Stoltmann Law Offices continues to investigate National Securities Corp broker Jonathan Aschoff and his recommendations of the following Biotech securities:
Avenue Therapeutics Inc (ATXI.O);
Checkpoint Therapeutics Inc (CKPT.O); and
Mustang Bio Inc. (MBIO.O)
Aschoff allegedly recommended and sold these investments to customers and failed to mentioned that his employer, National Securities, is owned by the same company that controls Avenue, Checkpoint and Mustang. Fortress Biotech Inc. (FBIO.N) is the company that oversees these investments. Its owners are Dr. Lindsay Rosenwald and Michael Weiss, who invested $3 million in National Holdings through an investment fund they controlled.
National supplies Fortress with 700 brokers, of whom almost a third have been flagged by regulators such as the Financial Industry Regulatory Authority (FINRA) and others. By recommending and selling these interests, National Securities aided Fortress in raising money for nine biotech ventures that are developing new drugs and treatments.
All brokers, including National Securities brokers and Jonathan Aschoff, are required by regulators to only recommend and sell those securities that are suitable for their clients, based on a number of factors. Some of these include their client’s ages, net worth, investment objectives and investment portfolio risk tolerance, among others. Investments in biotech ventures tend to be highly risky and illiquid ones that are not suitable for all clients based on these factors and others. If a broker recommends or sells these, and the client loses money because of it, his brokerage firm may be held liable for money losses on a contingency fee basis in the arbitration forum. The brokerage firm has a duty to reasonably supervise its employees in order to ensure that they do not violate securities laws and/or FINRA and internal firm rules. Brokers must disclose the risk associated with every security they recommend.
National Securities is Fortress’ in-house underwriter, and this creates a conflict of interest. To date, National Securities brokers, have helped raise at least $240 million from thousands of investors nationwide, to fund Fortress and its related biotech companies. This is according to data from the firm. Securities and Exchange Commission (SEC) filings indicate that Fortress-related deals could raise as much as $125 million in addition to the $240 million.
Thirty-five percent of National Securities brokers have a history of customer or legal disputes, financial matters and regulatory run-ins, according to a Reuters report published in June 2017. This is more than three times the national industry average. Aschoff himself, according to publicly available records with FINRA, has one regulatory matter against him, alleging that he “represented himself as a medical doctor to obtain confidential information about the effect of a drug on patients during clinical trials.” For this misconduct, he was fined $10,000 and suspended from association with any FINRA member firm for two weeks. He is currently registered with National Securities Corp in New York, New York, and has been since September 2016.