Elder Fraud

Philip Grasso Jr. Barred by FINRA Due to Allegations of Elder Fraud

October 16, 2015 | Silver Law Group

Broker misconduct results in “substantial harm’ to elderly customers

Philip Leonard Grasso Jr.’s 18-year career in the securities industry is now over due to allegations of elder fraud, where he purportedly misused funds, willfully misrepresented material facts and failed to complete on-the-record testimony requested by FINRA.

According to the FINRA Disciplinary Action, Philip Grasso has been permanently barred from association with any FINRA member in any capacity as of May 2015. There are three causes of action included in the findings.

Elder Fraud on the Rise in South Florida

September 26, 2015 | Silver Law Group

Elder Fraud on the Rise in South Florida on silverlaw.com

The Sunshine State may not be so sunny for seniors—here’s how to protect yourself and your loved ones from the unscrupulous and duplicitous

A running joke in sitcoms, movies, and even real life is that of retirees moving to South Florida to retire. Everyone dreams of sunny skies, beautiful beaches and trees that stay green all year long, right? But for targets of elder financial abuse, that dream can quickly become a nightmare.

According to Investment News, every day 10,000 of our 77 million baby boomers turn 65, officially making them senior citizens. That demographic is not the only thing that’s growing rapidly, however. Elder financial abuse is also on the rise.

Cetera Broker Alex P. Anderson Permanently Barred by FINRA

August 28, 2015 | Silver Law Group

Ohio broker Alex P. Anderson (CRD# 4243107) was permanently barred by FINRA in April 2015, for converting customer funds for his own use and benefit, in violation of FINRA Rules 2510 and 2010. According to the Letter of Acceptance Waiver and Consent, Anderson was appointed Power of Attorney over a 94 year-old customer of his, which gave Anderson broad authority over the customer’s financial affairs. Between May 21, 2014 and November 14, 2014, Anderson issued nine checks totaling $75,500 from the client’s bank account and deposited them into a bank account under Anderson’s control, for his own use and benefit. Due to these acts, Anderson violated FINRA Rules 2150(a) and 2010 and was permanently barred from the association with any FINRA member in any capacity. Anderson was registered with FINRA member firm Cetera Financial Specialists LLC from June 2004 through December 2014, and Hochman and Baker Securities Inc. of Stamford CT, from January 2002 through August 2004.

Many brokerage firms prohibit financial advisors from serving as trustees of clients’ trust accounts or executors of clients’ trust and estate plans. Financial advisors are generally prohibited from serving as power of attorney for elderly clients or managing money separate from investors’ accounts.

If you invested money with Alex P. Anderson or his firms and suffered losses, you may be entitled to recover some or all of those investment losses. Please call our securities law firm toll free at (800) 975-4345 to speak with an experienced attorney and to find out how we may be able to help you regain some or all of your losses. Most cases are handled on a contingent fee basis, meaning that you do not pay legal fees unless we are successful in your lawsuit.

FINRA Files Cease and Desist Order Against Avenir Financial Group, CEO Michael Clements, and Registered Representative Karim Ibrahim for Fraud Against Elderly Investors

August 27, 2015 | Silver Law Group

The Financial Industry Regulatory Authority (“FINRA”) announced on April 27th that Avenir Financial Group (“Avenir”), its CEO Michael Clements (“Clements”), and registered representative Karim Ibrahim a/k/a Chris Allen (“Ibrahim”), consented to an order halting further fraudulent sales of equity interests in the firm and promissory notes, pending a hearing on fraud charges related to the same offerings. The sales occurred from October 2013 through April 2015, and were often to elderly customers of the firm. According to FINRA, Avenir sold to several elderly investors including a 92 year-old customer who invested $250,000 for an equity interest in the firm, while Clements and Ibrahim falsely represented how the funds would be used, materially omitting and failing to disclose the firm’s financial difficulties, and thus willfully violated the Securities Exchange Act and FINRA rules. The misrepresentations and omissions that allegedly misled the elderly client included the fact that Avenir was in dire financial condition, as well as that he overpaid for his shares as compared to earlier investors.

Avenir is a New York, NY based full service broker-dealer. According to FINRA, during its 3-year operation as a FINRA member firm, Avenir and its branch offices raised over $730,000 in 16 issuances of equity or promissory notes, and most of the sales of equity and promissory notes were to elderly customers of the firm.

FINRA obtained the Cease and Desist Order based on its concern for ongoing customer harm and depletion of investor assets, prior to completion of a formal disciplinary proceeding against the firm and these individuals. Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, and order to pay restitution, censure, suspension or bar from the securities industry. The issuance of the disciplinary complaint represents the initiation of a formal proceeding by FINRA, in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.

Douglas William Finlay Jr. Suspended and Fined by FINRA

August 19, 2015 | Silver Law Group

Allegations include falsifying documents

Douglas William Finlay Jr. is facing an 18-month suspension and fine of more than $15,000 to be paid later, according to FINRA.

According to the disciplinary action documents, Finlay allegedly falsified a customer’s forms by claiming her net worth was more than $1.3 million, when in fact it was about $135,000. On the same form, he allegedly claimed the customer’s income was $150,000 when it was actually $70,000. These alleged falsifications resulted in the firm having inaccurate forms and led to another allegation of recommending an unsuitable transaction.

AlphaBridge Capital Management Charged By SEC for Fraudulent Fund Valuation Scheme

August 5, 2015 | Silver Law Group

Hedge fund firm owners agree to $5 million combined settlement

On June 1, 2015 the Securities and Exchange Commission charged Greenwich, Connecticut-based AlphaBridge Capital Management and its two owners with fraudulently inflating the prices of securities in funds they managed. These inflated valuations caused the funds to pay higher management and performance fees to AlphaBridge.

According to the SEC news release, AlphaBridge Capital Management and its owners – Thomas T. Kutzen and Michael J. Carino – “told investors and its auditor that it obtained independent price quotes from broker-dealers for certain unlisted, thinly-traded residential mortgage-backed securities.” In fact, what the firm did was give “internally-derived valuations to broker-dealers to pass off as their own.”

Giovanni Acevedo, of Voya Financial Advisors, Inc., Accused of Converting Funds

August 4, 2015 | Silver Law Group

Disciplinary action pending against Wilton Manors, FL financial advisor

Giovanni Acevedo could be facing disciplinary action from FINRA after a complaint that he allegedly converted more than $160,000 in customer funds. According to the report, he allegedly told a customer he would invest a $68,000 check she wrote to the company according to her instructions. He allegedly told her to leave 21 blank signed checks with him, resulting in a total of $145,848.42 converted to what is purported to be his own personal account or one of which he is a beneficiary, according to FINRA.

The official complaint, which was filed on April 8, asks that upon the conclusion that the allegations are proven as fact Acevedo be subject to sanctions according to FINRA Rule 8310, namely disgorgement, but the FINRA manual also allows for suspension or expulsion of a member’s registration.

Widow of HSN Founder Files Suit against Morgan Stanley

July 8, 2015 | Silver Law Group

Morgan Stanley has found itself on the wrong end of a Florida FINRA arbitration for claimed damages of $400 million. Lynnda Speer, the widow of Home Shopping Network (HSN) co-founder Roy M. Speer, filed the claim against Morgan Stanley and one of its branch managers and investment advisers. Due to its size, the firm acknowledged the claim in a disclosure in its annual financial report filed with the Securities and Exchange Commission (SEC) in March.

In addition to being the widow of Mr. Speer, Ms. Speer is the personal representative of his estate. In her claim, filed with the Financial Industry Regulatory Authority (FINRA), she alleges excessive trading, negligent supervision, and unjust enrichment. According to a SEC filing, the claims also include that Morgan Stanley and the adviser, working out of Palm Harbor, Florida, engaged in the unauthorized use of discretion and abused their fiduciary duty.

After helping to create the popular HSN, it was estimated by Forbes that Mr. Speer was worth $775 million in 2002. Before passing away in 2012, Mr. Speer suffered from “significant diminished capacity” during the later years of his life. It is alleged that during the final five years of his life, his adviser, Ami Forte, and the firm conducted roughly 12,000 unauthorized trades, which generated around $40 million in commissions. Also named in the suit is the Morgan Stanley branch manager, Terry McCoy.

Customer Files Claim Against Wells Fargo For Investing in F-Squared Investments

June 30, 2015 | Silver Law Group

A customer of Wells Fargo Advisors filed a FINRA complaint against Wells Fargo to seek the money he lost when his adviser invested his monies in “F-Squared Investments.” The customer’s claim is that Wells Fargo failed to supervise his adviser properly, and also did not do the required due diligence in the investment that he recommended (F-Squared). The customer is also seeking lost opportunity damages, which is the money he could have made if his money were invested in an S&P 500 Fund.

The SEC launched an investigation into F-Squared Investments and its co-founder and CEO Howard Present, in 2013. According to the SEC’s Order of December 2014, F-Squared Investments agreed to pay $35 million and admit wrongdoing to settle charges that it defrauded investors through false advertising about its flagship product (AlphaSector). The SEC alleged that while marketing AlphaSector into the largest active ETF (“exchange-traded funds”) strategy in the market, F-Squared falsely advertised a successful seven-year track record for the investment strategy based on the actual performance of real investments for real clients. In reality, the algorithm was not even in existence during the seven years of purported performance success. The data used in F-Squared’s advertising was actually derived through backtesting, although F-Squared and Howard Present specifically advertised the investment strategy as “not backtested.” Further, the hypothetical data contained a substantial performance calculation error that inflated the results by approximately 350 percent.

According to news reports, the customer in this case is an elderly person who claims that Wells Fargo did not perform due diligence on investments prior to selling them to the public. Additionally, the customer claims that Wells Fargo failed to properly supervise one of its advisers and recommendations the advisor made to the client, who described himself as a “moderately conservative investor seeking moderately conservative growth”, concerning his investment risk. The client claims that had Wells Fargo conducted full due diligence on the F-Squared product, it would have discovered red flags, additionally seeing that the ETF-based F-Squared product was not appropriate for a moderately conservative investor.

SEC Announces Fraud Charges against eCareer Holdings, Inc. and Brokers Dean Esposito of Boca Raton, FL, Joseph Devito of Brooklyn, NY and Frederick Birks of Orlando, FL

May 4, 2015 | Silver Law Group

The Securities and Exchange Commission (“SEC”) halted a microcap scheme in South Florida that included three boiler room stockbrokers trying to conceal the fact that they were barred from the securities industry. The stockbrokers’ investment scheme included the financial exploitation of the elderly, as well as the concealment of their disciplinary histories. Brokers Dean Esposito, Joseph Devito, and Frederick Birks, cold called investors, including many elderly, ages 85 to 98 years old, and defrauded them into purchasing unregistered stock shares of eCareer Holdings, Inc. The CEO of eCareer Holdings, Inc., Joseph Azzata of Boca Raton, FL, knowingly hired the 3 barred brokers and their sales agents, while allegedly perpetrating the fraud on investors.

“We allege that senior citizens and other investors were falsely told that purchasing eCareer stock was a good, profitable investment,” stated Eric Bustillo, Director of the SEC’s Miami Regional Office. “Concealed from these investors were the exorbitant fees being paid to sales agents as well as the disciplinary histories of Esposito, DeVito, and Birks.” That being, according to the SEC’s complaint filed in the U.S. District Court for the Southern District of Florida, these brokers were the subjects of a prior SEC enforcement action that resulted in them being barred from acting as a broker or dealer or participating in any offering of a penny stock, such as eCareer’s stock.

The SEC alleges that eCareer, Azzata, Esposito, Devito and Birks fraudulently raised more than $11 million in funds from more than 400 investors since August 2010, and that $3.5 million of that amount was for undisclosed exorbitant fees. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors. The SEC’s request for a temporary restraining order was granted as well as an asset freeze. The SEC also suspended the trading in shares of eCareer Holdings.