U.S. Attorney’s Office
March 21, 2014
Western District of New York
U.S. Attorney’s Office
March 21, 2014
Western District of New York
Both Morgan Stanley and Edward Jones are in hot water because of mismanagement and overcharging of fees regarding the companies’ 401(k) plans. Morgan Stanley was accused of mismanaging the firm’s 401(k) retirement plan and costing 60,000 employees hundreds of millions of dollars by picking inappropriate and high-priced investments. This was done in order for the firm to profit from those sales. A lawsuit was filed against the firm last month and included a class action status for all who were enrolled in the $8 million plan from March 2010 until February 2016. The lawsuit complaint argued that Morgan Stanley did not act in the best interest of its customers by placing them in 401(k) plans that had high fees.
Edward Jones is also facing a lawsuit from an employee of the bank who alleges that the company’s 401(k) plan has caused employees to pay high fees for investment management and record-keeping services that supposedly cost them millions in retirement savings. Allegedly, from August 19, 2010 until the present, customers potentially lost $8 million because of the unreasonable fees paid. It is also alleged that the plan offered high-cost mutual fund share classes when lower-cost alternatives were available for the same funds. The participants in the 401(k) would have saved tens of millions more dollars if assets were invested in collective investment trust funds and separately managed accounts. Edward Jones allegedly did not offer its customers the options of purchasing lower-cost index funds and stable value funds. The funds they offered underperformed and more than $100 million was lost as a result.
Stoltmann Law Offices is interested in speaking to those individuals who may have invested money with Jack Jarrell, an adviser with OAG Wealth Management in Kirkland, Washington. According to the Securities and Exchange Commission (SEC), Jarrell and another adviser, Jeffory Churchfield, sold promissory notes of the Providence Fixed Income Fund and Providence Financial Investments, which are purported to be investments in “factoring” of accounts receivable in Brazil. The SEC alleged that these companies did not account for the funds’ use of capital, and that they concealed the fact that they faced serious financial difficulties. The SEC subsequently alleged that the companies were ponzi schemes. Providence was unable to answer basic questions about the structure of its organization, use of investor proceeds and current financial situation.
Jarrell has been registered with OAG Wealth Management in Kirkland since December 2013. Jarrell filed for bankruptcy in 2010. If you or someone you know invested money with Jack Jarrell or OAG Wealth Management or with the Providence Fund, please call our Chicago-based law offices today to speak to an attorney. We may be able to help you bring a claim against OAG for investment losses. They may be responsible for losses and we sue firms such as OAG on a contingency fee basis. We only get paid if you recover your losses.
On Tuesday, the Securities and Exchange Commission (SEC) fined Apollo Global Management $52.7 million for allegedly breaching its fiduciary duty. Apollo was accused of failing to disclose fees and conflicts of interest to investors. It also failed to adequately disclose to its limited partners that it may accelerate future fees for monitoring portfolio companies when it ended consulting and services agreements. The firm also allegedly failed to supervise a senior partner who charged personal expenses to the funds. The executive who was charged was not named, but was twice caught “improperly charging personal items and services” to Apollo’s funds and its investors. His misconduct took place from early 2010 until mid-2013 and his transgressions included “fabricating information to Apollo in an effort to conceal his conduct.” His investigation is ongoing.
This is the latest in the SEC’s crackdown of private equity firms. Over the last years, the SEC has taken action against 10 private equity firms, including the Blackstone Group and Kohlberg Kravis Roberts & Company. Most of the firms were investigated and fined because of their failure to properly disclose fees and conflicts of interest to fund investors. In the case of Apollo, the SEC claims that the firm failed to fully inform its investors about so-called monitoring fees. The firm charges those fees to some of the companies it owns, and Apollo claims that it is entitled to collect on the consulting and advice it provides these companies.
The SEC also found that Apollo was “accelerating” the monitoring fees when one of its companies was sold or went public. Upon the sale of an IPO, for example, Apollo would turn the years of fees into one lump-sum payment, which would effectively reduce the “amounts available for distribution to fund investors.” Apollo was also accused of failing to fully disclose its practice of accelerating monitoring fees before clients invested in the firm. Apollo was also supposed to pay interest to funds from which it took out loans. The SEC found that that interest was “instead ultimately allocated solely” to the Apollo affiliate itself.
The Securities and Exchange Commission’s (SEC) Atlanta office is conducting an inquiry into Global Ministries Foundation and the 2011 sale of $12 million worth of bonds to purchase the Warren and Tulane apartments. The apartments are allegedly infested with roaches and caked with sewage. The ministry owns two municipal bond financed low-income apartment complexes. The trustee, Bank of New York Mellon Corp, sued Global Ministries in May and won the appointment of a receiver after the bonds defaulted. Two months earlier, in March, the U.S. Department of Housing and Urban Development cut off rent subsidies for more than 1,000 residents that backed the bonds and relocated them because of health and safety violations. Subsequently, the bonds defaulted.
Richard Hamlet, a Baptist minister, ran GMF, which built a 10,500 unit low-rent real estate empire with money raised in the municipal-bond market. In 2011, GMF issued $12 million in bonds through Memphis Health, Educational and Housing Facility Board, to finance the purchase of Warrant and Tulane in an area where as many as 40 percent of the families live in poverty. The SEC has since told the receiver to preserve documents created on or after June 1st, 2010, concerning the bond issue.
Michael Barranco, a former registered broker with LPL Financial, was accused of soliciting clients to invest in private securities transactions. He was terminated from LPL for the same thing on December 17, 2015. According to his recent Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA), Barranco was involved in almost 40 private securities transactions with three different issuers without providing proper notice to his firm between 2010 and 2015. Between November 2010 and February 2011, Barranco participated in 35 transactions through which 27 individuals, most of whom were firm customers, invested at least $2,087,000 in TMG notes. Many of them held their notes in LPL accounts. For this Barranco was suspended for two years and fined $20,000. His actions were against securities rules and regulations.
Barranco was registered with Raymond James Financial in Montgomery, Alabama from November 2004 until April 2007 and LPL Financial in Montgomery from April 2007 until December 2015. He is not currently registered with any firm and not licensed within the industry. Please call our law firm today if you invested money with Michael Barranco. We may be able to bring a claim against LPL Financial for failing to reasonably supervise its representatives. They may be liable for investment losses. We sue firms in the FINRA arbitration forum on a contingency fee basis for investors.
Mark McLaughlin, a Westover, Alabama mayor was recently and permanently barred from selling securities by the Financial Industry Regulatory Authority (FINRA) and the Alabama Securities Commission. Both entities alleged that McLaughlin engaged in unethical trading practices between 2010 and 2012. Between September 1989 through October 2012, he had served as a registered securities broker with multiple firms, including with Securities America Inc. He has been the mayor of Westover since 2004.
On November 8, 2013, the Alabama Securities Commission ordered McLaughlin to be “barred from further offers or sales of any security into, within or from the state of Alabama.” The commission is a state governmental agency regulating the securities industry in Alabama. This came after the investigation into whether McLaughlin may have committed several violations of the Alabama Securities Act. The ASC alleged that McLaughlin executed a total of 1,009 trades in his 10 most active accounts during the time period between August 1, 2011 until August 31, 2012. One of his clients paid $1,980.63 in commissions in February 2012 alone and had a turnover measure of 831 for a one-year period, which is high.
In November 2014, FINRA enacted a permanent bar on McLaughlin, who previously entered into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA, which claimed that he had engaged in excessive trading and had recommended unsuitable short-term trading of A-share mutual funds. A client alleged that losses in his account were caused by excessive trading. This is also against securities rules and regulations.
Have you lost money with either Daniel Dettlaff or Christopher Wacker of Park Avenue Securities in Brookfield, Wisconsin? If so, the attorneys at Stoltmann Law Offices are interested in speaking with you about your options of recovering your investment losses. We are securities attorneys who sue firms such as Park Avenue Securities in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis to recover money for investors. Please call us today for a free consultation. We may be able to bring a claim against the firm on your behalf.
FINRA alleged that Wacker lied about speaking to a client who wanted to sell securities. He did not, in fact, speak to the client, he only spoke to an unlicensed administrative assistant regarding the fabricated orders. This same assistant was alleged to have stolen $255,000 from two Park Avenue Securities customers by making unauthorized transfers from their accounts. These customers were serviced by Daniel Dettlaff. The misconduct occurred between 2010 and 2013. Wacker agreed to settle the allegations by paying a $5,000 fine and taking a two-month suspension.
According to his online BrokerCheck report, Dettlaff was registered with Northwestern Mutual Investment Services in Milwaukee, Wisconsin from October 1990 until January 1994, Robert W. Baird & Co. in Milwaukee from July 1992 until January 1994 and Guardian Investor Services in New York, New York from January 1994 until May 1999. He is currently registered with Park Avenue Securities in Brookfield, Wisconsin and has been since May 1999. He has one investigation against him.
The Securities and Exchange Commission (SEC) banned Lee Weiss from the brokerage and investment advisory industry for his involvement in a fraudulent scheme. A French company claimed it could reduce the harmful effects of tobacco smoking, and Mr. Weiss and his registered investment advisory firm fraudulently advised clients and hedge funds to invest more than $40 million in securities issued by companies owned by Biosyntec. Biosyntec claimed to have developed a cigarette filter that reduced the risk of lung cancer. Mr. Weiss was paid $600,000 by the company shortly after the investments were made. Weiss and his firm, Family Endowment Partners LLC, will pay about $8.4 million in relief to investors he duped. Combined, they have been ordered to pay a $1.5 million civil penalty.
The SEC alleged that from 2010 until 2012 Mr. Weiss and his registered investment advisory firm fraudulently advised clients and hedge funds to invest more than $40 million in securities issued by companies owned by Biosyntec. The SEC alleged he failed to disclose conflicts of interest to clients and how their investments were used. The agency filed a complaint against him in federal court in Massachusetts last year. In 2011, Weiss advised a client of Family Endowment to invest $2.5 million in a Biosyntec subsidiary, knowing the money would be used to pay delinquent interest owed to other clients of the firm, according to the complaint. He also recommended customers buy $8.5 million in the company’s notes and stock, failing to disclose that the funds would pay financial obligations rather than benefit the company in which they invested. He also failed to disclose the “significant risk” that the notes would never be repaid.
Did you lose money with Kory Keath? The Financial Industry Regulatory Authority (FINRA) brought a regulatory complaint against her, alleging that she violated FINRA rules when she failed to disclose to Edward Jones that her daughter and grandson were named as beneficiaries of a customer’s trust. A customer also allegedly paid for her trip to Egypt in 2010. Keath was a financial advisor and registered representative of Edward Jones from 1995 through April 2015. She worked at an Edward Jones’ branch office in Enumclaw, Washington. She was terminated from Edward Jones because of the transgressions described above. Edward Jones had a responsibility to reasonably supervise her while she was employed with them. Because they did not, the firm may be liable for financial losses. Please call us today to find out how you may be able to sue Edward Jones in the Financial Industry Regulatory Authority (FINRA) arbitration process. The call to us is free with no obligation.