Frederick Randhahn, a former Sigma Financial Corporation broker, is suspended by the Financial Industry Regulation Authority (FINRA) for nine months after he allegedly sold $625K of Woodbridge promissory notes to investors without the brokerage firm’s permission and approval to sell these products.
In a letter of acceptance, waiver and consent, Randhahn agreed to pay a $5K fine and disgorge the almost $32K in commissions plus interest that he made from the sales. However, he did not admit to or deny the self-regulatory authority’s (SRO) findings.
Randhahn Fired For Selling Unapproved Investments
According to FINRA, between 7/2016 and 9/2017, Randhahn solicited the Woodbridge promissory notes to investors, including Sigma customers. In August 2018, the brokerage firm fired him after finding that he sold investments that Sigma Financial never approved.
Randhahn’s BrokerCheck record notes that he has worked for more than 30 years in the industry. He was also previously a registered broker with Ameriprise Financial Services (AMP), Ameriprise Advisor Services, Merrill Lynch, Pierce Fenner & Smith, FIS Securities, Cigna Financial Advisors, and Pruco Securities.
His record also shows a pending customer complaint about the sale of unapproved and risky investments. Ranhahn’s former client is seeking $400K in damages.
Woodbridge Ponzi Scam Bilked Thousands Including Senior Investors
The Woodbridge Group of Companies, which includes 281 related companies, ran a $2.1B Ponzi scam that defrauded at least 8400 investors. Many of those who were harmed were retail investors, including retirees who lost their life savings.
Investors thought they were backing investments that were safe, conservative, low risk and had ties to actual real estate properties belonging to third parties. It was these third parties that supposedly would be paying the interest to investors.
Instead, it turns out that the majority of these properties were not even real. The properties that did exist secretly belonged to Woodbridge’s CEO. In a 2017 complaint, the US Securities and Exchange Commission (SEC) said that investors were told they could expect a 5-8% return. Instead, for the most part, newer investors’ money was used to pay earlier investors.
Woodbridge settled the SEC’s civil fraud case against it in 2018 by consenting to pay more than $1B, including $892M in ill-gotten gains. Meanwhile, Woodbridge CEO Robert Shapiro settled the regulator’s charges against him by agreeing to pay a $100M penalty, $18.5M of disgorgement, and $2.1M of prejudgment interest.
Last month, Shapiro was sentenced to 25 years in prison for operating the Ponzi scam.
Woodbridge Investor Fraud Lawyers
Shepherd Smith Edward and Kantas, LLP (SSEK Law Firm) is speaking to investors who purchased Woodbridge promissory notes through Federick Randhahn, another Sigma Financial broker, or a broker from any other broker-dealer.
Even brokerage firms that did not know that their financial representative was marketing Woodbridge investments to customers may still be held liable for failing to properly supervise that broker and/or not detecting when unapproved investments were sold to clients.
Over the years, our broker misconduct attorneys have successfully gone up against Wall Street firms and other broker-dealers located all over the US. We have recovered many millions of dollars on our clients’ behalf. Your first consultation with us is a free, no-obligation case assessment. Contact us today.