All Releases

Will the 2015 Market Break Cause FINRA Claims to Rise?

September 24, 2015 | Silver Law Group

Securities arbitration cases may increase due to margin calls made on behalf of ill-advised investors

According to the Securities Industry and Financial Markets Association (SIFMA) “Dashboard” publication for the week ending August 21, the 52-week range for the Dow was low. This break in the market, as well as the disappearing gains over the last year, drive the question: will investors suffer unnecessary losses due to excessive margin, overconcentration or other stockbroker negligence.

This remains to be seen. However, the practice of buying on margin—in short, borrowing money from a broker to purchase stock—could have a direct impact on brokers and brokerage firms. Many of these investors were encouraged to trade or sell speculative or low-priced securities through margin accounts. We have already received several calls from investors who were encouraged by cold callers to open accounts only to suffer losses.

Former Morgan Stanley Employees File Suit Alleging Violations of the SEC Whistleblower Protections

September 23, 2015 | Silver Law Group

Couple launches $20 million retaliatory-firing suit against the firm

A husband and wife who were formerly employed by Morgan Stanley launched a $20 million suit against the firm Monday, alleging that it violated whistleblower protection laws by terminating their employment after they made complaints to supervisors about unfair practices occurring at the firm.

Jaime Feldman-Boland and James Boland filed the suit in New York federal court after both were fired in August and October 2011, respectively, due to what the firm considered “poor performance,” according to the complaint.

Securities Industry Lingo May Interfere With Financial Advising

September 22, 2015 | Silver Law Group

Study finds investors are more willing to invest in what they understand

Imagine going somewhere people are supposed to help you, where you’re assured you will be in good hands. Imagine arriving there and realizing everyone speaks a language that’s completely foreign to you. According to a study conducted by Invesco Ltd. in partnership with a firm specializing in language strategy, this hypothetical situation may be similar to how investors feel when meeting with brokers about alternative investments. Brokerage firms have created billions in proprietary products to sell to Main Street. Now, they need a good marketing company to convince the average retail investor that this is what they want to invest in.

The yearlong study, titled The Power of Alternatives, found that certain buzzwords that are generally accepted in the industry, such as “alternative investments” and “derivatives,” may overwhelm investors and turn them off to potentially beneficial investments. According to the Wall Street Journal, only 23 percent of investors would prefer to invest in “liquid alternatives,” while 77 percent chose “alternative mutual funds that are bought and sold like any other fund,” despite the fact that both options mean the same thing.

South Florida Broker Ralph Oelbermann Barred by FINRA

September 21, 2015 | Silver Law Group

Record shows customer disputes and failure to respond to FINRA request

FINRA barred Ralph Oelbermann in February after 23 years in the securities industry. According to FINRA’s website, the bar resulted from Oelbermann allegedly failing to respond to FINRA requests for information.

In 2013, Oelbermann was discharged from his employing firm, LPL Financial LLC, for what the firm claimed was unauthorized trading, according to FINRA. Stockbrokers generally cannot make trades in a customer’s account without first seeking the customer’s permission.

Florida Broker Peter Gouzos Banned by FINRA

September 18, 2015 | Silver Law Group

His most recent employing firm was expelled by FINRA in October

After 22 years in the securities industry, FINRA permanently barred Peter Gouzos in February from acting as a broker or selling securities to the public. The final straw in a career full of customer dispute disclosures was his alleged failure to respond to FINRA requests for information, according to FINRA reports.

Gouzos most recently worked for Hunter Scott Financial in Delray Beach, Florida, which FINRA expelled in October. Before that, he worked for Dawson James Securities in Boca Raton and Emerson Bennett & Associates in Fort Lauderdale. Earlier in his career, he worked at various firms in New York, New Jersey, Georgia and Missouri.

Bryan Carnahan Barred From Practice in Securities Industry Following Allegations of Scheme to Defraud Customers

September 17, 2015 | Silver Law Group

Carnahan allegedly converted almost $170,000 in misappropriated customer funds

After 16 years and five disclosure events in the securities industry, Bryan Andrew Carnahan was barred permanently by FINRA on May 1 following allegations that he converted $169,500 in funds from a customer at his firm, The Huntington Investment Company, between September 2013 and March 2015. Prior to being employed by Huntington, Carnahan worked for John Hancock Distributors, Inc., in 1998.

According to FINRA reports, Carnahan transferred the customer’s funds and asked her to write cashier’s checks that were supposedly to be used for an investment. He then allegedly caused the checks to be re-issued fraudulently in the amount of $169,500. It is purported that he then made those checks payable to his own account and to the accounts of other customers who lost money in investments. FINRA reports that at least 13 additional customers were involved in the alleged scheme.

SEC Report Finds Flaws in the Retail Sales of Structured Securities Products

September 16, 2015 | Silver Law Group

35 percent of structured products at the firms investigated were liquidated below 80 percent of their face value, allegations of unsuitable recommendations and sales limit abuse raised

The Securities and Exchange Commission reported Monday that it has spotted failures in many broker-dealers controlling the retail sales of structured products, leading to unsuitable recommendations and potential abuse of limits to sales.

Structured products, according to Investopedia, are the result of taking traditional securities and replacing their typical payment features with other features that are meant to make an investor’s risk-return objectives more customizable than they would be with only traditional securities.

FINRA Orders Interactive Brokers LLC to Pay Hedge Fund $667,000

September 15, 2015 | Silver Law Group

Alleged wrongful auto-liquidation made accounts subject to additional margin calls, which continued a death spiral of financial loss.

The turmoil in the market over the last two weeks has likely had significant impact on investors. For investors trading with margin accounts through Interactive Brokers LLC, this could mean even greater financial loss due to the firm’s practice of automatic liquidation.

When trading on margin, an investor borrows funds from the brokerage firm with the agreement that a “maintenance margin,” or minimum account balance must be maintained. If the account value is at risk of falling below the maintenance margin, the firm can require investors to either deposit more funds or make a margin call where the broker exercises their right to sell the stock, or liquidate, to pay down the loan.

Timothy DiBlasi Under FINRA Scrutiny for Lack of Compliance Supervision

September 15, 2015 | Silver Law Group

Disciplinary action is pending as DiBlasi’s involvement in the sale of over 74 million shares of unregistered stock is investigated

After 11 years in the securities industry, Timothy D. DiBlasi may be facing a FINRA disciplinary action for his alleged involvement in the sale of more than 74 million unregistered stock shares. As the chief compliance officer at Scottsdale Capital Advisors, FINRA alleged that he failed to enforce a system of supervision and anti-money laundering compliance, leading to the alleged illicit trades.

DiBlasi has been registered with the firm since 2012, and FINRA is implicating him in the case due to his failure to prevent fraud and illicit activity relating to a penny stock, according to the report. Since October 2013, DiBlasi has served as the chief compliance officer at Scottsdale, making him responsible for written supervisory procedures, or WSPs, which detail how supervisors should handle any “red flags” that suggest improper trading activity, particularly in regards to unregistered securities. However, according to FINRA, DiBlasi’s system was not up to par when it came to verifying ownership of securities and their registration exemptions.

FINRA Has Darrel Michael “Mike” Cruz Under Fire After Alleged Supervisory Failings

September 14, 2015 | Silver Law Group

Regulatory action pending against president of Scottsdale Capital Advisors

D. Michael Cruz, president of Scottsdale Capital Advisors, is involved in a pending regulatory action by FINRA after his alleged involvement in the sale of more than 74 million unregistered shares between three microcap stocks.

Cruz has been registered with the firm since 2008, and FINRA is implicating him and Chief Compliance Officer Timothy DiBlasi in the case due to their alleged failure to enforce supervisory procedures that prevent fraud and illicit activity, according to the report.