Syosset, NY-based stockbroker Matthew Eckstein was recently charged with three counts of second-degree grand larceny, third degree grand larceny, and two counts of first-degree scheme to defraud by the Nassau County District Attorney. These charges stem from Mr. Eckstein’s business as a financial advisor in Garden City, NY, and more specifically, allegations that he “betrayed his clients’ trust when he stole their money in a multi-million dollar Ponzi scheme and even pilfered hundred of thousands from the estates of deceased clients” according to Madeline Singas, the Nassau County District Attorney.

FINRA BrokerCheck indicates that Matthew Evan Eckstein’s (CRD# 2997245) career in the securities industry dates back to 1998, when he first began working as a registered representative for Gould, Ambroson & Associates Ltd. (“Gould”) (CRD# 17412) in Garden City, NY. Since September 16, 2015, Mr. Eckstein has been registered at his own broker-dealer, Sisk Investment Services, Inc. (“Sisk”) (CRD# 19406), where he is chief executive and chief compliance officer. On April 27, 2018, FINRA Enforcement filed a Complaint naming Mr. Eckstein as Respondent. As alleged by FINRA, from December 2014 until December 2015, Mr. Eckstein purportedly sold over $1.3 million in supposedly safe private investments akin to CDs to numerous clients.

Publicly available information suggests Mr. Eckstein’s alleged victims are from Massapequa, Seaford, Smithtown, Melville, Staten Island, Brooklyn, Manhattan, Norwalk, CT, Jupiter, FL, and Redlands, CA. In January 2015, Mr. Eckstein allegedly convinced one customer to invest approximately $385,000 into a company, Conmac Funding (“Conmac”), that was touted as a safe, no-risk investment. Further, Mr. Eckstein purportedly assured the client that the investment principal would be returned in two years, with an additional four-percent interest, much like a certificate of deposit. However, as recently reported, when the client requested his money back two years later, he only received $26,699.

According to FINRA Enforcement, Mr. Eckstein’s alleged misconduct involved an investment scheme run by “KB”, a close friend of Eckstein. FINRA’s Complaint alleges that Mr. Eckstein conducted no due diligence on the issuer of the supposedly safe investments, Conmac: “Eckstein never reviewed the Issuer’s books or financial statements and did not know the sources of the Issuer’s funds, the identity of its customers … the default rate on its loans, its overhead, or the number of its employees.” Further, FINRA Enforcement has alleged that Eckstein misrepresented the nature of these private investments in Conmac as “similar to a CD” and “fully guaranteed.”

Included among the claims brought by FINRA Enforcement are allegations that Mr. Eckstein engaged in “selling away” activity in violation of NASD Rule 3040 and FINRA Rule 2010. Specifically, FINRA has alleged that while registered with Gould, Mr. Eckstein “participated in five securities transactions wherein LM, JS, LS, and BV invested $1.28 million…” Brokerage firms like Gould have a duty to ensure that their registered representatives are adequately supervised, and moreover, must take reasonable steps to ensure that their brokers follow all applicable securities rules and regulations, as well as internal policies and procedures. In instances where a financial advisor engages in selling away activity, a member firm like Gould may be held liable for losses sustained by investors. Broker-dealers including Gould must ensure that their supervisory system is reasonable and that client accounts are adequately monitored, as brokerage firms may be found vicariously liable for the misconduct or negligence of a registered representative.

Attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including cases involving high-risk, illiquid and opaque private placement investments and selling away cases. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

If you invested in a Woodbridge promissory note(s) upon the recommendation of broker Peter David Holler (CRD# 838897), you may be able to recover your losses through securities arbitration before FINRA. As disclosed by FINRA on May 21, 2018, registered representative Peter Holler has been suspended from the securities industry for a period of two years. From 2001 through August 2017, Mr. Holler was affiliated with Securities Service Network, LLC (BD No. 13318) (“SSN”) in their Bristol, TN office. FINRA BrokerCheck indicates that Mr. Holler was discharged from his employment with SSN on or about August 10, 2017 due to his alleged participation in “unapproved and undisclosed outside business activity…”

Pursuant to a Letter of Acceptance, Waiver, and Consent (“AWC”), through which Mr. Holler neither admitted or denied FINRA Enforcement’s findings, he accepted both the two-year suspension, as well as monetary penalties including a $10,000 fine and disgorgement of $49,790 in commissions received through the sale of unregistered Woodbridge securities to various investors. As encapsulated in the May 2018 AWC, Mr. Holler purportedly violated FINRA Rule 3280(b), an industry rule that prohibits brokers from participating in private securities transactions, without first providing written notice to their employer firm. Such written notice must set forth in detail the proposed transaction, as well as the financial advisor’s proposed role with regard to the contemplated transaction and whether he or she will receive any compensation in connection with the transaction.

According to FINRA Enforcement’s findings, from September 2016 – August 2017, Mr. Holler solicited various investors to purchase unregistered securities in certain Woodbridge Mortgage Investment Funds as offered through the Woodbridge Group of Companies (“Woodbridge”) of Sherman Oaks, CA. Further, FINRA Enforcement determined that Mr. Holler sold approximately $1.4 million in Woodbridge promissory notes to some 19 individuals, 9 of whom were SSN customers. In derogation of FINRA Rule 3280, Mr. Holler purportedly did not provide SSN with prior written notification of these private securities transactions.

As has been alleged by the SEC, Woodbridge and its owner and former CEO, Mr. Robert Shapiro, purportedly “used his web of more than 275 Limited Liability Companies to conduct a massive Ponzi scheme raising more than $1.22 billion from over 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.” According to Steven Peiken, Co-Director of the SEC’s Enforcement Division, the Woodbridge “[b]usiness model was a sham. The only way that Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.”

Irrespective of whether Mr. Holler’s alleged outside business activity was conducted without his employer’s knowledge, brokerage firms like Securities Service Network nonetheless have a duty to ensure that their registered representatives are adequately supervised. As such, brokerage firms must take reasonable steps to ensure that their brokers follow all applicable securities rules and regulations, as well as adhere to the firm’s internal policies and procedures. In instances when brokerage firms fail to adequately supervise their financial advisors, they may be held liable for losses sustained by investors.

Attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving broker misconduct, including claims against broker-dealers for their failure to supervise. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

On May 1, 2018, FINRA Department of Enforcement entered into a settlement via Acceptance, Waiver and Consent (“AWC”) with Respondent Laidlaw & Company (UK) LTD. (“Laidlaw”) (BD# 119037). Without admitting or denying any wrongdoing — Laidlaw consented to a public censure by FINRA, the imposition of a $25,000 fine, as well as agreeing to furnish FINRA with a written certification that Laidlaw’s “[s]ystems, policies and procedures with respect to each of the areas and activities cited in this AWC are reasonably designed to achieve compliance with applicable securities laws, regulations and rules.”

In connection with its investigation surrounding the matter, FINRA Enforcement alleged that “From April 2013 through December 2015… Laidlaw failed to establish and maintain a supervisory system and written supervisory procedures (“WSPs”) reasonably designed to ensure that” Laidlaw registered “representatives’ recommendations of leveraged and inverse exchange traded funds (“Non-Traditional ETFs”) complied with applicable securities laws and NASD and FINRA Rules.”

Non-Traditional ETFs are extremely complicated and risky financial products. Non-Traditional ETFs are designed to return a multiple of an underlying benchmark or index (or both) over the course of one trading session (typically, a single day). Therefore, because of their design, Non-Traditional ETFs are not intended to be held for more than a single trading session, as enunciated by FINRA through previous regulatory guidance:

“[t]he performance of Non-Traditional ETFs over periods of time longer than a single trading session ‘can differ significantly from the performance… of their underlying index or benchmark during the same period of time.” FINRA Regulatory Notice 09-31.

Further, because of the inherent complexities and risks embedded in Non-Traditional ETFs, FINRA has explicitly advised broker-dealers and their registered representatives that Non-Traditional ETFs “[a]re typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.” Id.

Pursuant to the AWC, FINRA’s findings of fact allege that Laidlaw registered representatives solicited and effected 869 purchases and 946 sales of Non-Traditional ETFs across 312 customer accounts, totaling in excess of $32,000,000 in transactions. Despite this volume of business in Non-Traditional ETFs, FINRA determined that Laidlaw’s own compliance systems, including its WSPs, “[d]id not require supervisors to review open positions in Non-Traditional ETFs held for extended periods or resulting in unrealized losses and did not impose product-specific limitations on Firm representatives’ ability to recommend trading in or holding Non-Traditional ETFs.” Due to these alleged infractions, FINRA Enforcement alleged that Laidlaw’s insufficient supervisory system gave rise to violations of FINRA Rules 3110 and 2010.

Moreover, brokerage firms like Laidlaw have a duty under NASD Rule 2310 and FINRA Rule 2111 — the so-called suitability rule — to, among other things, perform reasonable diligence to understand the nature of the recommended security. This due diligence “[w]ith respect to leveraged and inverse ETFs… means that a firm must understand the terms and features of the funds, including how they are designed to perform, how they achieve that objective, and the impact that market volatility, the ETFs use of leverage, and the customer’s intended holding period will have on their performance.” See FINRA Regulatory Notice 09-31 and FINRA Regulatory Notice 12-03.

Attorneys at Law Office of Christopher J. Gray, P.C. have substantial experience representing customers in FINRA arbitration cases involving claims against stockbrokers or investment advisors. Investors with questions concerning possible claims involving Non-Traditional ETFs or other non-conventional investments may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Investors who suffered losses due to misconduct by financial advisor Ralph Savoie (CRD# 411660) may be able to recover their losses in arbitration before the Financial Industry Regulatory Authority (“FINRA”). On March 26, 2018, Mr. Savoie plead guilty in Louisiana federal court to stealing up to $1.5 million from clients, using their monies for personal expenses including jewelry, hotels, and credit card bills, as well as to pay off previous clients in Ponzi-fashion in connection with prior purported investment opportunities. Mr. Savoie allegedly guaranteed his clients high rates of returns on various investments in securities and insurance products, describing the investments as a “sure thing.” In actuality, however, Mr. Savoie allegedly engaged in misconduct by using these funds on personal expenses, to pay prior clients and to funnel money into a “risky real estate venture.”

According to public records, Mr. Savoie of Mandeville, LA, was formerly associated with Cambridge Investment Research Advisors, Inc. (CRD# 134139) (“Cambridge”) in their Metairie, LA, branch office, until on or about August 11, 2015, at which time Mr. Savoie was discharged from his employment with Cambridge as a registered representative. Mr. Savoie’s career in the securities industry is lengthy and dates back to the early 1970’s, including his most recent stint at Cambridge from 2013 until August 2015.

According to publicly available information through FINRA, Mr. Savoie was discharged from his employment with Cambridge due to his alleged failure to “[d]isclose and receive approval for an outside business activity.” Further, FINRA reports that Mr. Savoie has been subject to six customer disputes, including three that remain pending and three that have resulted in settlement. A number of these disputes center on allegations concerning Mr. Savoie’s purported sales of “unsuitable, illiquid, expensive, private placements.”

As our office has discussed in previous blog posts, private placements are, in general, a risky investment proposition. To begin, private placements carry considerable risk (investors should be prepared to lose their entire investment), often are complex in nature, and typically are opaque insofar as investors only have limited information off which to make an ultimate decision as to whether an investment is warranted (as unregistered securities, private placements do not provide the same scope and depth of information as with other investments, such as publicly traded, registered stocks or mutual funds). The majority of private placements are offered pursuant to Regulation D (“Reg D”), an SEC regulation that allows private companies to raise capital without conducting a public offering.

Brokerage firms like Cambridge have a duty to ensure that their registered representatives are adequately supervised, a duty which includes monitoring their brokers in connection with outside business activities and/or sales of private placements. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

The attorneys at Law Office of Christopher J. Gray, P.C. have successfully resolved a number of disputes on behalf of investors, including losses sustained due to instances of fraudulent conduct such as Ponzi schemes, and related broker misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

Financial advisor Joseph C. Farah (CRD# 2978633), who was most recently affiliated with Gold Coast Securities, Inc. (CRD# 110925) (hereinafter, Gold Coast), has voluntarily consented to a bar from the securities industry pursuant to an Order Accepting Offer of Settlement (hereinafter, the Settlement) entered into on or about January 25, 2018. Without admitting or denying any wrongdoing, Mr. Farah consented to the industry bar following FINRA Enforcement’s investigation into certain allegations including, inter alia, that Mr. Farah purportedly engaged in excessive trading in a customer’s account, and further, allegedly failed to inform his employer, Gold Coast, that the customer had opened a brokerage account at another broker-dealer at Mr. Farah’s behest.

Beginning in 1998, Mr. Farah began working as a registered representative for Financial Network Investment Corporation in El Segundo, CA. Subsequently, he worked at National Planning Corporation (CRD# 29604) from July 1998 – September 2002. From September 2002 until September 2015, Mr. Farah was affiliated with Gold Coast as a registered representative. In September 2015, Mr. Farah was discharged from his employment with Gold Coast. According to publicly available information, this termination was due, in part, to allegations raised by FINRA that “[t]he representative had discretionary authority over a customer’s account at another broker-dealer without notifying the firm of his affiliation….”

As alleged in the Settlement, in October 2012 Mr. Farah opened a Gold Coast brokerage account on behalf of a self-employed artist – identified by the initials ‘LN’. At around the same time, Mr. Farah allegedly suggested that LN also open a brokerage account with TD Ameritrade. According to FINRA, Mr. Farah allegedly “promised to reimburse LN for any losses in her TD Ameritrade account that exceeded five percent and, in exchange, would take 30 percent of the trading profits as compensation.”

By November 2012, Mr. Farah purportedly began engaging in an ongoing pattern of heavy day-trading in LN’s TD Ameritrade account. For example, in February 2013 alone, a total of 147 settled trades were effectuated in LN’s TD account (purchases and sales totaling more than $8.2 million). As alleged by FINRA, by the end of September 2013, LN’s TD account had declined by approximately 25% in value.

Excessive trading, or churning, occurs where: (i) a registered representative exercises control over a customer’s account; and (ii) the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading constitutes a violation of FINRA’s suitability standards set forth under FINRA Rule 2111. In this instance, FINRA Enforcement’s allegations would suggest that Mr. Farah engaged in an unsuitable trading program in the TD brokerage account, in light of the sheer number of trades, the exorbitant turnover rate, and the cost-to-equity ratio.

Brokerage firms like Gold Coast have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

Law Office of Christopher J. Gray, P.C has experience representing investors in cases against stockbrokers and financial advisors, including cases involving excessive trading or churning, and related broker misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

Financial advisor Mark Kaplan (CRD# 1978048), who was most recently affiliated with Vanderbilt Securities, LLC (CRD# 5953, hereinafter “Vanderbilt”), has voluntarily consented to a bar from the securities industry pursuant to a Letter of Acceptance, Waiver & Consent (“AWC”) signed off on by FINRA Enforcement on March 7, 2018. Without admitting or denying any wrongdoing, Mr. Kaplan consented to the industry bar following FINRA’s investigation and findings concerning allegations of unsuitable and excessive trading in an elderly retail investor’s brokerage account.

According to FINRA records, beginning in 1989, Mr. Kaplan began working as a registered representative for Lehman Brothers. Subsequently, he worked at CIBC Oppenheimer Corp., Morgan Stanley DW Inc., Citigroup, and Morgan Stanley. During the course of his nearly thirty-year career, he has been involved in seven customer disputes, each of which concluded with a settlement.

With regard to the AWC, FINRA Enforcement alleged that “Between March 2011 and March 2015 [Mr. Kaplan] engaged in churning and unsuitable excessive trading in the brokerage account of a senior investor” and thus “[v]iolated FINRA Rules 2020, and 2111, NASD Rule 2310… and FINRA Rule 2010.” FINRA’s findings centered on Mr. Kaplan’s customer, identified in the AWC by the initials ‘BP’, as “[a] 93-year-old retired clothing salesman” who opened several accounts at Vanderbilt with Mr. Kaplan during March 2011.

After BP opened his accounts at Vanderbilt, FINRA Enforcement further alleged that over the ensuing months and years, Mr. Kaplan “exercised de facto control over BP’s accounts” and that the elderly investor “[r]elied on Kaplan to direct investment decisions” while simultaneously “[e]xperiencing a decline in his mental health.” FINRA has further alleged that during this March 2011-2015 time frame, Mr. Kaplan “[e]ffected more than 3,500 transactions” in BP’s accounts, which “[r]esulted in approximately $723,000 in trading losses and generated $735,000 in commissions and markups for Kaplan and [Vanderbilt].”

Excessive trading, or churning, occurs where: (i) a registered representative exercises control over a customer’s account; and (ii) the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading constitutes a violation of FINRA’s suitability standards set forth under FINRA Rule 2111.

Brokerage firms like Vanderbilt have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

At Law Office of Christopher J. Gray, P.C., our securities attorneys have significant experience representing investors in cases involving excessive trading or churning, and related broker misconduct. Investors may contact a securities arbitration attorney by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

As recently disclosed by the Financial Industry Regulatory Authority (“FINRA”), former Morgan Stanley (CRD# 149777) financial advisor, Kevin Scott Woolf (CRD# 6145312), has voluntarily consented to an industry bar. Pursuant to a Letter of Acceptance, Waiver and Consent (“AWC”), accepted by FINRA on or about January 26, 2018, Mr. Woolf has consented to sanctions stemming from FINRA Enforcement’s allegations that “[h]e failed to provide documents and information and to appear and provide… on-the-record testimony during the course of an investigation that he engaged in multiple undisclosed outside business activities, including the development of a hotel, and participated in an undisclosed private securities offering for that development project that was marketed to customers of his member firm.”

According to BrokerCheck, Mr. Woolf was affiliated with Morgan Stanley as a registered representative from 2013 – 2016, during which time he worked out of the wirehouse’s Winter Haven, FL branch office. According to the allegations set forth in the AWC, it would appear that Mr. Woolf was permitted to voluntarily resign from Morgan Stanley on or about June 2016, based upon the brokerage firm’s internal review of Mr. Woolf’s “potential outside business activity related to a securities offering for a real estate investment.”

Based upon applicable securities laws and industry rules and regulations, a stockbroker or financial advisor is prohibited from engaging in conduct that amounts to “selling away,” or selling securities to his or her customers without prior notice to or approval from the broker’s firm. A registered representative who engages in such activity does so in violation of NASD Rule 3040, in addition to FINRA Rule 3280. As stated by the SEC, NASD Rule 3040 is designed to protect “investors from the hazards of unmonitored sales and protects the firm from loss and litigation.”

Allegations of selling away typically also entail allegations that a broker has engaged in undisclosed outside business activities, in violation of NASD Rule 3030 and FINRA Rule 3270. The industry rules governing outside business activities mandate, among other things, that a broker must obtain written approval from their firm prior to selling any security product.

In instances where a financial advisor engages in certain outside business activities that include selling away from the firm, the brokerage firm itself may be held liable for losses sustained by investors. This is because brokerage firms, as members of FINRA, have a duty to monitor the activities of their registered representatives, a duty which includes ensuring that a robust compliance program is in place, in order to effectively monitor the sales activities of its registered representatives.

Typically, selling away scenarios involve investments in closely held business ventures, limited partnerships, various real estate investments, promissory notes, and in some instances – penny stocks. Investors who believe that they may have a claim for “selling away” violations by a stockbroker or financial advisor may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

On February 28, 2018, FINRA Enforcement entered into a settlement via Acceptance, Waiver and Consent (“AWC”) with Respondent Western International Securities, Inc. (“WIS”) (CRD# 39262). Specifically, without admitting or denying any wrongdoing — WIS consented to paying a fine of $521,908, in addition to restitution to certain investors in the amount of $125,000 — in connection with FINRA’s findings of fact that from January 2011 – November 2015, WIS allegedly failed to supervise its registered representatives with regard to sales of certain leveraged, inverse, and inverse-leveraged Exchange-Traded Funds (“Non-Traditional ETFs”).

As our firm has highlighted in a number of recent blog posts, Non-Traditional ETFs are extremely complicated and risky financial products. Non-Traditional ETFs are designed to return a multiple of an underlying benchmark or index (or both) over the course of one trading session (typically, a single day). Therefore, because of their design, Non-Traditional ETFs are not intended to be held for more than a single trading session, as enunciated by FINRA Enforcement in its recent AWC as concerns Respondent WIS:

“[t]he performance of Non-Traditional ETFs over periods of time longer than a single trading session ‘can differ significantly from the performance… of their underlying index or benchmark during the same period of time.” FINRA Regulatory Notice 09-31.

Furthermore, because of the inherent complexities and risks embedded in Non-Traditional ETFs, FINRA has explicitly advised broker-dealers and their registered representatives that Non-Traditional ETFs “[a]re typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.” Id. [emphasis added].

Pursuant to the AWC, FINRA’s findings of fact allege that WIS registered representatives solicited and effected Non-Traditional ETF purchases that were unsuitable for specific customers. For example, in one instance, FINRA determined that a 73 year-old customer with a net worth of $200,000 and an investment objective of growth and a conservative risk profile was purportedly steered into five Non-Traditional ETFs. As alleged by FINRA, this elderly investor held the Non-Traditional ETFs for an average of 356 days, resulting in a net loss of $20,232.

In another instance of purported unsuitable recommendations, FINRA Enforcement determined that a WIS customer with a net worth of $200,000 and an investment objective of growth and a conservative risk profile was also purportedly steered into five Non-Traditional ETFs. As alleged by FINRA, this investor held the Non-Traditional ETFs for an average of 350 days, resulting in a net loss of $32,865.

Brokerage firms like WIS have a duty under NASD Rule 2310 and FINRA Rule 2111 — the so-called suitability rule — to, among other things, perform reasonable diligence to understand the nature of the recommended security. This due diligence “[w]ith respect to leveraged and inverse ETFs… means that a firm must understand the terms and features of the funds, including how they are designed to perform, how they achieve that objective, and the impact that market volatility, the ETFs use of leverage, and the customer’s intended holding period will have on their performance.” See FINRA Regulatory Notice 09-31 and FINRA Regulatory Notice 12-03.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have incurred losses in connection with various alternative investments, including leveraged and inverse ETFs, as well as various active investment strategies. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Financial advisor Melvin Elwood Case (CRD# 2393464) has been suspended from the securities industry. According to publicly available information through FINRA, on January 19, 2018, Mr. Case, without admitting or denying FINRA Enforcement’s findings, consented to being barred from the securities industry in all capacities for a period of six months (the suspension is set to terminate on August 4, 2018).

Specifically, FINRA enforcement entered into a settlement via Acceptance, Waiver and Consent (“AWC”) with the Respondent, pursuant to which Mr. Case consented to a finding that he “willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934… this omission makes him subject to a statutory disqualification with respect to association with a [FINRA] member.” As disclosed by FINRA, Mr. Case pled guilty to a felony charge of exploitation of an aged adult on or about August 2016. It appears that final adjudication of guilt was withheld, and Mr. Case was placed on probation for a period of 24 months.

Based on his purported failure to report his criminal infraction to his employer, LPL Financial LLC (“LPL”) (CRD# 6413), Mr. Case was terminated by LPL on or about May 2, 2017. As disclosed through FINRA, Mr. Case’s termination by LPL concerned allegations of “criminal charges involving exploitation of an aged adult after converting the victim’s money for his own benefit.”

Mr. Case’s affiliation with the securities industry dates back to the early 1990’s, having worked as a registered representative for Pruco Securities, LLC (“Prudential”) (CRD# 5685) from September 1993 – August 2008. Thereafter, Mr. Case transitioned to a position with LPL in Jacksonville, FL, from July 2008 until his termination by LPL in May 2017. FINRA BrokerCheck indicates that Mr. Case has been named as a Respondent or otherwise involved in a total of four customer disputes, two of which resulted in settlement. Most recently, in August 2017, a customer dispute concerning allegations of misrepresentations, poor recommendations and fees resulted in a settlement in an amount exceeding the damages requested. Previous to that, in 2016, a customer case resulted in a settlement of $100,000.

FINRA has recognized that given the aging of the U.S. population, financial exploitation of seniors is a serious and growing problem. In fact, FINRA has recently adopted amendments to Rule 4512 and implemented new Rule 2165 in order to provide members with ways to better respond to situations in which seniors are falling victim to financial exploitation. FINRA firms like Prudential and LPL have an affirmative duty to ensure that their registered representatives are adequately supervised. As part of this mandate, brokerage firms must take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, including Rule 2165’s broad definition of ‘financial exploitation’ to include “the wrongful or unauthorized taking, withholding, appropriation, or use of a specified adult’s funds or securities.” In instances when brokerage firms fail to adequately supervise their registered representatives, they may be liable for losses sustained by investors.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in representing investors who have sustained losses due to the negligence or misconduct of stockbrokers or investment advisors. Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On January 8, 2018, the Financial Industry Regulatory Authority (“FINRA”) published its Annual Regulatory and Examination Priorities Letter (“2018 Letter”). The purpose of this letter is to highlight certain issues of importance to FINRA in the upcoming year, and serves as a useful guidepost for industry professionals and investors, alike. Included among the areas of concern addressed in the 2018 Letter is the increased prevalence of so-called securities backed lines of credit, or SBLOCs.

Given the current bull market that is currently approaching nine (9) years in age, it should come as no surprise that many brokerage firms and their registered representatives have heavily marketed SBLOCs to their clientele. The sales pitch in a rising market such as this is relatively simple: you may tap into the value of your investment portfolio in order to readily access cash in the form of an SBLOC, without the need to sell out of any investment holdings, thereby ensuring continued upside appreciation in the value of your investment portfolio. Such a marketing pitch, while logical, often downplays the risks associated with a SBLOC and its use of leverage against collateral that can rapidly deteriorate in value.

Put simply, SBLOCs are non-purpose in nature, meaning that such loans are not used to purchase more securities, and are thus distinguishable from traditional margin loans. Despite the fact that SBLOCs are non-purpose — and may be utilized for any number of ends, including for example creating liquidity for the purchase of a home, paying tuition, or financing the purchase of a car — FINRA has recently expressed concern over the risks associated with SBLOCs.

Specifically, through its 2018 Letter, FINRA has cautioned that “The use of SBLOCs has increased significantly in the past years, and FINRA will review firms’ compliance with sales practice and operational obligations that apply to SBLOCs.” In addition, “FINRA will assess the adequacy of disclosures firms provide customers regarding the potential risks associated with SBLOCs, including the potential impact of a market downturn….”

When recommending a SBLOC, a financial advisor is under a duty pursuant to FINRA Rule 2111 to ensure that the investment strategy is in keeping with the investor’s profile, including among other factors, his or her age, financial situation and needs, and stated investment objectives. Moreover, a financial advisor, and by extension his or her firm, must seek to ensure when marketing a SBLOC that there exists a “… reasonable basis to believe that the customer has the financial ability to meet such a commitment.”

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have suffered losses due to a range of misconduct, including the unsuitable recommendation by a broker to engage in certain investment strategies. Investors may be able to recover their losses in FINRA arbitration. Investors may contact a securities arbitration attorney at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On January 5, 2018, FINRA Enforcement signed off on a Letter of Acceptance, Waiver and Consent (“AWC”) between FINRA and former financial advisor Larry Martin Boggs (“Boggs” or “Respondent”) (CRD# 1582741). Without admitting or denying FINRA’s findings, Mr. Boggs voluntarily consented to an industry bar from associating with any FINRA member firm in any capacity.

Mr. Boggs first became associated with a FINRA member firm in 1986 as a general securities representative. During the course of his career, he worked at a number of brokerage firms, including Ameriprise Financial Services, Inc. (“Ameriprise”) (CRD# 6363) from July 2009 to May 2015. Thereafter, he was associated with Wedbush Securities Inc. (“Wedbush”) (CRD# 877) for less than a year (2015-2016).

In May 2015, Mr. Boggs was discharged from his position by Ameriprise, based on allegations of “violations of company policy related to discretionary trading and suitability.” At around the same time frame, FINRA Enforcement conducted an investigation into Mr. Boggs and his sales practices and handling of customer accounts. FINRA’s findings include the following alleged activities and purported misconduct:

“Between January 2014 and May 2015, Boggs engaged in excessive and unsuitable trading in the accounts of five customer households. Boggs also improperly exercised discretion in these accounts without written authorization to do so. Finally, Boggs changed the investment objectives and risk tolerance for several of the above-referenced customers in order that they would conform to his high-frequency trading strategy, even though the customers’ investment objectives and risk tolerance had not actually changed. By doing so, Boggs caused the Firm’s books and records to be incorrect. As a result of such conduct, Boggs violated NASD Conduct Rule 2510(b), and FINRA Rules 2111, 4511 and 2010.”

In one instance of alleged misconduct cited by FINRA, Mr. Boggs initiated over 100 transactions on behalf of an elderly 82 year-old retired university professor whose investment objectives were growth and income, and whose risk tolerance was moderate. In connection with these purportedly unauthorized transactions, the elderly customer sustained losses of nearly $20,000 and incurred commission charges of $34,889.

Excessive trading, or churning, occurs where: (i) a registered representative exercises control over a customer’s account; and (ii) the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading constitutes a violation of FINRA’s suitability standards set forth under FINRA Rule 2111.

Brokerage firms like Ameriprise and Wedbush have a duty to ensure that their registered representatives are adequately supervised. Brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

At Law Office of Christopher J. Gray, P.C., our securities attorneys have successfully resolved a number of disputes on behalf of aggrieved investors, including losses sustained due to instances of fraudulent conduct, excessive trading or churning, and related broker misconduct. Investors may be able to recover their losses in FINRA arbitration. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

On December 13, 2017, the Financial Industry Regulatory Authority (“FINRA”) disclosed that registered representative Brian Michael Travers has been barred from the securities industry. Specifically, pursuant to a Letter of Acceptance, Waiver, and Consent (“AWC”), pursuant to which Brian Travers neither admitted or denied FINRA’s findings, Mr. Travers acknowledged that on November 1, 2017, he received a written request from FINRA seeking his on-the-record testimony.

FINRA’s request concerned: “[a]n investigation into, among other things, potential undisclosed outside business activities and private securities transactions…” As set forth in the AWC, “By refusing to appear for on-the-record testimony as requested pursuant to FINRA Rule 8210, Travers violates FINRA Rules 8210 and 2010.”

Publicly available information through FINRA indicates that Brian Travers (CRD# 4767891) first entered the securities industry in 2004, and was most recently a registered representative of MML Investors Services, LLC (“MML”) (CRD# 10409) until his former employer terminated his registration in April 2017. Previous to working for MML (2013 – 2017), Mr. Travers was a financial advisor affiliated with Lincoln Financial Advisors Corporation (“Lincoln Financial”) (CRD# 3978). According to FINRA BrokerCheck, Mr. Travers was discharged from his employment with MML on April 4, 2017, in connection with an “[u]ndisclosed outside activity.”

Brokerage firms like MML and Lincoln Financial have a duty to ensure that their registered representatives are adequately supervised. In this regard, brokerage firms must take reasonable steps to ensure that their brokers follow all applicable securities rules and regulations, as well as adhere to the firm’s internal policies and procedures. In those instances when brokerage firms fail to adequately supervise their registered representatives, they may be held liable for losses sustained by investors.

In the event that a financial advisor wishes to consummate a private securities transaction, then he or she must first provide the firm with prior written notice, detailing the contemplated transaction. Such a transaction must first be approved by the firm. In the event that the transaction is not approved by the firm, then the broker cannot participate in the transaction. If the broker fails to notify the firm, in the first instance, or proceeds with an unauthorized transaction in derogation of the firm’s order, then selling away has occurred, in direct violation of FINRA Rule 3280.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving broker misconduct, including selling away, in addition to claims against brokerage firms for their failure to supervise. Investors may be able to recover their losses in FINRA arbitration. Investors may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

As part of its ongoing regulatory focus on variable annuity (“VA”) sales misconduct, the Financial Industry Regulatory Authority (“FINRA”) has recently barred a former Next Financial Group (“Next Financial”) (CRD# 46214) broker. Registered representative JoeAnn Walker (CRD# 2210194) was previously affiliated with Commonwealth Financial Network (1998-2006), LPL Financial LLC (2006-2015), and most recently, NEXT Financial – until her termination by her former employer in October. According to FINRA, it was conducting an inquiry into whether Ms. Walker was engaging in possible unsuitable VA sales practices.

As we have discussed in several recent blog posts, FINRA has ramped up its efforts in recent months to target VA sales practice misconduct. Since handing down a $20 million fine against MetLife Securities, Inc. (“MSI”) in May, 2016 (in addition, FINRA ordered MSI to pay $5 million to customers in connection with allegations of making negligent material misrepresentations and omissions on VA replacement applications), FINRA enforcement has continued to fine numerous member firms and investigate certain financial advisors concerning variable annuity sales practice issues.

In particular, FINRA has targeted brokers recommending unsuitable VAs, in the first instance, as well as recommending the sale of one VA for another in order to generate commissions (a practice akin to churning, and commonly referred to as “switching”). According to publicly available information through FINRA, Ms. Walker has three prior customer complaints, each of which resulted in a settlement. Most recently, in March 2016, a customer initiated a dispute against Ms. Walker, alleging “… unauthorized sales of various stocks, unauthorized and unsuitable purchases of variable annuities and unauthorized mutual fund switches between June 2014 and June 2015.” That FINRA proceeding alleged damages of $208,764 and ultimately settled for $175,000.

VAs are very complex financial products that typically charge significant commissions and fees. When a financial advisor sells a VA, they will usually receive a sizeable commission, ranging anywhere from 3-7%. Additionally, the VA contract carries various fees, such as a mortality expense (in connection with the contract’s death benefit), investment expenses associated with the sub-accounts holding securities, and administrative expenses on the hybrid security / insurance product.

Before recommending an investment product, applicable rules and regulations mandate that a financial advisor must first conduct a suitability analysis in order to determine whether the product best meets the investor’s stated objectives and profile. Moreover, under applicable industry rules and regulations, brokerage firms like NEXT Financial and Commonwealth Financial are charged with supervising their registered representatives.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have suffered losses due to a range of misconduct, including cases involving variable annuities. Investors may be able to recover their losses in FINRA arbitration. Investors may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On September 25, 2017, the Financial Industry Regulatory Authority (“FINRA”) issued a fine of $3.25 million against Morgan Stanley Smith Barney LLC (“Morgan Stanley”) in connection with the brokerage firm’s alleged failure to supervise its brokers’ short-term trades of unit investment trusts. Unit investment trusts (“UITs”) are a specific type of Investment Company, as defined by the Investment Company Act of 1940 (the ’40 Act), and subject to regulation by the SEC. Unlike mutual funds, closed-end funds, or ETFs, UITs are unique in that they are created for a specific, limited time period (e.g., 24 months). Furthermore, UITs consist of a static investment portfolio as part of a pre-selected pooled investment vehicle.

Typically, UITs impose a number of charges. Some of these charges include a deferred sales charge, a creation and development fee, as well as annual operating expenses charged as an annual fee to account for portfolio administration and bookkeeping. In aggregates, these various fees might total approximately 4% for a typical 24-month UIT. Thus, any investor in a UIT will experience a “drag” on the performance of their UIT portfolio in the form of various fees.

Because UITs carry a substantial fee structure and are subject to termination after a given time period, there exists the potential for some financial advisors to recommend to their clients that they roll-over, or switch, from one UIT to another. In its worst form, this sales practice amounts to a stock broker seeking enhanced income through switching clients out of one product to another on a short-term basis in order to earn commissions and fees, at the expense of the client.

After undertaking an investigation, FINRA alleged that hundreds of Morgan Stanley representatives “… executed short-term UIT rollovers, including UITs rolled over more than 100 days before maturity, in thousands of customer accounts” during a period from January 2012 through June 2015. In addition, FINRA alleged that Morgan Stanley did not provide sufficient guidance to Morgan Stanley supervisory personnel on, for example, how to review UIT transactions to discover unsuitable short-term trading. FINRA ordered the brokerage firm to pay approximately $3.5 million in fines, in addition to restitution of nearly $10 million to the approximately 3,000 customers who allegedly were negatively impacted.

As stated by FINRA Executive VP Susan Schroeder: “Due to the long-term nature of UITs, their structure, and upfront costs, short-term trading of UITs may be improper and raises suitability concerns. Firms must adequately supervise representatives’ sales of UITs – including providing sufficient training – and have in place a system to detect potentially unsuitable short-term UIT rollovers.”

Because UITs typically carry higher commissions and fees than many other retail financial products, there is a very real concern with some financial advisors switching, or rolling-over, from one UIT to another in order to earn enhanced commissions and fees. Before recommending an investment product, applicable rules and regulations mandate that a financial advisor must first conduct a suitability analysis in order to determine whether the product best meets the investor’s stated objectives and profile. Moreover, under applicable industry rules and regulations, brokerage firms like Morgan Stanley are charged with supervising their registered representatives.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have suffered losses due to unsuitable recommendations by stockbrokers and financial advisors. Investors may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

As recently reported, the Financial Industry Regulatory Authority (“FINRA”) barred broker John Phillip Correnti (CRD# 5319471) in light of his failure to provide testimony and documents in connection with an investigation into potential violations of applicable securities industry rules. Publicly available information through FINRA indicates that, in a career spanning 2007 – 2016, Mr. Correnti was previously affiliated with four different brokerage firms. Most recently, Mr. Correnti was associated with AXA Advisors, LLC (“AXA”) (CRD# 6627) (2015-2016).

FINRA records also indicate that Mr. Correnti was the subject of a customer dispute in 2011, which concerned allegations of mismanagement, misrepresentations, breach of fiduciary duty, as well as claims grounded in negligence / negligent misrepresentation. Furthermore, FINRA records indicate that Mr. Correnti was discharged from his employment with AXA in July 2016, following allegations concerning “[h]is apparent involvement in the possible manipulation of a low-price security.”

In August 2017, Mr. Correnti, who worked as a registered representative for AXA in Cleveland, Ohio, was barred from the securities industry by FINRA. Specifically, FINRA sanctioned Mr. Correnti with an industry bar following his failure to completely respond to FINRA’s request for documents, as well as his incomplete testimony. In addition, FINRA records suggest that the investigation was aimed, at least in part, on whether Mr. Correnti “[e]ngaged in undisclosed business activities….”

Publicly available information suggests that Mr. Correnti may have been involved in “possible manipulation of a low-price security.” According to the Securities and Exchange Commission (“SEC”), a penny stock generally refers to a security issued by a very small company that trades for less than $5 per share. Penny stocks are typically quoted over-the-counter (“OTC”) for trading purposes, meaning these stocks trade over a decentralized market. Prices of penny stocks may be susceptible to price manipulation due to the relatively low trading volumes in their shares.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience in recovering funds on behalf of investors who have incurred losses as a result of alleged misconduct by their financial advisor and/or brokerage firm. Investors may contact our office at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

On October 11, 2017, Michael Giokas, the founder of Giokas Wealth Advisors, was reportedly arrested on fraud charges. Mr. Giokas’ arrest was the result of an investigation by the FBI Buffalo Office concerning allegations that the Williamsville broker misappropriated $200,000 from one of his clients. At Mr. Giokas’ arraignment before Magistrate Judge Michael J. Roemer, Assistant U.S. Attorney Paul E. Bonanno informed the Judge that the investigation suggests Giokas led his client to believe that the $200,000 would be placed in an investment that would yield 8-9% interest. Instead, according to Attorney Bonanno “… the money was not placed in any investment and was instead spent by the defendant on personal expenses.”

According to publicly-available information as disclosed by the Financial Industry Regulatory Authority (“FINRA”), Michael Giokas (CRD# 1398674) has worked in the securities industry for over three decades. Since 1986, he has been affiliated with the following brokerage firms: Cigna Securities, Inc. (CRD# 145) (1986-1987), FSC Securities Corporation (CRD# 7461) (1987-1991), Guardian Investor Services Corporation (CRD# 6635) (1991-1992), Linsco/Private Ledger Corp. (CRD# 6413) (1992-1999), Securities Service Network, Inc. (CRD# 13318) (1999-2001), Comprehensive Asset Management and Servicing, Inc. (CRD# 43814) (2002-2013), and Fortune Financial Services, Inc. (“Fortune Financial”) (CRD# 42150) (2013-2017).

FINRA BrokerCheck indicates that Mr. Giokas is no longer registered as a broker. Further, in May 1991 he was permitted to resign from his employment with FSC Securities following violation of firm policy concerning an insurance related bank account. Mr. Giokas has been the subject of several customer complaints, including two complaints in 2000 and 2001 that were settled.

Brokerage firms like Fortune Financial have a duty to ensure that their registered brokers are adequately supervised. Brokerage firms must also take steps to ensure that their financial advisors follow all applicable securities rules and regulations, in addition to internal policies and procedures. In instances when brokerage firms fail to adequately supervise their registered representatives, they may be liable for losses sustained by investors. Publicly available information as disclosed on FINRA BrokerCheck indicates that, on September 3, 2009, Fortune Financial was sanctioned $125,000 by FINRA and censured in connection with its Acceptance, Waiver & Consent (“AWC”) to a regulatory investigation by FINRA. Specifically, without Fortune Financial admitting or denying any wrongdoing, FINRA determined that the brokerage firm had “… failed to establish, maintain and enforce written supervisory procedures that were reasonably designed to achieve compliance with all applicable laws, rules and regulations.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in disputes involving financial fraud, price manipulation, failure to supervise and other misconduct. Investors who wish to discuss a possible claim may contact a securities arbitration attorney via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.

FINRA alleged that certain Investors Capital brokers recommended that customers engage in unsuitable short-term transactions in UITs, and also alleged that the firm failed to apply sales charge discounts that should have been available to some customers. FINRA further alleged that Investors Capital Corporation lacked adequate systems and procedures to supervise the sales of UITs, leading to the violations. Short-term trading in UITs may be uneconomical in many cases due to relatively high up-front sales charges, and UITs are typically recommended only as long-term investments.

Investors Capital’s alleged violations occurred between 2010 and 2015.

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor. In making this assessment, a broker must consider the investors income and net worth, investment objectives, risk tolerance, and other security holdings.

If you received an unsuitable recommendation of securities from a broker or investment adviser, and suffered significant losses are a result, you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Investors Capital also allegedly failed to apply sales charge discounts to certain customers’ purchases of UITs, and inadequately supervised its representatives, according to FINRA’s allegations. To resolve the FINRA case, Investors Capital agreed to pay $250,000 in fines and $842,000 in restitution. The firm has already reportedly paid close to $224,500 in restitution to clients.

A UIT is a type of fund that holds a fixed portfolio of income-producing securities that is purchased and held to maturity as a long-term investment. UITs usually carry significant upfront sales charges of 2.5% to 3.5% of the purchase amount, according to FINRA.

When a broker recommends that a client purchase or sell a security, the broker must have a reasonable basis for believing that the recommendation is suitable for the investor. Recommendations of short-term transactions in UITs would likely be unsuitable in many circumstances due in part to the high transaction costs imposed by the upfront sales charges carried by UITs.

If you believe you have been the victim of stockbroker misconduct, you may wish to consult an attorney to find out more about your legal rights and options. Investors may contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

LPL’s failure to supervise sales of nontraditional ETFs continued into 2015, according to FINRA. FINRA also alleged that LPL failed to have adequate supervisory systems and guidelines for sales of nontraded REITs from January 2007 to August 2014. LPL consented to the fine without admitting or denying the charges.

This was not LPL’s first regulatory issue concerning lack of supervision concerning high-commission investments such as non-traded REITs. In March 2014, FINRA fined LPL $950,000 for supervisory deficiencies related to sales of a wide range of alternative investment products. These include nontraded REITs, oil and gas partnerships, business development companies, hedge funds, managed futures and other illiquid investments.

Real estate investment trusts (REITs) are highly risky products that pose a significant risk that the investor will lose some or all of his initial investment. REITs are often better suited for sophisticated and institutional investors, rather than retail investors such as retirees who do not wish to risk losing a significant portion of their investment.

Brokers and financial advisors are required to make investment recommendations that are consistent with their clients’ risk tolerance, net worth, investment objectives and experience in the market. However, due to the high sales commissions brokers typically earn for selling REITs – as high as 15%- brokers can be tempted to make “one size fits all” recommendations to investors in order to reap commissions. Brokerage firms such as LPL are required by FINRA rules to supervise brokers and investment advisors- even those who work in independent branch offices- to ensure that the brokers make only suitable recommendations.

If you have suffered significant losses as a result of unsuitable recommedations of REITs or other non-conventional investments by a stockbroker or financial advisor, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact an investor rights attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

“Fraley, who was a licensed securities professional employed with licensed broker-dealers until he was terminated in 2011, solicited hundreds of thousands of dollars from Colorado investors, promising the investors that their money would be invested in ‘a well-balanced portfolio of investments’ consisting of Roth IRAs, traditional investments such as stocks and bonds, mutual funds and non-qualified investments,” says the statement from Colorado enforcement officials. However, “Fraley gained unauthorized access to the investors’ accounts, forged the investors’ signatures on checks, deposited the money in a Wealth bank account and converted the money for his own personal benefit, including the purchase of a house.”

Stock fraud lawyers say Fraley was registered from March 2007 to May 2011 with Northwestern Mutual Investment Services, a FINRA-registered broker-dealer. Fraley was registered with another FINRA-registered broker-dealer, MML Investors Services, from May 2011 to October 2011. All FINRA-registered broker dealers are, according to securities fraud attorneys, required to properly supervise the activities of their brokers during the time in which they are registered with the firm. As a result, these firms may be held liable for failing to adequately supervise Fraley.

If you suffered significant losses as a result of your investments with Clinton D. Fraley, you may be able to recover your losses through Financial Industry Regulatory Authority arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.