Articles Posted in Featured Investigations

Securities & Exchange Commission (SEC) charged broker Marc Broidy and his firm, Broidy Wealth Advisors, for $1.4 million worth of ill-gotten gains, as per reports. It is believed that the firm profited off their client’s trusts by intentionally over-charging accounts.

It has also been reported that Marc Broidy allegedly used this money to finance his personal lifestyle, using the money to pay off mortgages, leases on his Mercedez-Benz cars and overseas trips. According to the SEC complaint, Broidy has misappropriated $865,000 from client’s accounts and billed $643,000 in excessive fees. He also reportedly misled clients by not disclosing his affiliation to certain private companies where investments were made. Briody Wealth Advisors had $25 million in assets under its management until this year, but the recent ADV from February 2016 reported $13.6 million.

According to an SEC risk advisory Office of Compliance Inspections and Examinations, they have increased their scrutiny of registered representatives. In Mr. Broidy’s case he “fell well short of his fiduciary obligations as an investment adviser”, according to SEC’s regional director.

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors who have purchased Variable Universal Life Insurance (VUL) policies.

According to Investopedia, VUL policies combine a death benefit with investment feature.  The investment feature generally includes sub-accounts, as with other variable annuities, that invest in stocks and bonds, or mutual funds that have exposure to stocks and bonds.  While a VUL investment feature may offer an opportunity to gain an increased rate of return by investing in securities, it generally comes with higher management fees and commissions.  As a result, these commissions and fees must be weighed against the risk of loss in the securities purchased.  These risks must be disclosed to the investor prior to investment.

Issues surrounding VUL policies are not new.  A U.S. News and World Report article from 2011 highlighted that these types of policies generally come with higher fees, fewer investment options and sometimes surrender policies.

businessman-with-the-notebook-1-1362246-m-141x300The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Eric L. Swenson.  Mr. Swenson was last employed and registered with PNC Investments, from the broker-dealer’s Fort Pierce, Florida office, from November 2014 to October 2016, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was previously registered with Scottrade, Inc. from October 2003 to January 2014, according to BrokerCheck records.

In 2016, Mr. Swenson was fined and suspended from association with any FINRA member broker-dealer for nine months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014039902901.  According to the AWC, Mr. Swenson violated FINRA Rules 3270 (Outside Business Activities of Registered Persons) and FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) because he did not inform his registering firm about his outside business activity, Impact Energy Gum, Inc.  The AWC detailed that while Mr. Swenson told his firm that he would be an investor in the company, which activity was approved, he did not disclose that from July 2012 through December 2013, he also contacted potential distributors, exporters, equipment vendors and lessors on behalf of Impact and was involved in attempts to solicit potential investors to purchase securities of Impact and obtained a short-term loan to Impact from a family member.  The AWC stated that Mr. Swenson did not fully disclose the extent of his involvement with Impact, in violation of Rule 3270.

Mr. Swenson’s BrokerCheck records detail that he was permitted to resign and was discharged from PNC Investments and Scottrade, respectively, amidst allegations of failing to fully disclose information regarding his outside business activity.

magnifying-glass-1412773-300x300The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding former UBS financial adviser Jeffrey Howell.

Per reports, Mr. Howell has been barred by the Financial Industry Regulatory Authority (“FINRA”)for providing a customer with false weekly account statements for over six years.  According to a settlement notice in connection with an investigation by FINRA , Mr. Howell sent these weekly statements with inflated values, at times overvaluing the account by close to $3 million.

Mr. Howell also allegedly used his own personal email account to distribute these reports, which compromised the accuracy of the firm’s books and records. Per BrokerCheck, Mr. Howell has not been licensed in the securities industry since 2014.

handshakeThe investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding L.O. Thomas & Co , Inc. financial advisor Anthony Librizzi.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Librizzi was most recently with Wells Fargo Advisors LLC before resigning amid allegations.

FINRA records indicate that Mr. Librizzi resigned from Wells Fargo voluntarily in 2013 amid allegations that he “accepted $8,000 from a client.”

businesswoman-with-briefcase-silhouette_1463647The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Megan Resch.  Ms. Resch is currently registered to sell securities with LPL Financial LLC in the broker-dealer’s Morristown, New Jersey office, according to her publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA). Ms. Resch has been registered with LPL Financial since November, 2010, and before then was registered to sell securities with Multi-Financial Securities Corporation in Martinsville, New Jersey from January 2006 to November 2010, according to her BrokerCheck records.

Ms. Resch’s BrokerCheck records indicate that two customers have raised disputes regarding her recommendations, including 2014 allegations of an unsuitable limited partnership investment that causes losses, which was settled for $78,400.  Additionally, a customer alleged in 2011 that there were misrepresentation and suitability issues on investments from April 2007 to December 2010, which dispute was settled for $105,000, according to the BrokerCheck records.

Generally speaking, FINRA Rules require that recommendations made by the broker to the customer be suitable.  This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

12234_corporate_blurMalecki Law’s team of investment fraud attorneys are interested in hearing from investors who have complaints regarding broker David S. James. Mr. James was most recently working with UBS in California before being terminated by the firm, according to reports and industry records.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. James has been the subject of at least two customer disputes during his career in the industry.

It was recently reported that UBS let Mr. James go by UBS “for business practices that persistently drew compliance scrutiny.” Reports indicate that Mr. James was a high producing broker with UBS, a member of UBS’s Pinnacle Council and ranked as a Barron’s “Top 1200 Advisors” five times.

benjamin-1239799-300x200The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Robert A. McAllister.  Mr. McAllister was formerly registered to sell securities from December 2011 to February 2016 with Edward Jones a broker-dealer in Ocean City, New Jersey, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

In 2016, Mr. McAllister was fined and suspended from association with any FINRA member broker-dealer for two months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2016048831201 (AWC).  According to the AWC, Mr. McAllister violated FINRA Rule 3240 (Borrowing from or Lending to Customers) and 2010 (Standards of Commercial Honor and Principles of Trade) because in May 2015, he borrowed $8,500 from a family friend and customer of Edward Jones.  According to the AWC, Mr. McAllister did not provide written notice to his registering firm of the loan with the customer, and did not receive approval to participate in the transaction.

According to Mr. McAllister’s publicly available BrokerCheck records, he was discharged from his employment with Edward Jones on January 12, 2016 amid allegations that his “employment was terminated for violating Firm policy by soliciting and accepting a loan from a client without approval from the Firm.”

729163_investing_1The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have purchased structured notes or other complex products from Merrill Lynch or its parent company, Bank of America.

According to a recent SEC press release, “Merrill Lynch has agreed to pay a $10 million penalty to settle charges that it was responsible for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index.” The issues surrounding the notes stemmed, at least in part, from disclosure of the fees paid by investors and the fee structure related to the “volatility index” to which the notes were linked, per the SEC.

For example, the notes reportedly were subject to a 2% sales commission and 0.75% annual fee. According to the SEC, for investors to earn back their original investment on the maturity date, the index would need to increase by at least 5.93%. The SEC also alleged that the offering materials failed to “adequately disclose” the 1.5% execution factor, which was an additional cost.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Christopher B Ariola.  Mr. Ariola was last employed and registered with Financial Telesis, Inc., an Aliso Viejo broker-dealer, from November 2012 to September 2014, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was previously registered with Bay Mutual Financial LLC from September 2004 to September 2012, according to BrokerCheck records.

FINRA filed Disciplinary Proceeding No. 2012034139101 against Mr. Ariola on August 25, 2016 alleging that he recommended that three elderly retiree investors invest a “substantial portion of their limited retirement assets in certain gold and energy stocks.”  The Complaint further alleged that these recommendations were unsuitable because they were not appropriate given each investor’s respective financial circumstances, investment objectives and low risk tolerances, and because the recommendations resulted in each account becoming concentrated in gold and energy stocks.  Gold is a commodity, which like energy stocks, can be traded.  Both commodities and energy stocks tend to risky investments, and can lead to large losses.

According to his BrokerCheck report, Mr. Ariola has been the subject of four customer complaints.  The latest customer complaint led to a FINRA arbitration proceeding, according to BrokerCheck records.  The BrokerCheck records reveal that the customer alleged churning and unsuitability.  Churning is generally defined as excessive trading by the broker in the client’s account to generate commissions.  FINRA Rules require that recommendations made by the broker to the customer be suitable.  This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.