Securities Lawyer Blog | Victim of Securities Fraud?

May/15

20

FINRA Orders UBS AG to Buy Back Investor’s Puerto Rico Bond Fund for $1 Million

UBS AG was ordered by the Financial Industry Regulatory Authority (FINRA) to buy back an investor’s Puerto Rico bond fund for $1 million. A San Juan FINRA arbitration panel found two UBS units liable to the 66+ year-old investor whose losses were $737,000 only four years after he opened his account in 2011. This FINRA ruling is one of the first involving the risky bonds. Also, on May 14th. a FINRA arbitration panel ordered UBS AG to pay an investor $200,000 for losses in the PR bond funds.

According to Rueters, some of the PR bond funds lost one-half to nearly two-thirds of their value between March 2011 and October 2013. This was due to fears about the size of Puerto Rico’s debt and the weakness of its economy. The island has still not recovered.

UBS is defending against hundreds of arbitration claims filed with FINRA, seeking more than $900 million.

Securities attorney Lars Soreide of Soreide Law Group, is still actively filing cases against broker/dealers for investors who suffered substantial losses from Puerto Rican bond investments. Call (888) 760-6552, for a free consultation if you’ve invested in Puerto Rico Bond Funds.

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Soreide Law Group has filed a $15 million FINRA arbitration claim against Ameriprise Financial, Palm Beach Gardens, Florida, and one of it’s brokers, Joseph Grund, on behalf of two South Florida retirees. The losses occurred from 2009 – 2014 when their accounts dropped 84.7%, but yet the broader market indexes went up 50%. Broker Joseph Grund, bought and sold over $146 million in the retirees accounts with a large position in both Arch Coal and Allied Nevada Gold Corporation.

Securities Attorney, Lars Soreide, has filed accusations against Ameriprise Financial and broker, Joseph Grund, of fraud, breach of fiduciary duty, negligent supervision, breach of contract, negligence, and violations of the Florida Investor’s Protection Act. The retirees are seeking $30 million in losses plus attorneys fees. Also, the claim alleges Ameriprise Financial failed to supervise Joseph Grund. Allegedly, Ameriprise Financial and Joseph Grund received $2,000,000 dollars in commissions and margin interests from the retirees’ accounts. In June of 2014, Ameriprise awarded Joseph Grund their Diamond Ring Club Award for being a top performing advisor, even though the two retirees lost their entire life savings. There have been no responses yet from Ameriprise Financial and Joseph Grund.

For more information on this or any other issue, call the Florida-based Soreide Law Group for a no-cost consultation with an attorney at: (888) 760-6552.

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BRYAN A. CARNAHAN (CRD# 3103811), a former broker with Huntington Bank in Hilliard, Ohio, was barred by FINRA early in May for allegedly stealing approximately $170,000 from a client’s brokerage account to cover his other clients’ investment losses.

FINRA reported that Carnahan had his client withdraw funds from her bank account and get cashier’s checks for supposed investments. Then Carnahan had the cashier’s check re-issued in multiple checks payable to his own personal accounts and the accounts of at least 13 clients who had investment losses. He allegedly deposited $149,000 into his client accounts and kept the remainder for himself. According to FINRA, this occured between September, 2013 through March 2015.

BRYAN A. CARNAHAN was permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public. According to FINRA’s BrokerCheck, he was previously registered with the following firms:

02/1999 – 03/2015 THE HUNTINGTON INVESTMENT COMPANY (CRD# 16986) – COLUMBUS, OH
08/1998 – 12/1998 JOHN HANCOCK DISTRIBUTORS, INC. (CRD# 468) – BOSTON, MA

If you suffered investment losses due to your broker or your financial advisor, call Soreide Law Group for a no-cost consultation on how to potentially recover those losses: 888-760-6552. We represent clients nationwide before FINRA.

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May/15

12

Former Rhode Island Broker Charged in Alleged $11 Million Ponzi Scheme by SEC

PATRICK E. CHURCHVILLE (CRD# 2245842), a 46 year-old Barrington, Rhode Island former broker, was charged May 8, 2015, by the SEC in an alleged $11 million Ponzi scheme which occured from December 2010 – November 2012. Churchville faces several charges connected with his ClearPath Wealth Management firm, which included diverting $2.5 million in 2011 to buy himself a house, allegedly investing nearly $1 million of clients’ money in a pharmaceutical product incubator fund for his own benefit, and transferring $30,000 into his own personal bank accounts. Additionally, some of the money lost by Churchville was lost in another $23-million Ponzi scheme according to the court documents.

According to the SEC, allegedly Churchville tried to cover up his shortfalls through a complex series of financial steps and tell his investors that at least a portion of their investments were intact, when, in fact, the money was gone.

The SEC is seeking from the federal court in a 110-point complaint, temporary and permanent injunctions against Churchville and ClearPath, and the SEC is seeking the return of investors’ money, unspecified fines, and interest payments.

PATRICK E. CHURCHVILLE, according to FINRA’s BrokerCheck, was previously registered with the following firms:

08/2009 – 02/2011 SPIRE SECURITIES, LLC (CRD# 144131) – PROVIDENCE, RI
04/2007 – 12/2007 MORGAN STANLEY & CO., INCORPORATED (CRD# 8209) – PROVIDENCE, RI
09/2004 – 04/2007 MORGAN STANLEY DW INC. (CRD# 7556) – PROVIDENCE, RI
03/2002 – 10/2004 WACHOVIA SECURITIES, LLC (CRD# 19616) – ST. LOUIS, MO
02/1997 – 04/2002 UBS PAINEWEBBER INC. (CRD# 8174) – WEEHAWKEN, NJ
09/1992 – 02/1997 OPPENHEIMER & CO., INC. (CRD# 630) – NEW YORK, NY

If you’ve experienced investment losses in this or other Ponzi-like schemes, call Soreide Law Group for a free consultation on how to potentially recover your losses at 888-760-6552. We represent our clients nationwide.

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The following summation of information was obtained by Soreide Law Group (888-760-6552) from FINRA’s Website under “Disciplinary and Other Actions April 2015.”

EDI Financial, Inc. (CRD #15699, Irving, Texas)

was censured and fined $100,000 by FINRA for allegedly failing to adopt and implement supervisory systems and procedures reasonably designed to achieve compliance with EDI Financial’s suitability obligations for the solicitation and sale of private placements.

FINRA’s findings stated that despite the risk and illiquidity of private placements, EDI Financial did not have written policies or procedures concerning the proportion of a client’s assets that could be allocated to private placements and EDI Financial’s representatives had insufficient written guidance for determining whether and how much to recommend that a particular client invest in a private placement. Also, because EDI Financial lacked adequate systems and procedures for monitoring the proportion of each client’s assets that was invested in private placements, if a client invested in multiple private placements, EDI Financial’s representatives and supervisors could not adequately determine whether the client’s assets were overly concentrated in private placements.

FINRA’s findings included that EDI Financial’s WSPs did not provide adequate guidance concerning how due diligence was to be documented, and EDI Financial failed to sufficiently document due diligence conducted on private placements. EDI Financial could not effectively supervise whether adequate due diligence was performed on private placements.

FINRA found that despite EDI Financial’s WSPs requiring switch letters, the firm failed to consistently obtain switch letters when clients switched between mutual funds. This prevented EDI Financial supervisors from confirming that clients received material facts regarding fees and charges incurred by customers from switching investments.

FINRA found that EDI Financial failed to timely provide a complete response to FINRA’s request for documents and information.
(FINRA Case #2012032643701)

Soreide Law Group represents clients nationwide. If you suffered significant financial losses in private placements call a Securities Arbitration Lawyer for a no-cost consultation on how to potentially recover your losses at 888-760-6552.

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Michael Willard Korson (CRD #2108802, Novi, Michigan)

was barred by FINRA for allegedly failing to timely and accurately notify his member firm of his outside business activities. Although Korson eventually provided notice to his firm and revealed that he received compensation from the outside business, he falsely stated when his involvement first began.

FINRA’s findings stated that Korson participated in private securities transactions, involving his outside business, with the sale of convertible debentures to firm clients and preferred stock to a non-client, without providing prior written notice to his firm and another member firm. Upon registering with one of the firms, Korson disclosed the business as an outside business activity, but then failed to provide prior written notice to the firm of an investment by the non-client in the outside business.

Also, FINRA’s findings stated that Korson misused his outside business’ investor funds by charging personal expenses to his outside business’ corporate credit card. FINRA’s findings also included that Korson’s wife opened a brokerage account in the name of the outside business away from his firm. Korson traded in the outside brokerage account without disclosing the opening of the account to his firm or disclosing his registration with his firm to the member firm where the account was opened. Instead, Korson falsely certified to his firm that he had disclosed all brokerage accounts held away from the firm.
(FINRA Case #2013036033801)

Michael Willard Korson, according to FINRA’s BrokerCheck, was previously registered with the following firms:

01/2014 – 07/2014 HBW SECURITIES LLC (CRD# 136959) – SOUTH LYON, MI
04/1991 – 02/2013 PFS INVESTMENTS INC. (CRD# 10111) – WIXOM, MI

This summation of information obtained from FINRA’s website “Disciplinary and Other FINRA Actions, April 2015,” ends here.

If you have experienced a financial loss due to your broker/financial advisor’s recommendations, call the Soreide Law Group for a free consultation with an attorney at: 888-760-6552.

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May/15

6

California Firm Fined and Censured by FINRA

Ascendiant Capital Markets, LLC (CRD #152912, Irvine, California)

was censured and fined $52,500 by FINRA for allegedly failing to record all terms and conditions on a customer order record and document time-in-
force; failed to record all terms and conditions on a customer order record and document the correct order receipt time; and failed to maintain a complete order record with the identification of the corresponding customer account name/account number.

FINRA’s findings stated that Ascendiant Capital Markets accepted orders from customers for execution in the pre-market session or post-market session without disclosing to such customers that extended-hours trading involves material trading risks, including the possibility of lower liquidity,
high volatility, changing prices, unlinked markets, an exaggerated effect from news announcements, wider spreads and any other relevant risk.

Ascendiant Capital Markets failed to submit to the Over-the-Counter (OTC) Reporting Facility the correct Related Market Center Indicator for a non-tape report. Ascendiant Capital Markets effected a short sale in an equity security for its own account without borrowing the security, or entering into a bona-fide arrangement to borrow the security; or having reasonable grounds to believe that the security could be borrowed so that it could be delivered on the date delivery is due; and documenting compliance with Securities Exchange Act of 1934 Rule 203(b)(1) of Regulation SHO.

Ascendiant Capital Markets executed short sale orders and failed to properly mark the orders as short, and incorrectly designated its compensation as “commission” on a customer confirmation for a transaction in which it acted in a principal or riskless principal capacity. Ascendiant Capital Markets also failed to transmit Reportable Order Events (ROEs) to the Order Audit Trail System (OATS TM) over 342 business days.

FINRA’s findings also stated that Ascendiant Capital Markets failed to establish, maintain and/or enforce adequate policies and procedures related to compliance with Regulation NMS.
(FINRA Case #2013035829502)

This summation of information obtained from FINRA’s Website “Disciplinary and Other Actions April 2015, ends here.”

Soreide Law Group represents our clients nationwide. If you experienced investment losses due to your broker/dealer or financial advisor, call a Securities Arbitration Lawyer for a no-cost consultation on how to potentially recover your losses at 888-760-6552.

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The Financial Industry Regulatory Authority (FINRA) has barred Aaron Parthemera, a Fort Lauderdale Wells Fargo financial advisor for allegedly engaging in a several outside businesses, and allegedly running Club Play, a hip hop club in South Beach.

According to FINRA, between 2009 to 2013, Aaron Parthemer, acted as an advisor to a number of NFL and NBA players, allegedly failed to disclose his involvement in Club Play, an Internet branding startup, and a tequila marketing operation. Parthemer was at Morgan Stanley Wealth Management until 2011. During that time he allegedly made unapproved loans to clients in connection with Club Play, and referred clients to invest in the branding startup.

FINRA stated that Parthemer managed operations at Club Play until January 2012, and loaned $400,000 to three professional athletes who were also owners at Club Play and clients of Wells Fargo. The loans violated firm policies against loaning clients money. Parthemer allegedly had eight of his NBA and NFL clients invest over $3 million in the Internet company known as GVC run by a friend of Parthemer. FINRA’s rules prohibit brokers/financial advisors from participating in private securities transactions without authorization and disclosure to their firms.

FINRA also claims Parthemer provided false information regarding his outside business activities.

According to FINRA’s BrokerCheck, Aaron Parthemera is currently registered with the following firm:

WELLS FARGO ADVISORS, LLC (CRD# 19616)
200 E LAS OLAS BLVD, STE 1820
FORT LAUDERDALE, FL 33301

Aaron Parthemera was previously registered with the following firms:

06/2009 – 11/2011 MORGAN STANLEY SMITH BARNEY (CRD# 149777) – FT. LAUDERDALE, FL
11/2006 – 06/2009 CITIGROUP GLOBAL MARKETS INC. (CRD# 7059) – FT. LAUDERDALE, FL
04/1998 – 11/2006 BANC OF AMERICA INVESTMENT SERVICES, INC. (CRD# 16361) – FT.LAUDERDALE, FL
05/1997 – 04/1998 BARNETT INVESTMENTS, INC. (CRD# 14897) – JACKSONVILLE, FL
10/1995 – 03/1997 MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (CRD# 7691) – NEW YORK, NY
10/1994 – 10/1995 L.C. WEGARD & CO., INC. (CRD# 3722) – NEW YORK, NY

Pompano Beach, Florida-based Soreide Law Group, (888) 760-6552, represents clients nationwide before FINRA. Please call for a free consultation with an attorney on how to potentially recover your investment losses.

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The Financial Industry Regulatory Authority (FINRA) announced that Avenir Financial Group, a New York-based broker-dealer, its CEO Michael Clements, and registered representative Karim Ibrahim (aka Chris Allen) consented to an order halting further fraudulent sales of equity interests in the firm and promissory notes pending a hearing on fraud charges relating to the same offerings. The sales, which occurred from October 2013 to present, were often to their elderly clients. FINRA also permanently barred registered representative Cesar Rodriguez for fraud and for improperly using $77,000 of investor funds for personal expenses in a related offering.

According to FINRA, Avenir and its branch offices raised more than $730,000 in 16 issuances of equity or promissory notes, mostly to the firm’s elderly clients.

FINRA charges that Avenir, Clements and Ibrahim committed fraud in the sale of promissory notes. FINRA alleges that in November 2013, Avenir and Ibrahim defrauded a 92-year-old investor by failing to disclose that Avenir was in financial trouble at the time they sold a 5 percent equity interest in the firm to him for $250,000. FINRA alleges that the document was misleading because it omitted information that a few weeks earlier Avenir offered ownership to other investors at different terms and other investors paid lower prices for their ownership interest, yet there was no basis for the changes in price. FINRA further charges that Clements aided and abetted that fraud by instructing Ibrahim regarding the sale price and offering. FINRA alleges Ibrahim was aware of the firm’s financial problems because his unfunded margin trading on behalf of another customer led to a $196,000 margin call and a request by Clements for all Avenir representatives to raise money.

If you or an elderly family member were victims of this or any other fraud due to your broker/financial advisor, call the Soreide Law Group for a no cost consultation on how to potentially recover your losses at 888-760-6552. We represent clients nationwide before FINRA.

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Apr/15

28

S&P Lowers Puerto Rico’s General Obligation Bond Rating to CCC+

On Friday, April 24, 2015, the credit-rating agency, Standard & Poor’s (S&P), downgraded Puerto Rico’s general-obligation bonds further into “junk” level territory from a B rating down to a CCC+ grade, making it even more difficult for the financially distressed island to borrow money and dig out from its severe financial problems. This grading means S&P grades the Puerto Rican debt four notches above the lowest possible grade of “default.”

S&P said in a statement, “We base the downgrade of Puerto Rico’s tax-supported debt on our view that the commonwealth’s market access prospects have further weakened and Puerto Rico’s ability to meet its financial commitments is increasingly tied to the business, financial, and economic conditions on the island. Absent improvement in those conditions, we believe debt and other financial commitments will be unsustainable.”

Lars Soreide, of Soreide Law Group, has been quoted in several national publications regarding the lawsuits he has filed against Puerto Rican bond sales on behalf of his clients. Please see some the blog articles regarding Soreide Law Group and the lawsuits filed at:

http://www.securitieslawyer.com/securitieslawyerblog/?p=4905

http://www.securitieslawyer.com/securitieslawyerblog/?p=3907

http://securitieslawyer.com/ubspuertoricofundloss.html

Soreide Law Group (http://www.securitieslawyer.com) is currently representing clients with significant losses in their Puerto Rico Bond investments, both nationally and internationally. Call Soreide Law Group (888) 760-6552 for a free consultation on how you may be able to recover your losses.

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