Investor Lawyers Blog

SEC Fines Aegis Capital $2.3M Over Allegedly Unsuitable Variable Interest Rate Structured Product Sales

Published on: August 19, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Aegis Brokers in Melville, NY and Boca Raton, FL Allegedly Unsuitably Recommended VRSPs to 48 Customers, Including Elderly Investors

In July 2022, the US Securities and Exchange Commission (SEC) filed civil charges against Aegis Capital Corp., former Managing Director Alan Zelig Appelbaum, and ex-broker Paul Francis Gallivan. They are charged for allegedly unsuitably recommending variable interest rate structured products (VRSPs) to retail customers. These complex, structured products are usually issued only by well-known financial institutions.

According to the Commission’s settled administrative proceeding against Aegis, fourteen of its brokers from its Melville, New York and Boca Raton, Florida branches recommended VRSPs to four dozen customers for whom this type of investment was unsuitable. Without denying or admitting to the regulator’s findings, Aegis will pay a $2.3M penalty and $220K disgorgement plus prejudgment interest.

Customers of Ex-First Allied Securities Broker Chad Barancyk Are Requesting More Than $2.1M in Damages

Published on: August 18, 2022 | by Shepherd Smith Edwards & Kantas, LLP

FINRA suspends former Florida Financial Advisor

The Financial Industry Regulatory Authority (FINRA) has indefinitely suspended ex-broker Chad Ryan Barancyk after he failed to respond to the self-regulatory organization’s probe. FINRA attorneys requested more information on the arbitration award/settlement agreement, which the former broker allegedly didn’t address.

Barancyk was fired by Great Point Capital, Chicago, where he worked as a registered representative for less than a year between 2021 to 2022.

Ex-Joseph Stone Capital Broker Joseph Ambrosole Faces Excessive and Unsuitable Trading Allegations

Published on: August 17, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Customer of Former New York Financial Advisor Is Requesting Over $850K in Damages

In July 2022, the Financial Industry Regulatory Authority (FINRA) permanently barred Joseph Albert Ambrosole after he refused to testify in the self-regulatory organization’s (SRO) probe. FINRA led this investigation concerning an amended Uniform Termination Notice by Joseph Stone Capital, one of the broker-dealers where he used to be registered. According to that member firm, Ambrosole, who resigned, was the subject of a customer complaint accusing him of allegedly engaging in unsuitable trading.

The ex-New York broker, who worked in the industry for eight years, was most recently a Joseph Stone Capital financial advisor between 2017 to 2021. Other firms where Ambrosole used to be a registered representative include Alexander Capital, Meyers Associates, Global Arena Capital, Laidlaw & Co., and Obsidian Financial Group.

Spartan Capital Securities Broker James Pecoraro Suspended Following Excessive Trading Allegations

Published on: August 16, 2022 | by Shepherd Smith Edwards & Kantas, LLP

New York Broker Allegedly Cost Customers Six-Figure Losses, Trading Costs, and Commissions

The Financial Industry Regulatory Authority (FINRA) has suspended Spartan Capital Securities financial advisor James Robert Pecoraro for nine months. FINRA ordered him to pay a $10K penalty and nearly $69K restitution for allegedly excessively unauthorized trading in customers’ accounts. The New York broker consented to the sanctions without denying or admitting to the findings.

According to the self-regulatory organization (SRO), Pecoraro recommended to certain clients a pattern of very costly, high-velocity trading that involved him making frequent stop loss orders, resulting in the liquidation of securities positions. At this point, he would allegedly recommend new purchases to the investors. FINRA said these trades were excessive and unsuitable for the investors, given their investing profiles. The trades cost them investment losses of over $166K and total trading costs of more than $184K, including over $165K in commissions.

Investors Who Worked with NI Advisors Broker Shirley Ank Wong, also of AK Advisors in Daly City, CA, Suffer GWG L Bond Losses

Published on: August 9, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Elderly couple alleges unsuitability and concentration in risky speculative junk bonds

Two San Francisco retirees have filed a $500k Financial Industry Regulatory Authority (FINRA) case against NI Advisors, its President Sui-hock Goy, and broker Shirley Ank Wong. Broker Ank Wong also operates locally as AK Advisors in Daly City, CA. The investors contend they were unsuitably recommended L bonds despite wanting safe, secure investments for their retirement money.

These elderly customers are accusing Wong of using their shared cultural affinity to market these illiquid high-yield bonds to them. She then allegedly proceeded to concentrate $200k of their money in GWG L bonds while earning high commissions in the process.

Marc Cline, formerly of CFG Capital, Allegedly Recommended GWG L bonds to Florida Retirees

Published on: August 8, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Claimants file FINRA arbitration claim against National Securities

Two Florida retirees have filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against National Securities Corp. They seek up to six figures in damages for the losses they sustained in GWG Holdings L bonds. The risky, illiquid junk bonds were allegedly recommended to them by former National Securities broker Marc Cline. He operated locally in Florida under the firm name CFG Capital, LLC (Cline Financial Group).

Cline, who’s no longer a registered representative, has fifteen customer disputes listed in his CRD. These were either settled or are still pending.

Texas Investors Awarded $2.57M in Second FINRA Arbitration Win Against LPL

Published on: August 7, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Claimants also name former LPL Financial brokers Edward Miller and Antonio Reyna

Two investors were awarded $2.57m in their Financial Industry Regulatory Authority (FINRA) arbitration case against LPL Financial and Financial Resources Group. Also named as respondents but who were not ordered to pay damages are two former ex-LPL financial advisors. Antonio Reyna is now a Securities America broker in Texas, and Edward Bruce Miller is currently registered with Financial Resources Group Investment Services in South Carolina.

This is the investors’ second FINRA arbitration case against LPL Financial. They are alleging unauthorized trading, fraud, breach of fiduciary duty, and breach of contract. Financial Resources Group and LPL were both ordered to pay over $1.6M in compensatory damages and nearly $850K in the claimants’ legal fees. Arbitrators have recommended expunging the case from Reyna’s CRD while Miller continues to deny allegations.

Following SEC Charges Related To GWG L Bonds, CFP Board Suspends Western International Securities Broker Patrick Egan

Published on: August 6, 2022 | by Shepherd Smith Edwards & Kantas, LLP

California investment advisor accused of best interest violations

The Certified Financial Board has suspended Western International Securities financial advisor Patrick Michael Egan from using his CFP designation. The decision comes after the US Securities and the Exchange Commission (SEC) charged him, the broker-dealer, and four other Western International brokers with alleged Regulation Best Interest (Reg BI) violations related to their sale of GWG Holdings L Bonds.

The SEC contends they sold investors these risky, illiquid junk bonds despite the fact these investments were not in the latter’s best interests, given their investing profiles, financial goals, and risk tolerance levels. The CFP Board is the non-profit organization that administers the Certified Financial Planner Certification program.

Ex-Summit Brokerage Services Financial Advisor Francis Velten Barred Following Churning Allegations in Elderly Customers’ Accounts

Published on: August 5, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Former New Port Richey, FL broker is also accused of selling away

Francis Joseph Velten, most recently an Ameriprise Financial Services broker, is now barred by the Financial Industry Regulatory Authority (FINRA). He’s accused of churning in older investors’ accounts and encouraging them to surrender their annuities and mutual fund holdings to buy bonus annuities. This caused them to pay surrender fees while he earned commissions from the transactions.

Churning, which involves excessively trading in customer accounts, is one of the ways many brokers will try to earn additional money through resulting commissions and fees. Unfortunately, this can cause investors substantial losses, especially if done in excess.

Centaurus Recommended GWG Holdings L Bonds To Houston Investor Who Was Saving For Retirement

Published on: August 4, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Claimant files FINRA arbitration claim for up to six figures in damages

A Houston, Texas investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against Centaurus Financial after he sustained losses in GWG Holdings L Bonds. These risky junk bonds were unsuitable for this inexperienced retail investor, yet his Centaurus broker allegedly recommended and sold L Bonds to this claimant.

GWG Holdings, Inc., which sold $1.6B of L bonds to investors through brokerage firms like Centaurus, filed for Chapter 11 bankruptcy protection in April 2022. Thousands of investors seek to recover losses in these complex, speculative, and illiquid high-yield bonds.