Articles Posted in Unregistered Securities

Published on:

FINRA fined Carolina Financial Securities, LLC (“CFS”) of Brevard, North Carolina $60,000 and served it with a Letter of Caution in a case involving allegations that CFS made material misrepresentations and omissions in connection with the sale of securities.   FINRA  also found that that the firm recommended securities- certain senior secured notes- to customers without conducting an investigation that was sufficient to provide a reasonable basis for determining that the notes were suitable for any investor.  Further, FINRA found that CFS made false and misleading communications to the public by distributing offering materials that contained false statements.  Finally, FINRA found that CFS failed to enforce the firm’s own Written Supervisory Procedures (WSPs) by in connection with permitting brokers employed by CFS to sell the subject secured notes.


Many retail investors may buy into non-conventional investments such as the subject notes without first being fully informed of the risks.  As members and associated persons of FINRA, brokerage firms and their financial advisors must ensure that adequate due diligence is performed on any investment that is recommended to investors.  Further, firms and their brokers must ensure that investors are informed of the risks associated with an investment, and must conduct a suitability analysis to determine if an investment meets an investor’s stated investment objectives and risk profile.  Either an unsuitable recommedation to purchase an investment or a misrepresentation concerning the nature and characteristics of the investment may give rise to a claim against a stockbroker or financial advisor.



The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in  non-conventional investments, including promissory notes.  Depending on the facts and circumstances, investors may be able to recover their losses in FINRA arbitration or litigation.   Investors may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at for a no-cost, confidential consultation.


Published on:

On July 16, 2017, the Wall Street Journal published an article – From $2 Billion to Zero: A Private-Equity Fund Goes Bust in the Oil Patch – discussing the financial distress besetting Houston based EnerVest Ltd. (“EnerVest”), a private equity firm focused on energy investments.  Essentially, the article discussed how falling oil prices (to a then current price of $45 per barrel of crude) had worked against the fund managers at EnerVest, who had borrowed heavily to invest in oil and gas wells before the recent collapse in energy prices.
According to recent reports, several of EverVest’s energy funds employed leverage to purchase oil and gas wells when crude process were much higher.  As a result, investors in those funds will undoubtedly suffer significant losses on their investments.  Further, recent reports have suggested that EnerVest fund managers have engaged in discussions to recapitalize or otherwise sell assets (presumably at firesale prices) from the $1.5 billion EnerVest Energy Institutional Fund XII, which closed in 2010, as well as the $2 billion EnerVest Institutional Fund XIII, which closed in 2013.

In the way of brief background, EnerVest is a private-equity firm that focuses on energy investments, claiming to operate more U.S. oil and gas wells than any other company operating in that space.  EnerVest began raising investor capital in 2013 when oil and gas was trading at an average price of $90 per barrel; since that time, energy prices have collapsed, with crude currently trading around $50 per barrel (as of October 2017).

Published on:

On August 11, 2017, the Securities and Exchange Commission (“SEC”) filed a Complaint against Defendants David R. Greenlee, David A. Stewart, Jr., and Richard “Ric” P. Underwood, in connection with various oil limited partnerships and joint ventures.  Specifically, the SEC has alleged that the Defendants engaged in a fraudulent scheme whereby at least $15 million in limited partnership and joint venture interests were sold to more than 150 investors.
According to the SEC Complaint, Defendants Greenlee and Stewart operated the alleged scheme through two Tennessee corporations, Southern Energy Group, Inc. (“SEG”) and Black Gold Resources, Inc. (“BGR”), which later changed its name to Tennstar Energy, Inc. (“Tennstar”).  Further, the SEC Complaint alleges that Defendant Underwood substantially assisted in facilitating and perpetuating the scheme by acting as principal salesman, assisting in drafting false offering materials given to potential investors, and overseeing the operations of a ‘boiler room’ sales team that solicited the oil investments.

In soliciting funds from prospective investors, the SEC has alleged that the Defendants represented that the limited partnerships and joint ventures would use investor funds in order to acquire “working interests” in various oil wells, as well as employ enhanced oil recovery techniques, such as fracking, to develop and recover oil from the wells.  Moreover, the SEC has alleged that the Defendants represented to investors that the entities would sell enough oil to earn investors returns ranging from 15-55%, or more, per year “for decades.”

Published on:

Investors in promissory notes of Credit Nation Capital, LLC (“CN Capital”) and affiliated companies may have viable legal claims based upon allegations in cases filed by the United States Securities and Exchange Commission (“SEC”).


The SEC filed a lawsuit in 2015 alleging that CN Capital and affiliates were engaged in fraud. The companies allegedly lost massive amounts of money and stayed afloat only by raising more money from investors, according to the SEC lawsuit. According to the SEC, related entities allegedly included Credit Nation Acceptance, LLC, a Texas limited liability company in Midland, Texas; Credit Nation Auto Sales, LLC, a Georgia limited liability company in Woodstock, Georgia, American Motor Credit, LLC, a Georgia limited liability company in Woodstock, Georgia; and Spaghetti Junction, LLC, a Nevada limited liability company.

Published on:

With increasing frequency retail investors are encountering scenarios in which they are offered an opportunity to invest in a private placement. A private placement – often referred to as a non-public offering – is an offering of a company’s securities that are not registered with the Securities & Exchange Commission (“SEC”). Under the federal securities laws, a company may not offer or sell securities unless the offering has been registered with the SEC or an exemption from registration applies.


When an investor decides to purchase shares in a publicly traded company, or for that matter purchase shares in a mutual fund or exchange traded fund (“ETF”), he or she will have the opportunity to first review a comprehensive and detailed prospectus required to be filed with the SEC. When it comes to a private placement, however, no such prospectus need be filed with the SEC – rather, these securities are typically offered through a Private Placement Memorandum (“PPM”).

Published on:

Financial Industry Regulatory Authority (FINRA) records indicate that Douglas P. Simanski (Simanski), a former stockbroker who was associated with NEXT Financial Group, has been permanently barred from the brokerage industry.  Simanski’s record also shows 4 currently pending customer disputes, 1 prior final customer dispute and a recent employment separation after allegations.

FINRA is the agency that licenses and regulates stockbrokers and brokerage firms.  In response to FINRA charges, Simanski, without admitting or denying the findings, consented to a permanent bar from the securities industry and entry of findings that he failed to provide documents and information related to an investigation into allegations related to the conversion of funds.

Four customers of NEXT Financial have also filed arbitration claims involving Simanski, alleging sales of high risk investments, loans to customers, sale of unregistered securities and sale of fictitious investments as part of a scheme to steal money from a customer.

Published on:

Platinum Partners LP Funds are under scrutiny after federal agents reportedly raided the funds’ New York offices in July 2016.  Hedge fund entities sponsored by Platinum Partners include the Platinum Partners Value Arbitrage Funds, the Platinum Partners Credit Opportunities Fund, Platinum Credit Holdings LLC, Platinum Credit Management LP, Platinum Partners Value Corp., and Platinum Management (NY) LLC.

15.2.17 piggybank in a cageIn June, the New York-based hedge fund manager reportedly began liquidating its funds, after the firm’s longtime associate Murray Huberfeld (Huberfeld) was accused of arranging for a $60,000 bribe and kickback, in a Salvatore Ferragamo bag, to Norman Seabrook, President of the New York correctional officers’ union.  Seabrook allegedly directed $20 million in union investments into the Platinum Partners Value Arbitrage Fund. Seabrook has denied that he is guilty of any charges.

Later, Cayman Islands Judge ­Andrew Jones reportedly ordered that a new advisor take control of the international arm of Platinum’s flagship fund, which is based in the Caymans, after an investor claimed he has not been able to gain access to his money since 2015.

Published on:

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of a securities fraud related to scalping. Scalping occurs when a broker or financial advisor recommends a security and immediately sells the security to turn a profit. According to securities arbitration lawyers, when many investors purchase the security, the price rises, allowing the fraudster to gain financially.

Have You Been the Victim of Investment Scalping?

In one recent scalping scheme, securities fraud charges were filed by the Securities and Exchange Commission (“SEC”) against John Babikian, the promoter behind and Both websites are affiliated microcap stock promotion websites and are known collectively as “ABS.” The SEC charges allege that Babikian engaged in scalping through the websites.

According to the SEC, on February 23, 2012, the websites sent emails to around 700,000 people, recommending investing in a particular penny stock, America West Resources Inc. (AWSRQ). However, the fact that Babikian held over 1.4 million shares of America West was not disclosed in the email, nor was the fact that he had positioned the shares for immediate sale via a Swiss bank.

Published on:

Securities fraud attorneys are currently investigating claims on behalf of the customers of James E. Neilsen. These investigations are concerning Neilsen’s conduct and the sale of investment agreements and promissory notes while he was registered with Tradition Asiel Securities, Longship Alternative Asset Management, and Sound Securities.

Customers of James E. Neilsen Could Recover Promissory Note Losses

On January 9, 2014, Neilsen was put under an Order to Cease and Desist, Order to Make Restitution, Notice of Intent to Fine and Notice of Rights to Hearing by the Banking Commissioner of the Connecticut Department of Banking. The order was amended on February 18. According to the allegations laid out in the order, to finance his partners’ business expenses, Neilsen individually and/or on behalf of his partners sold approximately $10 million in promissory notes and investment agreements that weren’t registered and weren’t exempt from being registered with the state. The conduct allegedly occurred between November 2005 and around September 2011. The order also states that though some investors have been partially repaid by Neilsen, $7 million remains outstanding.

Promissory notes are a type of debt sometimes used by companies in order to raise money. Through the note, the company promises to return the investor’s principal and pay fixed interest amounts. They have set terms and repayment periods that should be stated specifically in the note. According to stock fraud lawyers, some promissory notes are fraudulent from the beginning and exist only to convince investors they are entering into a contractual arrangement when, in reality, they are not. Others are real securities that, despite the fact that they should be registered with regulatory bodies, bypass registration and are sold as unregistered securities.

Published on:

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of fraud involving unregistered securities. Reportedly, in December 2013 a lawsuit was filed on behalf of the New Jersey Bureau of Securities by the Division of Law against George J. Bussanich and his son George Bussanich, both former brokers for Kovack Securities. Administrative action has also reportedly been taken against the Bussanichs by the bureau chief.

Investors Could Recover Losses for Unregistered Securities Fraud

Allegedly, the Bussanichs defrauded 26 investors out of $3.5 million using the sale of unregistered notes. Furthermore, it has been alleged that the Bussanichs used their clients’ money to purchase exotic vehicles including a Ferrari and two Maseratis, three homes and to fund other personal expenses.

According to the New Jersey Bureau of Securities, “investors allegedly were told that the money would be used for MetropolitanAmbulatorySurgicalCenter LLC and George J. Bussanich’s other companies. Contrary to its name, MetropolitanAmbulatorySurgicalCenter LLC, which has a Cliffside Park business address, is not a surgical center but rather a holding company controlled by George J. Bussanich. The investors purchased notes which carried a 6 to 8 percent annual rate of return.”

Contact Information