Securities Lawyer Blog | Victim of Fraud?

TAG | broker churning accounts

Feb/13

18

New Jersey Broker Fined and Suspended by FINRA for Excessive Trading in Clients’ Accounts

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The following information is from FINRA’s website under “Disciplinary and Other FINRA Actions, February, 2013.”

Richard Grant Cody (CRD #2794558, Registered Representative, Wall, New Jersey)

was fined a total of $27,500 and suspended from association with any FINRA member in any capacity for one year. The United States Court of Appeals for the First Circuit affirmed an SEC decision, which had sustained a NAC decision.

The FINRA sanctions were based on findings that Cody engaged in unsuitable and excessive trading in customers’ accounts, provided his customers with account summaries that contained materially misleading account values
and failed to timely update his Form U4 to disclose customer settlements.

This suspension is in effect from January 7, 2013, through January 6, 2014. (FINRA Case #2005003188901)

This ends the information from FINRA.

If you or a family member experienced financial losses due to your broker ‘churning’ your accounts, call for a free consultation with an attorney at, 888-760-6552, or visit our website: http://www.securitieslawyer.com.

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Feb/13

8

FBI, SEC and FINRA Investigating Tommy Belesis’ Firm, John Thomas Financial

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In an article, Feb. 7, 2013, in the New York Post, it was reported that (broker-dealer owner), Anastasios “Tommy” Belesis’ firm, John Thomas Financial, is being investigated by the FBI, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority Inc. (FINRA).

Mr. Belesis has made many media appearances on cable business/financial shows.

According to FINRA’s BrokerCheck, S.W. Bach & Co. fired him in 2005 for “inaccurate representation of identity to customer.” In 2001, a client sued him and a firm for $750,000 for churning and a FINRA arbitration panel later awarded the client $259,000. Mr. Belesis and firms he’s worked for have settled two other FINRA arbitration claims for nearly $100,000. Belesis paid $46,000 as his share of the settlements.

John Thomas’ FINRA record shows failures to disclose fees to clients about transaction charges. Arkansas Securities Department fined John Thomas $25,000 last year for allegedly not disclosing to clients handling fees for stock orders. The Connecticut Banking Department fined the firm $20,000 over similar failures on fee disclosures, and FINRA fined it $275,000 for “postage and handling” violations.

If you have been a client of Anastasios “Tommy” Belesis, and/or his firm, John Thomas Financial, and experienced financial losses call a securities lawyer at (888) 760-6552 or visit http://www.securitieslawyer.com.

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Sep/12

18

Lawsuit Alledges Harvey Kadden, a Top Broker at MSSB, is Churning Customer Accounts

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Clifford Jagodzinski, formerly of Morgan Stanley Smith Barney LLC (MSSB), claims he was fired for blowing the whistle on one of the firm’s newest wealth managers, Harvey Kadden. According to the complaint, filed in U.S. District Court in the Southern District of New York, Kadden “was flipping preferred securities in a manner that was generating tens of thousands of dollars in commissions but causing losses or minimal gains for his clients and exposing (them) to unnecessary risks.”

Harvey Kadden, who was with Merrill Lynch for 30 years, listed regularly on the Barron’s Top 1,000 advisers list, joined MSSB October, 2011. According to the lawsuit, he received a $25 million guarantee for signing on.

“Consequently, [MSSB] had very significant earnings expectations for Harvey Kadden and did not want to take any steps to jeopardize his book of business,” the complaint alleges. Mr. Jagodzinski was thus “told to stop investigating Mr. Kadden,” according to the complaint.

The Dodd-Frank Act prohibits retaliation against whistle-blowers, according to the complaint filed by Mr. Jagodzinski.

Harvey Kadden manages assets in excess of $1 billion.

MSSB acknowledged that Mr. Jagodzinski was asked to investigate certain trades in customer accounts served by Harvey Kadden’s team and that he had discussed those trades with his superiors. The firm, however, denied the other allegations.

From December 2011 to April, when he was fired, Mr. Jagodzinski reported several violations by brokers. They included improper trades of Treasuries by another MSSB employee, the failure of some of the firm’s brokers to register home offices as alternate work locations and drug abuse by one of the firm’s brokers.

“Finally, during a conversation during the week of April 4, Mr. Jagodzinski told Mr. Turetzky (his superior) that these violations should be reported” to the Financial Industry Regulatory Authority Inc., according to the complaint. “Mr. Turetzky bristled at this declaration, and less than 10 days later, Mr. Jagodzinski was fired.”

If you were a client of Harvey Kadden of MSSB, or another broker who may have been churning your accounts, 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 and complete our online form at: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Jun/12

18

FINRA Fined and Barred Delray Beach, FL Rep

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Alan Jay Davidofsky (CRD #1389312, Registered Representative, Delray Beach, Florida)

has been fined by FINRA in the amount of $11,741.78, which represents disgorgement, and he has been barred from association with any FINRA member in any capacity.

These sanctions were based on the findings that Davidofsky made unauthorized transactions in his customer’s account, controlled the customer’s Individual Retirement Account (IRA), and made excessive number of trades in the account. This was inconsistent with the customer’s financial circumstances and investment objectives. 

FINRA’s findings stated that Davidofsky implemented this high level of trading to benefit himself, not his customer. Davidofsky had lost accounts and was under increasing financial pressure to increase his numbers to meet his member firm’s expectations.

The findings also stated that Davidofsky excessively traded the customer’s account deliberately, thereby churning her account.

The decision has been appealed to the NAC, and the sanctions are not in effect pending the appeal.

(NRA Case #2008015934801)

This information was obtained on FINRA’s website,”Disciplinary and Other Actions, June, 2012.”

 

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: ww.securitieslawyer.com.

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Jun/12

18

Parkland, FL, Rep Fined $20,000 and Suspended by FINRA

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 Jeffrey Wayne Cimbal (CRD #2028791, Registered Principal, Parkland, Florida) 

has been fined $20,000 and suspended from association with any FINRA member in any principal capacity for five months.

Without admitting or denying the findings, Cimbal consented to the described sanctions and to the entry of findings that he served as his member firm’s CCO, and for more than three years, was responsible for reviewing transactions to ensure that customers received best execution, and to conduct surveillance for trading patterns that could potentially violate FINRA rules or federal securities laws.

The FINRA findings said despite this responsibility, Cimbal did not detect two representatives’ many corporate debt transactions that did not provide customers the best execution and/or involved interpositioning of an affiliated account. The net result was that the firm and/or accounts of its affiliates realized excessive trading profits.

These findings also stated that Cimbal did not take sufficient supervisory action to prevent the trading pattern from continuing during the relevant time period.

Jeffrey Way Cimbal’s suspension is in effect from May 21, 2012, through October 20, 2012.

(FINRA Case 2010023001601)

This information was on FINRA’s website under “Disciplinary and Other FINRA Actions, June, 2012.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented numerous clients nationwide. If you or a loved one sustained investment losses due to Jeffrey Way Cimbal, your stock broker/dealer, 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: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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May/12

23

FINRA Arbitration Filed Against Douglas A. Leone and Newport Coast Securities

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Soreide Law Group, PLLC, is currently investigating claims against Douglas A. Leone of Newport Coast Securities, Irvine, California.  Leone was previously, according to FINRA’s Brokercheck,  located in New York. Currently, according to FINRA’s Brokercheck, Leone has 3 pending customer disputes against him and has other cases that have been settled in arbitration.  The alleged charges against him that were settled in arbitration included: misrepresentations, fraud, deceit, breach of contract, unauthorized trades, and excessive commissions, to name a few.
 
Soreide Law Group recently filed a FINRA arbitration against Newport Coast Securities and their registered representative Douglas Leone. The allegations relate to excessive trading or account churning.
 
If you were a client of Doug Leone and you feel that your account was excessively traded 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: http://www.securitieslawyer.com.
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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May/12

18

FINRA Awards Nearly $1million; ‘Targeting’ Alleged

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Patel v. Balchandani, FINRA ID # 11-00973 (Louisville, KY, 5/4/2012) -

A FINRA Arbitration Panel awarded approximately $1 million, including $200,000 in punitive damages, to a pair of customers who alleged a churning scheme targeting Indian-Americans.

The following is part of the “Case Summary” that was presented on FINRA’s website:

“Claimants asserted the following causes of action: breach of fiduciary duty, churning; misrepresentations, omission of material facts, suitability; fraud; negligence; and control person liability. The causes of action related to Claimants’ allegation of being targeted as part of an ethnic (“Indian”) affinity fraud. Claimants alleged that Respondents have targeted Claimants and other Indians living in the United Stated in a scheme of using excessive margin calls and trading to generate huge commissions, mark-ups, interest and fees for Respondents and to the detriment of their unsuspecting clients. “

The Claimants are: Chhaganbhai Patel and Jashuben C. Patel

These allegations were made against (Respondants):

Shondeep Sajan Balchandani, Naveen K Bhagwani, Niyukt Raghu Bhasin, Michael Owen Brown, Irving Marvin Burstein, Rabinder Deshmukh, NSM Securities, Inc., and Sterne, Agee & Leach, Inc.

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: http://www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Apr/12

16

JUDGE ORDERS FORMER MASSACHUSETTS BROKER TO PAY OVER $500,000 FOR DEFRAUDING 9/11 WIDOW

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THE FOLLOWING IS AN ARTICLE FROM THE SEC’S WEBSITE:

“The Securities and Exchange Commission (SEC) announced that a federal judge in Massachusetts entered a final judgment on March 14, 2012 ordering defendant James J. Konaxis, formerly a registered representative of Beverly-based broker-dealer Sentinel Securities, Inc., to disgorge more than $483,000 in commissions earned over a two-year period by defrauding a former customer who was left widowed by the September 11, 2001 terrorist attacks. Together with prejudgment interested and a civil penalty, Konaxis has been ordered to pay a total of $514,954. In granting the Commission’s motion for monetary remedies, Judge Denise L. Casper found that Konaxis was liable in the amount of all commissions earned from three of the victim’s accounts over a two-year period because he “misled the victim into thinking her investments were safe, while churning (e.g., excessively trading) her funds in a manner contrary to her interests[.]”

According to the Commission’s complaint, Konaxis violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder by excessively trading his customer’s funds while knowingly or recklessly disregarding her interests. During a two-year period, the Commission alleges that the value of his customer’s accounts (funded by payments made to the victim and her family by the September 11th Victim Compensation Fund) decreased from approximately $3.7 million to approximately $1.6 million, much of which was due to Konaxis’s investments and the resulting commissions paid to Konaxis.

At the time the Commission’s complaint was filed, Konaxis entered into a partial settlement with the Commission, in which he consented to be enjoined from future violations of the antifraud provisions of the Securities Act and Exchange Act, and to be barred from participating in any offering of penny stock. In addition, as part of the settlement, Konaxis agreed to be barred in related administrative proceedings from any future association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent. However, the Commission also filed a motion with the Court seeking disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of a civil penalty, which Konaxis opposed.

After a hearing on March 1, 2012, Judge Denise L. Casper issued an order granting the Commission’s motion for monetary remedies, including disgorgement in the full amount of Konaxis’ commissions earned over a two-year period from the three accounts churned, totaling $483,460.23, prejudgment interest in the amount of $31,494.44, and a civil penalty of $10,000, for a total of $514,954.”

END OF SEC’S ARTICLE

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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Jul/11

21

FLORIDA OFR FINES BROWARD COUNTY INVESTMENT ADVISER $117,500 AND REVOKES REGISTRATION FOR DEFRAUDING VULNERABLE INVESTOR

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TALLAHASSEE, Fla. – On The Florida Office of Financial Regulation’s website it was announced, July 21, 2011, that The Florida Office of Financial Regulation (OFR) issued a final order on May 26, 2011, against investment adviser James Paul Birmingham (“Birmingham”) (CRD # 222511) and his Broward County companies Birmingham Investments and Birmingham Capital Advisors, LLC for multiple violations of the Florida Securities and Investor Protection Act (“Act”), Chapter 517, Florida Statutes.  Under Florida law, OFR has the authority to take enforcement actions against any firm or individual found to be in violation of the Act.  The registrations of both Birmingham and Birmingham Investments were revoked and fines of $117,500 were assessed against Birmingham and his two firms.  The time within which Birmingham could appeal the OFR final order expired on June 27, 2011.
 
The OFR reports that the order found that Birmingham misled a long time family acquaintance, with limited investment experience, to invest his incapacitated mother’s assets with Birmingham.  Birmingham then excessively traded the assets, resulting in substantial investor losses.  Birmingham’s trading pattern was inconsistent with the client’s wishes to preserve his mother’s assets, because the client’s mother was incapacitated and relied on her investments to survive financially.
 
“Investors cannot be too careful with whom they entrust their hard-earned money.  Once again, OFR had to take away a firm’s and individual’s registration to do business in Florida, because they took advantage of a trusting victim, with whom they had a long-time relationship,” OFR Commissioner Tom Cardwell said.  “When it comes to investing their money, investors should always be aware of the potential for greed, even with purported professionals they know.  Be vigilant about your investments, ask questions and be sure you know what is happening with your money and why.  After all, it’s your money, not the broker’s or adviser’s money.  Report anything suspicious to OFR, or the state securities regulator in your own state, if you live outside of Florida.”
 
According to the OFR article, Birmingham had been designated in 2005 to be the mother’s guardian by the Circuit Court for Miami-Dade County.  The guardianship was to provide prudent financial management of her property, as provided to incapacitated Floridians under the law.  Birmingham was granted authority to invest the mother’s money and trade the mother’s account for eight months without consulting anyone.
 
It was reported that the account was opened in March 2008, the mother’s assets invested with Birmingham totaled $375,000, which was most of the mother’s net worth.  While Birmingham managed the account over the next year, Birmingham excessively traded the mother’s brokerage account resulting in a loss of $122,000.
 
OFR reports that Birmingham and his firm were found to have committed multiple violations of the Act, including:
• Securities fraud
• Excessive trading of the mother’s account
• Failing to account for all received property
• Making unsuitable recommendations
• Violating OFR’s safekeeping requirements for advisers with custody of client funds
 
The Florida OFR’s Division of Securities recommends that investors do their research before investing with or having an investment or securities firm or representative manage the investor’s money. 
This article was obtained on Florida’s OFR’s website.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have become a victim of James Paul Birmingham of Florida, Birmingham Investments, or Birmingham Capital Advisors, LLC, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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