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 8, 2017, the Securities and Exchange Commission (“SEC”) issued a Cease-and-Desist Order (“Order”) against Ameriprise Financial Services, Inc. (“Ameriprise”) in connection with allegations that Ameriprise and its employees or agents purportedly misrepresented the performance of certain ETF strategies. Specifically, the SEC’s investigation focused on sales of AlphaSector strategies by ETF manager F-Squared Investments, Inc. (“F-Squared”). The F-Squared AlphaSector strategies, which were based upon an algorithm, were sector rotation strategies designed to issue a “signal” as to whether to buy or sell certain ETFs, that together, comprised the industries in the S&P 500 Index.

Pursuant to the Order, the SEC has alleged that F-Squared materially miscalculated the historical performance of its AlphaSector strategies (from April 2001 to September 2008) by incorrectly implementing signals in advance of when such signals could have occurred. In addition, the SEC alleged that F-Squared relied upon hypothetical and back-tested historical performance that was purportedly inflated substantially over what actual performance would have been had F-Squared applied the signals accurately.

In December 2014, F-Squared agreed to pay a $35 million fine to the SEC, and furthermore, admitting to wrongdoing regarding falsifying performance numbers in its advertising and marketing materials. See In the Matter of F-Squared Investments, Inc., Admin. Proceeding No. 3-16325 (Dec. 22, 2014). By July 2015, F-Squared filed for Chapter 11 bankruptcy protection.

As further alleged in the SEC’s Order, Ameriprise negligently relied upon misrepresentations made by F-Squared, including that the AlphaSector strategies had a history dating back to April 2001 and had been in use since then, and that the AlphaSector strategies’ “[t]rack record had significantly outperformed the S&P 500 Index from April 2001 through September 2008.” According to the SEC’s allegations, “[A]meriprise knew or should have known that it did not have a reasonable basis to believe that F-Squared’s advertising claims for the AlphaSector strategies were accurate.”

Moreover, the SEC has alleged that “[A]meriprise also provided its financial advisors – the primary interface between Ameriprise and its clients when soliciting investments in the AlphaSector strategies – with inaccurate information.” Notably, the Order alleges that “[A]meriprise represented inaccurately to Ameriprise financial advisors that the AlphaSector Rotation strategy was able to double investor money since 2001 and stressed the ‘proven results’ of AlphaSector strategies…”

Without admitting or denying any of the SEC’s findings encapsulated in the Order, Ameriprise is required to pay disgorgement of $6.3 million, prejudgment interest of $700,000, and a civil penalty of $1.75 million to the SEC.

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. Investors may contact our office at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.

Albertus Niehuis Jr. and his wife Andrea allegedly made an investment with Ameriprise Financial in early 2008 involving three high-risk tenant-in-common investments in hotels and office complexes. The total investment amount was $1.03 million. One of these three investments failed completely, and the other two lost significant value.

Fortunately, Niehuis and his wife had the good sense to contact a securities arbitration lawyer, and their situation was put in front of a FINRA arbitration panel. The FINRA panel found that Ameriprise’s investment advice was not appropriate considering the elderly couple’s risk tolerance and ordered Ameriprise to pay $1.17 million to the couple

If you suffered significant losses as a result of doing business with Ameriprise Financial Services Inc. or received an unsuitable recommendation involving high-risk investments from another stockbroker or financial advisor, you may be able to recover your losses through securities 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.

The five firms that settled with Massachusetts are Ameriprise Financial Services Inc., Commonwealth Financial Network, Royal Alliance Associates Inc., Securities America Inc., and Lincoln Financial Advisors Corp.

“Our investigation into the sales of REITs, triggered by investor complaints, showed a pattern of impropriety on the sales of these popular but risky investments on the part of independent brokerage firms where supervision has historically been difficult to monitor,” Mr. Galvin said in a statement.

Reportedly, many seniors are being persuaded to invest in non-traded REITs but are not being made aware of the risks and illiquidity of these products. According to securities fraud attorneys, many brokers and advisers with full-service brokerage firms may be tempting senior investors with promises of better returns while failing to adequately disclose the risks. Many retirees have a low risk tolerance and want conservative, income-producing portfolios and are attracted by brokers’ promises of a steady stream of distribution income from non-traded REITs. What brokers and advisors often times do not disclose is that distributions may be suspended or stopped completely. Another problem retirees face with REITs is that they may need access to their funds, but many non-traded REITs have suspended redemptions, leaving investors with limited options in the event that they need to sell REIT shares to access their funds.]

“The enforcement section’s investigation revealed significant and widespread problems with the firms’ compliance with their own policies, practices and procedures rules and adherence with Massachusetts prospectus requirements leaving investors often trapped in illiquid and underperforming financial products,” according to a statement by the Massachusetts Securities Division.

If you or a loved one suffered significant losses as a result of the unsuitable recommendation by any advisor to invest in non-traded REIT, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 for a no-cost, confidential consultation.