Securities Arbitration Lawyers Blog

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.

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.

How the SEC is Protecting Elderly Investors from Financial Exploitation

March 20, 2017 | Silver Law Group

The SEC National Exam Program concentrates on monitoring risks specific to elderly and retiring investors, at a time when it is needed most

Here’s the good news: in United States, people are living longer. As a result of this trend, the aging population in the U.S. is becoming more and more dependent upon their own investments for retirement income than ever before.

The bad news: This dependency upon retirement investments opens the door for fraudulent financial firms and advisers to take advantage of the elderly when managing their funds, an activity known as elder financial fraud.

Churning and the Elderly: How Excessive Trading Impacts Senior Investors

March 20, 2017 | Silver Law Group

Unnecessary trading leads to losses for many investors, and the elderly are especially vulnerable to churning

Churning is the process of a broker or investment adviser making unnecessary trades for a client with the sole or primary purpose of generating commissions. While there is no specific test to determine if an account has been churned, it’s usually straightforward; brokers who churn client accounts are responsible for demonstrating that the buying and selling of investments align with their customer’s specific investment objectives.

Why the elderly are especially vulnerable to churning and other forms of financial fraud

How the SEC Plans to Tackle Fraud and Protect Retail Investors from Unnecessary Risk

March 20, 2017 | Silver Law Group

How the SEC Plans to Tackle Fraud and Protect Retail Investors from Unnecessary Risk on silverlaw.com

The agency plans to get tougher on brokers and firms throughout 2017

The SEC’s Office of Compliance Inspections and Examinations (OCIE) has a new series of goals for 2017. The agency’s department, which is responsible for examining brokers, firms, and financial products to prevent fraudulent activities, identify risks, and inform government policies, has consulted employees throughout the organization to determine its direction for the new year.

Throughout this process, the SEC has focused on three main points of analysis: researching risks for retail investors, looking at risks for retired and elderly investors, and examining overall market risks.

FINRA Fines and Suspends Waterford, Connecticut Broker William Stephen Smith

March 16, 2017 | Silver Law Group

Allegations include non-disclosure, false statements, and being named executor of an elderly client’s estate

William Stephen Smith, a broker with nearly 30 years of professional experience, was fined $10,000 and suspended for three months by the Financial Industry Regulatory Authority (FINRA). It’s reported that Smith didn’t disclose that he had served as the executor of a client’s estate, and that he received compensation for doing so while working at National Planning Corp. in Waterford, CT.

Smith’s firm has procedures in place requiring that their registered brokers disclose any outside business activities prior to engaging in them. In addition, the firm prohibits their representatives from acting as executors for client estates. In annual compliance questionnaires, Smith is reported to have lied, stating that he had notified his firm about his outside activities and that he wasn’t named as a beneficiary to any accounts.

FINRA Suspends and Fines Broker Jeffrey Jacobson

March 16, 2017 | Silver Law Group

Jacobson was sanctioned for failing to supervise a broker who is accused of executing unsuitable investments for elderly clients

The Financial Industry Regulatory Authority (FINRA) suspended Minnesota broker Jeffrey Jacobson for 15 days ending on December 12th, 2016 and fined him $7,500. Jacobson is alleged to have failed to adequately supervise a representative of his firm who initiated hundreds of trades for his elderly customers without contacting them. The representative is also reported to have unsuitably recommended transactions to those customers, including a variety of short-term trades in corporate and municipal bonds. Churning of municipal bonds is a particular problem, because the costs of bond trading are not transparent.

As a supervisor, Jacobson is alleged to have ignored warning signs of these unsuitable transactions, including unusually high trading activity in client accounts.

Former NYLife Securities LLC Broker Amr Aboulmagd Is Permanently Barred from Acting as a Broker

March 15, 2017 | Silver Law Group

Former NYLife Securities LLC Broker Amr Aboulmagd Is Permanently Barred from Acting as a Broker on silverlaw.com

He allegedly misrepresented information regarding both fixed and variable annuities to customers who suffered financial losses as a result

While the Financial Industry Regulatory Authority (FINRA) permanently barred former NYLife Securities LLC broker Amr Mostafa Aboulmagd in October 2016, additional complaints continue to be filed against him.

With a total of four customer disputes lodged against him, Aboulmagd was barred by FINRA due to his failure to appear for on-the-record testimony requested by the regulatory body in connection to an investigation into allegations of misrepresentation and making unsuitable recommendations to customers regarding switches from a fixed annuity to a variable annuity.

Summit Equities Broker Rembert McNeer is Given a 1-Year Suspension from FINRA

March 15, 2017 | Silver Law Group

Summit Equities Broker Rembert McNeer is Given a 1-Year Suspension from FINRA on silverlaww.com

The Parsippany, New Jersey broker was also hit with a $10,000 fine

Up until recently, Rembert McNeer had a clean record with the Financial Industry Regulatory Authority (FINRA). A broker for over 30 years, McNeer worked for three firms: E.F. Hutton & Company Inc.; G.A. Michele, Inc. in New York City; and Summit Equities, Inc. located in Parsippany, NJ.

But in October of 2016, FINRA found that McNeer failed to supervise the private securities transactions of one of his representatives. McNeer was the representative’s immediate supervisor, as well as the member firm’s chief compliance officer.

Catalyst Hedged Futures Strategy Fund (HFXIX) Under Investigation Over Recent Drop in Value and Misclassification

March 15, 2017 | Silver Law Group

Silver Law Group is investigating Catalyst Capital Advisors LLC (CRD# 139895/ SEC# 801-66886) (“Catalyst”) and one of its mutual funds, Catalyst Hedged Futures Strategy Fund Class I (“HFXIX”) after the fund lost approximately 30 percent of its value in the span of three months.

HFXIX is a fund that seeks to provide positive returns in all market conditions with low volatility and low correlation to the equity markets by investing in option strategies on equity index futures contracts, according to the fund’s fact sheet. The fund primarily invests in long and short call and put options on U.S. Stock Index Futures contracts, and lists the primary reason for investing as capital appreciation and preservation.

The fund has performed well relative to other managed futures funds, which fell 2.8 percent. But according to an InvestmentNews report, the fund is actually an options writing fund, which opens up arguments of misclassification against Catalyst.