Archives for Broker Fraud

Merrill Lynch Sanctioned $10 Million Related to Sale of Strategic Return Notes

The Securities and Exchange Commission (“SEC”) recently imposed a cease and desist order against Merrill Lynch, Pierce, Fenner & Smith in which the Commission found that Merrill Lynch failed to adequately disclose certain fixed costs in a proprietary volatility index linked to structured notes known as Strategic Return Notes (“SRN”) of Bank of America Corporation (“BAC”). Merrill Lynch offered and sold approximately $150 million of these volatility notes to approximately 4,000 retail investor accounts in 2010 and 2011. The SEC found that the disclosures made it appear as if the volatility product had relatively low fixed costs. The offering materials emphasized that investors would be subject to a 2% sales commission and a 0.75% annual fee. The offering materials failed to adequately disclose a third fixed, regularly occurring cost included in its proprietary volatility index known as the “Execution Factor”. As a result, the disclosures in the offering materials of the fixed costs associated with the Strategic Return Notes were materially misleading.

The SEC found that as an issuer of securities, BAC had a duty to disclose all material information necessary to make statements contained in the retail pricing supplements, in light of the circumstances under which they were made, not misleading. BAC delegated to Merrill Lynch principal responsibility for drafting and reviewing the retail pricing supplements. The SEC found that Merrill Lynch violated Section 17(a)(2) of the Securities Act which prohibits obtaining money or property by means of material misstatements and omissions in the offer or sale of securities.
The SEC deemed it appropriate to impose sanctions against Merrill Lynch, including a civil monetary penalty in the amount of $10 million.

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 investing in Strategic Return Notes at Merrill Lynch, 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.

FINRA Sanctions Fidelity Brokerage Services LLC $1 Million for Supervisory Failures

The Financial Industry Regulatory Authority (FINRA) announced that it fined Fidelity Brokerage Services LLC $500,000 and ordered the firm to pay nearly $530,000 in restitution for failing to detect or prevent the theft of more than $1 million from nine of its customers, eight of whom were senior citizens. Lisa Lewis posed as a Fidelity broker, obtained her victims’ personal information, and systematically stole customer assets through numerous transfers and debit-card transactions.

FINRA found that from August 2006 until her fraud was discovered in May 2013, Lewis was running a conversion scheme by targeting former customers from another brokerage firm from which she had been fired. Lewis told the victims she was a Fidelity broker and urged them to establish accounts at the firm and also established joint accounts with her victims in which she was listed as an owner. She eventually established more than 50 accounts and converted assets from a number of these accounts for her own personal benefit. In June 2014, Lewis pleaded guilty to wire fraud, and was sentenced to 15 years in prison and was ordered to pay more than $2 million in restitution to her victims.

FINRA found that Fidelity failed to detect or adequately follow up on multiple “red flags” related to Lewis’s scheme. FINRA also found that Fidelity failed to detect Lewis’ consistent pattern of money movements and overlooked red flags in telephone calls handled by its customer-service call center in which there were indications that Lewis was impersonating or taking advantage of her senior investor victims. FINRA also found that Fidelity’s inadequate supervisory systems and procedures contributed to the failure to detect and prevent Lewis’s fraudulent activities. Though Fidelity maintained a report designed to identify common email addresses shared across multiple accounts, it failed to implement procedures regarding the report’s use and dedicate adequate resources to the review and investigation of the reports. As a result, there was a backlog in reviewing thousands of reports, including a report in March 2012 showing that Lewis’ email address was associated with dozens of otherwise unrelated accounts. The report was not reviewed by anyone at Fidelity until April 2013, more than a year after it was generated.

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 conduct, 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.

FINRA Sanctions Cantor Fitzgerald & Co. $7.3 Million for Selling Billions of Unregistered Microcap Shares, and for Related Supervisory and AML Violations

The Financial Industry Regulatory Authority (FINRA) announced that it has fined Cantor Fitzgerald & Co. $6 million and ordered disgorgement of nearly $1.3 million in commissions, plus interest, for selling billions of unregistered microcap shares in violation of federal law. Cantor Fitzgerald & Co. was also sanctioned for failing to have adequate supervisory or anti-money laundering programs tailored to detect “red flags” or suspicious activity connected to its microcap activity. In addition, two of the firm’s business executives were suspended and fined: Jarred Kessler, Executive Managing Director of Equity Capital Markets during the relevant period, was suspended for three months in a principal capacity and fined $35,000 for supervisory failures; and equity trader Joseph Ludovico was suspended in all capacities for two months and fined $25,000.

FINRA found that Cantor Fitzgerald & Co.’s supervisory system was not reasonably designed to satisfy the firm’s affirmative obligation to determine whether the microcap securities that it was liquidating for clients were registered with the Securities and Exchange Commission or subject to an exemption from registration. FINRA alleged that as a result of these failures, Cantor Fitzgerald & Co. and Ludovico, as the broker of record, sold billions of shares of thinly traded microcap securities between March 2011 and September 2012 without adequate review and due diligence, a significant portion of which were neither registered nor exempt from registration.

Joseph Ludouico was registered with the securities industry for sixteen (16) years, and is registered with the following firm:

Cantor Fitzgerald & Co.
CRD # 134
New York, NY
3/15/2000- present

Jarred Kessler was registered with the securities industry for sixteen (16) years, and was registered with the following firm(s):

Cantor Fitzgerald & Co.
CRD # 134
New York, NY
1/2011-12/2015

Credit Suisse Securities, LLC
CRD # 816
New York, NY
5/2008-12/2010

Morgan Stanley & Co. Inc.
CRD # 8209
New York, NY
12/2006-5/2008

Goldman, Sachs & Co.
CRD # 361
New York, NY
7/2005-9/2006

Bear, Stearns & Co. Inc.
CRD # 79
New York, NY
3/2004-7/2005

Knight Securities, L.P>
CRD # 38599
Jersey City, NJ
4/2000-6/2002

FINRA’s Executive Vice President and Chief of Enforcement, stated, “If a broker-dealer is looking to increase its revenues by expanding a high-risk business line, the firm and its supervisors must tailor their supervision to the risks associated with those businesses. This is especially true when the new business involves the mass liquidation of microcap securities, which presents overwhelming risks of fraud and investor harm. FINRA has no tolerance for firms and business executives who choose to engage in this business without robust systems designed to ensure that they do not become participants in illegal, unregistered distributions.”

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.

FINRA Sanctions Barclays Capital, Inc. $13.75 Million for Unsuitable Mutual Fund Transactions and Supervisory Failures

The Financial Industry Regulatory Authority (FINRA) recently announced that it has ordered Barclays Capital, Inc. (CRD # 19714) to pay more than $10 million in restitution, including interest, to affected customers for mutual fund-related suitability violations. These suitability violations relate to a variety of mutual fund transactions, including mutual fund switches. Additionally, FINRA alleged that the firm failed to provide applicable breakpoint discounts to certain customers. Barclays was also censured and fined $3.75 million.

According to FINRA rules, broker-dealers are obligated to ensure that any recommendations to switch mutual funds are evaluated with regard to the net investment advantage to the investor. FINRA advises that “switching among certain fund types may be difficult to justify if the financial gain or investment objective to be achieved by the switch is undermined by the transaction fees associated with the switch.” A “mutual fund switch” involves one or more mutual fund redemption transactions coupled with one or more related mutual fund purchase transactions.

FINRA found that from January 2010 through June 2015, Barclays’ supervisory systems were not sufficient to prevent unsuitable switching or to meet certain other firm obligations regarding the sale of mutual funds to retail brokerage customers. In particular, the firm incorrectly defined a mutual fund switch in its supervisory procedures to require three separate transactions within a certain time frame. Based on this incorrect definition, Barclays failed to act on thousands of automated alerts for potentially unsuitable transactions, excluded transactions from review for suitability and failed to ensure that disclosure letters were sent to customers regarding the transaction costs. As a result, during the five-year period, there were more than 6,100 unsuitable mutual fund switches resulting in customer harm of approximately $8.63 million.

Additionally, FINRA found that the firm failed to provide adequate guidance to supervisors to ensure that mutual fund transactions for its retail brokerage customers were suitable based upon customer investment objectives, risk tolerance and account holdings. During a six-month look back review, 1,723, or 39 percent of mutual fund transactions were found to be unsuitable, with 343 customers experiencing financial harm totaling more than $800,000, including realized losses.

In addition, FINRA alleged that during the same five-year period, Barclays’ supervisory system failed to ensure that purchases were properly aggregated so that eligible customers could be provided with breakpoint discounts. A six-month look back review by FINRA found that the firm failed to provide eligible customers discounts in Class A share mutual fund transactions.

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.

FINRA Bars Brokers George Johnson and Joseph Mahalick and Suspends Broker Christopher Wynne

The Financial Industry Regulatory Authority (FINRA) recently announced that it has barred broker George Johnson (CRD # 2245802) from the securities industry for engaging in a manipulative trading scheme to artificially inflate the market price and trading volume for the common stock of IceWEB, Inc. (OTCBB: IWEB). FINRA also sanctioned Christopher Wynne (CRD # 7654), Johnson’s supervisor, suspending him for two years in all capacities, barring him in a principal capacity, and fining him $25,000. Joseph Mahalick (CRD # 5563167), another broker who worked with Johnson and Wynne, was suspended for six months and fined $20,000 for falsifying firm records and has been barred from the securities industry in a separate action. Johnson, Wynne and Mahalick all worked for Meyers Associates L.P. in that firm’s Chicago branch office during the time period of the misconduct.

FINRA found that Johnson manipulated the market for IWEB by recommending that certain of his customers buy at increasingly higher and artificially inflated prices while also recommending his other customers sell their shares, frequently matching trades between the customers. FINRA found that among Johnson’s motives for manipulating the stock was the fact that he wanted to obtain business from the issuer for which he would anticipate receiving compensation in connection with a future private offering. Johnson coordinated a campaign with a stock promoter to attempt to increase the stock’s share price to a level that would allow for the exercise of certain warrants.

Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “Any broker engaging in manipulative activity poses a threat to market integrity and has no place in the securities industry. The branch office manager, who was the first line of defense in supervising George Johnson’s activities, completely failed to supervise his transactions to ensure compliance with securities laws and FINRA rules.” FINRA also found that Johnson and Wynne sent customers sales materials that omitted information concerning material conflicts of interest and material risks concerning IWEB’s business, and contained misleading, exaggerated and unwarranted information. Moreover, Johnson disclosed confidential information to potential purchasers concerning another offering.

In addition to the IWEB scheme, FINRA found that Johnson committed fraud by recommending that certain of his customers purchase shares of another penny stock without disclosing to them that he was liquidating his own personal positions of the security from his own brokerage accounts. Furthermore, FINRA’s investigation found that to cover up Johnson’s violations of state securities registration requirements, Johnson, Mahalick and Wynne agreed to the practice of entering false information on more than 100 order memoranda, indicating that Wynne or Mahalick was responsible for the account or transactions, instead of Johnson.

George Johnson was registered with the securities industry for twenty three (23) years, and was registered with the following firm(s):

Newport Coast Securities, Inc.
CRD # 16944
Chicago, IL
4/2013 – 2/2016

Meyers Associates L.P.
CRD # 34171
Chicago, IL
11/2011 – 5/2013

Anderson & Strudwick, Inc.
CRD # 48
Chicago, IL
7/2010-12/2011

Jesup & LaMont Securities Corp.
CRD # 39056
Chicago, IL
11/2009-7/2010

Garden State Securities, Inc.
CRD #10083
Chicago, IL
5/2005 – 11/2009

Stifel, Nicolaus & Co.
CRD #793
St. Louis, MO
3/2001-5/2005

Auerbach, Pollak & Richardson, Inc.
CRD # 29824
Stamford, CT
12/2000-3/2001

American Fronteer Financial Corp.
CRD # 1398
Denver, CO
10/1998 – 12/2000

H.J. Meyers & Co., Inc.
CRD# 15609
Rochester, NY
7/1992-10/1998

Christopher Wynne was registered with the securities industry for sixteen (16) years, and was registered with the following firm(s):

Newport Coast Securities, Inc.
CRD # 16944
Chicago, IL
4/2013-2/2016

Meyers Associates, L.P.
CRD # 34171
Chicago, IL
11/2011-5/2013

Anderson & Strudwick, Inc.
CRD 48
Chicago, IL
7/2010-12/2011

Jesup & LaMont Securities Corp.
CRD 39056
Chicago, IL
11/2009-7/2010

Garden State Securities, Inc.
CRD 10083
Chicago, IL
5/2005–11/2009

Stifel, Nicolaus & Co.
CRD 793
St. Louis, MO
3/2001-5/2005

Auerbach, Pollak & Richardson, Inc.
CRD 29824
Stamford, CT
12/2000-3/2001

American Fronteer Financial Corp.
CRD 1398
Denver, CO
11/1999-12/2000

Joseph Mahalick was registered with the securities industry for seven (7) years, and was registered with the following firm(s):

Newport Coast Securities, Inc.
CRD 16944
Chicago, IL
4/2013-10/2015

Meyers Associates, L.P.
CRD 34171
Chicago, IL
11/2011 – 5/2013

Anderson & Strudwick, Inc.
CRD 48
Chicago, IL
7/2010-12/2011

Jesup & LaMont Securities Corp.
CRD 39056
Chicago, IL
11/2009-7/2010

Garden State Securities, Inc.
CRD 10083
Chicago, IL
9/2008-11/2009

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.

Fraud Charges Filed Against Owners of Jay Peak Ski Resort Relating to Millions of Dollars Solicited under the EB-5 Immigrant Investors Program

The Securities and Exchange Commission recently announced fraud charges and an asset freeze against a Vermont-based ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program. The Securities and Exchange Commission filed a complaint for Injunctive and Other Relief against Ariel Quiros, William Stenger, Jay Peak, Inc., Q Resorts, Inc., Jay Peak Hotel Suites L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Hotel Suites Phase II L.P., Jay Peak Management, Inc., Jay Peak Penthouse Suites L.P., Jay Peak GP Services, Inc., Jay Peak Golf and Mountain Suites L.P., Jay Peak GP Services Golf, Inc., Jay Peak Lodge and Townhouses, L.P., Jay Peak GP Services Lodge, Inc., Jay Peak Hotel Suites Stateside L.P., Jay Peak GP Services Stateside, Inc., Jay Peak Biomedical Research Park L.P., and AnC Bio Vermont GP Services, LLC. The SEC’s case was unsealed in federal court in the United States District Court Southern District of Florida, and the court has appointed a receiver over the companies to prevent any further spending of investor assets.

The SEC alleges that Ariel Quiros of Miami, Florida, William Stenger of Newport, Vermont, and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont. According to the SEC complaint, investors were told they were investing in one of several projects connected to Jay Peak Inc., a ski resort operated by Quiros and Stenger, and their money would only be used to finance that specific project. The SEC complaint alleges that instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects. The SEC complaint alleges that more than $200 million was used for other-than-stated purposes, including $50 million spent on Quiros’s personal expenses and in other ways never disclosed to investors.

According to the SEC’s complaint, Quiros improperly tapped investor funds for such things as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort. The SEC’s complaint charges Quiros, Stenger, Jay Peak, and a company owned by Quiros called Q Resorts Inc., as well as, seven limited partnerships and their general partner companies with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Four other companies are named as relief defendants in the SEC’s complaint for the purpose of recovering investor funds transferred into their accounts.

If you have suffered investment losses 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. 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 and Securities Fraud.

SEC Charges Wade James Lawrence with Unauthorized Trading and Fraud

The Securities and Exchange Commission recently announced that it charged Wade James Lawrence, a former investment adviser  with executing unauthorized trades in his clients’ investment accounts and defrauding other individuals who tried to invest their money with him.The SEC’s complaint, filed in federal court in Texas, alleges that:

  • Starting in 2010 while employed at the first firm, Lawrence executed unauthorized trades in speculative, high-risk securities in several of his clients’ accounts.
  • After joining the other firm in August 2011, Lawrence continued to place unauthorized trades of risky securities in his clients’ accounts.
  • Between 2010 and 2013, Lawrence’s clients lost at least $2 million due to his improper and unauthorized trading.
  • Lawrence fraudulently obtained approximately $480,000 from at least five individuals by claiming that he could trade securities for them at prices lower than those available to the general public and in securities that were not otherwise available to individual investors.
  • Immediately after receiving the investors’ funds, Lawrence used most of the money for personal expenditures and to repay personal debts, while returning a portion of the funds disguised as investment profits.

In a related action, on August 25, 2015, Lawrence pleaded guilty to fraud charges and, on January 20, 2015 was sentenced to 36 months imprisonment, ordered to pay $1,454,384.48 in restitution, and ordered to forfeit $126,074.10 as a result of his conduct.

Lawrence has agreed to settle the SEC’s action by consenting to a court order that enjoins him from violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940; orders him to disgorge $458,700 plus prejudgment interest of $32,101.13, but deems payment of these amounts satisfied by the entry of the criminal restitution and forfeiture orders; and does not order the payment of a civil penalty based in consideration of his criminal conviction and 36-month sentence. The settlement is subject to court approval.

Lawrence was previously registered with:

08/2011 – 12/2013 SOUTHWEST SECURITIES, INC. (CRD# 6220) – DALLAS, TX

06/2008 – 07/2011 OPPENHEIMER & CO. INC. (CRD# 249) – FORTH WORTH, TX
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, and Investor Protection.

Attention Purchasers of IceWEB, Inc. (IWEB)

The Financial Industry Regulatory Authority (FINRA) announced that it barred broker George Johnson from the securities industry for engaging in a manipulative trading scheme to artificially inflate the market price and trading volume for the common stock of IceWEB, Inc. (OTCBB: IWEB). FINRA also sanctioned Christopher Wynne, Johnson’s supervisor, suspending him for two years in all capacities, barring him in a principal capacity, and fining him $25,000. Joseph Mahalick, another broker who worked with Johnson and Wynne, was suspended for six months and fined $20,000 for falsifying firm records and has been barred from the securities industry in a separate action. Johnson, Wynne and Mahalick all worked for Meyers Associates L.P. in that firm’s Chicago branch office during the time period of the misconduct.

FINRA found that over an eight-day period, Johnson manipulated the market for IWEB by recommending that certain of his customers buy at increasingly higher and artificially inflated prices while also recommending his other customers sell their shares, frequently matching trades between the customers. FINRA found that among Johnson’s motives for manipulating the stock was the fact that he wanted to obtain business from the issuer for which he would anticipate receiving compensation in connection with a future private offering. Johnson coordinated a campaign with a stock promoter to attempt to increase the stock’s share price to a level that would allow for the exercise of certain warrants.

FINRA also found that Johnson and Wynne sent customers IWEB sales materials that omitted information concerning material conflicts of interest and material risks concerning IWEB’s business, and contained misleading, exaggerated and unwarranted information. Moreover, Johnson disclosed confidential information to potential purchasers concerning another offering.

In addition to the IWEB scheme, FINRA found that Johnson committed fraud by recommending that certain of his customers purchase shares of another penny stock without disclosing to them that he was liquidating his own personal positions of the security from his own brokerage accounts.

In addition, FINRA’s investigation found that to cover up Johnson’s violations of state securities registration requirements, Johnson, Mahalick and Wynne agreed to the practice of entering false information on more than 100 order memoranda, indicating that Wynne or Mahalick was responsible for the account or transactions, instead of Johnson.

In settling this matter, Johnson, Wynne and Mahalick neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

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 and Investor Protection.

Attention Investors in American Growth Fund II

SEC Charges Lending Company and Brokerage Firm with Fraud

On February 3, 2016, the Securities and Exchange Commission charged a Manhattan-based lending company and its owner with repeatedly lying to investors purchasing high-yield securities. The SEC also charged the brokerage firm that acted as the placement agent and two of its executives.

The SEC alleges that American Growth Funding II LLC and Ralph Johnson promised investors 12-percent annual returns and falsely claimed its financial statements were being audited each year. AGF II, which raises capital from investors to provide loans to businesses, also made misrepresentations in offering documents about its management and concealed details about deteriorating loan values that could imperil full payment of the promised returns to investors. The company’s placement agent Portfolio Advisors Alliance and its owner Howard Allen and president Kerri Wasserman allegedly knew the offering documents were inaccurate yet continued using them to solicit sales of AGF II securities.

According to the SEC’s complaint filed in federal district court in Manhattan:

In a private placement offering, AGF II raised approximately $8.6 million from investors from March 2011 to December 2013.

The company represented in offering documents that its financial statements had been audited and would continue to be audited each fiscal year. Johnson knew this statement was false. No audit of AGF II’s financials occurred until 2014.

The offering documents represented that AGF II was governed by a Board of Managers comprised of Johnson and two other individuals when, in fact, the two individuals never agreed to serve in any managerial capacity.

Johnson caused AGF II to send out monthly account statements to investors that concealed the precariousness of its business. The company failed to disclose that it could not have possibly paid investors their stated account balances because the majority of AGF II’s loans were likely uncollectible at the time.

While PAA acted as the placement agent, Allen became aware by no later than June 2012 that AGF II’s offering documents were not accurate. But he continued using them to solicit investors without informing them the financial statements were unaudited.

Allen informed Wasserman that AGF II’s offering documents contained false information, but Wasserman took no action and the firm’s brokers continued using misleading documents to solicit investors.

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 and Investor Protection.

FINRA Fines E.S. Financial Services nka Brickell Global Markets, Inc.

E. S. Financial Services, Inc., nka Brickell Global Markets, Inc. (CRD #104316, Miami, Florida) submitted an AWC in which the firm was censured and fined $275,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it charged customers a transaction fee and a custody fee in addition to a commission on fixed income transactions. The findings stated that the foregoing charges were not reasonably related to any direct handling-related services it performed, or handling-related expenses it incurred in processing transactions, but rather, were effectively additional commissions for it. The findings also stated that the firm failed to deliver prospectuses to customers who had purchased commercial paper of its affiliate. The findings also included that the firm failed to establish, maintain and enforce a supervisory system and WSPs regarding email review and to ensure prospectus delivery. FINRA found that the firm allowed persons without trading authority in a brokerage account opened by a Central American bank to direct trading in the account. The firm failed to establish, maintain and enforce a supervisory system or WSPs to prevent unauthorized trades in the Central American bank brokerage account. FINRA also found that the firm maintained inaccurate books and records reflecting that transactions were solicited, when in fact, the transactions were unsolicited. In addition, FINRA determined that the firm inaccurately computed its customer reserve formula which resulted in hindsight deficiencies and inaccurate Financial and Operational Combined Uniform Single (FOCUS) reports. (FINRA Case #2015045608701)

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 and Investor Protection.