Security Fraud in Florida and Nationwide

Securities Arbitration and Litigation Attorneys

Securities Fraud is widespread and as an investor, it is essential to be aware of the most common types of fraud so you can take preventative measures, maximize your gains and reduce the possibility of taking a loss. Not all types of fraud are the result of premeditated criminal schemes, though a lot of them are. Professionals in the securities industry are trained in making sound investments so even if they didn’t have the intention of compromising your investment, in the event they have or do in the future, those individuals can still be held responsible. Similar to the medical profession, a doctor who commits malpractice may not have had the intention of harming the patient, but if they do they can be held responsible in a civil court and even a criminal court if laws were violated in the process. This logic is also applicable to investment bankers, firms, stock brokers,etc.

The most common types of fraud are propagated by individuals who practice outright deception and those who are incompetent/irresponsible. Whether your losses are a result of reckless practices or flat out lies, the implications for you don’t vary as much as they do for the individual you trusted with your hard earned money. In either case, you can seek to recover losses suffered.

Investments Compromised due to Negligence

One of the most common types of fraud occurs when an inappropriate investment is made, this is related to the investors status and is usually a high risk investment. For example, a particularly high risk investment would not be right for a person who is retired or an investor with a conservative track record.

Another form of fraud is when the firm fails to perform their fiduciary duty to the investor, this is called failure to perform due diligence and commonly this results in the firm investing someones funds in a company they didn’t properly research.

Additionally, failure to diversify an investors portfolio is considered an inappropriate practice. Over concentrating funds in one investment is a poor practice that can result in losses for the investor.

Brokers Knowingly Compromising Your Investment

There a number of circumstances when brokers knowingly compromise your investment for their own personal gain. There are a wide range of practices from over-trading to selling penny stocks that are considered fraud. Excessive trading is when a broker trades with the primary intention of profiting from the commission they make as a result of the trade, this is called Churning and is illegal. To prove churning, attorneys will look at excessive activity, that is quantifiable by turnover rate and cost-equity ratio.

Misrepresentation occurs when a stockbroker fails to disclose pertinent information to an investor, which interferes with their ability to make a sound decision/ investment. Omitting facts or details about a company is a common cause of investment loss.

Investors who promise guaranteed returns on investments or claim that an investment will offer high returns with little to no risks are committing fraud. Shy away from brokers or firms that guarantee a return , usually one that is just too good to be true.

Finally, trading without permission of the investor is considered unauthorized trading and is also a poor practice. In certain circumstances, the broker does have permission to trade without consulting the investor only if they receiver prior authorization, these accounts are called discretionary accounts.

If you’ve suffered losses due to fraudulent practices, contact the The Law Offices Of Place & Handley, who are offering free case evaluations. Place and Hanley have experience recovering losses for sole investors and in class actions suits against major investment firms.

Categories: Broker Fraud.

John Thornes Barred for Stealing Money from Client Accounts

According to the U.S. Securities and Exchange Commission (SEC), John T. Thornes (CRD #2097878), formerly the owner of Thornes & Associates, Inc. and investment adviser registered in California, was permanently barred for misappropriating approximately $4.4 million from two (2) of his client’s accounts.

The SEC alleged that from December 2010 through January 2013, Thornes misappropriated approximately $4.4 million from two brokerage accounts: a trust account established for the benefit of a dementia patient in her eighties, for which Thornes was the trustee and broker; and a scholarship trust account established for the purpose of providing scholarships to local students, for which Thornes’ mother was trustee.

The SEC’s complaint alleged that Thornes exercised control over the client’s accounts in his capacity as either trustee or adviser to the trustee.  Allegations stated that Thornes used the misappropriated funds by transferring them to his friends, where the funds were then used to purchase a vacation home, a luxury vehicle, and to pay for gambling or gambling debts.

According to FINRA’s Broker Check, John Thornes has been permanently barred by both FINRA and the SEC from acting as a broker and investment adviser, or otherwise associating with firms that sell securities or provide investment advice to the public. Thornes was registered in the securities industry for twenty one (21) years, and was registered with the following firm(s):

THORNES & ASSOCIATES, INC. INVESTMENT SECURITIES

CRD #40868

REDLANDS, CA

08/1996 – 07/2013

FINRA expelled this firm in 07/2013

 

GORIAN THORNES INC.

CRD #10865

REDLANDS, CA

01/1992 – 09/1996

 

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options.  The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide.  If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses.  Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

 

Categories: Broker Fraud, Investor Protection, and Securities Broker Misconduct.

SEC Takes Action Against Colonial Tidewater and Signator Investors, Inc. Representatives for Defrauding Investors

According to a recent Press Release by the Securities and Exchange Commission (SEC), three Maryland men have recently agreed to settle charges that they defrauded investors in a company that owned and operated residential and commercial real estate. (See SEC Press Release 2015-167)

According to a complaint filed by the SEC, James R. Glover (CRD #1296755) formerly of Signator Investors, Inc., who was principally responsible for soliciting investors to invest in Colonial Tidewater Realty Income Partners, LLC, allegedly defrauded at least 125 investors out of more than $13 million through the sale of unregistered securities. Allegations stated that Glover lured investors through distribution of a private placement memorandum and oral representations that falsely overstated the financial condition of Colonial Tidewater, the liquidity of the investments, and the expected rates of returns. In further defrauding these investors, Glover allegedly took undisclosed commissions and other unjustified fees totaling more than $800,000. Although Glover was primarily responsible for personally interacting with most investors, representatives Sherman T. Hill, Cory D. Williams, and Gregory J. Mitchell were also allegedly involved in this fraudulent offering scheme.
According to the Complaint filed by the SEC, Hill, Colonial Tidewater’s co-manager, allegedly abused his position of managing the day-to-day operations of the business. Allegations stated that Hill prepared false valuations of Colonial Tidewater’s underlying properties and also omitted material facts about other properties in the various written materials used to solicit investments. (See U.S. District Court for the District of Maryland Case No. 1:15-cv-2401)

Furthermore, according to another Order by the SEC, Cory D. Williams, a former registered representative and investment adviser at Signator Investors, Inc., also allegedly assisted Glover in this fraudulent offering scheme with Colonial Tidewater by accepting the undisclosed and unjustified fees and commissions being taken by Glover. The SEC states that as an investment adviser Williams had a fiduciary duty to disclose material conflicts of interest to his clients and to act in their best interest, but he failed to do so. (See SEC Administrative Proceeding File No. 3-16754)

The SEC also alleged that Signator Investors, Inc. did not have policies and procedures reasonably designed to prevent and detect Glover and Williams’ misuse of Signator’s consolidated reports that showed that a large number of Signator’s customers were invested in Colonial Tidewater, which was a security not offered or approved by Signator. According to the SEC, had Signator had such policies in place, the fraudulent activity by Glover and Williams would have likely been uncovered. Furthermore, Gregory Mitchell of Signator, who was responsible for supervising Glover and Williams, allegedly failed to implement Signator’s policies and procedures for conducting reviews of files of brokerage customers and advisory clients, which contained correspondence, emails, and documents authorizing the fraudulent transfer of funds from Signator-approved investments to Colonial Tidewater. The SEC stated that the fraud would likely to have been detected had Mitchell reasonably implemented the firms policies and procedures regarding client file reviews.
As a result of such fraudulent activity, the SEC has taken action against Colonial Tidewater, Signator, and their affiliates.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Broker Fraud, Securities Broker Misconduct, and Securities Fraud.

How to Recover Damages Through Securities Arbitration

Florida Securities Arbitration Attorneys at Place & Hanley, PLLC

If you have investments with a financial corporation or brokerage firm, it’s important to monitor your investments to ensure they are being handled according to your agreement with the broker. If you suspect that some fraudulent activity might be going on, including any activity you didn’t consent to, you might want to consider resolving the issue through arbitration. Arbitration is how the majority of disputes in the securities industry are resolved (as opposed to a traditional courtroom trial) because it is a quick and inexpensive way to solve complicated concerns.

The process will typically take anywhere between 12-14 months from the time the claim was filed, but the timeframe will vary depending on certain factors (# of involved parties, complexity of issues, personal schedules, volume of necessary discovery) and can be expedited in special circumstances (due to medical concerns or age). The first step is to file a Statement of Claim with FINRA. This will include the details of the dispute, including identifying the Claimant (who filed the claim) and Respondent (who the claim is against), and the type of damages requested. The Claimant must also file an Arbitration Submission Agreement and pay a filing fee, which depends on the amount of the claim, number of discovery motions, number of hearing sessions and any postponements. Next the claim gets served to the respondent(s), who then file an “answer” which specifies any relevant facts and outlines their defense.

After the answer is received, the arbitrator selection process begins. The Claimant and Respondent are provided lists of arbitrators (generated from FINRA’s Neutral List Selection System) and get the opportunity to evaluate their potential arbitrators and eliminate those they don’t want on their case. Depending on the dollar amount of the damages requested and parties involved, 1-3 arbitrators may be assigned. Next, you will have a prehearing conference with all parties involved including the appointed arbitrators to determine the timelines for discovery, briefing & motions, and evidentiary hearing dates.

After all discovery and any motions have been filed it is time for the actual hearing, which is similar to a normal trial where the Claimant will try and prove their claim and the Respondent will try to defend their position. The hearing will typically include testimony from involved parties and any witnesses, and reviewing any evidentiary documents. After the hearing arbitrators will then deliberate and render their decision of award, which is issued within 30 days. There is no appeals process offered through FINRA, but district courts do have the power to overturn an arbitration award under certain circumstances. Brokerage firms & brokers then have 30 days to pay you, or they risk suspension by FINRA.

This is a highly simplified version of the securities arbitration process, intended to give a general overview of how to collect damages through arbitration. To learn more or to have your case evaluated for free by legal experts, please contact The Law Offices of Place and Hanley.

Categories: FINRA Arbitration.

Attention Edward Jones Customers Who Have Purchased Municipal Bonds

The Securities and Exchange Commission announced Edward Jones agreed to settle charges that they overcharged customers in new municipal bonds sales.  The firm also was charged with separate misconduct related to supervisory failures in its review of certain secondary market municipal bond trades.

An SEC investigation found that instead of offering bonds to customers at the initial offering price, Edward Jones  took new bonds into Edward Jones’ own inventory and improperly offered them to customers at higher prices.  Edward Jones also refrained from offering the bonds to its customers until after trading commenced in the secondary market, and then offered the bonds at prices higher than the initial offering prices.  The firm’s customers paid at least $4.6 million more than they should have for new bonds.

Edward Jones agreed to settle the case by paying more than $20 million, which includes nearly $5.2 million in disgorgement and prejudgment interest that will be distributed to current and former customers who were overcharged for the bonds.

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

 

 

Categories: Broker Fraud, Investor Protection, and Securities Fraud.

Jonathan Parker of Woodstock Georgia Suspended by NFA

According to the National Futures Association (NFA), Jonathan Parker (NFA ID #425645), a sole proprietor commodity trading advisor, and an associated person and listed principal of his firm, as well as an NFA Associate, was recently suspended from NFA membership and associate membership until further notice.

Allegations stated that the NFA believes Parker has been operating as an unregistered commodity pool operator (CPO).  The NFA initially became concerned after receiving a customer complaint over allegations of losses of approximately $90,000, which was allegedly the customer’s entire investment.  Furthermore, the NFA also alleged that Parker solicited the same customer to invest what funds he had remaining in his individually managed trading account into a pooled investment vehicle, even though Parker was allegedly not registered to do so.  In fact, the NFA alleged that Parked collected approximately $400,000 from pool participants.

The NFA began an emergency examination of Parker and his alleged misconduct in July, 2015.  According to the NFA, Parker admitted the allegations of the customer complaint and also the allegations of operating a commodity pool as an unregistered representative.  Parker has refused to provide records and information to the NFA, and therefore remains suspended from NFA membership and associate membership for further investigation.  Based on Parker’s failure to cooperate, the NFA is unable to determine at this time what Parker did with the money he received from pool participants, how much Parker collected in total, and the total number of pool participants that existed. (See NFA Case No. 15-MRA-003)

Parker was formerly affiliated with BASIC Details Cyprus Futures, LLC

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options.  The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide.  If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses.  Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Broker Fraud, Broker Investigations, Investor Protection, and Securities Broker Misconduct.

Aegis Capital Fined Nearly $1 Million over Sales of Unregistered Penny Stocks

Aegis Capital Corp. (CRD No. 15007), a New York based broker dealer, was recently fined $950,000 by FINRA over allegations of improper sales of billions of shares of unregistered penny stocks and anti-laundering supervisory lapses. Furthermore, two former chief compliance officers were also fined and suspended in connection with this penny stock scheme.

According to FINRA’s Disciplinary and Other FINRA Actions publication, Aegis Capital Corp., along with representatives, Charles D. Smulevitz (CRD No. 5099387) and Kevin C. McKenna (CRD No. 1343870), allegedly liquidated nearly 3.9 billion shares of five unregistered penny stocks that seven customers deposited into their accounts at the firm. According to FINRA, most shares have to be registered with the SEC to ensure that potential investors are able to receive facts about the issuers. However, allegations stated that the shares were not registered with the SEC nor were the transactions exempt from registration.

As a result of the illicit sales conducted by Aegis Capital Corp. and its representatives, the customers allegedly generated over $24.5 million in proceeds and Aegis collected over $1.1 million in commissions, according to FINRA. (See FINRA Disciplinary Proceeding No. 2011026386001)

Charles D. Smulevitz has been registered with the following member firm(s):

UBS FINANCIAL SERVICES INC.
(CRD# 8174)
NEW YORK, NY
07/2012 – 04/2013

AEGIS CAPITAL CORP.
(CRD# 15007)
NEW YORK, NY
06/2009 – 07/2012

CASIMIR CAPITAL L.P.
(CRD# 105061)
NEW YORK, NY
04/2006 – 06/2009

Kevin C. McKenna has been registered with the following member firm(s):

MORGAN STANLEY SMITH BARNEY
(CRD# 149777)
NEW YORK, NY
06/2009 – 02/2010

MORGAN STANLEY & CO. INCORPORATED
(CRD# 8209)
NEW YORK, NY
04/2007 – 06/2009

MORGAN STANLEY DW INC.
(CRD# 7556)
NEW YORK, NY
12/2006 – 04/2007

VANDERBILT SECURITIES, LLC
(CRD# 5953)
MELVILLE, NY
01/2006 – 12/2006

METLIFE SECURITIES INC.
(CRD# 14251)
NEW YORK, NY
08/2005 – 01/2006

METROPOLITAN LIFE INSURANCE COMPANY
(CRD# 4095)
NEW YORK, NY
08/2005 – 01/2006

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
(CRD# 7691)
NEW YORK, NY
10/1988 – 06/2004

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options. The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

Categories: Broker Investigations.

Types of Broker Misconduct

Broker misconduct makes up a large portion of securities lawsuits. Understanding the different types of broker misconduct is essential if you’re having issues with your stock broker. Most of these claims can be categorized as churning, unsuitability, overconcentration, or misrepresentation & omissions.

Churning happens if your stock broker is engaging in excessive trading on your behalf to increase their commissions. Be wary if they always have some “good” reason you should just take quick profits. To actually establish proof of this, we recommend doing as much as possible of the following:

  • Calculate the annualized rate of return that would be necessary to cover commissions charged in your account.
  • Determine how many times your account’s equity has been turned over to purchase securities.
  • Determine all purchase & sale trading that occurred in your account.

Armed with this information you will have the necessary proof to determine if your stock broker has been churning your account illegally.

A broker might also be on the hook for making any investments that would be considered “unsuitable” for their clients. When a broker makes a decision on your behalf, it must be consistent with that client’s needs, their tolerance for risk, and the objectives of their investment. For example, an investor may have made what could be considered a “high risk” investment if their client’s financial situation couldn’t reasonably incur the associated risk, or if the client was unaware of or didn’t understand these risks. Because a broker should be well aware of a client’s investment goals and their financial situation, they are responsible to make suitable investments.

Another common type of misconduct occurs when a broker has concentrated too many of a client’s investments in one individual investment or one type of investment. Focusing like this greatly increases the risk for potential losses as you are essentially ‘putting all your eggs into one basket’. If this one investment or this investment area declines in value, you don’t have any other investments to fall back on and help the health of your portfolio. If your investment fails and you find that your broker hasn’t properly diversified your portfolio, they are potentially liable for your losses.

You might also feel like an investment wasn’t explained or presented to you in an entirely truthful way. Misrepresenting and omitting information that may prove important in a client’s decision making process is considered broker misconduct. Brokers will misrepresent certain investments so they can better disguise the potential risk involved. Obviously, this can lead to clients losing money due to the trust they placed in their broker.

When hiring a broker there is a certain amount of trust involved, but they are also required to adhere to certain standards and guidelines. At Place and Hanley we are well-informed about all types of broker activity and have handled our share of misconduct cases. Contact us today for an evaluation of your broker misconduct case.

Read more on broker misconduct here: http://placeandhanley.com/practice-areas/stockbroker-fraud/

Categories: Broker Fraud.

Securities Attorneys Representing Clients in Florida and Nationwide

Securities are the financial instruments that represent a form of ownership or stake in a company. Securities allow individuals to own asset(s) without taking possession of them. Because of this, securities can be exchanged easily. In addition to this, pricing securities is not difficult which is why they are a strong indicator of the value of the asset. In order to purchase or sell securities, a trader must obtain a license to ensure they have been trained to follow a set of laws established by the SEC (Securities and Exchange Commission). Despite the regulatory agencies and laws in effect, fraud is still widespread. Fraud is an “umbrella term” that encompasses a wide range of deceptive and manipulative practices utilized by perpetrators to profit at the expense of the investor(s).

Types of securities:

Bonds, which can be issued by corporations or the government (Federal/Local).

A corporate bond is essentially a loan to a corporate entity in which you receive interest annually until the loan is paid off. Corporate bonds offer stability and are considered safer than stock in a company. Bondholders do not get dividends or voting rights which is why in the long haul, stocks have the potential for larger returns.

A bond issued by the federal government is very low in terms of risk and most frequently issued by the US Treasury. The potential for return is significantly lower than stocks or bonds issued by corporate entities.

A municipal bond is issued by state and local government. These include a city, county, town or school district. Typically,the rate of interest is lower than that of a bond issued by a corporation.

Mutual Funds , which are composed of a variety of securities.

A mutual fund can be stock options, bonds or both. In most cases, the investment is placed in a pool with monies from other investors. The fund is managed by an investment company, who selects the securities. The risk of the investment is reduced due to the diversity of the portfolio.

Stock Options

The right to purchase or sell stock in a company, at a specific rate for a window of time. The right to purchase stock is referred to as a call, the right to sell is called a “put”.

Futures Option

A futures contract is an agreement to sell a certain security in the future for a pre-determined rate. An option is the right to purchase or sell a contract at a certain price for a specified period of time. Since it used to reduce risk, a futures option is utilized by many investors.

History of Regulation

The regulation of Securities in the United States dates back to the 1930’s when the New Deal was passed. In the1930’s & 40’s, five major laws were put into place by the Federal Government.

  • Securities Act of 1933 a regulation on the distribution of new securities
  • Securities Exchange Act of 1934- regulation of trading securities , brokers & exchanges
  • Trust Indenture Act of 1939- regulation of debt securities
  • Investment Company Act of 1940- regulating mutual funds
  • Investment Advisers Act of 1940- regulation of investment advisers

Since the 1940’s a number of amendments have been made to these regulations in order to promote fair trade and enforce illegitimate/illegal practices. These major laws also serve to protect investors, ensuring they are adequately informed at the time of purchase.

While many measures are in place to reduce risk, it is still inherent, especially when dealing with non-governmental entities. Educating yourself on the common practices of Fraudsters can help you identify red flags when it comes time to invest your hard earned money. While often, fraudsters target vulnerable investors, saavy, educated people are still victimized.

Florida Based Law Firm Place & Hanley have represented thousands of clients nationwide and represent individual investors in claims for securities and stockbroker misconduct. If you’ve suffered monetary loss due to misconduct or believe your investment was mishandled, contact us for a Free Case Evaluation.

Categories: Securities Information.

MetLife Securities Broker Barred by FINRA

According to FINRA’s Disciplinary and Other FINRA Actions publication, Kwen Young Chun (CRD #3136403) of New Jersey, was barred by FINRA for allegedly converting approximately $201,144 from client accounts, which he then used for his personal use and benefit.

Allegations stated that between 2010 and 2013 Chun made nine (9) unauthorized disbursements from a Customer’s MetLife Variable Annuity and MetLife Insurance Policy.  Allegedly, Chun forged the Customer’s name on withdrawal forms, and also requested two (2) loans from the Customer’s MetLife Insurance Policy, which were all conducted without the knowledge or consent of the customer.  Allegations further stated that Chun then opened an account in the customer’s name without the customer’s authorization, made himself beneficiary, and directed the funds to the account by using electronic funds transfer and direct deposit.  As a result of such misconduct, Chun was in direct violation of FINRA rules. (See FINRA AWC No. 2014041664801)

According to FINRA’s Broker Check, Kwen Young Chun has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public.  Chun was registered in the securities industry for fifteen (15) years, and was registered with the following firm(s):

METLIFE SECURITIES INC.

CRD #14251

FAIRFIELD, NJ

11/1998 – 07/2014

 

METROPOLITAN LIFE INSURANCE COMPANY

CRD #4095

LAKE SUCCESS, NY

11/1998 – 07/2007

 

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Law Offices of Place & Hanley, LLC to discuss your legal options.  The Law Offices of Place & Hanley, LLC is dedicated to helping investors nationwide.  If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses.  Contact our office toll free at (866) 318-4725 for a complimentary initial consultation.

 

Categories: Broker Investigations and Securities Broker Misconduct.