high standards of commercial honor and just and equitable principles of trade.” Signing a customer’s name to a document without proper authority constitutes forgery, and forgery is inconsistent with this Rule

The FINRA AWC can be found at the following link.

Kelly Clayton Althar

Kelly Clayton Althar has been barred from the securities industry for excessive trades and recommending and purchasing investments that were too high of a risk for the broker’s investors.

The allegations to which Althar consented, without admitting or denying fault, are that between April 2011 and March 2014 the broker made unsuitable recommendations and engaged in excessive trading in two accounts held by an elderly customer.  Althar engaged in high volume trading to generate commissions and over concentrated a client’s accounts in risky securities, despite the fact that the client was close to retirement and wanted only low risk investments. Althar’s trading decimated the client’s accounts, which constituted the bulk of her net worth and retirement savings.

During the Relevant Period, Althar often purchased, sold, and subsequently repurchased the same security in CN’s accounts within a short period oftime. For example, on December 26, 2012, Althar purchased 696 shares of American Capital Agency Corp. (“AGNC”), a REIT, for $21,559.09 and sold those shares, at a loss, two months later on February 28,2013, for $21,298.50. He then re-purchased 782 shares of AGNC two months later after the price had risen, for $26,756.36. and then sold those shares, at a significant loss, six weeks later for $18,619.03. On those four trades, on which CN lost over $8,000 in a matter ofmonths, Althar generated over $3,000 in commissions.

A link to the AWC can be found at the following link.

Althar had previous pled no contest to a charge for felony grand theft and was sentenced to a 30-day work program and 36 months probation.

 

UBS Investor Loss Recovery

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

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

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

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

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

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

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

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

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

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

Losses at LPL Financial

LPLIf you have lost money with LPL you may be entitled to recovery of some or all of your losses.  Please call 1-866-817-0201 toll-free to speak to a lawyer for more information.

In May 2016, LPL broker Brian David Smit of Sioux Falls, South Dakota was barred from the securities industry.  This was pursuant to an agreement reached between Smit and FINRA regulators, an agreement referred to as an “AWC.”  The allegations concerned the sale of unapproved private securities.  His record also reflects that Smit was under investigation for such sale when he left LPL.  The sale of unapproved investments is a matter of concern since it is commonly a vehicle for fraud.

On May 6, 2015, the Financial Industry Regulatory Authority Inc. (“FINRA”), ordered LPL Financial to pay $11.7 million in fines and restitution for what it deemed “widespread supervisory failures” related to sales of complex investment products.  Such products are suitable for only a limited portion of the investing public and FINRA prohibits the sale of such products to investors to whom such investments would not be suitable.

From 2007 to as recently as April 2015, LPL failed to properly supervise sales of certain complex investments, including certain exchange-traded funds (“ETFs”), variable annuities and nontraded real estate investment trusts (“REITs”), and also failed to properly deliver more than 14 million trade confirmations to customers, according to the regulator.

LPL did not have a system in place to monitor the length of time customers held securities in their accounts or to enforce limits on concentrations of those complex products in customer accounts, FINRA said.  Such issues can lead to the sale of unsuitable investments and put such portfolios in a position of greater risk than the investor may have wanted or could afford to take.

The systems that LPL had in place to review trading activity in customer accounts were plagued by “multiple deficiencies,” Finra said. The firm failed to generate proper anti-money laundering alerts, for instance, and did not deliver trade confirmations in 67,000 customer accounts, according to the settlement letter.

The regulator also charged the firm for failing to supervise advertising and other communications, including brokers’ use of consolidated reports.

The penalty includes a $10 million fine and restitution of $1.7 million to customers who were sold certain exchange traded funds (“ETFs”). FINRA said the firm may pay additional compensation to ETF purchasers “pending a review of its ETF systems and procedures.”  As such, investors should speak to an attorney to maximize recovery of losses.

Content from this post from Investmentnews.com.

 

Marijuana Investment Loss

Many individuals invested in marijuana companies in Colorado and elsewhere.  Those suffering investment loss may have grounds for recovery.  Please call the Law Offices of Jeffrey Pederson, P.C. at 303-300-5022 in Colorado and nationwide at 1-866-817-0201 for a free consultation.

Many marijuana investments are inherently speculative.  Investments such as Aurora Cannabis, Canopy Growth, and Cronos are inappropriately being sold to moderate investors.  Such investors have legal claims for the losses in these and other marijuana investments.

In addition to over saturation problems in Canada, the primary issue still revolves around the uncertain legal status in the United States.

On January 4, 2018, Attorney General Jeff Sessions changed the position of the US Justice Department that allowed the marijuana industry to flourish in Colorado and other states.  This has created investment loss on the part of investors.  Sharing the blame are investment professionals who recommended such marijuana investments to conservative investors, knowing the industry was in such a precarious position.

There has also been fraud in selected areas of the marijuana industry.  The Securities and Exchange Commission issued an alert on May 16, 2014 warning investors of potential fraud in investments in marijuana-based companies.  “Fraudsters follow headlines  […] and recent law changes [in Colorado concerning marijuana] has created new opportunities for penny stock fraud,” stated the SEC.

The SEC recently halted trading in Colorado-based cannabis cultivation system maker FusionPharm Inc. related penny stock in the past two months.  Questions had arisen concerning assets, revenues, financial statements, business transactions and financial condition disclosures.  Other suspended companies include Cannabusiness Group, Inc., (CBGI), GrowLife, Inc., (PHOT), Advanced Cannabis Solutions, Inc. (CANN), and Petrotech Oil and Gas, Inc. which had previously stated that it would be venturing into the pot industry.                      

If you have suffered losses in marijuana investments, you need an attorney licensed in Colorado with experience in handling securities suits.  Jeffrey Pederson is a Colorado licensed attorney who has successfully represented hundreds of investors.  Contact him for a free consultation on your matter by calling 303-300-5022.

Information in this post is derived from the following:  www.fa-mag.com/news/sec-warns-of-marijuana-stock-scams-17998.html ;

Variable Annuity Fraud

We help investors who believe that they are victims of variable annuity fraud.  Variable annuity fraud has always been a frequent trick of brokers looking to put their own interests ahead of their investors (often by selling to those approaching retirement which is generally an unsuitable recommendation).  The investments pay an extremely high commission and the investments are only suitable for a small section of the investing public.  This fraud hit a new low last week.

Exchanging one variable annuity for another variable annuity is a form of fraud.  In May 2019 Woodbury Financial entered into a settlement agreement with regulators concerning systemic practices of exchanging annuities.  Annuities pay a commission that is very high compared to most suitable investments.  There is very little that would justify the switching of one variable annuity to another variable annuity other than the windfall that such an exchange provides the broker.

There are other schemes involving variable annuities where brokers enrich themselves at the expense of investors.  As reported in http://www.investmentnews.com/article/20140313/FREE/140319954, the Securities and Exchange Commission Thursday, March 13, 2014, filed charges against a group of brokers in a scheme wherein investors used variable annuities to wager on the lives of the terminally ill.

The brokers in question were Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of Brooklyn, N.Y.

The brokers allegedly obtained the personal health and identification data of the dying patients through fraud, marking them as annuitants on variable annuity contracts that he had marketed to wealthy clients, according to the SEC’s complaint.  Under false pretenses, the brokers allegedly received their employers’ approval to sell the annuities.  The motivation with this plan, as with most fraudulent sales of variable annuities was the commission.  Variable annuities pay as large of a commission as just about any investment product that you can purchase through a securities brokerage.  The brokers reaped approximately $1 million in commissions from their sale, the SEC claimed, with Mr. Horowitz obtaining more than $300,000 and Mr. Cohen became unjustly enriched to the tune of more than $700,000.

If you have lost money with these or any other brokers you believe may have defrauded or mismanaged you portfolio call 303-300-5022 or toll-free at 1-866-817-0201.