SEC Actions

Former Boston, Massachusetts-based Morgan Stanley Brokers Under Investigation for Allegedly Stealing Almost Half a Million from Elderly Client

September 7, 2018 | Silver Law Group

Silver Law Group is investigating claims against former Boston, Massachusetts-based Morgan Stanley brokers James Polese (CRD# 2636427) and Cornelius Peterson (CRD# 5769919) after FINRA barred both of them for allegedly stealing $450,000 from an elderly client.

Both Boston, Massachusetts brokers were charged by the Securities and Exchange Commission (the “SEC”) in January 2018 and agreed to plead guilty to the charges conspiracy, advisor fraud and bank fraud.

The SEC alleges in its complaint that Polese and Peterson misappropriated money from their Morgan Stanley customers starting in 2014. According to the SEC, Polese and Peterson fraudulently misappropriated $350,000 in March 2016 from an elderly customer. Polese and Peterson used a portion of the money to make investments in their own names, and directed a larger portion to Polese’s personal bank account. Then, according to the SEC, from March through May 2017, Polese made numerous unauthorized transactions from the same elderly customer’s account totaling approximately $93,000 to pay Polese’s credit card and college tuition expenses for Polese’s children.

Some of National Securities Corporation’s FINRA-Reported Brokers

September 5, 2018 | Silver Law Group

These four brokers have been accused of numerous infractions

National Securities Corporation has been operating for decades and has offices and brokers all over the U.S. Unfortunately, however, a significant percentage of their brokers have been involved in numerous customer complaints. Here are just a few examples of how National Securities employees have allegedly violated FINRA rules:

James Eichner

The SEC Has Proposed New Regulations for Fiduciaries

August 22, 2018 | Silver Law Group

What the new code of conduct rule entails and how it could affect elderly investors

Up until earlier this year, the Department of Labor had a rule in effect for fiduciaries that specified that they couldn’t earn commissions unless the advice they offered was in the best interests of their clients. In addition, the rule mandated that they could only earn reasonable compensation and must be transparent about this compensation as well as the products they sell.

However, in March, a federal appeals court struck down the DOL’s rule. Recently the SEC proposed their own rule – called Regulation Best Interest or Reg BI – that aims to address three areas:

Donald Fowler Charged With Excessive Trading And Churning

August 7, 2018 | Silver Law Group

Broker Donald Fowler (CRD #4989632) is a broker currently registered with Worden Capital Management LLC (CRD #148366) of Rockville Center, New York. He has been with Worden since 2014. He was previously employed by J.D. Nicholas & Associates, Inc. (CRD #44791) of Syosett, NY, and American Capital Partners, LLC (CRD #119249) of Wantagh, NY. He has been in the industry since 2005.

sec-300x198 Fowler, along with another Worden broker, is the subject of an SEC complaint regarding excessive trading, churning, and what the SEC calls an “in-and-out” trading strategy. This generated bigger fees for himself and the other broker who was charged, but caused clients to suffer significant losses as a result.

Fowler is alleged to have recommended the strategy to his 27 clients at now-defunct J.D. Nicholas & Associates without any reason to believe it would benefit any one of them. He knew, or should have known, that the cost structure and nature of the trading would cause them all to lose money. Furthermore, at least three of his 27 accounts were the subject of “churning” (excessive training to generate more commissions and fees.) Both of these practices violated antifraud provisions in federal trading laws. This action is listed as “pending.”

Worden Capital’s Broker Gregory Dean Charged With Churning

August 7, 2018 | Silver Law Group

Stockbroker-Misconduct-1-300x150-300x150 Gregory Dean (CRD #4922996), currently employed with Worden Capital Management of Rockville, NY (CRD #148366) is the subject of multiple disclosures, mostly customer complaints. He is also the subject of a civil SEC complaint and one regulatory complaint, going back to 2013.

Dean’s previous employers include:

D. Nicholas & Associates, Inc. (CRD #44791) of Syosett, NY, from 01/16/2007 through 11/24/2014

Insurance Agent James E. Hocker Charged In $1.27 Million Ponzi Scheme

June 28, 2018 | Silver Law Group

On the heels of a Ponzi scheme that cheated investors out of $102 million, the SEC has charged a former insurance broker with defrauding inexperienced retail investors. James Hocker, aged 48, of Bellefonte, Pennsylvania has been charged with defrauding 25 investors of $1.27 million for non-existent securities. He operated his own insurance agency out of his home, James E. Hocker & Associates, selling insurance and annuities as an unregistered entity.

Hocker’s tactic was different—he sold them insurance first to gain their trust, then offered these customers non-existent “investment securities.” He was licensed to sell insurance and annuities, but not securities.

Promising “guaranteed returns” of 10% to 30%, Hocker told these customers that he would invest their money into the S&P 500 and other unspecified investments. However, the monies he collected were deposited in bank accounts he controlled, and investors were not informed that they were his. Hocker used the money to pay bills, tax liens, and spousal support to his ex-wife. He also spent the monies on restaurants and casinos.

DeVere Investment Fraud Victims

June 13, 2018 | Silver Law Group

Recently, there has been an important decision that affects how pension fraud schemes are handled within the United States by the Securities and Exchange Commission. The recent case was filed against DeVere USA, Inc. DeVere USA Inc. has been registered with the Securities and Exchange Commission since June 5, 2013 and is incorporated in the State of Florida with its principal place of business in New York. DeVere USA, Inc.’s most recent report revealed that it has over $500 million in assets under management for its clients. If you have utilized DeVere’s USA Inc.’s services and have experienced losses, it is highly recommended that you speak with an attorney to see your potential legal rights for recovering your losses.

Facts of the Case

A case was filed with the Securities and Exchange Commission due to DeVere USA, Inc.’s failure to make full and fair disclosure to clients and prospective clients about material conflicts of interest regarding external compensation received from third-party product and service providers. DeVere USA Inc. maintains a list of clients from both the U.S. and the U.K. in which it provided investment guidance to its clients about recommended overseas transfers of U.K. pension plans to overseas retirement plans. The way they justified these transfers was that they qualified under the U.K. tax authority’s regulations as a Qualifying Recognised Overseas Pension Scheme (QROPS).

SEC Charges Essex Capital Corporation and Securities Fraud Recidivist Ralph Iannelli in $80 Million Fraud

June 11, 2018 | Silver Law Group

On June 6, 2018, the Securities and Exchange Commission (the “SEC”) charged Essex Capital Corporation and its founder, Ralph Iannelli, with defrauding investors in connection with the sale of over $80 million in promissory notes. Silver Law Group is investigating potential claims against third parties for losses in Essex Capital Corporation.

According to the SEC’s complaint, Iannelli and Essex Capital Corporation induced approximately 70 investors to collectively invest over $80 million dollars in the company’s failing equipment leasing business through two (2) unnamed registered investment advisors. Iannelli and Essex Capital Corporation induced these investors by making false and misleading statements and illusory personal guarantees to these two registered investment advisors.

The first investment advisor, based out of Santa Barbara, California, had been recommending Essex Capital Corporation to its customers since 2002. Between 2015 and 2017, this investment advisor invested over $8.1 million on behalf of over 20 customers in Essex Capital Corporation. According to the SEC complaint, a major reason this investment advisor recommended Essex Capital Corporation customers to invest were due to false financial statements prepared by Essex Capital Corporation’s outside accountant.

NYSE Brings Action Against Edward Wedbush and Wedbush Securities

June 8, 2018 | Silver Law Group

Wedbush Securities is in hot water with the SEC, FINRA, and the New York Stock Exchange for a scheme involving its owner and founder, Edward Wedbush. Mr. Wedbush was allegedly employing a manipulative trading scheme involving over 70 accounts at Wedbush Securities. The trading practice, often referred to as “cherry-picking,” occurs when “traders choose to allocate the best performing trades to their own or preferred accounts.”

According to the NYSE’s complaint, Mr. Wedbush’s scheme involved instructing an employee to execute trades in a general account, and then he would later allocate the trades to various accounts that he controlled. No other employees at the firm were permitted to make these “post-execution allocations.” Mr. Wedbush also executed these trades on a separate trading platform that was not used by other traders at the firm.

The firm allowed Mr. Wedbush to exercise this discretion and had no procedures in place to ensure that the allocations were not made for improper purposes, like steering the more profitable trades into Mr. Wedbush’s controlled accounts. NYSE alleges this lack of supervision violated both SEC and NYSE rules. The firm failed to establish and maintain adequate written supervisory procedures, and failed to retain adequate books and records. The firm’s Co-Chief Compliance Officer even raised concerns over Mr. Wedbush’s trading activity, yet the firm still “took no meaningful action.”

Silver Law Group is Investigating Timary Delorme of Wedbush Morgan Securities

June 8, 2018 | Silver Law Group

Timary Delorme (CRD #736418) was the subject of a March 2018 regulatory action by the Securities & Exchange Commission. Delorme was employed at the Los Angeles branch of Wedbush Morgan for over 40 years.

In the recent regulatory action, the SEC found that Delorme violated federal securities laws stemming from her involvement in a manipulative trading scheme at Wedbush Morgan. The SEC ordered Delorme to cease and desist from further violating any more federal securities laws as well as barred her from association with any securities broker or investment adviser.

Delorme has also been the subject of a recent FINRA customer dispute alleging $250,000 in damages. In the pending dispute, the Claimant alleges fraud, breach of fiduciary duty, and breach of contract on the part of Delorme. In a past dispute from 2012, a Claimant alleged that Delorme engaged in fraud, deceit, material misrepresentation, and extortion, among other claims, in connection with the Claimant’s account. The Claimant alleged $750,000 in damages as a result of Delorme’s misconduct.