Investor Lawyers Blog

Ex-Windsor Street Capital Broker is Barred

Published on: June 18, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Jovannie Aquino, a former Windsor Street Capital broker, is now barred by the US Securities and Exchange Commission. Aquino was charged by the regulator last year with allegedly churning in clients’ accounts. The Commission is accusing Aquino of engaging in acts of fraud and omissions that caused customers to lose about $881K, even as he made $935K in commissions.

The SEC, in its complaint, accused the ex-Windsor Street Capital broker of excessive trading in retail customers’ accounts. The regulator said that Aquino allegedly convinced at least seven customers to maintain trading accounts at Windsor and told them he would engage in a trading strategy that would cause them to make money. He suggested frequent, short-term trades and charging fees and commission for each transaction.

The Commission said that because of how often the trading took place, along with the fees and commissions that the clients were charged, from the start they stood to lose money rather than make a profit. This means that Aquino didn’t have reasonable grounds for thinking that his trading strategy would be suitable for the customers despite the fact that suitability for recommending an investment is a requirement. Not only that, but also, for six of the investors who were harmed, the trading levels employed were entirely unsuitable for them in light of their investment goals, financial needs, the level of risk that they could handle, and other specifics.

Leon Vaccarelli Convicted on 21 Counts Involving Investor Fraud

Published on: June 14, 2019 | by Shepherd Smith Edwards & Kantas, LLP

A federal jury has found Leon Vaccarelli guilty of 21 counts of fraud and money laundering. Vaccarelli, a former registered The Investment Center broker, an ex-IC Advisory Services-associated investment adviser, and the owner of LWLVACC who conducted business through Lux Financial Services, is accused of defrauding investors, including elderly clients, of $1.5M.

Vaccarelli gave investment advice and sold securities and investments to families in Connecticut. According to Justice.gov, from about 2011 and 2017, the ex-former investment adviser and broker defrauded about 15 victims. He falsely represented that their money would be invested in IRA rollover accounts, certificates of deposit, money market accounts, and other investments that would earn interest.

Instead, Vaccarelli put investors’ money into his own business and personal accounts, commingling their funds with his, and used the money to help cover his own mortgage and other personal expenses, as well as certain business costs. Some customers’ monies were used to pay “interest” to other investors whom he was also defrauding.

Wells Fargo Sued for More than $1B in RMBS Fraud Case

Published on: June 12, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The Federal Housing Finance Agency (FHFA) has filed a more than $1B residential mortgage-backed securities (RMBS) fraud lawsuit against Wells Fargo (WFC) on behalf of Freddie Mac. The government-owned mortgage company had invested in over $1B in RMBSs backed by NovaStar loans prior to the 2008 financial crisis. NovaStar, once a subprime lender, is no longer in operation.

While several banks underwrote the securities, the investor fraud case is targeting Wachovia Capital Markets, LLC, an ex-Wachovia brokerage firm, that is now Wells Fargo Securities, LLC. Wachovia was a Wells Fargo acquisition in 2008.

According to the RMBS fraud case, FHFA claims that offering documents sent to Freddie about the quality of the loans backing the RMBSs were misleading. The independent federal agency contends that Wachovia, which played a part in packaging these securities, put out registration statements that were also allegedly misleading and included misrepresentations that eventually resulted in Freddie Mac sustaining huge financial losses.

Another Ex-LPL Broker Barred Following Misrepresentation Allegations

Published on: June 11, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Jason Nelson, an ex-LPL Financial broker (LPLA), is now barred by the Financial Industry Regulatory Authority (FINRA). The bar comes after Nelson refused to participate in the self-regulatory organization’s (SRO) probe into his sales activities.

LPL fired Nelson early last year after finding that he misrepresented customer financial information related to annuity sales. Without denying or admitting to FINRA’s findings, Nelson consented to the entry of findings and the bar. He worked nearly 14 years as a formerly registered broker. Previous to working with LPL Financial, Nelson was an Edward Jones broker.

It was just last month that FINRA permanently barred ex-LPL Financial broker Philip John Nalesnik, whom the broker-dealer also fired last year.

Recent Ponzi Fraud Allegedly Targeted College Grads

Published on: June 7, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission (SEC) is accusing a recent college graduate of running a Ponzi fraud that targeted young investors, including college students and other recent graduates. The regulator announced its emergency action against Syed Arham Arbab, Artis Proficio Capital Management, LLC, and Artis Proficio Capital Investments, LLC this week. It wants an asset freeze, emergency relief, civil penalties, and the repayment of allegedly ill-gotten earnings along with prejudgment interest.

At least eight college students, recent college graduates, or their relatives invested over $269K in the alleged hedge fund fraud. According to the regulator’s complaint, Arbab ran his scam out of a fraternity house close to the University of Georgia campus. He is a recent alumni and is accused of using his college connections to perpetuate his alleged scam.

According to the SEC’s complaint, Arbab sold investments in Artis Proficio Capital, a supposed hedge fund, that he touted as making up to 56% returns the year before, and he supposedly guaranteed up to $15K of investor money. Investors who purchased bond agreements were told that their money would be returned with a fixed return rate.

FINRA Bars Ex-Ameritas Broker Following Selling Away Allegations

Published on: June 6, 2019 | by Shepherd Smith Edwards & Kantas, LLP

James Anderson, an ex-Ameritas Investment Corp. adviser, is now barred by the Financial Industry Regulatory Authority (FINRA) after he failed to participate in a probe into allegations that he had taken part in selling away. Ameritas fired Anderson earlier this year after the brokerage firm’s own investigation found that he had engaged in selling promissory notes and indexed annuities that it had not approved.

Anderson was at Ameritas for 14 years. In April, a claimant filed a FINRA arbitration case accusing of making unsuitable recommendations by pushing promissory notes. The allegations are related to the selling away charges against him. The claimant is asking for $400K in damages.

Selling Away

Stephen Brandon Anderson Accused of Multiple SEC Findings

Published on: June 5, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Investment Advisor Allegedly Overcharged Clients $367K in Advisory Fees

The US Securities and Exchange Commission (SEC) has filed investor fraud charges against investment adviser Stephen Brandon Anderson, accusing him of defrauding clients and overcharging them at least $367K in advisory fees. Anderson ran River Source Wealth Management, LLC. The formerly registered investment advisory firm (RIA) is no longer in operation.

However, while in business, said the SEC, the RIA’s main income source was customer advisory fees. The fees were determined according to the assets under management of each customer.

Ex-Morgan Stanley Broker Suspended Over Alleged Churning

Published on: June 4, 2019 | by Shepherd Smith Edwards & Kantas, LLP

David Strnad, a longtime broker, has been suspended by the Financial Industry Regulatory Authority (FINRA) for 18 months. According to his BrokerCheck record, in 2016, the daughter of a client accused Strnad of churning in her father’s account while he was a registered Morgan Stanley representative. Following the allegations, FINRA opened a probe into the matter.

The self-regulatory authority (FINRA) found that Strnad made over 270 trades involving CDs in the account of one elderly customer between 2013 and 2015. While the client had given the former Morgan Stanley broker permission to purchase the CDs, Strnad allegedly exceeded the authority granted to him when he sold the CDs before they matured and used the money made from those transactions to purchase more CDs for the client.

As a result, said FINRA, the client ended up paying nearly $4300 commissions that were not warranted. Morgan Stanley has since paid that money back to the client.

FINRA Bars Additional Bad Brokers from Big Firms

Published on: June 3, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Former Securities America Broker Is Accused of Unsuitable and Unauthorized Trades

Michael Bastardi, an ex-Securities America broker, is barred by the Financial Industry Regulatory Authority (FINRA) after he failed to give the regulator the information it requested for an investigation into his alleged conduct. Bastardi was a registered representative with Securities America from 2014 to 2016.

In 2018, the brokerage firm submitted a Form U5 that disclosed that Bastardi had been named in a customer complaint accusing him of unauthorized trading, unsuitable margin trading, forgery, and fraud while at Securities America and previous to that when he was a registered Dalton Strategic Investment Services broker. His alleged misconduct is said to have resulted in about $250K in damages. The investor fraud claim is still pending.

Former Och-Ziff Capital Executive Admits To Lying

Published on: May 31, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Michael L. Cohen, the ex-head of Och-Ziff Capital Management Group in Europe, has pleaded guilty to one criminal count of lying to authorities. The guilty plea comes a year after he was accused of defrauding a client, a biomedical research charity, of millions of dollars. Although prosecutors have not identified the charity, sources have told various media that it was Wellcome Trust, which backs research in health, science, and other fields.

Cohen, who was based in the UK at the time while working for the hedge fund management firm, is the one who brokered the sale of shares in an African mining company to the charity. The company belonged to one of his business associates.

Cohen made $4M from the sale of the shares. He allegedly failed to tell the charity that he himself owned shares in the mining company.