Author: finralawyer

Identifying Risk Factors that Make Investors Susceptible to Fraud

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Avoiding Investment Scams which described risk factors that make investors susceptible to investment fraud and provides tips to avoid being scammed.

FINRA has identified the 5 following risk factors for investors falling prey to fraudsters:

  1. Owning high-risk investments.
    2. Relying on friends, family, co-workers for advice.
    3. Being open to new investment information.
    4. Failing to check the background of an investment or investment professional.
    5. Inability to spot persuasion tactics used by fraudsters.

FINRA urges investors to ask questions about investments and investment professionals by doing the following:

  1. Perform a Background Search on the Investment Professional: Ask if the investment professional is licensed to sell you the investment and confirm which regulator issued their license. Additionally, ask if and when their license has ever been revoked or suspended. A legitimate securities salesperson must be properly licensed, and his or her firm must be registered with FINRA, the SEC or a state securities regulator—depending on the type of business the firm conducts. An insurance agent must be licensed by the state insurance commissioner where he or she does business. To verify the investment professional’s response use FINRA BrockerCheck, contact National Association of Insurance Commissioners or contact North American Securities Administrators Association.
  2. Check Out Investments: Ask whether the investment is registered and, if so, with which regulator. Usually companies register their securities before they can sell shares to the public. You can find out whether a product is registered with the SEC by using the EDGAR database. Additionally, you can also use FINRA’s ScamMeter to determine whether an investment might be a scam.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA takes Disciplinary Action Against New Jersey Broker David Chapman for Forging the Signature of Deceased Client

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According to FINRA’s “Disciplinary and Other FINRA Actions” publication, David Glenn Chapman of PRUCO SECURITIES, LLC was recently barred for forging the signature of a deceased client in effort to renew the client’s insurance policy. Chapman also provided false information to FINRA regarding the renewal of the client’s policy.

FINRA found that Chapman signed the deceased client’s name to a letter without authority or consent, and submitted the letter to the insurance company to renew the client’s insurance policy. Chapman further arranged for his assistant to pay the outstanding premium on the policy using the assistant’s personal credit card. FINRA also states that Chapman claimed that the deceased client’s sister-in-law both signed and paid the premium for the renewal of the insurance policy; both statements allegedly false. As a result of such actions, Chapman earned a quarterly bonus of $325 from PRUCO SECURITIES.

According to FINRA’s Broker Check, David Glenn Chapman (CRD #1702066) of PRUCO SECURITES, LLC has been permanently barred as a broker or from otherwise associating with any FINRA member.

David Glenn Chapman was an acting broker for 25 years with the following securities firm(s):

PRUCO SECURITIES, LLC.
CRD #5685
MATAWAN, NJ
06/1988 – 01/2014

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
CRD #680
NEWARK, NJ
06/1988 – 12/1993

F.D. ROBERTS SECURITIES, INC.
CRD #693
02/1988 – 04/1988

If you or anyone you know has been a client of David Glenn Chapman or any of the above referenced securities firms and have suffered financial losses, please contact The Hanley Law to explore your legal rights. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation

FINRA Issues New Investor Alert, Should You Exchange Your Variable Annuity

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The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Should You Exchange Your Variable Annuity. The article explains what a variable annuity is, reasons investors should or should not make a section 1035 exchange, what investors should look out for and what regulators do to protect investors.

An annuity is a contract between an investor and an insurance company. The investor buys the annuity and the company promises to make periodic payments to the investor. There are three types of annuities, fixed, variable and equity-indexed. Fixed annuities are guaranteed a payout, variable annuities payouts depend on the investments chosen and equity-indexed annuities payouts vary, but typically not as much as a variable annuity.

Variable annuities are securities registered with the Securities and Exchange Commission (SEC) and their sales are regulated by the SEC and FINRA. These annuities may impose numerous fees when you invest in them, including surrender charges, mortality and expense risk charges, administrative fees, underlying fund expenses and charges for special features.

An investor might choose to make a Section 1035 Exchange because of new developments in annuity features, including an increase in investment options, less expensive variable annuity contracts, and enhancement of death and living benefits.

However, Section 1035 Exchanges are not always a good idea for investors. FINRA listed the following reasons why investors should not take part in the exchanges:

1) The credits offered are usually offset by the insurance company adding other charges.

2) Contract provisions, such as surrender charges, expire with an existing contract. New charges could be imposed with a new contract or may increase the period of time for which the surrender charge applies.

3) There could be higher charges, like annual fees for the contract.

4) The costly features might not benefit the investor.

5) The broker usually gets paid a higher commission for a variable annuity, compared to the sale of a stock, bond or mutual fund.

Prior to making a Section 1035 Exchange an investor should learn all the facts to determine if the exchange will benefit them. An investor should only exchange their investment when it benefits the investor, not just the financial advisor.

Financial Advisors and Insurance Agents must provide all information to the investor. The advisor or agent should offer the exchange only if it is determined that it could benefit the investor after conducting a review of the investor’s personal and financial situation and needs, tolerance for risk and financial ability to pay for the contract. This suitability obligation is based on FINRA Rules.

Several states and brokerage firms require forms to reflect customer acknowledgement of a replacement transaction. Such forms should provide a comparison of features and costs of an existing contract to the proposed contract and detail what is needed to make the exchange.

FINRA and the SEC have conducted special sales practice examinations that focus on the sales of variable contracts, annuities and life insurance products. The results indicated that some advisors and agents recommended unsuitable products for their customers and the firms did not properly supervise their employees to prevent the unsuitable recommendations.

Furthermore, FINRA points out that unsuitable sales of variable contracts are routinely investigated. Therefore, it is important for the investor to do research and protect their assets.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Fines and Suspends Naples Florida Broker Brian Pittman Over Sales Not Approved by Member Firm

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FINRA found that Brian Lewis Pittman participated in private securities transactions by making sales of oil and gas limited partnership interests that were not approved by his member firm, Westport Resources Investment Services, Inc.

FINRA found that between April 2011 and June 2011, Pittman participated in private securities transactions by referring customers with Westport accounts to invest in limited partnership interest in the Permian Advanced Oil Recovery Investment Fund 1 LP (“Permian”), which was being offered by Quest. The Permian limited partnership interests are a security. Specifically, Pittman referred two customers with Westport accounts to Quest. In total, these customers invested $375,000 in the Permian offering. Pittman also participated in the transactions by assisting the customers with processing the requisite paperwork to effect the transactions. In connection with these transactions, Pittman received compensation from Quest of approximately $45,000.

Pittman’s failure to obtain approval of his participation in such transactions has resulted in an assessed fine of $7,500 and suspension from any FINRA member firm for four months. According to FINRA Broker Check (CRD # 2963196), the suspension is in effect from December 15, 2014, through April 14, 2015.

Brian Lewis Pittman has previously been registered with the following member firm(s):

SABADELL SECURITIES USA, INC.
CRD #148137
MIAMI, FL
10/2012 – 02/2014

WESTPORT RESOURCES INVESTMENT SERVICES, INC.
CRD #24535
NAPLES, FL
02/2010 – 10/2012

BONDS.COM, INC.
CRD #43875
NAPLES, FL
10/2007 – 02/2010

JVB FINANCIAL GROUP, LLC
CRD #104412
BOCA RATON, FL
08/2007 – 10/2007

PINNACLE BROKERAGE SERVICE, INC.
CRD #107803
CHARLOTTE, NC
07/2007 – 08/2007

SUNTRUST INVESTMENT SERVICES, INC.
CRD #17499
SARASOTA, FL
03/2006 – 07/2007

CITIGROUP GLOBAL MARKETS INC.
CRD #7059
NEW YORK, NY
11/2003 – 02/2006

ROBERT W. BAIRD & CO. INCORPORATED
CRD #8158
MILWAUKEE, WI
12/1997 – 11/2001

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

J.P. MORGAN Broker Permanently Barred for Misappropriation of Funds

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Former J.P. Morgan Broker Alen Alic was permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public.

Prior to becoming associated with J.P. Morgan Securities, LLC as a securities broker, Alic was a retail bank employee with JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities. While working as a retail bank teller, Alic allegedly misappropriated $3,000 in cash from his teller drawer and converted it for his personal use without the bank’s knowledge or consent. (See FINRA Case #2014043420501)

If you have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

Ameriprise Financial Broker Randall A. Samson Barred by FINRA for Conversion of Customer Funds to Personal Bank Account

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Randall A. Samson of Ameriprise Financial Services, Inc. was barred for distributing funds from a customer’s 401(k) account into his personal bank account. In connection, Samson also provided false information to Ameriprise regarding the conversion of funds.

FINRA affirms that Samson abused his position as the plan’s trustee and financial advisor to complete a $10,000 distribution from customer’s 401(k) account into his personal bank account, which he used to fund payroll and other company expenses. Samson falsely represented the knowledge and consent of the customer for the distribution, and further provided false statements to his firm’s compliance department in connection with an inquiry into the $10,000 distribution.

According to FINRA’s Broker Check, Randall A Samson (CRD #2691518) of Ameriprise Financial Services, Inc. has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. Randall A. Samson first became registered with a FINRA member firm in 1996. He was registered with Ameriprise Financial Services, Inc. (or its predecessor firms) from January 1996 until Ameriprise terminated his registration in April 2014.

Randall A. Samson was an acting broker for 18 years with the following securities firm(s):

AMERIPRISE FINANCIAL SERVICES, INC.
CRD #6363
OAKDALE, CA
01/1996 – 04/2014

IDS LIFE INSURANCE COMPANY
CRD #6321
MINNEAPOLIS, MN
01/1996 – 07/2006

If you have suffered financial losses as a result of your Broker’s or Brokerage Firm’s misconduct, please contact the Hanley Law to explore your legal rights. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of fraudulent activity, you may be entitled to recover financial losses. Contact our office toll free at (239) 649-0050 for a free initial consultation.

FINRA- Before You Invest, Working With Your Investment Professional

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The Financial Industry Regulatory Authority (FINRA) issued an article titled Working With Your Investment Professional which provides tips to promote a productive relationship between customers and financial advisors.

FINRA has identified the following 10 tips for customers:

  1. Review the background of any investment professionals you work with or are considering working with. This can be done by using FINRA’s BrokerCheck.
    2. Be clear in your investment goals and risk tolerance with your financial advisor.
    3. Prior to investing, research the product.
    4. Discuss fees with your financial advisor. Fees include commissions, costs associated with the sale of an investment, or management charges.
    5. Review and retain you monthly account statements, confirmations and other correspondence.
    6. Contact your financial advisor immediately if you have questions or concerns about an investment. Additionally, contact the firm’s compliance department if you are unhappy with you financial advisor’s response.
    7. Be wary of exaggerated claims about an investment.
    8. Be wary of financial advisors who pressure you to invest quickly or do not provide you sufficient information about the investment.
    9. Never send money to a firm or financial advisor that you are hearing from for the first time.
    10. Contact the firm’s compliance department in writing if you suspect improper business conduct. Additionally, retain a copy of your complaint and in responses the firm sends.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article Titled Before You Invest, Suitability: What Investors Need to Know

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The Financial Industry Regulatory Authority (FINRA) issued an article titled Suitability: What Investors Need to Know which provides investors with a guide to understanding their investment profile.

FINRA’s suitability rule (FINRA Rule 2111) is based on the requirement that brokerage firms and their brokers, financial advisers or financial consultants deal fairly with their customers. In compliance with FINRA’s suitability rule (FINRA Rule 2111) brokerage firms and their associated persons “must have a reasonable basis to believe” that a transaction or investment strategy involving securities is suitable for the customer prior to making such a recommendation. The firm’s reasonable belief must be based on information obtained through the brokerage firm’s obligation to recommend securities or transactions that are suitable for the investor based on the investor’s:

  • age
    • other investments
    • annual income
    • liquid net worth
    • tax status
    • investment objectives
    • investment experience
    • expected time to reach financial goal
    • liquidity needs
    • risk tolerance

To help ensure that investors receive suitable investment advice, firms and their associated persons are required to diligently learn about a customer’s investment profile before recommending a transaction or investment strategy. Therefore, the suitability rule places an obligation on the brokerage firm and the firm’s associated person(s) to seek information from the customer prior to recommending a security or transaction.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of unsuitable investment recommendations. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article on Common Investor Problems

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The Financial Industry Regulatory Authority (FINRA) issued a new article called Common Investor Problems and How to Avoid Them. The article discusses the four most reported investment problems and provides steps investors can take to avoid them.

Listed below are summaries of the common problems, how to detect them, and how to avoid them.

  1. Misrepresentation: This is when the advisor makes untrue statements or omits information in regards to the investment. The problem is usually detected when the investor reviews prospectuses, account statements, confirmations and other documents or suffers a decline in their investment account. In order to avoid this problem, investors should understand the products they are investing in, ask the advisor to send them information on the investment and keep notes of their conversations with their advisor.
    2. Cold-Calling: This is when investors receive unwanted phone calls from advisors and the advisors use high-pressure sales tactics to solicit the investor to purchasing a product. Usually a cold-call consists of an advisor calling frequently, pressuring the investor to move quickly, asking the investor to sell a well-known security for an obscure product and/or using a three-call system to entice a buy. Investors can avoid cold-calls by asking the cold-call firm to add them to their “do-not-call” list, being wary of sales pitches, conducting a FINRA BrokerCheck on the advisor and firm and/or visiting the firm prior to sending money for the investment.
    3. Unsuitability: A suitability problem occurs when an advisor purchases an investment that is inconsistent with the investor’s objectives and investing profile. The problem can be detected by the investor reviewing their account and researching the investment or another professional pointing out the suitability issue. To avoid a suitability problem, an investor should read and understand all account documents, understand the investment, provide the firm with accurate data regarding income and risk tolerance and keep records of conversations with the advisor.
    4. Unauthorized Trading: This problem occurs when an advisor makes a purchase in an investor’s account without the investor’s knowledge or authorization. The problem is usually detected when the investor reviews his or her confirmations and statements and discovers an unknown product. To avoid unauthorized trading investors should review and retain all documents received from their brokerage firm, document all conversations with advisors and always repeat clear instructions to their advisor.

FINRA also suggests that investors should research investments prior to purchase and act quickly if you believe you have been wronged.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.

FINRA Issues Article Titled Prohibited Conduct

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The Financial Industry Regulatory Authority (FINRA) issued a new article called Prohibited Conduct. The article lists 13 actions that are prohibited in the securities industry. These actions include the following:

  1. Recommending unsuitable investment products based on the investor’s profile, objectives and risk tolerance.
    2. Making purchases or sales without the knowledge of the investor, unless the advisor received discretionary authority.
    3. Moving an investor from one mutual fund to another when there is no legitimate purpose.
    4. Misrepresenting and/or failing to disclose information to the investors in regards to an investment.
    5. Removing funds or securities without the knowledge of the investor.
    6. Charging the investor excessive mark-ups, markdowns or commissions on their investments.
    7. Making price predictions, promising investors they will not lose funds or agreeing to share in any losses of the investor’s account.
    8. Securities transactions that violate FINRA’s rules, these are usually private transactions between the advisor and investor in which the firm has no knowledge.
    9. Placing an order for the firm’s account before entering a customer’s limit order when there is no legitimate purpose.
    10. Failure by a market maker to display an investor’s limit order in its published quotes when there is no legitimate purpose.
    11. Not using due diligence when executing an investor’s order, this includes executing at the best price.
    12. Purchasing or selling an investment while in possession of non-public information about an issuer.
    13. Using fraudulent methods to elicit a transaction or induce the purchase or sale of and investment.

If you and have suffered investment losses, please contact the Hanley Law to explore your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be able to recover your financial losses. Contact us today toll free at (239) 649-0050 for a free initial consultation.