Category: Broker Fraud

Hanley Law Investigates Jeffrey Palish Ex-Wells Fargo Rep Barred for Stealing from Elderly

According to the Financial Industry Regulatory Authority (“FINRA”) Jeffrey Palish has been barred from the industry for receiving more than $180,000 from an elderly client “with no intent or ability to repay” her. Wells Fargo terminated Mr. Palish’s registration in November 2017 according the FINRA Letter of Acceptance, Waiver and Consent (AWC 2917056152891).

It has been reported that Mr. Palish, who was a resident of Woodcliff Lake, N.J., was arrested by detectives from the Bergen County’s prosecutor’s office. The prosecutor’s office allegedly received information in November that Mr. Parish was believed to have stolen at least $600,000 from elderly clients over four years, and that he had not made payments on a $100,000 loan he received from two clients.  According to FINRA, starting in or around 2015, while registered with Wells Fargo, Palish received money from an elderly Wells customer for his personal use and he accepted the money with no intent or ability to repay the customer.  Over approximately three years, Palish allegedly received more than $180,000 from the client.  As a result, FINRA found that Palish converted customer funds, in violation of FINRA Rules 2150 and 2010.

Palish entered the securities industry in 1986 when he became registered as a General Securities Representative.  Mr. Palish began his securities career in 1986 at McLaughlin, Piven, Vogel Securities and moved to UBS PaineWebber in 1993.  He joined Morgan Stanley in 2002 and Wells Fargo in 2010. Wells Fargo terminated Palish’s registration in November 2017 because Wells Fargo learned that Palish had accepted money from an elderly customer and that he had made misstatements to the firm regarding those transactions.

HANLEY LAW

Hanley law represents individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts.  The firm is dedicated to assisting investors to recover losses suffered by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent.  The firm handles cases against the major Wall Street broker dealers, including Wells Fargo.

Let Hanley Law work for you. Call (239) 649-0050 or contact the firm through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with your stock broker which resulted in investment losses.

Interactive Brokers LLC Censured and Fined Relating to the Firm’s Supervisory System

According to FINRA’s Disciplinary and Other Actions publication, FINRA censured and fined Interactive Brokers LLC (CRD #36418).   On October 18, 2017, an Acceptance Waiver and Consent (“AWC”) was issued in which the firm was censured and fined a total of $70,000.  Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that the firm failed to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations regarding the use of intermarket sweep orders. FINRA found that given the recurring nature of the violations from January 2015 through December 2015, the firm’s supervisory system was inadequate. (FINRA Case #2014041235404).

HANLEY LAW

Hanley law represents individual investors nationwide with significant losses in their portfolios, retirement plans or investment accounts.  The firm is dedicated to assisting investors to recover losses suffered by unsuitability, over-concentration, fraud, misrepresentation, self-dealing, unauthorized trades or other wrongful acts, whether intentional or negligent.  The firm handles cases against the major Wall Street broker dealers, including Interactive Brokers.

Let Hanley Law work for you. Call (239) 649-0050 or contact the firm through our Website to arrange a free confidential consultation with an attorney to discuss your experiences with your stock broker which resulted in investment losses.

Lisa Lewis scam

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 Hanley Law to discuss your legal options. The Hanley Law 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 (239) 649-0050 for a complimentary initial consultation.

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 Hanley Law to discuss your legal options. The Hanley Law 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 (239) 649-0050 for a complimentary initial consultation.

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 Hanley Law to discuss your legal options. The Hanley Law 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 (239) 649-0050 for a complimentary initial consultation.

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 Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. You may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

Futures Fraud and How To Avoid It

What is Futures Trading?

Futures trading is a formal agreement between parties to buy or sell a particular commodity at a certain price and at a specific point in time. The trading can be done with a number of different commodities: precious metals (i.e., silver or gold), petroleum products (i.e., crude oil and unleaded gas), foreign currency (i.e., Euros, Yen, or Deutschmarks), and agricultural products (i.e., corn, soybeans, or cattle). This type of trading is considered high-risk trading and is best suited for experienced investors who are willing to potentially risk losing their entire investment. For this reason, it’s always best to confer with a knowledgeable investor and do research before agreeing to any trading activity and exposing yourself to potential futures fraud.

What is Futures Fraud?

Futures fraud occurs when the party selling the commodity (e.g., commodity broker, financial advisor, or other third-party) engages in illegal activities or practices while trading futures to investors. Illegal activities often involved in futures fraud can include trading without the investor’s consent, false statements about the risk or value of the investment, withholding information from the investor on purpose (nondisclosure), trading on the investor account for commissions without regard for the investor, and using the investor’s assets for anything other than the stated purpose.

What Are Some Warning Signs of Futures Fraud?

The following are some common warning signs of potential futures fraud:

  • Investment opportunities that seem too good to be true and get-rich-quick schemes.
  • Promises or guarantees of large profits.
  • Assurances of little or no financial risk in the venture.
  • Claims of currency being traded in an “Interbank Market,” which can refer to a collection of transactions between banks and investment banks.
  • Unsolicited telephone calls about investment opportunities.
  • Requests for urgent transfers of cash to a recipient.

 

Do You Need A Futures Fraud Lawyer?

If you believe that you are the victim of futures fraud, reach out to Hanley Law and we can examine your case and determine the best course of action. Hanley Law has the experience required to help you receive the best possible outcome.

Florida FINRA Litigation

FINRA is the financial institution which regulates securities and the financial market. FINRA attorneys focus their practice on niche areas of FINRA law, whether they are defending brokers against regulatory inquiries, working on arbitration claims involving both investors & brokers, or defending investors against predatory broker practices. Most, if not every, brokerage firm requires potential investors to agree to resolve any disputes through FINRA arbitration. This is usually outlined in the opening documents, and states specifically that any issues will be settled through FINRA dispute resolution. Legal professionals with experience representing both investors & brokers before FINRA arbitrators should be familiar with all procedures, the forum & arbitrators. With their experience and knowledge, the first step to take if you have an issue with an investment should be to contact an accomplished FINRA attorney. They know how to properly prosecute cases on the behalf of both brokers and investors.

If you are an investor, they are many ways that you might feel you’ve been wronged by a broker or financial institution. You might believe that an investment made was unsuitable to your investment portfolio, or that an investment was made based on misleading or even fraudulent statements made by your broker. You might feel that your portfolio was over-concentrated in one industry or area, which resulted in your investments not being profitable or worthwhile. Even more concerning, you might feel your account was subjected to unauthorized trading, or churning (excessive trading to increase broker commissions). However you might feel that your investments have been mishandled, it’s important to consult with an attorney experienced in FINRA litigation to evaluate your case and determine any legal discourse necessary.

Most investment issues are resolved through securities arbitration, and as stated earlier, many brokers outline this requirement in their opening documents. Securities arbitration has become the most popular means of resolving broker-dealer conflicts in Florida and nationwide, largely due to a Supreme Court decision in 1987, and has long been used as it provides a quick and inexpensive alternative to arbitrating through the courts. After beginning the arbitration process, there are many different factors which need to be determined and decided upon by all involved parties, including arbitrator panel composition, hearing locations, and other details related to the arbitration process. While cases typically take between 1 year and 14 months to resolve, the process can be delayed or expedited depending on the complexity of the issue or the discovery timeline.

In Orlando and Florida, there are strict deadlines and regulations related to securities arbitration that can elude an inexperienced individual. If you are concerned about your investments it’s important to consult an experienced attorney who understands all FINRA litigation and arbitration requirements as they relate to Florida. Contact the Hanley Law to have your case evaluated for free and determine the legal validity and potential outcomes of your unique situation.

Fraud Lawyers in Florida

Investing in securities can be a great way to secure your financial future; however, it’s important to understand the ways your investments can be mishandled. Understanding the different types of fraudulent activity that can occur is crucial if you plan to invest your money. Making an arrangement with a stockbroker should be carefully considered, as there are many ways that your investments can be mishandled. Stockbroker fraud constitutes a large portion of all lawsuits related to securities, so understanding the different ways your broker could be mishandling your accounts is essential for investors.

You might feel that your investments are unsuitable to your portfolio, over-concentrated in one area or industry, were misrepresented to you (either by purposefully withholding information or presenting misleading information), or that your broker was churning your investments. Churning refers to when a broker trades excessively on your behalf to increase their commissions. Insurance and annuity fraud is often subject to this; annuities, for example, offer some of the highest commissions for stockbrokers, and as such can be misrepresented or sold to investors when it is not in their best interest.

In addition to stockbroker fraud, there are other abuses that regulatory agencies like FINRA & the SEC (Securities & Trade Commission) look out for. Insider trading, fraud and market manipulation also occur in the industry, when individuals privy to certain company information use that information to help theirs or others investments. Investment schemes need to also be considered – these include methods for stealing investor’s money, using misrepresentation and instilling false hope into the investor. A well-known example of an investment scheme is the Ponzi scheme – Where brokers will use the money from new investors to pay their current clients, rather than money generated from the investment. To this end, when the Ponzi scheme is shut down, there isn’t enough real money that can be used to pay back investors. Pyramid schemes are another example of an investment scheme.

Securities violations come in many different forms and carry severe punishments. The process for solving these issues can come in the form of litigation or, more commonly, arbitration, and anyone looking to recover damages from a securities lawsuit should fully understand both options and the prerequisites to filing a claim. If you feel your investments have been mishandled or you may have been subject to securities abuses, it’s important to speak with an attorney who specializes in securities arbitration and litigation. The Hanley Law offer free case evaluations and can help you navigate through your claim.

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 Hanley Law, who are offering free case evaluations. Hanley Law have experience recovering losses for sole investors and in class actions suits against major investment firms.