Investor Lawyers Blog

Infinity Q Founder James Velissaris Accused of Over $1B Valuation Fraud

Published on: March 14, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Brokerage Firms Sold Infinity Q Diversified Alpha Fund and Volatility Alpha Fund to Investors

The US Securities and Exchange Commission (SEC) has filed civil charges against James Velissaris, the founder and ex-chief investment officer of Infinity Q Capital Management. According to the regulator, Velissaris allegedly overvalued assets by over $1B while “pocketing” tens of millions of dollars in fees.

This is bad news for investors who were marketed and sold the Infinity Q Diversified Alpha mutual fund and the Volatility Alpha private fund by broker-dealers and their financial advisors. The two funds purportedly had about $3B in assets under management.

Ex-Garden State Securities Broker Joseph DeGregorio Allegedly Defrauded Elderly Investors

Published on: March 11, 2022 | by Samuel B. Edwards

SEC Says Older Seniors Were Defrauded of $1.2M by Garden State Securities Broker

The U.S. Securities and Exchange Commission (SEC) filed civil charges against former Garden State Securities financial advisor Joseph Orazio DeGregorio. The previously registered broker, who worked at 14 firms in 14 years, is accused of defrauding four elderly investors of $1.2M.

He has now settled the Commission’s charges with disgorgement, interest, and a penalty to be determined later. The U.S. Attorney’s Office for the Eastern District of New York has filed parallel criminal charges.

SSEK Law Firm Continues to Investigate Northstar Financial Services (Bermuda) Losses Involving East West Bank

Published on: March 11, 2022 | by Kirk G. Smith

Several East West Bank Customers Worked With Cetera Broker Linda Fang

Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) is continuing to investigate claims of losses involving East West Bank customers who invested in Northstar Financial Services (Bermuda) products.

East West Bank had signed a partnership agreement with Cetera Investment Services, LLC. The latter would offer “wealth management solutions and support” to the bank’s clients at several branches. East West Bancorp owns East West Bank. It was founded in Los Angeles in 1973 to cater to the Chinese American community in Southern California. It has branches in several U.S. states and China.

Advisor Group Broker-Dealers Facing $19.4M in GPB Capital Holdings Investor Claims

Published on: March 11, 2022 | by Samuel B. Edwards

In Focus Reports submitted to the US Securities and Exchange Commission (SEC) in February 2022, four brokerage firms from the Advisor Group network disclosed that they were respondents in 58 Financial Industry Regulatory Authority (FINRA) arbitration cases. These arbitration cases, from July 2019 through the end of 2021, were over GPB-related losses.

GPB Capital Holdings, LLC, which issued these private placements, is accused of operating an over $1.8B Ponzi scam that defrauded more than 17,000 thousand investors. GPB investors typically purchased these high-commission products in $50K to $100K tranches. They have since suffered substantial investment losses.

Distributions of GPB private placements were stopped in 2018. Ponzi fraud allegations, resulting investigations, and litigation followed. The GPB funds plunged in value. Meanwhile, dozens of brokerage firms marketed and sold these alternative investments to customers, earning many millions of dollars in commissions and fees.

FINRA Suspends Ex-Stifel Nicolaus Broker Andrew Elsoffer for Two Years

Published on: March 10, 2022 | by Kirk G. Smith

Ohio Financial Advisor Andrew Elsoffer Named in Multiple Customer Disputes

Andrew Bruce Elsoffer, who Stifel, Nicolaus & Co. fired in 2018, is suspended by the Financial Industry Regulatory Authority (FINRA) for two years, beginning March 7, 2022. The suspension comes in the wake of customer allegations that he exercised discretion in their accounts without their written authorization.

He also allegedly lent money to one client, his personal friend, for home renovations without the firm’s approval. The friend later repaid him.

Class Action Securities Lawsuit Filed Against GWG Holdings Over L Bond Losses

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

Texas-Based GWG Holdings and its Directors Are Defendants in Class-Action Lawsuit

Two investors seeking class-action status have filed a lawsuit against GWG Holdings, Inc. (NASDAQ: GWGH). They are accusing the Texas-based alternative asset manager and investor of life settlements, as well as its directors, of making misrepresentations and omissions in offering documents of its L Bonds.

GWGH sold more than $350M of these high-yield bonds between August 2020 and April 2021, when sales were discontinued due to liquidity problems. The company also failed to submit its 2020 yearly report in a timely manner. In February 2022, GWG Holdings defaulted on $3.25M of principal payments plus $10.35M of interest owed to L Bond investors.

Trusts of Late Investor Awarded $1.875M in UBS YES Case

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

FINRA Arbitration Ruling Grants Largest UBS YES Award to Date

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded a deceased investor’s family trusts $1.857M in their securities case against UBS Financial. The broker-dealer had involved the late Irving Siegel’s QTIP Trust and generation-skipping transfer trust in its UBS Yield Enhancement Strategy. This is the largest award to claimants over UBS YES losses to date.

Siegel passed away in 2013. He left the trusts for his family. The trusts accused the broker-dealer of misrepresentation, negligence, and fraud in their investor claim. A FINRA arbitration panel in Boca Raton, Florida, awarded Siegel’s QTIP trust $1.171M and his generation-skipping trust $517K. The rest of the award was for prejudgment interest and other fees.

Appointment of Class Representatives in Northstar (Bermuda) and Omnia Liquidations Doesn’t Help Investors

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

Joint Provisional Liquidators & Deloitte Updates Credit Holders and Policyholders

On February 23, 2022, Rachelle Frisby, the Deloitte Financial Advisory head in Bermuda and the British Virgin Islands, sent a letter to creditors and policyholders updating them about the liquidation proceedings involving Northstar Financial Services (Bermuda) and Omnia, Ltd. (formerly Old Mutual (Bermuda)). Northstar (Bermuda) filed for bankruptcy in 2020. Omnia submitted its filing in 2019.

Both entities, which Global Bankers previously acquired, have come under scrutiny in the wake of owner Greg Linberg’s conviction for conspiracy to commit wire fraud and bribery, as well as their subsequent liquidation proceedings. Meanwhile, investors of both entities have struggled to recover their investment losses.

Ex-Worden Capital Broker William Athas Accused of Excessive Trading That Cost Customers $1.1M

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

Ex-NY Worden Capital Broker Barred After Allegedly Charging $1.6M in Commissions

The Financial Industry Regulatory Authority (FINRA) has barred ex-Worden Capital Management and former SW Financial registered representative, William Nicholas Athas. This bar comes in the wake of allegations that he engaged in excessive trading in customer accounts.

According to the self-regulatory organization’s (SRO’s) complaint, Athas controlled the trading in these accounts, deciding the frequency and volume of trades. He also allegedly made the calls regarding which securities to purchase and sell, as well as the quantity and timing of each transaction. William Athas’ customers usually would go by his recommendations.

Massachusetts Charges Purshe Kaplan Sterling Investments Over Investors’ $2.3M in ETF Losses

Published on: March 3, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Brokers Allegedly Involved Were Also Harvest Group Wealth Management Investment Advisers

Massachusetts Secretary of the Commonwealth William Galvin has filed a complaint against Purshe Kaplan Sterling Investments (PKS Investments), accusing the broker-dealer of failing to supervise its financial advisors. These advisors who were dually registered through another financial firm allegedly sold exchange-traded funds (ETFs) that were unsuitable for customers.

This other firm was Waltham-based investment advisor Harvest Group Wealth Management. As a result, the state securities regulator contends that investors suffered $2.3M in losses.