Articles Tagged with SEC

Stoltmann Law Offices, P.C. is a Chicago-based securities and investment fraud law firm that offers representation to victims on a contingency fee basis, nationwide. We are investigating claims for investor/victims of Ron Harrison’s alleged options trading scheme. On September 30, 2021, the SEC filed a civil complaint against Ron Harrison and his company Global Trading Institute, LLC seeking an injunction and to have a restraining order put in place to freeze his assets.  The SEC complaint alleges that Harrison ran a substantial options trading scheme where he charged clients a percentage of alleged gains in their brokerage accounts on a monthly basis. The problem is, as alleged by the SEC, there were no gains, only losses. According to the complaint, Harrison traded directly through access to his clients’ brokerage accounts.  Twenty-two investor victims suffered losses of over $2 million.  The SEC alleges that Harrison received at least $900,000 in ill-gotten fees from the scheme, a lot of which was transferred to his Russian fitness instructor girlfriend.

Harrison was not licensed to provide investment advice or trade securities with any regulator or state. In fact, he was barred from the securities industry way back in 1992 for misappropriating funds and excessively trading customer accounts. This trading scam dates back to 2016 and continued on well into 2021.  Records reviewed by Stoltmann Law Offices reveals that Harrison’s clients used TD Ameritrade as their broker/dealer. Part of Harrison’s scheme was to have investors provide him with their credentials to log into their brokerage accounts and trade options pursuant to his alleged strategy.  The options trading Harrison engaged in was highly speculative and aggressive, including writing naked put options and using hefty amounts of margin.  Because of the activity Harrison engaged in, and because of the highly regulated market options trading takes place in, TD Ameritrade could be liable to Harrison’s victims for aiding and abetting his scheme.

In order to trade options in any brokerage account, the brokerage firm must perform a high level and detailed know your customer analysis. To qualify for the level of margin Harrison used, referred to as portfolio margin, the account owner in many cases has to take a test to even qualify for that level of margin clearance.  Furthermore, technical metrics and electronic log-ins and tracing would have revealed that Harrison was logging into multiple client accounts from the same device and IP address. Since he was unlicensed, he could not do this and TD Ameritrade’s compliance system should have caught on to what he was doing, but failed to do so.  FINRA Rules, Anti-Money Laundering, and Bank Secrecy Act regulations mandate that TD Ameritrade have adequate compliance systems to detect and deter violations of this sort.

Chicago-based Stoltmann Law Offices, P.C. represents GPB investors in claims against brokerage firms and financial advisors who solicited investments in the GPB Capital Funds.  GPB was named in a criminal indictment by the U.S. Department of Justice on February 4. GPB’s top executives were charged with fraud and running a Ponzi scheme. The government charged three GPB executives — David Gentile, Jeffrey Schneider and Jeffrey Lash — with securities fraud, wire fraud and conspiracy.

According to Investment News, “GPB raised $1.8 billion from investors starting in 2013 through sales of private partnerships, but it has not paid investors steady returns, called distributions, since 2018. More than 60 broker-dealers partnered with GPB to sell the private placements and charged customers charged clients commissions of up to 8%.” Stoltmann Law Offices pursues those brokerage firms for their investor-clients to recover GPB losses.

Gentile, the owner and CEO of GPB Capital, and Schneider, owner of GPB Capital’s agent Ascendant Capital, are charged with lying to investors about the source of money used to make 8% annualized investor payments, according to the SEC’s complaint. Using the marketing broker-dealer Ascendant Alternative Strategies, GPB told investors that the unusually high payments were paid exclusively with monies generated by GPB Capital’s portfolio companies, the SEC alleged. At first glance, the distributions were highly appealing to investors, since ultra-safe U.S. Treasury Notes are yielding around 1%.

Stoltmann Law Offices, a Chicago-based investor rights and securities law firm, has been representing investors in cases against brokerage firms that sold the private placement limited partnership offerings in several GPB Funds, including:

  • GPB Automotive Fund
  • GPB Holdings Fund II

Chicago-based Stoltmann Law Offices has represented investors in cases against securities brokers and has been investigating claims against LPL and filing arbitration complaints for investors. Can securities brokers who’ve been fleecing investors somehow keep working in the industry? If a firm’s records systems are poorly managed, sadly, the answer is yes. Sometimes they slip through the cracks and continue to steal customers’ funds and place them in bad or fraudulent investments that turn out to be Ponzi schemes.

That was the case with former LPL broker James T. Booth, who worked for the firm from 2018 through 2019. Booth pled guilty to one count of securities fraud in October, 2019, and was barred from the industry by the U.S. Securities and Exchange Commission (SEC). LPL was also cited for “supervisory deficiencies” by FINRA, the industry regulator, in connection with Booth stealing “at least $1 million of LPL customers’ money as part of a multi-year Ponzi scheme,” according to thediwire.com. The regulator fined LPL $6.5 million.

There was a bigger problem at LPL, though: FINRA claims that LPL’s recordkeeping system failed to report millions of customer communications. The firm’s failure “affected at least 87 million records and led to the permanent deletion of more than 1.5 million customer communications maintained by a third-party data vendor. These included mutual fund switch letters, 36-month letters, and wire transfer confirmations that were required to be preserved for at least three years.”

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with broker-advisors affiliated with the Cetera financial group.  The securities regulator FINRA recently fined three Cetera Financial Group broker-dealers $1 million, claiming that Cetera’s “supervisory systems and procedures were deficient when handling securities transactions.”

Like many advisory firms, Cetera employs representatives who are “dually registered,” meaning they are broker-dealers and registered investment advisers. In the Cetera case, their representatives managed more than $80 billion in assets across 47,000 accounts. According to U.S. Securities and Exchange Commission (SEC) exams conducted in 2013, 2015 and 2017, Cetera was “aware of the supervisory deficiencies.”

Without admitting or denying the allegations, Cetera recently signed a FINRA letter of Acceptance, Waiver, and Consent and agreed to FINRA’s sanctions, which included a censure and an agreement that they would review and revise, as necessary, systems, policies and procedures related to the supervision of dually-registered reps’ securities transactions, according to ThinkAdvisor.com.

AdobeStock_198259345-300x200Stoltmann Law Offices is interested in speaking to those investors who may have been recommended Premium Point Investments, LP by their investment advisor. The Securities and Exchange Commission (SEC) announced that it has charged the New York-based company with inflating the value of private funds it advised by over $200 million. The SEC also charged Premium Point’s CEO Anilesh Ahuja and Amin Majidi, a former partner and portfolio manager at the firm, in the same complaint. According to the complaint, Premium Point described itself as focused on investment opportunities in securities, mortgages, loans, real property, and consumer receivables. The SEC alleged that it ran a scheme from at least September 2015 through March 2016 by inflating the value of its portfolio to hide the poor performance. The fund also allegedly engaged in secret deal where, in exchange for sending trades to a broker-dealer, Premium Point received inflated broker quotes for certain mortgage-backed securities (MBS). Premium also allegedly used mid-point valuations that further inflated the value of securities. This was all done by the fund and its heads to make the holdings appear more attractive to potential investors, and to discourage clients from withdrawing funds. The SEC sued Premium Point in May of this year. Premium Point Investments offerings include the following:

Premium Point Credit Fund, LP

Premium Point ERISA Offshore Mortgage Credit Fund, LTD

AdobeStock_41845221-300x212Stoltmann Law Offices is interested in speaking to those investors who may have suffered losses with Beverly Hills Wealth Management (BHWM) broker Margaret Mulligan Black (aka Margaret Mulligan Scott). Ms. Black recently entered into a cease-and-desist order with the Securities and Exchange Commission (SEC). The cease-and-desist order claims that Black withheld prepaid, unearned advisory fees totaling $131,000 from 63 departing clients who requested terminating their advisory relationship with BHWM despite representations made in its Form ADV brochures and advisory agreements. Specifically, Black and the firm refused to recognize clients’ e-mails and mailed requests as proper termination notices. They instead demanded that the clients send written requests with a “wet signature.” Between March 2013 and April 2018, BHWM and Black continually omitted material facts and made false and misleading statements regarding BHWM’s financial condition in its Firm Brochures. The firm failed to disclose that it was unable to repay its loans during this entire time. BHWM had borrowed $700,000 in order to keep the firm afloat. The firm also owes an additional $75,000 in unpaid interest. These are against securities laws.
Margaret Mulligan Black, according to publicly available records with the Financial Industry Regulatory Authority (FINRA), is not currently registered as a broker. She was previously registered with Calton & Associates, Mutual Securities, Purshe Kaplan Sterling Investments and Morgan Stanley from 1979 until 2008, all in Beverly Hills, California. Beverly Hills Wealth Management may be liable for any losses sustained, because the firm had a duty to reasonably supervise Ms. Black while she was registered there. We take cases on a contingency fee basis only.

AdobeStock_194438920-300x200On June 5th, 2018, the Securities and Exchange Commission (SEC) filed a complaint against Essex Capital Corporation and Ralph T. Iannelli. From 2014 until 2017, Essex, and Iannelli, the company’s president and founder, allegedly perpetrated an $80 million, ponzi-type securities fraud scheme. According to the complaint, “Iannelli attracted investments through the sale of promissory notes that paid a high rate of return-typically 8.5% per annum. Those investor returns were supposedly based on the strength of Essex’s equipment leasing model, in which Essex’s lease portfolio would generate sufficient income to fully offset its borrowing costs and obligations to noteholders, leaving Essex with a profit of its own. Between 2014 and 2017, Iannelli raised over $80 million from approximately 70 promissory note investors. Unbeknownst to the investors, however, the representations Iannelli made about their investments were materially false and misleading.” Also during this time period, Iannelli siphoned millions of dollars out of the company in the form of bonuses and personal loans to give to himself.

Many of the customers Iannelli solicited were friends of his in the Santa Barbara, California community. Essex, whose headquarters are in Santa Barbara, California, and was purported to operate as a lease financing business, sustained a $32 million operating loss during the aforementioned years. This was according to the company’s own financial statements, and was due, in part, to the fact that Essex used the bulk of its revenue to pay back original investors and banks, instead of using it to purchase income-generating equipment. In 2014 alone, Essex raised over $20 million from its promissory note investors and limited partnership investors, and borrowed $6 million from banks, but only spent $2.3 million of its incoming funds to purchase equipment. Essex paid back more than $25 million of its funds to the banks and investors, and suffered a net operating loss of over $2 million. This trend continued until 2017.

Essex and Iannelli continued to raise new investor funds, and “resorted to a pattern of ponzi-like payments, for a total amount of at least $1.5 million since 2014.” According to the SEC Complaint, two investment advisory firms were responsible for attracting investors to the Essex fraud. These firms are referred to by the SEC anonymously as “Investment Adviser A” out of Santa Barbara, California, and “Investment Adviser B” out of New York, New York. Although the SEC alleges that Essex Capital and Iannelli made material misrepresentations to these investment advisers about Essex’s business, as fiduciaries under the law, these investment advisers had an iron-clad legal duty to perform adequate due diligence into these offerings prior to recommending any of them to their fiduciary clients.

AdobeStock_112465076-1-300x164Former Indianapolis, Indiana-based Merrill Lynch advisor Thomas J. Buck is to be sentenced next month after pleading guilty in January to one count of securities fraud. He may face up to 25 years in prison. Buck has agreed to pay a $5 million penalty as part of a separate settlement agreement with the U.S. Securities and Exchange Commission (SEC). Buck, according to federal investigators, defrauded clients by charging excessive commissions and intentionally failing to advise them of cheaper pricing options for his services. His criminal activity caused client to suffer losses of $2 million. He was fired by Merrill Lynch in 2015 due to “management’s loss of confidence.” He had been senior vice president of investments at Merrill Lynch.
According to his online, FINRA BrokerCheck report available to the public, Thomas J. Buck was previously 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 has 35 customer disputes against him, one of which is pending, one civil matter and one criminal pending charge. He has been permanently barred from the industry.
If you or someone you know has lost money with Mr. Buck, please call our securities law firm today to find out how you may be able to recover your losses in the FINRA arbitration forum on a contingency fee basis. Merrill may be liable for investment losses because the firm has a duty to reasonably supervise its brokers while they are employed with the firm.

AdobeStock_91053286-1-300x194Stoltmann Law Offices is investigating former broker Nicholas Genovese, who was charged by the Securities and Exchange Commission (SEC) with a brazen offering and investment adviser fraud. The SEC alleged that, since 2014, Genovese and his hedge fund, Willow Creek Investments LP raised more than $5.3 million from at least six investors by affirmatively misrepresenting his prior money-management, securities industry experience and size of operations. The SEC charged that Genovese falsely stated that his hedge fund’s investment adviser had $30-$39 billon of assets under management, that his firm had between 42 and 60 employees, when it actually had 10, and that his hedge fund had investment gains of 30-40 percent per year, when, in reality, it sustained losses. It was also alleged that Genovese lied about his education and prior work experience, and concealed his criminal past from investors. The U.S. Attorney’s Office for the Southern District of New York has filed parallel criminal charges against him. If you or someone you know lost money because of Nicholas Genovese and Willow Creek Investments, you may be able to recover those investments through the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis.

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