Tag Archives: FINRA

SEC: 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.

In the Complaint file June 15, 2022, the SEC identifies the L Bonds are inappropriate for the average investor. 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.

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.

Investigation into Everbridge Losses

In December 2021, Everbridge (EVBG) lost approximately half of its value. This highly speculative investment is only for investors willing to take the highest level of risk. If you are not such an investor, and recommended this investment by your advisor, please call 1-303-300-5022.

We are currently investigating the circumstances surrounding the fall of EVBG. While the popular refrain is that the losses were unexpected due to the abrupt resignation of CEO David Meredith, we believe that issues with this investment were known prior to the resignation.

The volatility of Everbridge was known to be a speculative option for investment. This company built assets faster than its revenue growth. Some external analysts even saw extreme financial distress in the finances of EVBG to the extent that they opined imminent bankruptcy.

Additionally, we believe that the internal research of the broker-dealers originally recommending Everbridge will reveal problems at EVBG. The advisors never revealed and disregarded these issues until the abrupt resignation of Meredith.

As such, we are looking to speak to investors to investigate our suspicions. We are currently only looking at brokerage firms recommending this investment to moderate or conservative investors. If you were recommended EVBG please contact us at the number above.

For the last 20 years, the Law Offices of Jeffrey Pederson represents investors nationwide. Initial consultation is free, and all consultations are confidential.

Worden Capital Lack of Supervision

If you have suffered as the result of the lack of supervision at Worden Capital – commonly in the form of either excessive broker trading or failing to transfer your funds – call 303-300-5022.  Jeffrey Pederson is an attorney who represents investors.  Initial consultation is free and confidential.

On December 31, 2020, FINRA, the Financial Industry Regulatory Authority, ordered Worden to pay restitution of over $1 million to investors.  The order stems from systemic problems in supervision of Worden brokers.

FINRA found that from January 2015 to October 2019, Worden and the firm’s owner and CEO, Jamie Worden, failed to establish and enforce a supervisory system to achieve compliance with regulatory rules relating to excessive trading, also known as “churning.” As a result, Worden’s brokers and advisors made more than $1.2 million in excessive commissions. In one instance, a Worden investor paid $205,557 in commissions in the course of one year. Worden did not take action to investigate or stop the trading in this investor’s account and others like it.

The Head of FINRA’s Department of Enforcement said, “FINRA has an unwavering commitment to protect investors from excessive and unsuitable trading. Firms must ensure they establish systems and procedures reasonably designed to supervise representatives’ recommendations to their customers, and firms’ supervisory personnel must have in place the necessary tools and training to address red flags.”

FINRA also found that Worden and its CEO interfered with customers’ requests to transfer their accounts to another brokerage.

Future Income Payments (FIP)

Numerous securities brokers around the country have been selling Future Income Payments (FIP) to investors.  This is a fraudulent investment.  Investment firms have the duty to supervise their representatives to prevent the sale of such unapproved and fraudulent investments.  Call 303-300-5022 for a free and confidential consultation.

Kari M. Bracy, formerly of NY Life, recently lost her securities license rather than cooperate in an investigation into her sale of unapproved investments in future income payment streams.   These investments are alleged to be part of an elaborate Ponzi scheme.  Our firm represents individuals in such suits and other Ponzi-type frauds.

On December 30, 2019, in connection with an investigation by the regulator FINRA, the Financial Industry Regulatory Authority, of Bracy’s sale of a Future Income Payments, LLC’s (“FIP”) structured cash flow investment comprised of pension streams, FINRA staff sent a request to Bracy directing her to appear for on-the-record testimony on January 16, 2020 pursuant to FINRA Rules. On December 31, 2019, Bracy acknowledged during a telephone call with FINRA staff that she received request letter and did not intend to appear for testimony.

There are very few reasons for a broker to sell unapproved securities other than for his own personal gain.  Unapproved securities puts an investor at great risk because there is insufficient research to verify the financials of the company or determine whether the investment is even legitimate.  Firms have a duty to monitor its brokers to confirm that the brokers are not selling unapproved investments.

Another broker selling inappropriate FIP is David Todd Phillips formerly of Moloney Securities and ProEquities.  Between May 2017 and April 2018, Phillips solicited eight investors to purchase $876,636 in FIP.   Respondent received a total of $33,184 in commissions in connection with his sales of FIP securities.  FINRA gave Phillips a nine month suspension.

FINRA is the regulator that is charged by the Securities and Exchange Commission with the oversight of all securities brokers in the United States.  The failure to cooperate led FINRA to bar Bracy from the securities industry.

FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational, which is the definition of a Ponzi scheme. When FIP ceased doing business in early 2018, investors were owed approximately $300 million.

This is not the first time Bracy has faced legal issues concerning these  FIP investments.  An investor initiated suit against NY Life concerning Bracy’s sale of these FIP investments in future income streams.  The investor filed for arbitration with FINRA in July 2018.

That lawsuit, which alleged damages in the amount $142,000, settled for $80,000.  The investor alleged that in December 2017 her investment in FIP, a private securities transaction, was misrepresented as a conservative and safe investment with a 7.5% annual return for ten (10) years.  The FIP investment is not a conservative investment and was known to be highly aggressive and inappropriate for most, if not all, investors.  

Likewise, Phillips has been the focus of multiple suits and was permitted to resign from Moloney.

 

 

 

Attention Stokesbary Investors

If you were one of the investors of Arlyn Roy Stokesbary, formerly of Thrivent Investment Management, please call 303-300-5022.   Initial consultations with an attorney are free and confidential.

The Financial Industry Regulatory Authority (FINRA) accused Stokesbary of a large number of unauthorized trades in the accounts of his investors.  FINRA is the regulatory arm of the New York Stock Exchange and the NASDAQ, and is overseen by the SEC.  FINRA alleged that Stokesbary took such fraudulent actions in the accounts of 20 separate investors.   The actual number may be much higher.

In August 2017, Thrivent identified Stokebary trading for two unrelated investors within several minutes of each other, actions which raise a red flag that appropriate authorization was not obtained.  Stokesbary confessed to his employer, Thrivent, that he did not speak to either customer prior to the trades.  Thrivent warned him of the need for contemporaneous authorization of trades, but did not fire him at the time.

Unauthorized trading is a form of fraud.  A broker can enrich himself at the expense of his investor when the broker makes unauthorized trades.  As such, a broker cannot exercise such control over an account absent written authorization.

Unfortunately, the warning from Thrivent was not heeded.  FINRA identifies that shortly thereafter, Stokesbary effected an additional 109 trades without contacting investors on the day of the trade.  Once again, this number may be much higher.

On September 20, 2018, Thrivent disclosed that it  terminated the employment of Stokesbary.  Thrivent stated the termination was for his  “failing to discontinue improper trading practices [in customer accounts] after being educated.”

Thrivent, and its predecessor Lutheran Brotherhood had been the employer of Stokesbary since 1987.

FINRA suspended Stokesbary for 15 days from the industry and imposed a $5000 fine.

Investors holding accounts at Thrivent should contact an attorney if they believe that Stokesbary effectuated trades in their accounts.

 

Jimmy Booth Investment Fraud

If you were with James “Jimmy” Booth, and question whether you are a victim of investment fraud, please call 303-300-5022.  Booth has previously been a broker for LPL, Invest Financial, and Cadaret, Grant & Co.  He did business for these firms under the name “Booth Financial Associates.”

In May 2019, FINRA, the regulator overseeing securities brokers, began an investigation into the Booth matter after receiving information from Booth’s former employer, LPL, following an internal investigation. During the Relevant Period, multiple customers of Booth gave him their savings totaling at least approximately $1,000,000 to invest on their behalf.

Booth, however, deposited the funds into an account he controlled and, instead of using the funds for investment purposes, used them for his own personal use. FINRA rules provides that “[n]o member or person associated with a member shall make improper use of a customer’s securities or funds” and that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade. ”

FINRA barred Booth from ever serving as a securities broker as part of the settlement of the regulatory matter.

LPL has sent letters to some of the impacted investors to ask them if they authorized the withdrawals in their accounts.  For full recovery, investors should speak to an attorney.

Booth primarily worked in the Norwalk, CT area but it is believed that he had investors nationwide.

Booth has a history of customer disputes going back to 2004.

Recover Nina Jessee Investment Losses

Nina S. Jesse, formerly of National Capital Corp. and Cetera Advisors, has been sued over 20 times for her improper recommendation of unsuitable investments.  Her former employers are responsible for failing to supervise Jessee.  Please call 303-300-5022 for a free and confidential consultation with an attorney if you have suffered losses you believe were too aggressive or not appropriately investigated by Jessee or her employers.

Ms. Jesse is permanently barred from the securities industry.  FINRA, the regulatory body that oversees securities brokerage firms, investigated Jessee.  The focus of the investigation was the large number of complaints that Nina Jesse sold unsuitable investments.  The sale of unsuitable investments is a form of fraud.  A broker motivated by commission or other payment recommends investments that are overly risky or otherwise inconsistent with an investor’s objectives or tolerance for risk.  The investors then suffers losses as the result of the broker’s greed.

The bar of Nina Jessee was issued when Jessee failed to provide documents or otherwise contest the regulator’s allegations.  Her attorney acknowledged that she received the regulatory action but declined to participate.

Another subject of the investigation was undisclosed outside business activity of Jessee.  The reason that disclosure of such activity is important is that brokers will commonly use their access to investors to direct investment toward their own business or the business of a friend.  This is done despite the lack of oversight by the broker’s employer or verification that the business is worthy of anyone’s investment.

Suits concerning losses with investors such as Nina Jessee are largely handled through an arbitration process.  Investors suffering losses should speak to an attorney knowledgeable with the investment arbitration process.  Please call the number above to discuss Nina Jesse and the recovery process.

Christopher Duke Bennett Fraud Victims

If you have suffered losses with Christopher Duke Bennett of J.J.B. Hilliard, please call 303-300-5022.   Victims may receive a free and confidential consultation with an attorney.  Bennett is accused of participating in systemic fraud of his investors.

Bennett engaged in unauthorized trading, or churning.  This is where a broker makes trades in an account to effectuate commissions for himself without regard for the investor.  Between January 2014 and December 2015, Bennett violated federal and state securities laws by exercising discretionary trading authority in the accounts of several customers without written authorization, in violation of NASD Rule 2510(b) and FINRA Rule 2010.  This was the grounds for a regulatory action filed against Bennett by the Financial Industry Regulatory Authority (FINRA).

Between January 2014 and December 2015, Bennett made unauthorized trades in the accounts of four customers, one of whom was a senior investor, by placing approximately 75 total trades in those accounts. A broker is required to speak to an investor contemporaneously to a trade, or have written authorization that the broker has authority to make a trade at the broker’s discretion.  Bennett did not obtain express authorization from those customers for those trades prior to placing them, did not have written authorization from the customers to exercise discretionary authority in those accounts, and neither sought nor obtained from Hilliard Lyons prior written acceptance of the accounts as discretionary.

To date, at least 10 of Bennett’s former clients have filed suit, via FINRA arbitration, seeking redress.

Pagartanis Fraud

If you were a victim of Steven Pagartanis please call 303-300-5022.  The Law Offices of Jeffrey Pederson, PC is a firm that specializes in suits concerning securities brokers.

Pagartanis, the former Lombard and Cadaret broker from Long Island, N.Y., pleaded guilty Monday, December 10, 2018, in federal court to conspiracy to commit mail and wire fraud for running a Ponzi scheme over 18 years

Investors have recourse when investment professionals turn bad.

Investors have recourse when investment professionals turn bad.

Steven Pagartanis victims invested over $13 million and saw actual losses of more than $9 million,  according to the U.S. Attorney’s office.

This former licensed securities broker solicited elderly victims to invest in real estate-related investments, including those affiliated with publicly traded companies and an international hotel conglomerate, according to the Department of Justice. Pagartanis promised his investors returns consistent with conservative investments-that their principal would be secure and earn a fixed return of 4.5% to 8% annually.

The victims wrote checks payable to an entity secretly controlled by Mr. Pagartanis at his direction, according to the government. He utilized a network of bank accounts to launder the stolen funds, which he used to pay personal expenses, buy luxury items and make the phony interest or dividend payments to other victims, according to the Department of Justice. He faces up to 20 years in prison.

Recovery of these losses will focus on the employers of Pagartanis.  These employers are required to have supervisory safeguards in place to prevent such actions.  FINRA, the Financial Industry Regulatory Authority, has rules that require licensed brokerages to take steps to monitor and detect private securities transactions away from the firm.  Consequently, liability exists even if such actions were not taking place right under the nose of the firms.  FINRA offers an arbitration forum to recover such losses.

The SEC also filed a civil suit concerning this matter in May 2018.

On June 26, 2019, a FINRA arbitration panel awarded an investor a judgment in the amount of $1.46 million against Pagartanis for his role iin the multi-million dollar Ponzi scheme.

Jeffrey Pederson is an attorney who helps investors recover losses from brokerage firms through the FINRA arbitration process.  This is just one of the 17 customer complaint disclosures on his record.

DAVID FAGENSON LOSS RECOVERY

Call 303-300-5022 to learn about potential loss recovery for investors of David Fagenson.  Mr. Fagenson was previously with Newbridge, Merrill Lynch and UBS Financial.  Initial consultations are free and most representations are done on a contingency basis.

FINRA, the regulator that oversees securities brokers, alleged that Fagenson engaged in churning and unsuitable trading in the accounts of three senior customers during the period of January 2012 and September 2016.

We believe that the problem could be more widespread.  Churning is rarely restricted to just aInvest photo 2 small percentage of a broker’s clients.  An average broker usually has over 100 investors in that broker’s book of business.

Also, Fagenson has a long history of actions that question his veracity and ability to hand the savings of others.  In addition to a felony charge in 2010, Fagenson has been the subject of eight investor lawsuits/complaints, three regulatory actions, a termination of brokerage employment for cause, and one bankruptcy.

The history of Fagenson raises questions of how he was supervised and whether he should have ever been hired by the aforementioned brokerages.  UBS has acknowledged his issues and that he Fegenson required heightened supervision.  However, even that was not enough in light of the many red flags that existed.

Jeffrey Pederson is a private attorney handling FINRA arbitration cases for investors to obtain loss recovery.