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Articles Tagged with stock broker fraud lawyer

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7-waysAs 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….”

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Stock broker fraud lawyers are on the lookout for investors who have been the victim of cold-calling fraud. Even though the number of sales calls has been reduced by the National Do Not Call Registry, securities firms still commonly use cold-calling as a tool for generating investments. Because not all cold-calls indicate fraud, cold-call scams remain a dangerous possibility for investors.

Have You Been a Victim of Cold-Call Stock Broker Fraud?

Individuals who have made investments based on a cold-call may have been the victim of fraud. Here are several indicators that a cold-call may have been a scam:

  • The caller used high-pressure sales tactics. Cold-calling fraudsters often use scripts that contain a list of retorts for every possible objection and will continue to attempt a sale as long as the investor remains on the line.
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While investors are told time and time again to inspect monthly statements from the broker or firm handling their investments, many are still victims of fraud that could have been detected before losses become so substantial that the victim may never recover. Careful evaluation of monthly statements and transaction documents can uncover discrepancies that indicate stock broker fraud has occurred.

Have You Been the Victim of Stock Broker Fraud? Check your Monthly Statements for Discrepancies, Irregularities, and Unauthorized Transactions

Ralph Edward Thomas Jr., Vice President of Harbor Financial from August 2000 through February 2004 and a financial advisor for Wells Fargo Advisors LLC from February 2004 through July 2010, is allegedly the perpetrator of a particularly heinous fraud. Thomas controlled a trust of $3 million that had been granted as a result of birth injuries that resulted in cerebral palsy for a child. According to allegations against Thomas, he stole more than $756,900 from the trust through cashier’s checks and unauthorized withdrawals and used the money to pay personal expenses and personal credit card accounts. How did he do it? The settlement funds were used to purchase an annuity which would pay the child at least $3,990 per month. In reality, the monthly payment actually averaged around $6,287 per month. However, when Thomas should have dispersed this monthly sum to the mother for care of the child, he only dispersed $1,000 to $1,500 a month. In addition, Thomas allegedly used forgery to initiate three mortgages in the name of the fund’s trustee. Proceeds from the mortgages were deposited into the account and then withdrawn by Thomas for personal use. In this way, Thomas obtained an additional $205,000.

Stock broker fraud lawyers strongly urge investors to keep a close eye on their monthly statements and any other documentation received from entities controlling their investments. Investors that have not, up to this point, been diligent in monitoring their statements should go back and review statements immediately. If any discrepancies, irregularities or unauthorized transactions are found that may indicate stock broker fraud has occurred, contact an investment attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.

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Stock broker fraud lawyers are investigating potential securities arbitration claims against LPL Financial and Jack Kleck, a former LPL broker. LPL Financial was fined $100,000 in late November for failure to adequately supervise Kleck. LPL was fined by the Oregon Department of Consumer and Business Services.

Customers of LPL Financial and Jack Kleck May Have Valid Securities Arbitration Claim

Kleck, who was LPL Financial’s branch manager in La Grande, “sold investments in high-risk oil and gas partnerships to nearly three dozen Oregon residents, including many elderly people,” according to the State of Oregon. In addition, Kleck’s recommendations were unsuitable for his clientele and were not in keeping with their age and investment objectives. The State of Oregon stated, “Many of Kleck’s clients were in their 70s and 80s, and some were not capable, due to poor health, of making sound investment decisions.” According to Oregon’s decision, LPL violated securities laws including failure to supervise and failure to properly enforce company policies and procedures.

By law, broker-dealers must make “suitable” recommendations to their clients. Under FINRA Rule 2111, brokers are required to consider investment objectives, tax status, financial status, age, risk tolerance, time horizon, liquidity needs, other investments and experience when determining if a recommendation is a suitable investment for a client. For example, broker-dealers handling a customer’s conservative investment portfolio may not recommend high-risk investments that are not in keeping with the customer’s investment objectives. For more on the suitability standard, see the previous blog post, “FINRA Revises Suitability Rule 2111.”

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Unauthorized trading, a form of broker misconduct that occurs when a broker makes a trade without the investor’s consent, can be a valid claim for securities arbitration. However, there is more than one way for unauthorized trading to be committed. In one way, the broker may believe that the transaction is suitable for their client but can’t or doesn’t contact the investor before making the trade. However, in other circumstances, the broker may make the trade and then try to convince the investor to consent to the trade — even though it’s after the fact, which the broker does not disclose. This second scenario is especially tricky because if the client then consents to the trade, the unauthorized trading may go unnoticed unless the client is careful to check the dates of transactions on their monthly statements.

Investment Fraud: Unauthorized Trading

The following suggestions will help you prevent unauthorized trading and determine if you have been a victim of unauthorized trading:

1. Take notes! This can be especially helpful in determining if you have been a victim of the second method of unauthorized trading described above. It is important to keep careful notes of all conversations between you and your broker. Notes should include dates, times, what was discussed and what your instructions were to your broker. These notes can be compared with monthly statements to determine if your broker conducted trades that were either unapproved or conducted before your approval was given. Remember, unauthorized trading is still fraud, even if you later consented to the trade, and should not go unchecked.

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Investor education is an important part of avoiding broker misconduct, so it is critical that investors have a general idea of how trades work. The following is a short summary of what occurs when a stockbroker executes a buy or sell order.

Investor Education: How Stockbrokers Buy and Sell Stock

Brokers usually have a choice of markets in which they can execute a trade. If the stock is listed on an exchange, the order may be directed — by the broker — to the same exchange, a different exchange or a “market maker.” A market maker is a firm which remains ready to pay publicly-quoted prices for a stock listed on an exchange and sometimes offers “payment for order flow,” a term that refers to a payment made from the market maker to a broker in exchange for having the order routed to it. OTC stocks can be sent to an “OTC market maker.” Brokers can also use internalization, in which the order is sent to another division of the firm and is then filled from the inventory of the firm. Finally, the broker may use an ECN, or electronic communications network, in which orders are automatically matched at specified prices.

The broker may choose any of the above methods for executing a buy or sell order so long as the method falls within the limits of “best execution.” Best execution refers to the broker’s duty to seek the method that is both reasonably available and most favorable to the customer. “Price improvement” is an important part of determining which method is determined to be the best execution. When an order has an opportunity to be executed at a price that is better than the current quote, this is an opportunity for price improvement. It is important to note, however, that price improvement is an opportunity, not a guarantee.

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While stock broker fraud is always a despicable crime to the victims of the fraud, the case of Joshua Gould's broker misconduct seems infinitely worse for the close relationship between victim and perpetrator, as well as the vulnerable nature of other investors. Gould, a former independent broker for Woodbury Financial Services in University City, defrauded friends, family, and investors, including the elderly, widows, and religious organizations.

Hedging and “Failure to Hedge” Claims

Not even Gould's own mother was safe, and she lost around $500,000 to her son, the bulk of her inheritance. All in all, more than 25 people were swindled out of more than $5 million. Gould spent some of the money on charitable donations to boost his reputation while at the same time spending it on strippers and entertaining them at St. Louis hotel parties. In addition, he paid the rent of at least one stripper. Gould also paid off personal debt, renovated his home, started several businesses, and facilitated a ponzi scheme.

Once the theft was discovered, Gould confessed and, according to his lawyer, has cooperated and attempted to remedy the losses of his victims. During his trial, he expressed remorse for his actions and disdain for himself.

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