Boutique Broker-Dealer Pays Another 7-Figures to Resolve Customer Disputes
Independent brokerage firm Purshe Kaplan Sterling Investments, Inc. has agreed to settle another Financial Industry Regulatory Authority (FINRA) arbitration claim with investors. This time, 50 customers had pursued financial recovery from the firm.
According to the broker-dealer’s yearly audited financial statement that it recently submitted with the Securities and Exchange Commission (SEC), the settlement amount is $1.6M. Wentworth Management Services, which owns the firm, will pay $1.2M while its insurer will cover the rest.
Other details about this latest FINRA arbitration settlement have not been disclosed.
Purshe Kaplan Has Paid $16M to Investors Since 2017
The largest amount, in 2019, was $9.5M for selling alternative investments to the Saginaw Chippawa Indian Tribe of Michigan. It was ex-Purshe Kaplan broker Gopi Vungarala who sold the Native American tribe $190 million in non-traded real estate investment trusts (non-traded REITs) and BDCs (business development companies). Vungarala earned $11.4 million in commissions from the sales, $9.6 million of which went to him.
The settlement was reached two years after FINRA ordered Purshe Kaplan to pay restitution of almost $3.6M to the tribe. The self-regulatory organization (SRO) also fined the broker-dealer $750K for failing to properly supervise Vungarala, who has since been barred from the industry.
Last year, in an institutional investor fraud case, Purshe Kaplan paid $1.5M to the St. Jude Heritage Medical Group in California. That FINRA arbitration case was related to the outside activities of then Purshe Kaplan broker, James Casey.
The broker-dealer claimed it was not aware of these activities by Casey, who was also a registered investment advisor and president of Integrated Wealth Management. St Jude accused him of fraudulently moving assets within its pension plan to earn commissions.
Purshe Kaplan is known for working with brokers who exit Wall Street to establish their own registered investment advisors.
Recently, FINRA suspended another former Purshe Kaplan broker, Tonya Smoake, after she raised $1.6M without notifying the brokerage firm. An-ex Merrill Lynch broker, she and five others left that firm in 2017 to establish registered investment advisor, Avestar Capital.
Purshe Kaplan Sold GPB Private Placements To Investors
As one of the brokerage firms that sold GPB Capital Holdings private placements to customers, Purshe Kaplan earned significant commissions even as its customers suffered huge losses in this alleged $1.8B Ponzi scam. It was former Purshe Kaplan compliance officer Toni Caiazzo Neff who turned whistleblower, suing the firm through a federal lawsuit in 2018.
Neff contends that after reviewing the GPB Holdings II, LP fund for the broker-dealer, she cautioned senior management that GPB Capital was improperly using investors’ money. She recommended that the firm not approve this alternative investment for sale to customers.
Neff claims that Purshe Kaplan ignored her assessment, choosing instead to earn the high commissions from the sales. After she went to FINRA about her concerns, the brokerage firm fired her. Dozens of brokerage firms have earned over $160M in commissions from the GPB private placement sales. Meanwhile, thousands of investors are still fighting to recoup their investment losses.
Experienced Broker-Dealer Fraud Attorneys
Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) represent investors in their FINRA arbitration claims against brokerage firms who were negligent, failed to properly supervise their registered representatives, or engaged in fraudulent activities. We have recovered many millions on behalf of our clients.
SSEK Law is also currently pursuing numerous broker fraud cases against the firms that sold GPB investments to customers.
Contact SSEK Law Firm today if you suffered losses from working with a Purshe Kaplan broker or a registered representative from another firm. Call (800) 259-9010 or contact us online today.