Investor Lawyers Blog

Investment Recommendations Don’t Always Equate To a Customer’s Best Interests

Published on: February 1, 2021 | by Shepherd Smith Edwards & Kantas, LLP

SEC’s Regulation BI May Not Be Protecting Investors The Way They Think

It has been nearly seven months since the SEC’s Regulation Best Interest (BI), a rule mandating that brokers NOT market themselves as financial advisors unless they actually are dually registered to be one, went into effect. The aim of this distinction is to let investors know whether they are working with someone who is bound to act in their best interests or not.

While brokers are supposed only to recommend financial products to customers that are suitable for them, this recommendation can also be based on what product will earn them the highest commission. This potential conflict of interest can be financially disadvantageous to an investor.

GME, AMC, BB and Other High Flying Stock Losses

Published on: January 29, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Retail Investors Make Stock Market History

The week of January 25, 2021, saw a remarkable market event where retail investors bid up the price of a handful of stocks in an attempt to force a “short-squeeze” on major Wall Street hedge funds. When an investor “shorts” a stock, which is a bet the stock is going to go down in price, the investor borrows the shares and then sells them at the existing price. If the share price goes down, the investors will “cover” the short by buying at the lower price to return the borrowed shares, capturing the difference between what the investor sold the shares at and the cost to buy the shares back in order to return them. Conversely, if the stock price goes up, the investor has to buy the shares at a high price than what the investor received when they were sold in order to return the borrowed share and loses the difference on the short play.

When shorting a stock, since the investor does not own the stock, the investor’s position is done on margin, that is, using credit from the brokerage firm. As the value of the stock increases, the margin balance increases. In such a situation, an investor can receive a “margin call”, where the brokerage firm forces the investor to close the position. In a margin call from a short position, that means forcing the investor to buy the stock, regardless of the price, which is when there is this short-squeeze.

Ex-Ameriprise Broker Angel Bardeche Accused of Earning $450K From Allegedly Unsuitable Mutual Fund Switches

Published on: January 29, 2021 | by Shepherd Smith Edwards & Kantas, LLP

FINRA Suspends Cincinnati, Ohio Financial Advisor

The Financial Industry Regulatory Authority (FINRA) has suspended former Ameriprise (AMP) stockbroker, Angel W. Bardeche, for nine months over allegations that she engaged in unsuitable mutual fund switches over a two-year period that earned her $450K in commissions.

The self-regulatory organization (SRO) also contends that the ex-Ameriprise Financial broker made 109 trades in eight non-discretionary customer accounts without authorization. Bardeche will pay a $10K fine and $5K in disgorgement.

Customers Seeking $1.8M Over Investments Recommended By Western International Securities’ David Bibo

Published on: January 26, 2021 | by Shepherd Smith Edwards & Kantas, LLP

California Stockbroker Accused Of Unsuitability & Misrepresentations

David Omori Bibo, a Western International Securities, Inc. registered representative is named in two pending customer disputes collectively seeking $1.8M in damages. The San Jose broker has been part of the industry for 25 years. He has seven disclosures on his BrokerCheck record.

Our California securities fraud lawyers are looking into investor claims involving Western International Securities broker, David Bibo, or any other registered representative from the firm. Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) today so that we can help you determine whether you have grounds for a Financial Industry Regulatory Authority (FINRA) arbitration case to recover your losses.

Crown Capital Securities Broker Lanny Howarter Is Named in $600K Unsuitability Claim

Published on: January 25, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Crown Capital Securities Broker Has Four Customer Disputes On Record

Lanny Ray Howarter, a Crown Capital Securities registered representative, is named in a more than $624K Financial Industry Regulatory Authority (FINRA) arbitration claim accusing him of unsuitability, negligence, breach of fiduciary duty, omissions, and negligence involving alternative investment products. This latest customer dispute was brought in November 2020.

At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our San Diego broker fraud attorneys are looking into claims involving Lanny Howarter and other Crown Capital Securities registered representatives who may have sold investments to customers even when they were unsuitable for their portfolios and risk tolerance levels.

David Lerner Associates Broker Rafael Klein May Have Unsuitably Recommended Energy 11 To Investors

Published on: January 21, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Pending Customer Disputes Involving David Lerner Associates Broker Rafael Klein Seek $300K in Damages

Rafael Scott Klein, a David Lerner Associates broker and Spirit of America Management Corp. investment advisor, may have unsuitably sold investments in Energy 11, LP to customers. Energy 11 is a non-traded limited partnership set up to acquire and develop natural gas and oil properties in the United States. It was marketed and sold through David Lerner Associates but is no longer available to new investors.

According to BrokerCheck, Rafael Klein, who has been a David Lerner Associates registered representative for 15 years, is currently the subject of two pending customer disputes.

FINRA Orders Worden Capital Management to Pay Over $1.5M For Brokers’ Churning

Published on: January 19, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Worden Capital Management’s Settlement Includes $1.2M in Customer Restitution

In December 2020, Worden Capital Management, a New York-based broker-dealer, arrived at an over $1.5M settlement with the Financial Industry Regulatory Authority (FINRA) over excessive trades made by the firm’s registered representatives.

The self-regulatory organization (SRO) contends that from January 2015 to October 2019, the New York brokerage firm did not have the kind of supervisory system in place that would have allowed it to “achieve compliance” with rules having to do with churning and excessive trading.

LPL Financial Acquires Lucia Securities

Published on: January 18, 2021 | by Shepherd Smith Edwards & Kantas, LLP

San Diego-Based Brokerage Firm Under Scrutiny Over Sierra Income Sales

LPL Financial Holdings (LPLA), the largest independent brokerage firm in the United States, has finalized its acquisition of Lucia Securities, a San Diego-based broker-dealer and registered investment advisor. With over $1.5B in assets, Lucia Securities and its advisors will operate under the name Lucia Capital Group.

Even prior to the acquisition, our San Diego broker fraud attorneys at Shepherd Smith Edwards and Kantas (SSEK Law Firm at Investorlawyers.com) were investigating Lucia Securities over its sale of Sierra Income Corporation investments to customers. LPL Financial also used to market and sell investments in this nontraded business development company (BDC) to investors but stopped.

SunTrust Brokers May Have Unsuitably Recommended Northstar Financial Services (Bermuda) to Investors

Published on: January 14, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Customers Claim That Northstar Financial Services Products Were Touted As Low Risk & Safe

If you are an investor who suffered losses while investing in Northstar Financial Services products that were recommended to you by a SunTrust Investment Services stockbroker, please contact Shepherd Smith Edwards and Kantas (SSEK Law Firm investorlawyers.com) today so that we can help you explore your legal options.

Unfortunately, there are financial advisors who may have marketed Northstar Financial Services’ investments as stable, safe, low risk, and liquid – like a CD or a money market account – even when that has proven to be far from the case. Now, Northstar Financial Services is in bankruptcy and undergoing liquidation proceedings. It is very likely that investors have lost most of, if not their entire, investment.

LPL Financial Fined $6.5M by FINRA Over Inadequate Supervision

Published on: January 12, 2021 | by Shepherd Smith Edwards & Kantas, LLP

Lax Oversight Purportedly Allowed An LPL Broker to Continue Defrauding Customers in Ponzi Scam

The Financial Industry Regulatory Authority (FINRA) has fined LPL Financial Holdings (LPLA) $6.5M due to purported supervisory inadequacies related to recordkeeping, fingerprinting employees that were non-registered representatives, and its financial advisers’ consolidated reports. The self-regulatory organization (SRO) found that due to weak oversight of these consolidated reports, an ex-broker was enabled to continue committing a $5M Ponzi scheme.

The former registered investment advisor, identified by Advisors Hub as ex-Norwalk, Connecticut broker James Thomas Booth, pleaded guilty to securities fraud in November. He was sentenced to 42 months behind bars. Booth has been named in 36 customer disputes.