Stockbroker Misconduct

IMS Securities Broker Michael J. Spears Under Investigation Over Non-traded REIT Unsuitability Allegations

March 27, 2017 | Silver Law Group

Silver Law Group is investigating Houston, Texas-based IMS Securities Inc. (CRD# 35567) broker Michael J. Spears (CRD# 4501523) after two (2) customers filed complaints against Spears regarding non-traded REITs.

According to Spears’ FINRA BrokerCheck report, two customers filed complaints against Spears in 2016. The first, in August 2016, alleges negligence, misrepresentation, failure to supervise, breach of fiduciary duty and involves non-traded REITs. The FINRA arbitration claim alleges over $1.6 million in damages.

The second, filed in July 2016, also involves real estate securities as well as variable annuities (“VAs”). This FINRA arbitration complaint alleges negligence, overconcentration, breach of fiduciary duty, misrepresentations, failure to supervise and damages in the amount of $3 million.

Former Houston, Texas-based Park Avenue Securities Broker Beth Ty Under Investigation Over Selling Away

March 27, 2017 | Silver Law Group

Silver Law Group is investigating former Houston, Texas-based Park Avenue Securities (CRD# 46173) broker Lizabeth Gotuaco Ty (CRD# 4737319) (also known as “Beth Ty”) after FINRA permanently barred her.

According to Ty’s FINRA BrokerCheck report, FINRA permanently barred Ty in May 2016 after she failed to provide documents and information requested by FINRA during the course of an investigation into allegations that she sold unregistered securities. It has been alleged in a pending FINRA claim that Ty recommended that her clients invest in DayStar Funding LP (“Daystar”), which allegedly was outside of Park Avenue’s approved investments.

In July 2015, the Securities and Exchange Commission (the “SEC”) filed a complaint against Frederick Alan Voight, owner and control person of Daystar, and Daystar alleging that it was a Ponzi scheme. In August 2016, Voight settled the SEC charges.

Former Las Vegas Wells Fargo Broker Donald S. Toomer Allegedly Received Kickbacks for Selling Microcap Stocks

March 14, 2017 | Silver Law Group

Silver Law Group is investigating former Las Vegas, Nevada-based Wells Fargo Advisors Financial Network, LLC (CRD# 11025) broker Donald S. Toomer (CRD# 2842723) after he was discharged by Wells Fargo and named in an SEC and criminal complaint over allegations that he sold microcap stocks to his customers in exchange for cash kickbacks.

On December 21, 2015, a criminal charge was filed against Toomer charging him with conspiracy to commit securities fraud and investment adviser fraud, investment adviser fraud, and securities fraud. The same day, the SEC announced civil charges against Toomer when it amended its initial complaint. Wells Fargo subsequently allowed Toomer to resign following the allegations, according to Toomer’s FINRA BrokerCheck report.

According to the SEC amended complaint (the “Complaint”), the SEC alleges Toomer abused his role as financial advisor to help create the false appearance of market demand in four microcap stocks: BioNeutral Group, Inc. (“BONU”); NXT Nutritionals Holdings, Inc. (“NXTH”); Mesa Energy Holdigns, Inc. (“MSEH”); and Clear-Lite Holdings, Inc. (“CLRH”) (collectively, the “Issuers”).

Former LPL Financial Broker Michael Babyak Jr Under Investigation After FINRA Permanent Bar

March 14, 2017 | Silver Law Group

Silver Law Group is investigating former LPL Financial LLC (CRD# 6413) broker Michael Babyak Jr, II after FINRA permanently barred him.

According to Babyak’s FINRA BrokerCheck report, FINRA permanently barred Babyak from acting as a broker or otherwise associating with firms that sell securities to the public in October 2016.

Without admitting or denying the findings, FINRA found that Babyak had customers invest a total of $4.25 million into a limited liability company that he set up. Babyak, who had complete control over the LLC, then loaned the $4.25 million to a third party for the benefit of his customers. Further, Babyak arranged for the repaid funds to be loaned to two additional borrowers. Babyak failed to notify his employing firm he was participating in these additional transactions.

Former Milestone Investments Broker Michael W. Miles Under Investigation After FINRA Suspension

March 14, 2017 | Silver Law Group

Silver Law Group is investigating former Charlotte, North Carolina-based Milestone Investments, Inc. (CRD# 47090) broker Michael W. Miles (CRD# 3206302) after FINRA suspended him for six months.

According to Miles’ FINRA BrokerCheck report, FINRA suspended Miles six months and fined him $10,000 in October 2016. According to the BrokerCheck report, Miles consented to the sanctions, without admitting or denying the findings, and to the entry of findings that he willfully failed to amend his Form U4 to report a Consent Judgment and Order he entered into with the United States Department of Labor (the “USDL”) in which he was permanently enjoined from acting as a fiduciary to any employee benefit plan.

The Acceptance, Waiver & Consent (“AWC”) entered into between FINRA and Miles references an additional disclosure on Miles’ BrokerCheck report that occurred in May 2014. According to Miles’ BrokerCheck report, the USDL alleged that Miles breached his fiduciary duty with respect to the Miles & Associates, Inc. 401(k) profit sharing plan by failing to discharge his duties under the plan and violating multiple ERISA rules.

Las Vegas Broker Frank R. Underhill Under Jr Investigation After FINRA Permanently Bars Him

March 14, 2017 | Silver Law Group

Silver Law Group is investigating former Las Vegas, Nevada broker Frank R. Underhill Jr. (CRD# 4970331) after FINRA permanently barred him.

According to Underhill’s FINRA BrokerCheck report, Underhill who owned and operated his own brokerage firm, Underhill Securities Corp. (CRD# 148001), FINRA permanently barred Underhill from acting as a broker or otherwise associating with firms that sell securities to the public.

Underhill failed to respond to a FINRA request for information, according to his BrokerCheck report, which was the cause of his permanent bar.

Transamerica Financial Advisors Broker Harry C. Bennett Barred in Connection Unsuitability Investigation

February 27, 2017 | Silver Law Group

Silver Law Group is investigating former Michigan-based Transamerica Financial Advisors, Inc. (CRD# 16164) broker Harry C. Bennett (CRD# 2395555) after FINRA permanently barred the broker in connection with an investigation alleging excessive commissions and unsuitability.

According to Bennett’s FINRA BrokerCheck report, FINRA permanently barred Bennett from selling securities to the public in November 2016. FINRA barred Bennett when, according to his BrokerCheck report, Bennett failed to appear for on-the-record testimony requested by FINRA in connection with an investigation involving allegations that he may have engaged in sales practice violations by charging excessive commissions and recommending unsuitable transactions to his customers.

FINRA’s findings state that Bennett’s refusal to appear for the on-record testimony prevented FINRA from reaching a determination as to whether the alleged unsuitable recommendations and excessive commission charges violations occurred.

William Upchurch Jr., Former Maryland PFS Investments Broker Under Investigation

February 27, 2017 | Silver Law Group

Silver Law Group is investigating former PFS Investments Inc. (CRD# 10111) broker William Upchurch Jr. (CRD# 1195846) after FINRA permanently barred the broker.

According to Upchurch’s FINRA BrokerCheck report, FINRA permanently barred Upchurch from acting as a broker or otherwise associating with firms that sell securities to the public in July 2016. According to the BrokerCheck report, Upchurch failed to respond to a FINRA request for information.

In September 2015, Upchurch settled a FINRA arbitration for the full amount after the customer alleged she could not locate a $20,000 account Upchurch had established for in 2013.

Broker Matthew DiGregorio Who Has Worked at 18 Different Firms Under Investigation After FINRA Bar

February 27, 2017 | Silver Law Group

Silver Law Group is investigating former New York broker Matthew DiGregorio after FINRA permanently barred him.

According to DiGregorio’s FINRA BrokerCheck report, FINRA permanently barred DiGregorio after he told FINRA staff that he does not intend to honor an award that a FINRA arbitration panel ordered him to pay to his former partners at a FINRA member firm. Further, the complaint DiGregorio was named a respondent in alleges that DiGregorio made false representations to the FINRA panel regarding claims that his child was involved in an accident in order to extend the hearing sessions.

This is not the first time DiGregorio has been punished by FINRA for similar misconduct. In August 2015, FINRA suspended DiGregorio for failing to comply with a settlement agreement or arbitration award or to satisfactorily update FINRA on the status of his compliance.

Former Cetera-related Broker Clay E. Hoffman Has 19 BrokerCheck Disclosures; FINRA Actions

February 27, 2017 | Silver Law Group

Silver Law Group is investigating former Georgia-based Summit Brokerage Services, Inc. (CRD# 34643) broker Clay E. Hoffman (CRD# 4371162) due to multiple FINRA actions pending against him and his racking up of 16 BrokerCheck disclosures in the past five years.

FINRA has initiated four regulatory actions against Hoffman in 2016, according to Hoffman’s FINRA BrokerCheck report. Our attorneys have been monitoring FINRA’s actions against Hoffman.

The first, initiated in February, alleged Hoffman exercised discretion in a customer’s account and made unauthorized transactions without written authorization from the customer or the approval of Hoffman’s firm. Hoffman was fined $5,000 and suspended for 15 days.