Articles Posted in Securities Fraud

Watch Out for Brokers Looking to Make High Commissions During COVID-19

With the market crashing in the wake of the Coronavirus (COVID-19), many investors are suffering from massive losses in their portfolio and are looking to their brokers for investment advice.

Unfortunately, not all stockbrokers work with their customers’ best interests at heart, breaching their fiduciary duty in the process. There are also unscrupulous registered representatives who may even seek to take advantage of these hard times and try to persuade investors to buy into risky investments that charge high commissions. Such fraudulent and negligent behavior will lead to even more investment losses and ultimately, acts of stockbroker misconduct. 

Broker-Dealers Accused of Not Properly Supervising Custodial Accounts

The Financial Industry Regulatory Authority (FINRA) announced that it has fined five major firms $1.4M in total for not reasonably supervising custodial accounts. The broker-dealers are:

  • Citigroup (C), which will pay $300K.

Ex-Principal Securities Broker Allegedly Got Investors To Back Companies He Ran 

John Krohn, a former Principal Securities broker, is now the subject of a $28M securities fraud complaint. The claimants contend that he persuaded them to invest in venture capital companies that he either controlled, owned, or oversaw. 

Shepherd Smith Edwards and Kantas (SSEK Law Firm) is offering free, no-obligation initial case assessments to former Principal Securities customers of Krohn who sustained substantive losses while working with him. 

Rogue Broker Convicted & Faces Decades In Prison

A jury has convicted Anthony Diaz, a barred rogue stockbroker who was fired by several brokerage firms and has been the subject of more than four dozen customer complaints, of 11 counts of wire fraud and mail fraud. Each criminal court comes with a maximum sentence of 20 years in prison. 

Shepherd Smith Edwards and Kantas (SSEK Law Firm) have been speaking to former customers of Diaz who sustained investment losses while working with him. If you are one of these investors, contact our broker fraud attorneys today. You may have grounds for a civil claim against the brokerage firm where he was working at the time. 

Fired Cetera Advisors Broker Accused Of Unauthorized Securities Sales

Our stockbroker fraud attorneys are speaking to former clients of former Cetera Advisors LLC broker, Roger Lee Owens that sustained substantial investment losses while working with him. Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm) today to schedule your free, no-obligation case consultation. 

Cetera Advisors fired Roger Owens last year for allegedly taking part in unapproved private securities transactions. A few months later, the Financial Industry Regulatory Authority (FINRA) suspended Owens for a year, through August 2020, for the same reasons. 

Collateral Yield Enhancement Strategy (CYES) Damages: SSEK Investigating Merrill Lynch Financial Advisor 

Shepherd Smith Edwards & Kantas (SSEK), a law firm specializing in representing wronged investors is looking into allegations against Gordon Harper, a financial advisor with Merrill Lynch out of Upper Montclair, New Jersey. Prior to that, he worked at Banc of America and Edward Jones. 

According to allegations in a recent Financial Industry Regulatory Authority Inc. (FINRA) claim, Gordon Harper recommended something called Harvest Volatility Management CYES (also known as collateral yield enhancement strategy). Harvest is a money manager which, as the name implies, attempts to manage volatility. 

SSEK Investigating Ex-Commonwealth Financial Network Broker

SSEK Law Firm is meeting with investors who suffered losses while working with former Commonwealth Financial Network broker, Gerald Allan Eaton, or another financial representative from the firm. 

Eaton was recently barred by the Financial Industry Regulatory Authority (FINRA) in the wake of allegations that he fraudulently took money out of his clients’ accounts. Commonwealth fired him last month, claiming it had found that he’d engaged in “serious misconduct” that involved “fraudulently facilitated distributions” from accounts that were not for clients’ benefit and without letting them know or getting their permission. 

The US Securities and Exchange Commission (SEC) has secured an asset freeze against three people and entities accused of operating a $125M offering fraud. The regulator contends that the international trading program, run by Mediatrix Capital, Inc. and its principals Michael Stewart, Michael Young, and Bryant Sewall, touted an algorithmic trading strategy that was supposedly “highly profitable,” had never experienced a month when it didn’t make money, and rendered over 1600% of returns.

The SEC contends that the reality was a very different story, with the trading strategy regularly losing money–over $18M from trading just in 2018. The Commission is accusing the defendants of the following:

    • Misrepresentations involving the trading strategy’s ability to make money

Ex-target=”_blank” rel=”noopener noreferrer”>LPL Financial (LPLA) broker, Kerry L. Hoffman, is now facing fraud charges brought by the US Securities and Exchange Commission (SEC). Hoffman is accused of fraudulently selling $3.3M of unregistered securities, along with childhood friend Thomas V. Conwell, who is also a defendant in the civil case. The latter was barred by the regulator from the industry in 2000 after a separate $800K fraud that harmed 19 investors. Conwell pleaded guilty to criminal fraud charges against him and was sentenced to time in prison.

According to the SEC’s current complaint, the two men defrauded at least 46 investors in a dozen states by selling GT Media, Inc. securities to them. Hoffman was a registered LPL Financial broker during most of the time of the fraud, which allegedly took place between July 2015 and July 2018. He resigned from the firm in the wake of allegations that he served as consultant to GT Media without getting LPL’s approval or notifying the firm about these outside activities. He also was accused of helping a number of LPL clients and his own family members to invest in the company.

Hoffman allegedly offered and sold $350K of GT Media convertible promissory notes and $500K of the company’s stock to five advisory clients, making $50K in commissions. The Commission is accusing him of soliciting some of his advisory clients to invest in the unregistered securities but without letting them know that he had a conflict of interest. Not only was GT Media  paying him compensation, but also the company was paying back money he had let it using investors’ money.

The US Securities and Exchange Commission has filed fraud charges against Mark Suleymanov, who owns the options trading website SpotFN. According to the regulator, Suleymanov, who is a New York resident, defrauded retail investors of about $4M in a binary options scam that took place from at least 2012 to 2016.

Binary Options

Investor.gov describes a binary option as a kind of options contract upon which payout depends on a “yes/no proposition” outcome and typically involves whether a certain asset’s price will go over or under a set figure. Upon acquisition of the option, a holder no longer has to decide about exercising said binary option because they “exercise automatically.” The holder of a binary option is not entitled to sell or purchase the asset. Upon expiration of the binary option, the holder is given either a cash amount that was previously determined or nothing at all.

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