Articles Posted in Texas Securities Fraud

If former Cetera Advisers broker James Christopher Hayne has handled your investments  and you suffered investment losses that you suspect were due to fraud or negligence, you should speak with an experienced stockbroker fraud law firm right away. Over the years, Hayne, a Texas broker, has been named in numerous customer arbitration claims brought  before the Financial Industry Regulatory Authority (FINRA).

With 17 years in the industry, Hayne, previously was a registered broker with Questar Capital, First Allied Securities, Edward Jones, and Morgan Stanley. His BrokerCheck record shows nine customer disputes, five of which were settled.

Most recently, there was the Financial Industry Regulatory Authority claim brought against Hayne by a customer that was resolved for $325K. The former client had requested $100K in damages. In that investor fraud case, Hayne  was accused of violating both the Texas Securities Act and California Corporate Securities Law, breaching contractual duties to the claimant, negligence in the way he handled the latter’s account, and causing the customer to suffer investment losses.

The Texas State Securities Board is ordering William H. Lowell, the president of Lowell & Co., to pay a $40K fine after he allegedly failed to properly supervise one of his firm’s ex- financial representatives. The formerly registered broker and investment advisor, Jody Bryant Bowers, allegedly lost nearly all of the assets in two client accounts after holding onto an exchange traded fund (ETF) for too long.

According to the state’s disciplinary order, Bowers bought and sold Proshares Ultra VIX Short-Term Futures ETF (UXVY) shares, which she “exclusively” traded in in the accounts of certain clients. This type of fund makes money through S&P 500 Index volatility, benefiting when there is a drop in the index.

Because the UXVY ETF is a leveraged exchange-traded fund that is a high-risk and costly investment, it is intended for short-term trading and must be monitored every day. However, Bower allegedly disregarded the warnings that were in the ETF’s prospectus and proceeded to hold on to positions in UVXY in two client accounts for too long, including 11,000 shares in one client’s account that were held there for 987 days. This caused the loss of 93% of that client’s initial investment. Bower also allegedly held on to 2,000 UXVY shares in another client’s account for 356 days, causing a 93% loss on the initial investment.

A Texas investor has filed an investor fraud claim against Kalos Capital, Inc. and its financial advisor Joshua Daniel Stivers, who operated under the name Platinum Wealth Advisory. The retired investor claims that Stivers promised her an investment plan that was low risk and conservative. Instead, the Kalos Capital advisor allegedly employed an unsuitable employment strategy that was improperly allocated and involved investing in private placements, including the GPB Holdings II, LP Fund.

The investor contends that this has resulted in substantial losses for her. Now, she is seeking up to $500K, with interest, plus costs.

GPB Private Placements Funds

According to the Texas State Securities Board, target=”_blank” rel=”noopener noreferrer”>LPL Financial (LPLA) will pay a $450K fine and buy back unregistered securities. The Consent Order noted that the settlement is part of the wider $26M one reached between the brokerage firm and state securities regulators in 2018.

In its deal with Texas, LPL agreed to buy back unregistered securities that it sold to investors in the state going as far back as Oct 1, 2006. LPL will pay “3% interest per year on the value of the securities either in damages if they were sold or by repurchasing the investments.” Similar terms were part of the wider agreement offered to all US states and territories regarding how to compensate investors who were sold unregistered stocks and fixed-income securities.

In January, Maryland Attorney General Brian Frosh announced his state’s settlement with LPL, which involved buying back these same types of securities, along with 3% simple interest annually, from investors. Aside from its restitution and rescission offers to Maryland investors, the brokerage firm agreed to pay a $499K civil penalty.

Cameron Jezierski, a Texas resident, has pleaded guilty to charges tying him to a Ponzi scam that defrauded over 400 investors of $360M. Jezierski and two other men, Jay Ledford, also of Texas, and Kevin Merrill were indicted last year for money laundering, identity theft, wire fraud, and conspiracy.

They allegedly persuaded investors to buy consumer debt portfolios that had defaulted by claiming that money could be made either through collecting on the debts or by selling the portfolios to third-party debt buyers. The investors who were harmed included restaurateurs, small business owners, retirees, construction workers, financial advisers, professional athletes, and other working professionals. However, instead of investing the money as promised, the three men allegedly used most of the funds on their lavish lifestyles or to pay earlier investors in a Ponzi scam-like fashion.

In the US Securities and Exchange Commission’s (SEC) investor fraud case against the three men, which was brought last year, the regulator’s complaint said that of the money raised by investors, more than $90M came from over 200 individual investors, almost $203M was from feeder funds made up mostly of individual investors, and $52M came from family offices.

William Neil Gallagher, a Dallas area-based radio host based who calls himself the “Money Doctor,” is now facing securities fraud charges accusing him and his companies, Gallagher Financial Group and W. Neil Gallagher, PhD Agency, Inc., of seeking to defraud older investors of their retirement money in a $19.6M Texas-based Ponzi scam/affinity fraud. The US Securities and Exchange Commission (SEC) brought the civil fraud charges against them.

According to the SEC’s complaint, from 12/2014 through 1/2019, Gallagher, who is based in the Dallas/Fort Worth area, raised at least $19.6M (maybe even up to more than $29M) from about 60 elderly investors ranging in age from about 60 to the early 90’s. He allegedly did this through his companies in what the regulator is referring to as an “affinity fraud investment scam” that is also a Ponzi scheme.

Gallagher is accused of using his radio shows to target retired Christian investors, who were his radio audience, and to whom he ingratiated himself by often making religious references on his shows. He also allegedly urged radio listeners to call GFC to set up meetings, during which he would help them with their retirement plans and give them advice regarding how to make money without having to take on any risks.

Virginia Regulator Fines UBS Financial After Its Broker Makes Unsuitable Recommendations

To settle charges brought by Virginia’s State Corporate Commission accusing a UBS (UBS) broker of making unsuitable recommendations involving gold and precious metals securities to 18 clients, UBS Financial Services will pay $319K—$289K to the clients and $30K to the state.

Virginia’s regulator contends that unsuitable recommendations were made in 2013 and 2014 and caused UBS clients to hold an overconcentration of these securities, which were not even suitable for some of them. The state said that this violated its securities rules.

The CFTC is ordering Lawrence/Laurence Hong, his wife Grace Hong, and their Pishon Holding LLC to pay over $1.25M in restitution for the misappropriation and fraudulent solicitation of futures contracts. The couple already pleaded guilty to related criminal charges last year, with Laurence sentenced to 180 months in prison and Grace to 72 months behind bars.

According to the CFTC’s complaint, which it brought against the couple in 2017, the Hongs defrauded investors of more than $11M. They allegedly did this by fraudulently soliciting people at a church gathering, through a YouTube video, and via misrepresentations that a Pastor made about Laurence’s supposed record as a successful trader and how much money he oversaw. The couple is accused of giving these misrepresentations to the Pastor before the church gathering.

The self-regulatory authority (SRO) also accused the Hongs of making false statements in solicitation materials, including that:

The US Securities and Exchange Commission has filed fraud charges against Phillip Michael Carter, Bobby Eugene Guess, Richard Tilford, and several entities accusing them of operating a multi-million dollar offering fraud. The regulator contends that the three men raised nearly $45 million from more than 270 investors in the US through the sale of high-yield, short-term promissory notes that were touted to prospective buyers as low-risk.

According to the SEC, investors thought they were getting involved in actual real estate development companies but instead ended up buying securities from entities with no assets. Carter, who is the principal of North Forty Development LLC and Texas Cash Cow Investments, is accused of then misappropriating $1.2M in investor funds for his own expenses, including a personal IRS tax lien and to operate a luxury hunting ranch. He also allegedly made over $3M in Ponzi payments that were issued to investors.

Now, the defendants are accused of offering and selling unregistered securities, violating the Exchange Act and the Securities Act, and acting as unlicensed brokers. The entities that are relief defendants in the case include:

Next Financial Group Inc. will be purchased by Atria Solutions. The Houston-based independent broker-dealer is the fourth brokerage firm that Atria, which is located in Dallas, has acquired since 2017. The other brokerage firms are Cadaret Grant & Co., Cusco Financial Services, and Sorrento Pacific Financial.

Next Financial currently has almost 540 advisers and representatives and nearly $13B in assets under management. According to InvestmentNews, Under the Next Financial deal, Atria will acquire the broker-dealer and its related companies. Following the acquisition, Atria will work with almost 2,000 advisers with about $65B in assets under administration.

Next Financial’s BrokerCheck record shows 19 disclosure events that have been settled, usually without the firm admitting to or denying the findings, for various causes, including:

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