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Archive for February 2012

Feb/12

29

Weston, FL, Rep Sanctioned by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Jeffrey Scott Donner (CRD #2631248, Registered Principal, Weston, Florida)
 
was barred from association with any FINRA member in any capacity. The sanction was based on findings that Donner executed several unauthorized transactions in customers’ accounts at his member firm without their knowledge and consent.
 
These findings stated that Donner exercised discretion in a customer’s account without written authorization; Donner neither sought nor obtained the customer’s or his member firm’s authorization.
 
These findings also stated that Donner used his personal email account to send business-related emails to customers and admitted to FINRA that he used an unapproved, personal email account to send emails to and receive emails from his customers.
 
The findings also included that his firm’s WSPs required that the firm review email communication between registered representatives and customers, but Donner did not forward any of these emails to the firm for review. FINRA found that Donner’s use of his personal email account prevented his firm from accessing these customer communications and complying with its obligations to review correspondence between registered representatives and their customers, and from complying with its recordkeeping requirements.
(FINRA Case #2009020228501)
The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide.
For a free consultation with an attorney, please call 888-760-6552, or visit our website at: www.securitieslawyer.com.

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Feb/12

28

Palm Harbor, FL, Rep Barred by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Neal Seth Smalbach (CRD #1459854, Registered Principal, Palm Harbor, Florida)
 
submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity.
 
Without admitting or denying the allegations, Smalbach consented to the described sanction and to the entry of findings that he fraudulently misrepresented the risks and omitted material facts, for the sale of an oil and gas private placement
investment to retired, senior citizen customers. The findings stated that Smalbach claimed to have conducted his own due diligence, which included reviewing the PPM, subscription agreement, promotional material and speaking with employees of the issuer and firm due diligence personnel.
 
These findings also stated that Smalbach told investors that the investment was safe and high-yielding, which was false and misleading, and Smalbach virtually guaranteed his customers a yearly dividend and the return of their principal after three years but omitted telling them that the company had no significant assets, no current cash flow, and no prior operating history which was disclosed in the subscription agreement and PPM.
 
In addition, FINRA determined that Smalbach’s recommendations were unsuitable to unaccredited customers in light of the customers’ age, limited investment experience, conservative risk tolerance and need for the preservation of principal and also unsuitable for accredited investors because of his misrepresentations and omissions of material fact.
 
These findings also included that Smalbach’s member firm required customers to complete a client information new account form that asked for customers’ contact information, investment experience, risk tolerance, investment objectives, net worth, annual income, liquid net worth, retirement horizon and other background information, and to complete subscription agreements the firm kept and maintained, but Smalbach asked customers to sign blank information forms and subscription agreements and initial risk and financial disclosures on the subscription agreement without giving some of the customers the opportunity to read what they were signing. FINRA found that Smalbach had an administrative assistant complete the forms with false information Smalbach provided, which enabled him to shroud unsuitable transactions from the firm’s supervisory review.
 
Moreover, FINRA found that Samlbach falsified client information new account forms and subscription agreements that the firm kept and maintained caused its books and records to be inaccurate. FINRA also found that as a result of these fraudulent misrepresentations, omissions and acts, Smalbach caused customers to sustain approximately $840,116 in net out-of-pocket losses on the $925,000 investment they purchased, and Smalbach received $74,000 in gross commissions from his activities. Furthermore, FINRA found that Smalbach failed to adequately respond to FINRA requests for information and documents.
(FINRA Case #2010021972801)
 

The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide.
For a free consultation with an attorney, please call 888-760-6552, or visit our website at: www.securitieslawyer.com.

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Feb/12

28

The SEC Warns Firms Regarding Policing of Unauthorized Trades

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In a February 28th., 2012 article written by Liz Skinner for InvestmentNews.com, Skinner writes that the top securities regulator in the U.S. wants investment advisers and brokers to take a closer look at certain trading behaviors to help root out unauthorized trading in accounts.

The Securities and Exchange Commission (SEC) said Monday in a risk alert that changes in trading patterns, a high volume of trade cancellations or corrections, manual trade changes and unexplained profits for a particular trader or client are all conditions that could warrant scrutiny.

Skinner goes on to say that unauthorized trades might include rogue trades in client or proprietary accounts, creation of records of sham transactions or trades that exceed risk tolerances, the commission noted. Perpetrators could include traders, assistants on trading desks, portfolio managers, brokers, risk managers, advisers or other personnel — even those in administrative positions in the back office.

The InvestmentNews.com article said the alert, issued by the Office of Compliance Inspections and Examinations, said firms should review their compliance and supervisory procedures to see where improvements could be made. The regulator said such heightened oversight might include stress testing, independent trading reviews and possibly policies that would not allow traders to have remote access to trading accounts. Firms also should consider how compensation and other incentives are aligned with “responsible risk-taking,” the alert said.

Todd Cipperman, a compliance attorney in Wayne, Pa., said it’s noteworthy that the commission’s exam staff is taking on this issue. Typically, rogue trading is addressed by the Financial Industry Regulatory Authority Inc., the self-regulatory organization for brokers writes Skinner.

In noting that advisers and brokers have different regulatory requirements, the alert stated that both professions face “financial and reputational losses” from unauthorized trading.

“Unauthorized trading is not a new problem, and the risks it poses should be a perennial concern to financial firms as well as to regulators,” said Carlo di Florio, director of OCIE.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
 
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Feb/12

28

Florida Rep Fined and Suspended by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Charles Rainsford Marks Jr. (CRD #4727907, Registered Representative, South Jacksonville, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which he was fined
$5,000 and suspended from association with any FINRA member in any capacity for 10 business days. The fine must be paid either immediately upon Marks’ reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.
 
Without admitting or denying the findings, Marks consented to the described sanctions and to the entry of findings that he exercised discretion in the accounts of customers who had authorized him to use discretion, but without their written authorization and without his member firm’s acceptance, in writing or otherwise, of the accounts as being discretionary.
 
These findings stated that Marks exercised discretion in a customer’s accounts without written authorization by executing a number of trades without first contacting the customer and without his firm’s prior approval. The findings also stated that Marks exercised discretion in another customer’s accounts by selling shares in several mutual funds valued at approximately $10,000 and reinvesting the proceeds in various stocks, without the customer’s written authorization and without his firm’s prior approval. The suspension was in effect from December 19, 2011, through January 3, 2012.
(FINRA Case #2010021318501)
 
The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. For a free consultation with an attorney, please call 888-760-6552, or visit our website at:  www.securitieslawyer.com.

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Feb/12

23

Hallandale, FL, Rep Fined and Suspended by FINRA

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 The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”

Jordan Alan Linn (CRD #2664439, Registered Representative, Hallandale, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which he was fined $2,500 and suspended from association with any FINRA member in any capacity for 30 days. The fine must be paid either immediately upon Linn’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.
 
Without admitting or denying the findings, Linn consented to the described sanctions and to the entry of findings that he failed to amend his Form U4 to disclose a material fact. 
 
This suspension is in effect from January 17, 2012, through February 15, 2012. (FINRA Case #2010024718601)
 
The information from FINRA’s website has ended.
 
Securities Attorney, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide all consultations are free. To speak with an attorney call 888-760-6552, or visit our website at:

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Feb/12

23

Lars K. Soreide, of Soreide Law Group, Files a FINRA Arbitration Against National Securities Corporation for the Sale of Roundstone Healthcare Capital Partners

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Lars K. Soreide, of Soreide Law Group, PLLC, filed a FINRA arbitration in February of 2012, against National Securities Corporation alleging: negligence, negligent supervision, and breach of fiduciary duty, due to among other unsuitable investments, the sale of Roundstone Healthcare Capital Partners. Recently, Roundstone Healthcare Partners, and its affiliates, have filed a RICO suit against numerous defendants in “GREENFISH II, L.P. et al v. INTERNATIONAL PORTFOLIO, INC. et al,” which alleges that Roundstone and their affiliates were sold portfolios of medical receivables at artificially inflated values with no real ability to resell. Roundstone then, through stock brokers and financial advisors, sold these receivables to the general public states securities attorney, Lars K. Soreide.
 
Roundstone Healthcare Capital has purchased more than $2 billion of discounted portfolios of hospital patient-care receivables. The firm receives returns for its investors through collection efforts and the eventual resale of the portfolios into the secondary credit collection markets. Many brokers and broker dealers recommended this investment to their customers with doing little or no due diligence.
 
If you have invested in a Roundstone receivable through your stock broker or financial advisor contact Lars K. Soreide, today at (888) 760-6552 or visit our website at: http://www.securitieslawyer.com
 
 

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Feb/12

23

Did You Invest in These TICs?

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ATTENTION Tenant-in-Common (“TIC”) Investors.
 
If you have sustained losses in the following Tenant-in-Common (“TIC”) investments, call attorney Lars K. Soreide of the Soreide Law Group today at 1 (888) 760-6552 or visit securitieslawyer.com:
  • DBSI Tenant In Common (TIC) Investment
  • TSG Tenant in Common (TIC) Investment
  • Evergreen Tenant in Common (TIC) Investment
  • US Advisors Tenancies in Common TIC securities
  • NNN Tenancies in Common investments
  • Core Tenancy in Common
  • Grubb & Ellis Tenancy in Common Investment
  • Moody’s Tenancy in Common investment
  • Eliason Tenant in Common investment
  • Cottonwood Tenant in Common TIC investment
  • Cabot Tenancy in Common investment
  • Gemini Tenancy in Common investment
  • Oil and gas tenancies in common TICs from Striker Petroleum and Ridgewood Energy
 

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Feb/12

20

ETFs May be Great for Trading, Not so Great for Investors

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In a February 16th., 2012, article in InvestmentNews.com, Jason Kephart writes that John Bogle, founder of The Vanguard Group Inc., believes low-cost, passive indexes are the best way to invest — as long as they’re not offered through an exchange-traded fund.

“There’s no question that ETFs are the greatest trading innovation of the 21st century,” Mr. Bogle said today at the Bloomberg Portfolio Manager Mash-Up in New York. “But the question is, ‘Are they the greatest investment innovation?’ and the answer is ‘no.’”

Kephart writes that the ability to trade the funds intraday leads to bad decisions by investors, such as buying high and selling low, which cause them to underperform over the long run. Mr. Bogle even has qualms with the ETF providers for the influx of products, which he says makes it even more difficult for investors to pick the right fund. “There’s something like 2,000 ETFs now,” Mr. Bogle said. “That’s almost as many stocks as there are.”

John Bogle called out BlackRock Inc. for its aggressive product launches. “BlackRock is just making a muddy pool muddier,” he said. BlackRock’s ETF arm iShares offers more than 260 ETFs, seven of which were launched recently. That’s nearly 100 more than the next biggest ETF lineup. Vanguard currently offers 47 ETFs.

The InvestmentNews.com article goes on to say that Mr. Bogle does have one thing in common with BlackRock though — a bullish outlook on stocks over the next decade. He didn’t go as far as BlackRock’s chief executive Larry Fink did recently and claim that investors should be 100% in equities. He did say, however, that the case for stocks to outperform bonds over the next 10 years was “pretty simple.” Bond yields have a 90% correlation to 10-year returns, Mr. Bogle said. With bond yields at historic lows, that should translate to returns of no more than 3% or 4% over the next 10 years, he said. Stocks, meanwhile, should benefit from a strengthening U.S. economy and have returns closer to 7%, he said. “But not without a few bumps along the way.”

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations regarding TICs, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
 
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Feb/12

20

Deerfield Beach, FL, Rep Named in FINRA Complaint

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The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, January 2012.”
 
Andrew James Aragona (CRD #1320844, Registered Representative, Deerfield Beach, Florida)
 
was named as a respondent in a FINRA complaint alleging that he recommended
variable annuity switches to an elderly customer who had a moderate risk tolerance
and a primary investment objective of capital appreciation.
 
The complaint alleges that Aragona recommended that the customer consolidate several annuities into one annuity because it purportedly offered revocable annuitization and permitted the customer to leave money to her heirs in a tax-efficient manner; the annuity was purchased for $1,185,229 and the customer incurred approximately $69,000 in surrender fees for which Aragona received $67,500 in commissions.
 
This complaint also alleges that less than a year later, Aragona recommended that the customer switch the annuity for another one because he believed it provided more flexibility in volatile market conditions and allowed investments in subaccounts; the annuity was purchased for $1,017,195 and the customer incurred approximately $61,000 in surrender fees for which Aragona received $56,000 in commissions.
 
This complaint further alleges that because the customer incurred a total of
approximately $130,000 in surrender fees in less than one year, the costs outweighed any purported benefits; therefore, the recommendations were not suitable for the customer.
(FINRA Case #2010023963301)
 
The information from FINRA’s website has ended.
 
Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained  losses through Andrew James Aragona, of Deerfield Beach, FL, or similar losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
 
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Feb/12

19

Ex-broker Charged By FINRA with Many Offenses — Including Misusing Funds From Church

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In a February 17th., 2012, article for InvestmentNews.com, Bruce Kelly writes that a broker formally affiliated with Morgan Stanley Smith Barney LLC, Berthel Fisher & Co. Financial Services Inc. and LPL Financial LLC was arrested in Oregon this month for allegedly stealing $584,000 from three investors.

The now ex-broker, James Scott McKee, was charged Feb. 9 with four counts of aggravated theft in the first degree, according to a statement by the City of Eugene Police Department. McKee’s victims included an 81-year-old retiree and a local church, according to a complaint against Mr. McKee filed this Tuesday by the Financial Industry Regulatory Authority Inc.

Mr. McKee persuaded an LPL client in April 2007, to invest $400,000 in a real estate venture. Mr. McKee did not notify LPL or get the firm’s approval for the venture, according to the Finra complaint.

Kelly writes that after the client had a heart attack, she incurred significant medical expenses and contacted Mr. McKee to get her money back, according to Finra. In February 2008, Mr. McKee received two checks for $200,000 from the development and converted those funds to his own use, even though he told the client the funds were still invested in the development. So far, Mr. McKee has not returned the client’s investment, according to Finra.

McKee, 44, from February 2008 to the present,  “committed aggravated theft by deception and fraud with respect to securities or securities business,” according to the police statement.

Kelly writes that according to officials in Eugene, Mr. McKee’s actions included the sale of unregistered securities, the unauthorized liquidation of monies from investment accounts by a financial planner, the unauthorized deposit of those funds into the financial planner’s personal bank account and the subsequent concealment of that liquidation.

Mr. McKee was affiliated with LPL from November 2002 to September 2008 and with Berthel Fisher from that point until November 2010. He then joined Morgan Stanley, where he worked until this October when he was discharged, according to his profile on BrokerCheck.

Finra filed a complaint this week against Mr. McKee alleging that he defrauded investors from February 2006 until September 2011.

Kelly writes that Mr. McKee persuaded investors to invest in various undisclosed outside real estate ventures through material misrepresentations and omissions, according to the Finra complaint. Mr. McKee had a direct or indirect financial interest in those real estate ventures, according to Finra.

McKee’s other alleged victims included an owner of a small office supply company and other unsophisticated investors seeking conservative investments, according to the Finra complaint. Mr. McKee allegedly promised investors unreasonably high returns not supported by the underlying businesses and hid the precarious financial condition of those businesses, according to Finra. He also allegedly lied about how he would use the invested funds, and also allegedly improperly used or converted customer funds for his own benefit, according to the Finra complaint.

The InvestmentNews.com article adds that McKee used money from one customer to pay off another customer who threatened him with legal action for wrongfully taking funds in connection with an earlier transaction, according to Finra.

McKee also allegedly recommended that a local church invest in a local coffee shop in which he had a business interest, and knew that the investment was not consistent with church’s stated objectives and financial needs, according to Finra. He also allegedly falsified the church’s account documents to prevent his firm and securities regulators from discovering the unsuitable nature of the investments, according to Finra.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained  losses through James Scott McKee, or similar losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
 
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

 

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