Articles Tagged with commission

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from brokers who churn customer accounts. One of the most perennial abuses in the brokerage industry is when broker-adviser “churn” accounts to generate extra commissions or fees. When that happens, it’s difficult for clients to make money because their accounts are consumed by transaction fees.

Marc Augustus Reda, a registered representative for Spartan Capital Securities in New York City, was recently charged by FINRA, the securities industry regulator, with overcharging clients some $2 million. “From 2017 through 2019,” reports, “Reda, among other things, recommended unsuitable investments to his clients and traded excessively in those accounts, the FINRA complaint said. His activities resulted in 66 clients paying a total of $952,764 in commissions and fees, while incurring total net losses of $934,482,” FINRA said.

Reda generated the excessive fees through an “active trading” strategy in which he made trades without his clients’ specific permission. FINRA noted that “Reda failed to consider that the substantial commissions and costs associated with his investment strategy made it unlikely his customers could make any profits.”

AdobeStock_9577728-1-300x200Johnny Depp is accusing his financial advisors of fraud and negligence in a $25 million lawsuit filed in Los Angeles Superior Court last month. His former advisors, Joel and Rob Mandel, brothers with the Management Group, filed a countersuit against the actor. Allegedly, Depp spent more than $2 million per month despite warnings from his advisers that he was living beyond his means, according to the countersuit. He bought 14 homes and a 150 foot luxury yacht and paid over $3 million to fire author Hunter S. Thompson’s ashes out of a cannon. Depp accused the advisors of breach of fiduciary duty and other negligent practices leading to debts over $40 million. According to his lawsuit, the brother took $28 million in contingency fees with no written agreement, loaned $10 million of his money without his consent or knowledge and cost him $6 million by failing to pay his taxes on time. His suit states that the Management Group “engaged in years of gross mismanagement, self-dealing and at times, actual fraud.” The Mandels argue that Depp owes them $560,000 in unpaid fees including a 5% commission for an upcoming film and payments on a company credit card. Depp retained new financial advisors in March of this year.

Robert Rotunno, a former registered representative with National Securities, has received five customer complaints and one pending customer complaint. He has been accused of engaging in churning, making unsuitable investment recommendations, breaching fiduciary duty, breaching contract, misrepresenting material facts, using margin without authorization, acting negligently, churning accounts and engaging in misconduct involving commission, among other things that are against securities rules and regulations.

Rotunno was registered with American Investment Services in Oklahoma City, Oklahoma from October 1999 until May 2000, Murphy & Durieu in New York, New York from May 2000 until December 2000, Global Capital Securities Corp in Englewood, Colorado from January 2001 until March 2002, Sands Brothers & Co. in New York from April 2002 until August 2004 and Laidlaw & Co in New York from August 2004 until February 2016. He is currently registered with National Securities in New York and has been since January of this year. Please call our Chicago-based securities law firm at 312-332-4200 to speak to one of our attorneys about your options of suing National Securities in the FINRA arbitration forum to recover your losses. The firm may be responsible for them.

The attorneys at Stoltmann Law Offices are investigating Clark Gardner, a former broker at Cetera Advisors. Gardner was recently permanently barred from the industry by the Financial Industry Regulatory Authority (FINRA). Gardner was accused of taking a $243,000 check from a customer and depositing it directly into his personal bank account. The money was supposed to go into an investment opportunity. Gardner then used the funds for his own personal use. FINRA also alleged that he worked as an agent for a real estate investment company without his firm’s knowledge or consent, which is against securities rules and regulations. Gardner allegedly facilitated a customer’s $150,000 real estate property investment through the company, and for this, received $20,000 in commission for his facilitation of the transaction. Gardner entered into a Letter of Acceptance, Waiver and Consent (AWC) with FINRA on September 4, 2014.

According to his online FINRA BrokerCheck report, Gardner was registered with Walnut Street Securities in El Segundo, California from June 1997 until February 2002, Sammons Securities Company in Orem, Utah from February 2002 until December 2013 and Cetera Advisors in Orem from December 2013 until May 2014. He has two customer disputes against him, one of which is currently pending. He is not licensed within the industry and FINRA and the Securities and Exchange Commission (SEC) have both permanently barred him from acting as a broker and investment adviser, or otherwise associating with firms that sell securities or provide investment advice to the public. If you or someone you know invested money with Clark Gardner, you may be able to sue his former firm, Cetera Advisors, in the FINRA arbitration forum on a contingency fee basis. Please call our law offices today at 312-332-4200. Your call with one of our attorneys is free and with no obligation.

The Securities and Exchange Commission (SEC) last week said it will make positive reforms such as automated processes, a mediation service to protect minority shareholders, and a crackdown on investment scams. In addition to the automation, the SEC will also strengthen its program against investment scams and the Capital Market Development Plan (CMDP) and finally, organizational enhancement. The SEC intends to fully automate procedures to allow corporations to register and file required submissions online and complete such processed within one day. Online payment methods will also be offered. The SEC will lobby to keep revenue only from fees and charges, not from penalties, which is an adopted practice in some other countries. This proposed amendment to the Securities Regulation Code would further provide the SEC with the power of disgorgement. This will allow the commission to fine or cause the forfeit of amounts pocketed by companies found in violation of the rules. In line with its ongoing efforts to protect investors, the SEC has expanded its presence across the country with the establishment of more satellite and regional offices.

Have you been a victim of Gopi Vungarala or his firm, Purshe Kaplan Sterling, or know someone who has? Stoltmann Law Offices is interested in speaking to those investors who may have invested money with Gopi Vungarala and Purshe Kaplan. A recent Financial Industry Regulatory Authority (FINRA) complaint alleges that, from 2011 to 2015, Vungarala lied to his Native American tribe customer about the commissions that would be paid to himself and the firm in the sale of non-traded real estate investment trusts (REITs) and business development companies (BDCs). Vungarala served as the tribe’s financial advisor and its Treasury Investment Mangaer, giving access to the tribe’s decisions regarding investments. The complaint alleges that Vungarala ignored the conflict of interest, misled and lied to the tribe, urging them to invest $190 million in risky and illiquid REITs and BDCs, leading to $11.4 million in commissions to the firm of which $9.6 million was paid to Vungarala himself. He also allegedly let the tribe pay full commission when it did not have to.

Currently, the Securities and Exchange Commission (SEC) requires registered financial institutions, including broker-dealers, investment companies and investment advisers, to adopt written policies and procedures reasonably designed to ensure the security and confidentiality of customer information and records. In the past few years, the commission has grown increasingly focused on cybersecurity compliance. Today, investment firms and the like face the daily threat of a data breach or other cybersecurity event, such as hacking, phishing, spamming, bot-networking operating and the use of spyware and malware and other criminal activities. In 2016, the SEC’s cybersecurity compliance will “reflect certain practices and products that the Office of Compliance Inspections and Examinations perceives to present potentially heightened risk to investors and/or the integrity of the U.S. capital markets. In April, 2014, the SEC announced a series of examinations to identify and assess cybersecurity risks and preparedness in the securities industry. In February 2015, the Financial Industry Regulatory Authority (FINRA) released their own “Report on Cybersecurity Practices.” In September 2015, the SEC launched a second initiative to examine the cybersecurity compliance and controls in place at broker-dealers and investment advisory firms. Its concern came from public reports that had identified cybersecurity breaches related to weaknesses in basic data controls at firms.

The attorneys at Stoltmann Law Offices are interested in speaking to retail investors who may have lost money with William Wesley Marshall, a broker with Ameriprise Financial Services. According to his Financial Industry Regulatory Authority (FINRA) AWC, (Letter of Acceptance, Waiver and Consent), Marshall allegedly participated in the sale of $1.72 million of privately issued preferred stock to his immediate Firm supervisor, his Complex Manager, two other Ameriprise registered representative, and several firm customers. Marshall received common stock purchase warrants from the issuer, BioChemics Inc. as commission. Marshall was also serving as a member of BioChemics’ Scientific Advisory Board during his association with Ameriprise. He engaged in outside business activities, which, is referred to as selling away. This is against securities rules and regulations. He also allegedly distributed sales literature prepared by BioChemics to investors that failed to disclose his business and person financial interest in the company. The literature also allegedly contained misleading, exaggerated, and/or unwarranted statements and inadequate risk disclosures. For this, he was suspended from the industry for 15 months and fined $10,000.

It is possible for retail investors to sue Ameriprise in the FINRA arbitration process if they have suffered losses with Marshall. This is because Ameriprise has a duty to supervise their brokers, and if they do not, can be held liable for losses. We take cases on a contingency fee basis for these types of cases so please call us as soon as possible. Marshall was registered with May Financial Corporation in Dallas, Texas from October 1999 until December 2001 and Southwest Securities Inc. in Dallas from January 2002 until February 2011. He is currently registered with Ameriprise in Plano, Texas and has been since January 2011.

Last week, JP Morgan agreed to pay $4 million to settle charges that it misled customers about its brokers’ compensation, according to the Securities and Exchange Commission (SEC). The SEC said that the bank falsely stated on its private banking website and in marketing materials that advisers are compensated “based on our clients’ performance; no one is paid on commission.” The subsequent investigating revealed that brokers are, in fact, paid a salary and a discretionary bonus. The SEC also stated that the claims were made from 2009 until 2012 and in marketing materials including a prospecting card, a pitch book and a marketing letter. There were four separate instances between the dates, but the firm did not make moves to correct the statement until May 2012. JP Morgan Securities agreed to be censured and cease and desist from future similar violations.

Stoltmann Law Offices continues to investigate claims against Tom Buck, a former registered broker with Merrill Lynch in Indianapolis, Indiana. Since March of last year, Buck has 27 customer complaints against him, and according to the Indiana Business Journal on Friday, has cost his former firm, Merrill Lynch, more than $4.1 million in settlements to date. He has since been fired and was barred from the industry permanently by the Financial Industry Regulatory Authority (FINRA) in July. FINRA claimed that Buck “willfully committed fraud” by placing clients in commission accounts when they could have done better in fee-based advisory accounts. He was officially charged with misrepresentation of commissions, unsuitable investments and excessive trading. Many of the customer complaints settled for the full amount requested, with the largest being for $719,000. Two of the complaints are still pending, with the most recent being filed on November 17th. Before that, he was heralded by “Barron’s” as Merrill Lynch’s top broker in Indiana and had been named that every year from 2009 until 2013.

According to his online FINRA BrokerCheck report, Buck was registered with Merrill Lynch in Indianapolis, Indiana from December 1981 until April 2015 and RBC Capital Markets in Indianapolis from April 2015 until July 2015. He is not currently registered with any firm or licensed within the industry. FINRA has permanently barred him from the industry. Please call our securities law offices in Chicago if you or someone you know lost money with Thomas Buck. Merrill Lynch can be held responsible for your investment losses because they had a duty to reasonably supervise him while he was employed there. We sue firms in the FINRA arbitration process. The call is free with no obligation. We take cases on a contingency fee basis only.

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