Articles Tagged with Aequitas

Stoltmann Law Offices previously posted about Scott Wayne Reed, former broker at Wells Fargo Advisors, selling away to his customers, including customers of Wells Fargo. On December 15, 2020, the Arizona Corporation Commission filed a “Notice of Opportunity for Hearing Regarding Proposed Order to Cease and Desist, Order for Restitution, Order for Administrative Penalties, Order for Revocation and Order for Other Affirmative Action” against Reed, his wife, Sarah Reed, Pebblekick, Inc. and Don K. Shiroishi, the Chief Executive Officer and President of Pebblekick.

According to the ACC’s notice, Mr. Reed sold at least $3.5 million of investments in short-term, high-interest notes issued by Pebblekick. Mr. Reed sold these notes as offering an annualized rate of return of sixty-percent (60%). In turn, Pebblekick paid at least $191,340 to Reed. He sold these notes to clients as “100% safe” investments and represented that he also invested in Pebblekick. He went as far as personally guaranteeing $100,000 of the $200,000 investment made by one investor.Reed also sold other outside investment to customers, which he alleged were connected to Pebblekick, including but not limited to Precision Surgical, Mako Studio, and Ascensive Creator.

Reed was a registered representative of Wells Fargo Advisors at the time that he sold this investment, but did not disclose that he was selling notes in Pebblekick or that he received nearly $200,000 in commissions and fees for selling Pebblekick. According to the ACC, “when Reed’s firm reported him for potentially selling away and the Securities Division requested Reed to provide information and documents concerning the allegation, Reed impeded the Division’s investigation by providing responses that were false, incomplete, and misleading.”

Scott Wayne Reed (“Agent Reed”), of Scottsdale, Arizona, has been engaging in various misconduct in customer accounts for years now. Most recently, earlier this year a Wells Fargo customer alleged that Agent Reed solicited him to invest in “an investment opportunity in a company not offered by Wells Fargo Advisors”, Reed broker-dealer at the time. Upon information and belief, Reed tried to solicit several customers to invest in outside business activities sponsored by Hollywood producers. This “selling away” activity led to Reed’s departure from Wells Fargo on April 7, 2020.

Several of Agent Reed’s customers have complained that he sold them unsuitable investments in private placements, oil and gas investments, hedge funds, and mutual funds and over-concentrated their accounts in private placements. In 2017, elderly clients of Reed filed a complaint against Reed’s previous brokerage firms, Accelerated Capital Group (“ACG”) which is now out of business, and Coastal Equities, and later adding him personally to the complaint, for selling them several unsuitable investments. Included in these investments were various Staffing 360 issuances, Aeon Multi-Opportunity Fund, which became Kadmon, and Aequitas, which ended up being a Ponzi scheme. The clients lost their entire investment in Aequitas. They lost between 92% to 99% of their investments in Staffing 360 and lost 70% of their investments in Aeon/Kadmon. Reed sold these investments to his clients even after there were red flags that these companies were completely failing and drowning in debt.

Agent Reed has bounced around several brokerage firms, and has also worked as a registered investment advisor. From 1999-2001, he was registered at Ameritrade. His longest tenure was at Fidelity from 2001 through July 2010. He had brief stints at Strategic Advisors, Inc. and Meridian United Capital before joining Accelerated Capital Group from 2010 through 2015. Agent Reed was registered with Coastal Equities for only five months then joined Wells Fargo from April 2016 through April 2020. While his CRD Report states that he “voluntarily resigned” from Wells Fargo, the explanation details that his resignation came while he was under investigation for selling away. He has been registered with First Financial Equity Corporation since April 2020. Reed was also a dually registered RIA with Gentry Wealth Management from July 2010 through April 2016, which became Ashton Thomas Financial in 2015. According to his FINRA BrokerCheck Report, Mr. Reed operates as “Reed Private Wealth”.

Stoltmann Law Offices is investigating GPS Capital Management. Allegedly, investment advisors Daniel Wu and Dennis Lin Chen at the firm recommended Aequitas Notes (ACF), private promissory note investments to at least one elderly customer, who is now deceased. The notes were purchasing loans made to Corinthian College students. In 2014, the federal government filed a suit against Corinthian Colleges, and the advisors failed to mention the suit to the investor before making the purchase of the notes. The litigation with the college significantly decreased the possibility to collect on the loans it was purchasing with the funds raised from investors. This also likely made the ACF notes unsuitable for any investor after September 2014 when the litigation was filed. Aequitas then suspended interest payments and redemptions on all of its investment products including the ACF Notes in January of this year. The Securities and Exchange Commission (SEC) then filed a complaint against Aequitas and its entities and officers in March 2016. These notes were not suitable for investors, especially elderly ones, and the brokers and GPS had a duty to only recommend suitable investments. Because they did not, GPS Capital Management can be held liable for investment losses and can be sued to recover those losses in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis. Please call today for your free consultation concerning GPS and its sale of ACF Notes. The call is free.

According to Daniel Wu’s Investment Advisor Public Disclosure, he is currently registered with Pair Lending in San Francisco, California, Onvest LLC in San Francisco, and PG Global Wealth Management in San Ramon, California and has been since November 2016. He has two customer disputes against him. Dennis Lin Chen is currently registered with FPS Capital Management in San Ramone, California and has been since November 2005. He was previously registered with Charles Schwab in Milpitas, California from December 1997 until October 2005. He has three customer disputes against him.

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