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

Posted by finralawyer on November 14, 2017 with 0 Comment

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 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.

Types of Broker Misconduct

Posted by finralawyer on November 14, 2017 with 0 Comment

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 Hanley Law 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.

Securities Attorneys Representing Clients in Florida and Nationwide

Posted by finralawyer on November 14, 2017 with 0 Comment

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 Hanley Law 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.

Former Merrill Lynch Broker Thomas Buck Barred by FINRA Over Numerous Allegations of Misrepresentations and Misconduct

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, former top Merrill Lynch Broker Thomas Buck (CRD #1024868) of Indianapolis, Indiana, was barred by FINRA over numerous allegations of engaging in misrepresentations and other misconduct in the handling of customer accounts.

Allegations stated that Buck held customer assets in commission-based accounts rather than fee-based accounts in order to generate higher revenues. According to FINRA, registered representatives are required to assess the comparative costs to customers of commission-based or fee-based accounts, and discuss those alternatives with their customers, which Buck failed to do. FINRA alleges that Buck not only failed to fully assess the suitability of the fee structure for certain clients, but in fact decided to use commission-based accounts despite knowing that it would have been less expensive for those clients to maintain fee-based accounts. As such, Buck allegedly misled customers regarding the relative costs of commission-based or fee-based trading for their accounts, in order to keep them in higher-cost commission-based accounts.

Furthermore, allegations also stated that Buck exercised discretion and made unauthorized trades in customer accounts without prior authorization from the customers or his member firm, Merrill Lynch. Allegedly, Buck placed trades in customer accounts without obtaining his customers’ consent in advance or even after placing the trade, exercised discretionary authority without obtaining authorization, and placed trades which he assumed the customers would want without obtaining their authorization to do so. As a result of engaging in such conduct, Buck, according to FINRA, directly violated FINRA rules and his obligation to observe high standards of commercial honor and just and equitable principles of trade

According to a recently published InvestmentNews Article, Buck has been Merrill Lynch’s top broker in Indiana since at least 2009, overseeing approximately $1.3 billion in assets. Since that time, Buck has allegedly pursued unethical and improper business practices which generated increased revenues and commissions, which in turn enhanced his status as a top-producing broker. Buck has accrued nearly a dozen customer complaints for unsuitable investments and unauthorized trading.

According to FINRA’s Broker Check, Thomas Buck (CRD #1024868) has been permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public. Buck was registered in the securities industry for thirty three (33) years, and was registered with the following firm(s):

RBC CAPITAL MARKETS, LLC
CRD #31194
INDIANAPOLIS, IN
Registered with this firm since 04/2015

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
CRD #7691
INDIANAPOLIS, IN
12/1981 – 04/2015

Broker Dealer Financial Services Corporation Fined by FINRA for Unsuitable Recommendations and a Failed Supervisory System

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Broker Dealer Financial Services Corp. (CRD#8073), an Iowa Firm, was censured and fined $75,000 for failing to establish and maintain a supervisory system, including written procedures, that were reasonably designed to ensure that the firm’s sales of leveraged or inverse exchange-traded funds (“ETFs”) compiled with applicable securities laws and NASD and FINRA rules.

Allegedly, representatives of Broker Dealer Financial Services Corp. made unsuitable recommendations to their customers by recommending high-risk ETFs. FINRA further alleged that Broker Dealer Financial Services Corp. did not investigate nontraditional ETFs before allowing its registered representatives to recommend them to customers. Furthermore, Broker Dealer Financial Services Corp. allegedly did not train its personnel in the appropriate use of nontraditional ETFs, and did not adequately monitor and supervise ETF activity in customer accounts. (See AWC No. 2012030436501)

Former Huntington Bank Broker of Columbus Ohio Barred by FINRA for Misappropriation of Client Funds

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Bryan A. Carnahan (CRD No. 3103811), a former broker with Huntington Bank in Hilliard, Ohio, was barred by FINRA for misappropriation of funds from a Huntington customer. FINRA alleged that between September 2013 and March 2015, Carnahan converted approximately $169,500 from one of his customers by causing fund transfers to be made on five occasions from the customer’s brokerage account to her bank account at the Firm’s affiliated bank. FINRA further alleged that Carnahan then had his client withdraw funds from her bank account and get cashier’s checks for supposed investments. FINRA alleged that after Carnahan took possession of the cashier’s checks, he fraudulently caused them to be re-issued in the form of multiple cashier’s checks, totaling approximately $169,500, that were payable to his own accounts and to the accounts of at least 13 of his other customers who had suffered investment losses. (See FINRA AWC No. 2015044908301)

According to FINRA’s Broker Check, Bryan A. Carnahan was permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public. Carnahan was registered in the securities industry for sixteen (16) years with the following firm(s):

THE HUNTINGTON INVESTMENT COMPANY
CRD #16986
COLUMBUS, OH
02/1999 – 03/2015

JOHN HANCOCK DISTRIBUTORS, INC.
CRD #486
BOSTON, MA
08/1998 – 12/1998

If you have suffered financial 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 represents investors nationwide and is dedicated to helping investors who have been victims of securities fraud. If you have been a victim of securities fraud, you may be entitled to recover your investment losses. Contact the Hanley Law toll free at (239) 649-0050 for a complimentary initial consultation.

Michigan Representative Fined and Suspended by FINRA over Unlicensed Insurance Sales and Misappropriation

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Brian Kenneth Edwards (CRD #6011762) was fined $5,000 and suspended by FINRA for fourteen (14) months for violating Michigan law and his member firm policies by allegedly permitting his insurance agency to enter into a client referral relationship with an individual who was not licensed to sell insurance. FINRA further alleged that Edwards created circumstances which allowed the unlicensed individual to misappropriate over $6,900 in funds from customers that were intended to pay insurance premiums. Despite discovering such misconduct, FINRA alleged that Edwards failed to report the misconduct to the insurance affiliate, and did not terminate his agency’s relationship with the individual until one (1) month later. (See FINRA AWC No. 2013037999901)

According to FINRA’s Broker Check, Brian Kenneth Edwards is not currently licensed to act as a broker or as an investment adviser. Edwards has been registered in the securities industry for one (1) year with the following firm(s):

STATE FARM VP MANAGEMENT CORP.
CRD #43046
BLOOMINGTON, IL
01/2012 – 08/2013

Former Arizona Broker Barred by FINRA for Conversion of Client Funds

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Adam Robert Bollinger (CRD #6065030), a former Edward Jones broker, was barred by FINRA for allegedly converting funds from seven (7) individuals, six (6) of whom were Firm customers. FINRA alleged that during the period of February through December 2014, Bollinger converted $17, 525 by requesting that the individuals make out checks payable to him for a variety of reasons, such as for charitable contributions. FINRA further alleged that rather than using the funds for their intended purposes, Bollinger converted the funds for his own personal use and benefit. (See FINRA AWC No. 2015044164801)

According to FINRA’s Broker Check, Adam Robert Bollinger has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. Bollinger was registered in the securities industry for two (2) years with the following firm(s):

EDWARD JONES
CRD #250
CHANDLER, AZ
08/2012 – 01/2015

Tallahassee Florida Broker Barred by FINRA for Misuse of Customer Funds

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, William Oscar Hardy Jr. (CRD #1444999) was barred by FINRA for misusing customer insurance premium funds which caused the customer’s policy to lapse. FINRA alleged that Hardy misused $658 in customer funds by applying them to various insurance policies held by the customer’s daughter and son-in-law, and depositing some of the funds into his personal business checking account, instead of paying the customer’s premium payments for his fixed life insurance policy. As a result, the customer’s policy lapsed. (See FINRA AWC. No. 2014039881901)

According to FINRA’s Broker Check, William Hardy has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. Hardy was registered in the securities industry for twenty eight (28) years with the following firm(s):

NYLIFE SECURITIES LLC
CRD #5167
TALLAHASSEE, FL
05/2002 – 03/2014

MUTUAL OF OMAHA INVESTOR SERVICES, INC.
CRD #611
OMAHA, NE
12/1985 – 03/2002

Wells Fargo Advisors, LLC Fined and Required to Revise Written Supervisory Procedures

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Wells Fargo Advisors, LLC (CRD #19616) of St. Louis, Missouri, was censured, fined $35,000, and required to revise its Written Supervisory Procedures (WSPs). The Firm allegedly accepted and held customer market orders, traded for its own account at prices that would have satisfied the customer market orders, and failed to immediately thereafter execute the customer market orders.

FINRA alleged that the firm failed to show the correct time of execution on the memorandum of numerous different brokerage orders, which was a direct violation of FINRA rules. FINRA’s findings also allege that the firm’s Written Supervisory Procedures did not provide for reasonable supervision designed to achieve compliance with respect to the applicable securities laws and regulations, and FINRA rules. (See FINRA AWC. No. 20120352228-01)