Investor Lawyers Blog

Advisor Group Broker-Dealers Facing $19.4M in GPB Capital Holdings Investor Claims

Published on: March 11, 2022 | by Samuel B. Edwards

In Focus Reports submitted to the US Securities and Exchange Commission (SEC) in February 2022, four brokerage firms from the Advisor Group network disclosed that they were respondents in 58 Financial Industry Regulatory Authority (FINRA) arbitration cases. These arbitration cases, from July 2019 through the end of 2021, were over GPB-related losses.

GPB Capital Holdings, LLC, which issued these private placements, is accused of operating an over $1.8B Ponzi scam that defrauded more than 17,000 thousand investors. GPB investors typically purchased these high-commission products in $50K to $100K tranches. They have since suffered substantial investment losses.

Distributions of GPB private placements were stopped in 2018. Ponzi fraud allegations, resulting investigations, and litigation followed. The GPB funds plunged in value. Meanwhile, dozens of brokerage firms marketed and sold these alternative investments to customers, earning many millions of dollars in commissions and fees.

FINRA Suspends Ex-Stifel Nicolaus Broker Andrew Elsoffer for Two Years

Published on: March 10, 2022 | by Kirk G. Smith

Ohio Financial Advisor Andrew Elsoffer Named in Multiple Customer Disputes

Andrew Bruce Elsoffer, who Stifel, Nicolaus & Co. fired in 2018, is suspended by the Financial Industry Regulatory Authority (FINRA) for two years, beginning March 7, 2022. The suspension comes in the wake of customer allegations that he exercised discretion in their accounts without their written authorization.

He also allegedly lent money to one client, his personal friend, for home renovations without the firm’s approval. The friend later repaid him.

Class Action Securities Lawsuit Filed Against GWG Holdings Over L Bond Losses

Published on: March 9, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Texas-Based GWG Holdings and its Directors Are Defendants in Class-Action Lawsuit

Two investors seeking class-action status have filed a lawsuit against GWG Holdings, Inc. (NASDAQ: GWGH). They are accusing the Texas-based alternative asset manager and investor of life settlements, as well as its directors, of making misrepresentations and omissions in offering documents of its L Bonds.

GWGH sold more than $350M of these high-yield bonds between August 2020 and April 2021, when sales were discontinued due to liquidity problems. The company also failed to submit its 2020 yearly report in a timely manner. In February 2022, GWG Holdings defaulted on $3.25M of principal payments plus $10.35M of interest owed to L Bond investors.

Trusts of Late Investor Awarded $1.875M in UBS YES Case

Published on: March 8, 2022 | by Shepherd Smith Edwards & Kantas, LLP

FINRA Arbitration Ruling Grants Largest UBS YES Award to Date

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded a deceased investor’s family trusts $1.857M in their securities case against UBS Financial. The broker-dealer had involved the late Irving Siegel’s QTIP Trust and generation-skipping transfer trust in its UBS Yield Enhancement Strategy. This is the largest award to claimants over UBS YES losses to date.

Siegel passed away in 2013. He left the trusts for his family. The trusts accused the broker-dealer of misrepresentation, negligence, and fraud in their investor claim. A FINRA arbitration panel in Boca Raton, Florida, awarded Siegel’s QTIP trust $1.171M and his generation-skipping trust $517K. The rest of the award was for prejudgment interest and other fees.

Appointment of Class Representatives in Northstar (Bermuda) and Omnia Liquidations Doesn’t Help Investors

Published on: March 7, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Joint Provisional Liquidators & Deloitte Updates Credit Holders and Policyholders

On February 23, 2022, Rachelle Frisby, the Deloitte Financial Advisory head in Bermuda and the British Virgin Islands, sent a letter to creditors and policyholders updating them about the liquidation proceedings involving Northstar Financial Services (Bermuda) and Omnia, Ltd. (formerly Old Mutual (Bermuda)). Northstar (Bermuda) filed for bankruptcy in 2020. Omnia submitted its filing in 2019.

Both entities, which Global Bankers previously acquired, have come under scrutiny in the wake of owner Greg Linberg’s conviction for conspiracy to commit wire fraud and bribery, as well as their subsequent liquidation proceedings. Meanwhile, investors of both entities have struggled to recover their investment losses.

Ex-Worden Capital Broker William Athas Accused of Excessive Trading That Cost Customers $1.1M

Published on: March 4, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Ex-NY Worden Capital Broker Barred After Allegedly Charging $1.6M in Commissions

The Financial Industry Regulatory Authority (FINRA) has barred ex-Worden Capital Management and former SW Financial registered representative, William Nicholas Athas. This bar comes in the wake of allegations that he engaged in excessive trading in customer accounts.

According to the self-regulatory organization’s (SRO’s) complaint, Athas controlled the trading in these accounts, deciding the frequency and volume of trades. He also allegedly made the calls regarding which securities to purchase and sell, as well as the quantity and timing of each transaction. William Athas’ customers usually would go by his recommendations.

Massachusetts Charges Purshe Kaplan Sterling Investments Over Investors’ $2.3M in ETF Losses

Published on: March 3, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Brokers Allegedly Involved Were Also Harvest Group Wealth Management Investment Advisers

Massachusetts Secretary of the Commonwealth William Galvin has filed a complaint against Purshe Kaplan Sterling Investments (PKS Investments), accusing the broker-dealer of failing to supervise its financial advisors. These advisors who were dually registered through another financial firm allegedly sold exchange-traded funds (ETFs) that were unsuitable for customers.

This other firm was Waltham-based investment advisor Harvest Group Wealth Management. As a result, the state securities regulator contends that investors suffered $2.3M in losses.

Investor Files Claim Against FSC Securities Over FS Energy and Power Fund & Northstar Healthcare REIT Losses

Published on: March 2, 2022 | by Shepherd Smith Edwards & Kantas, LLP

California Retiree Was Unsuitably Recommended Illiquid, Risky Investments

An elderly Los Angeles investor has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against FSC Securities Corporation over investment losses suffered. He was unsuitably recommended certain high-risk investments, including Northstar Healthcare Income REIT (also known as Northstar Healthcare REIT) and FS Energy and Power Fund (FSEP). Now, this claimant is seeking up to six figures in damages.

Our REIT lawyers are representing this investor in his FINRA arbitration claim. If you suffered losses and suspect that your FSC Securities broker may have been negligent, please get in touch with SSEK Law Firm today. We can help you explore your legal options.

MSC-BD Ordered to Pay Widow $221K Over GPB Private Placement Losses

Published on: February 28, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Former MSC-BD Broker Robert Fehrman Made Unsuitable GPB Private Placement Recommendations

A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded a widow $221K in compensatory damages, legal fees, and costs against brokerage firm MSC-BD, LLC over losses she sustained in GPB private placements. GPB Capital Holdings is accused of running a more than $1.8B Ponzi scam that defrauded over 17,000 investors, including many seniors and retail clients.

MSC-BD is a broker-dealer owned by Austin, Texas-based investment banking firm Madison Street Capital. The widow’s ex-broker, Robert Malone Fehrman, is no longer with the firm. At least one other customer accuses him of selling investments in the GPB Funds.

Emerson Equity Broker Tony Barouti May Have Sold GWG L Bonds to Customers

Published on: February 18, 2022 | by Shepherd Smith Edwards & Kantas, LLP

Firm Owes Millions to Investors of GWG High-Yield L Bonds

Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) is looking into claims of losses by customers who purchased GWG L Bonds at the recommendation of Emerson Equity broker Tony Barouti.

Unfortunately, it appears that Barouti, who is based out of Los Angeles, may have unsuitably sold L Bonds to several investors, including retirees and older retail customers.