Articles Posted in Uncategorized

According to a recent Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA), James Wright allegedly used unapproved personal emails and text messages to communicate with an unregistered administrative assistant regarding firm customers. Allegedly, from August 21st, 2015, through May 26th, 2016, Wright communicated with his unregistered administrative assistant using two personal email addressed and the text message function of his personal smartphone, none of which were networked to the firm’s retention system for electronic communications. The emails included information regarding the customers’ assets, securities holdings, and financial goals. This is against securities laws and internal firm rules. For this, he was suspended from the industry for 10 business days and fined $5,000.

James Wright was previously registered with IDS Life Insurance Company in Minneapolis, Minnesota from July 2000 until July 2006, Ameriprise Financial Services in Garden City, New York from February 1987 until January 2014, and Raymond James in New York, New York from February 2014 until February 2015. He is currently registered with American Portfolios Financial Services in New York, and has been since March 2015. He has three customer disputes against him, alleging delays in transferring mutual funds to a moneymarket fund, a customer not being advised of potential tax consequences from a redemption, and lost money in investments due to the advice of the advisor. These are all against securities laws. This is according to Wright’s BrokerCheck report with FINRA online.

Stoltmann Law Offices continue to investigate broker Timothy Tilton Ayre of Massachusetts, who has been charged by FINRA with the unlawful distribution of unregistered cryptocurrency securities and fraud.  The FINRA complaint alleges that Ayre bought the rights to HempCoin in 2015.  He repackaged it as a security backed by his own company Rocky Mountain Ayre, Inc. (RMTN).  Calling it “the first minable coin backed by marketable securities”,  Ayres sold HempCoin telling investors that each coin was equivalent to 0.10 shares of RMTN common stock. After selling more than 80 million HempCoin securities, FINRA charged Ayre with the unlawful distribution of an unregistered security because HempCoin was never registered and no exemption applied.  FINRA also alleges Ayre defrauded investors in RMTN by making materially false statements and omissions regarding RMTN and its financial statements, along with the unlawful distribution of HempCoin and failing to disclose his creation of it.

AdobeStock_35532974-1-300x200Stoltmann Law Offices continue to investigate Securities America, after it was fined $175,000 by FINRA. Between August 2014 and January 2016, FINRA charged that brokers with Securities America, overlooked or violated suitability concerns with two classes of variable annuities that were sold.  During this time frame, FINRA alleged that Securities America received close to $53 million from sales of share class variable annuities, including over $6 million from the sale of 1,904 L-share contracts.  These products have shorter surrender periods, and are therefore more expensive.  Investors pay a higher fee in exchange for increased liquidity which is unsuitable for many investors.  Firms that fail to disclose to investors these risks and fees, are more likely to be confronted with allegations of misconduct in the course of their business.

AdobeStock_35532974-1-300x200Were you a client of TD Ameritrade, Charles Schwab, ETrade or Fidelity? Were your account positions sold out to satisfy margin calls? If so, under some circumstances, the brokerage firm can be sued to recover the losses associated with the margin blowout activity.

Ordinarily, brokerage firms have the right to liquidate investors out of various positions to satisfy margin calls. We are currently representing clients who were told by the brokerage firm they had a specific period of time to satisfy the margin calls. Unfortunately, the firms then proceeded to sell the clients out of those positions prior to the time given to satisfy the margin calls. The verbal representations made by the firm modified the contract and required the firms to give the investors that period of time to satisfy the calls.

The FINRA arbitration claims process or class-action lawsuits can be used to recover damages associated with the margin blowouts. Please call our law firm in Chicago Illinois for a no-cost review by an attorney.

AdobeStock_41845221-300x212If you lost money because of a recommendation by Horter Investment Management, please call our Chicago-based law firm today. We are securities attorneys who help clients bring claims against firms like Horter Investment Management. Horter sold shares of LJMIX as part of its “sleeves” investment philosophy. Notwithstanding the name of the fund, LJMIX was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses. This occurred on February 5th, 2018, when the S&P 500 fell 4.6% and by the close of trading on February 6th, LJMIX had lost 88%. It was an inaptly named Fund, as it actually pursued the opposite of a capital preservations and growth strategy, and was implementing an options trading strategy with unlimited downside (in other words, no preservation) and limited upside (no growth). A professional investment advisor like Horter must understand the options strategy employed by a fund like LJMIX and not simply relied on the name of the fund when it selected it as part of the firm’s “sleeves” strategy.

Hundreds of clients of the Cincinnati, Ohio-based Registered Investment Advisor (RIA) had LJMIX in their portfolios. This investment was unsuitable for many clients due to its speculative nature, which included the risk of total loss. As a fiduciary investment advisor, Horter had a legal obligation to understand LJMIX prior to selecting it as part of its “sleeves” strategy.

This is not the first time Horter has been in hot water in connection with a mutual fund. According to an Order Instituting an Administrative Cease and Desist against Horter brought by the Securities and Exchange Commission (SEC) last year, Horter Investment Management was accused of making misstatements to clients concerning F-Squared Investments, Inc. (F-Squared), which materially inflated performance track record for its AlphaSector strategy. These alleged misstatements were made between January 2012 and October 2013, and resulted in a $250,000 fine to Horter.

According to a recent InvestmenNews article, Merrill Lynch has reached an agreement with the Securities and Exchange Commission (SEC) related to its sale of shares of a Chinese software company that has been found to be operating a fraud scheme. The SEC claimed that Merrill failed to perform proper due diligence functions in the unregistered sales of shares of Longtop Financial Technology Ltd. Merrill Lynch will be required to pay a penalty of $1.25 million and more than $154,000 in disgorgement and prejudgment interest from commissions and fees earned on the improper sales. The bank also agreed to be censured and consented to the order requiring it to cease and desist from committing or causing any future violations of the registration provisions of the Securities Act. The distribution generated almost $38 million in proceeds for the overseas issuer and its affiliates. According to the case summary, from January 2011 until August 2011, Merrill violated the registration provisions of federal securities laws by effecting unregistered sales of nearly three million shares of Longtop Financial securities for a customer.

Did your Credit Suisse broker recommend to you The VelocityShares Daily Inverse VIX Short-Term (XIV) exchange-traded note (ETN) to you? If so, you may be able to recover your losses with this security on a contingency fee basis in the Financial Industry Regulatory Authority (FINRA) arbitration forum. XIV supposedly gives the opposite return of the Cboe Volatility Index (VIX), which is the market’s turbulence gauge, and is supposed to bet on calm markets. It and its sister fund, ZIV, are designed to go up when the volatility of the S&P 500 goes down. XIV was issued by Credit Suisse, slumped almost 4 percent on Tuesday morning, and closed down 93 percent on the same day, losing nearly 100 percent of its value. Many exchange-traded securities that are also supposed to be bets on calm markets were halted Tuesday, after losing the majority of their value overnight.

According to the XIV fund’s prospectus: “The ETNs, and in particular the 2x Long ETNs, are intended to be trading tools for sophisticated investors to manage daily trading risks…The ETNs are riskier than securities that have intermediate or long-term investment objectives, and may not be suitable for investors who plan to hold them for longer than one day.”

XIV is down more than 80 percent in extended trading as of yesterday, because of its popularity with hedge funds betting on an ever-calm market. Because of the market decline, fear has sparked among some traders that violent declines in ETNs like XIV would cause market volatility measures to spike further. It also raised fears of even bigger losses from hedge funds and other investors holding this security, as they may not be able to sell.

AdobeStock_49363801-1-300x200Attorneys at Stoltmann Law Offices are investigating sexual harassment claims against brokerage firms such as Wells Fargo. A former Wells Fargo broker claimed sexual harassment against the firm in a lawsuit that points the finger at colleagues and manager. Laurie A. McNally filed a complaint in federal court in the eastern district of Pennsylvania, alleging that Wells Fargo allowed her to be subject to lewd comments from colleagues and managers, lower pay than comparable male producers, and retaliation for reporting fraudulent practices at three Philadelphia-area branches where she worked. She also alleged that she was given far less administrative support than her male counterparts. She alleged that she was told by a regional manager, “we only hire hot women and you qualify,” and that other male employees told her she should be wearing thigh-high stockings because it was “thigh-high Thursday,” to “lift up her shirt” for one employee, and suggested they have carnal relations “one time before I die of cancer.” It also asserts that the branch manager, David Lucy, suggested that she “had to do something to get something.”

In a separate occurrence, a former Wells Fargo broker Jessica Nibert, stated that her supervisor, Robert Courtwright began making sexual advances toward her almost immediately after she was hired by the firm. She alleged that Courtwright questioned whether she would like to make more money outside the firm by cooking him dinner in the nude. He also allegedly and intentionally put her cubicle next to his so he could see her “ass and legs all day.” He told her she had a “nice butt,” and made a pass at her at her infant’s funeral, telling her she looked “hot,” and that he couldn’t tell she had “just had a baby.” He then allegedly called her at odd hours at home to find out whether she was in the shower because he “loved thinking of her naked.” Nibert claims it led to the deterioration of her marriage because she was hesitant to go to human resources, thinking she would be terminated if she took action against him.

According to a recent InvestmentNews article, Zachary Berkey and Daniel Fischer, two brokers with Four Points Capital Partners, were charged with churning the accounts of 10 customers. The brokers clients allegedly lost a total of $573,867, according to the complaint, while the brokers received $106,000 and $175,000 respectively, in commissions. Mr. Fischer is ordered to return his gains with interest and pay a $160,000 fine. He also agreed to be barred from the securities industry by the Securities and Exchange Commission (SEC) in a separate action. He was also ordered to pay $5,000 to the Financial Industry Regulatory Authority (FINRA) in connection with his trading activity. Mr. Berkey’s litigation with the SEC will go to federal district court in Manhattan.

Churning is when a broker excessively trades a customer’s account in order to generate commissions for himself. This can lead to unnecessary fees for the client and is against securities laws. Four Points Capital can be held liable for investment losses, because the firm had a duty to reasonably supervise its employees while they were registered there. Four Points Capital can be sued in the FINRA arbitration forum on a contingency fee basis.

According to FINRA records, Berkey was previously registered with The J.B. Sutton Group, Woodstock Financial Group, National Securities Corp, and Four Points Capital Partners in Melville, New York from April 2013 until January 2015. He has four customer disputes against him and three judgments/liens. He is not currently registered as a broker. Daniel Terry Fischer was previously registered with Monroe Parker Securities, On-Site Trading, Worldco, Quest Capital Strategies, Hold Brothers On-Line Investment Services, E*Trade Securities Dimension Trading Group, Dimension Securities, WTS Proprietary Trading Group, and Four Points Capital in New York, New York from November 2012 until July 2017. He is not currently registered as a broker.

FOX Business
The Wall Street Journal
FOX News Channel
USA Today
abc NEWS
Contact Information