Failure to Supervise

Elderly Retiree Claims Sheppard Mosher advisor Jason Mosher Overconcentrated His IRA With GPB Private Placements

Published on: June 11, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Investor Sues Kalos Capital Over GPB Capital Losses

A widower retiree in his eighties is suing Kalos Capital for losses he suffered in GPB Capital Holdings’ private placements and other risky investments that were recommended to him by Kalos broker, Jason Mosher.

The claimant contends that Mosher, who operates his business under the name Sheppard Mosher but is an employee of Kalos, overconcentrated his IRA in GPB investments and other risky securities including private Real Estate Investment Trusts (REITs) and privately traded securities. Now, this elderly investor is seeking up to $500K in damages.

SunTrust Investment Services to Pay $634K For Alleged Inadequate Supervision Of Unsuitable ETF Sales Practices

Published on: June 5, 2020 | by Shepherd Smith Edwards & Kantas, LLP

FINRA Accuses SunTrust Investment Services of Failing to Properly Supervise Brokers

The Financial Industry Regulatory Authority (FINRA) has ordered SunTrust to pay $634K to settle charges accusing the broker-dealer of not properly supervising 17 of its brokers when they recommended that customers hold non-traditional exchange-traded funds (ETFs) for long periods–a practice that can lead to losses especially when there is market volatility.

Of this settlement, $50K is a fine and $584,466 is restitution. SunTrust Investment Services, which is owned by Trust Bank, agreed to the sanctions but without denying or admitting to the self-regulatory organization’s (SRO’s) findings.

Investor Sues Kestra Investment Services For IRA Losses Involving Barred Broker James Daughtry

Published on: May 29, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Alabama Retiree Lost Retirement Savings To Broker Fraud and Negligence

An investor in Alabama has filed a Financial Industry Regulatory Authority (FINRA) arbitration complaint against Kestra Investment Services, Inc. for retirement losses that she suffered while working with the now-former broker, James Daughtry.

The firm fired Daughtry earlier this year around the same time that FINRA barred him indefinitely after he refused to testify in the self-regulatory (SRO)’s probe into allegations that he engaged in potentially fraudulent and unauthorized transactions in customers’ accounts.

Citigroup, LPL Financial, Morgan Stanley, JP Morgan Securities, and Merrill Lynch Fined $1.4M for Failure to Reasonably Supervise

Published on: March 2, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Broker-Dealers Accused of Not Properly Supervising Custodial Accounts

The Financial Industry Regulatory Authority (FINRA) announced that it has fined five major firms $1.4M in total for not reasonably supervising custodial accounts. The broker-dealers are:

Citigroup (C), which will pay $300K.

Shepherd Smith Edwards & Kantas Investigates Merrill Lynch and Gordon Harper over Collateral Yield Enhancement Strategy (CYES) Damages

Published on: January 9, 2020 | by Shepherd Smith Edwards & Kantas, LLP

Collateral Yield Enhancement Strategy (CYES) Damages: SSEK Investigating Merrill Lynch Financial Advisor

Shepherd Smith Edwards & Kantas (SSEK), a law firm specializing in representing wronged investors is looking into allegations against Gordon Harper, a financial advisor with Merrill Lynch out of Upper Montclair, New Jersey. Prior to that, he worked at Banc of America and Edward Jones.

According to allegations in a recent Financial Industry Regulatory Authority Inc. (FINRA) claim, Gordon Harper recommended something called Harvest Volatility Management CYES (also known as collateral yield enhancement strategy). Harvest is a money manager which, as the name implies, attempts to manage volatility.

Financial Fraud: Massachusetts Mayor is Accused of Bilking Investors, Former Wells Fargo Broker Allegedly Stole $1M From Older Clients, and the LendingClub Asset Management Settles $4.27M Securities Case

Published on: October 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

26-Year Old Mayor is Arrested and Accused of Investor Fraud

Jasiel Correira, who is the mayor of Fall River, Massachusetts, has pleaded not guilty to multiple criminal counts of wire fraud and tax fraud. The 26-year-old was arrested this week following allegations that he defrauded investors of over $230K.

Correira maintains that the investor fraud allegations are false. He refuses to step down as city mayor.

Deutsche Bank, UBS, and HSBC Securities Settle Respective Spoofing Cases with the CFTC for $46.6M

Published on: January 29, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Deutsche Bank Securities Inc. and Deutsche Bank AG (DB) will pay a $30M civil penalty to resolve charges brought by the Commodity Futures Trading Commission accusing them of spoofing. According to the regulator, from at least 2/2008 through 9/2014, DB AG, with the help of a number of precious metal traders, sought to rig the price of precious metals futures contracts that were traded on the Commodity Exchange, Inc.

The CFTC’s order said that the traders worked alone and with each other to buy or sell these contracts while planning all along to cancel them before they were executed after a smaller offer was made on the opposite side of the market. The spoof orders were purportedly made to give the impression of market depth in order to generate trading interest.

The regulator found that through the traders’ actions, Deutsche Bank AG sought to not only rig the price of precious metals futures contracts but also to profit from these manipulations. The CFTC said the firm worked with one trader in Singapore who made orders and trades to “trigger customer stop-loss orders.”

FINRA Cases: Hallmark Investments is Expelled For Fraud and FSC Securities Must Pay $592K Over Exchange-Traded Fund Sales

Published on: August 15, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Investment Firm and Its CEO Are Expelled and Barred for Inflating the Price of Shares Before Selling Them

The Financial Industry Regulatory Authority has expelled Hallmark Investments and barred Steven G. Dash, who is the firm’s CEO, over a securities scam that involved selling stocks at inflated prices. According to the self-regulatory organization, Hallmark, Dash, and firm representative Stephen P. Zipkin used an outside broker-dealer and engaged in manipulative trading, as well as in trade confirmations that were misleading, to sell almost 40,000 shares of stock to 14 customers at prices that were fraudulently inflated. Zipkin has been suspended by FINRA for two years and he will have to pay over $18K in restitution.

Hallmark purportedly employed a trading scam to sell the Avalanche shares that they owned at $3/share. Meantime, the prices for Avalanche were selling at the public offering price of $2.05/share and Hallmark sold other Avalanche shares to other customers for as low as 80 cents/share. Also, the investment firm, Zipkin, and Dash failed to tell customers that Hallmark owned the shares they were buying or that it was marking up the transactions (or that the shares could be bought for less on the open market) even as it sold the shares to others at lower prices.

Apollo Global Management Settles Supervisory and Disclosure Failure Charges for $52.7M

Published on: August 23, 2016 | by Shepherd Smith Edwards & Kantas, LLP

Apollo Global Management (APO) has agreed to settle for $52.7M allegations that the firm misled fund investors regarding fees and a loan agreement, as well as failed to supervise a senior partner. The settlement was reached with the U.S. Securities and Exchange Commission, which found during its probe that Apollo advisers did not adequately disclose benefits they obtained. This ended up harming fund investors.

Four private equity fund advisors will be paying part of the settlement include:

· Apollo Management V, LP

Broker Gets 1-Year Suspension From FINRA Over Inadequate Due Diligence and Supervision

Published on: September 14, 2013 | by Shepherd Smith Edwards & Kantas, LLP

Gary Mitchell Spitz, a broker and a registered principal of an Iowa-based brokerage firm, is suspended from associating with any FINRA member for a year and must pay a $5,000 fine. The SRO says that Spitz did not perform proper due diligence of an entity—a Reg D, Rule 506 private offering of up to $2 million—even though this action is mandated by his firm’s written supervisory procedures.

FINRA’s finding state that because of Spitz’s inadequate review, he did not make sure that the offering memorandum had audited financials of the issuer or make sure that these financials were accessible to non-accredited investors prior to a sale—also, a Regulation D requirement. The SRO says that Spitz let certain registered representatives, who were associated with the firm, to sell the entity’s shares and turn in offering documents that customers had executed directly to that entity. This meant that Spitz did not get copies of the documents or perform a suitable review of the transactions before they were executed. Certain customers even invested in the entity prior to Spitz getting the subscription documents from these representatives.

Spitz also is accused of not acting to make sure that the representatives made reasonable attempts to get information about the financial status, risk tolerance, and investment goals of customers. FINRA says he did not retain and review these representatives’ email correspondence and that they worked for a company that was the entity’s manager. Spitz let these representatives use the company’s email address to dialogue with customers and prospective clients but that the firm’s server did not capture the correspondence.