Securities Arbitration Lawyers Blog

John S. Elliot, Former Kansas Ameriprise Financial Broker, Under Investigation Over Selling Away Allegations

April 3, 2017 | Silver Law Group

Silver Law Group is investigating former Overland, Kansas-based Ameriprise Financial Services, Inc. (CRD# 6363) broker John S. Elliot (CRD# 5981598) over allegations that he sold customers an outside investment.

According to Elliot’s FINRA BrokerCheck, Ameriprise discharged Elliot in August 2016 for violating Ameriprise compliance policies relating to selling away.

Following Elliot’s Discharge from Ameriprise, two customers filed FINRA arbitration complaints against the broker in November 2016. Both of the complaints allege Elliot sold the customers an unapproved investment in Selden Companies, LLC and damages of almost $1 million in the aggregate.

After FINRA’s Ruling, Joel Weiner has been Permanently Barred from the Securities Industry

March 31, 2017 | Silver Law Group

The Boynton Beach broker is alleged to have profited from unsuitable investment recommendations

Joel Weiner is no longer allowed to act as a broker as of December of 2016. It was then that the Financial Industry Regulatory Authority (FINRA) decided to permanently bar him due to serious allegations involving the solicitation of millions of dollars from a client.

FINRA reported that Weiner recommended that his client invest in an outside business that was owned by a representative of his firm, whom Weiner supervised. The business provided loans to small businesses, and the client ended up issuing $2.6 million in loans over several years. Weiner is reported to have earned about $65,000 in finder’s fees as the result of these transactions. In 2014, the business stopped providing loans and asked for repayment of all outstanding loans, but by February of 2015, only half of them had been repaid.

Nicholas Schorsch and Associates Sued; Alleged to Have Looted RCS Capital and Public Investors

March 28, 2017 | Silver Law Group

A group of investors has accused former head of Cetera Financial Group Nicholas “Nick” Schorsch and his partners of shaving off revenues of RCS Capital (“RCAP”), a company once controlled by Schorsch that went into bankruptcy, for their own benefit.

The complaint was filed on March 8, 2017 by RCS Creditor Trust as a damages suit in the RCAP bankruptcy case, according to an InvestmentNews report. The complaint accuses Schorsch and some of his associates and companies of essentially looting RCAP and its public investors. According to a Law360 report, RCS Creditor Trust ties many of its allegations of “disloyal self-dealing” to Schorsch.

The complaint accuses the Schorsch and his associates of breaching or aiding breaches of fiduciary duty, duty of care, and duty of loyalty, as well as wasting corporate assets. Further, it alleges that nearly $1 billion in public stakeholder investments in RCAP were destroyed. One of the individuals named in the suit, Brian S. Block, was arrested on conspiracy, securities fraud and related charges in September 2016 in connection to a Schorsch-owned company, American Realty Capital Properties.

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.