New York Securities Fraud Lawyers Blog
Malecki Law filed an expedited FINRA arbitration complaint today on behalf of nine investors from Upstate New York, Northern Virginia and Long Island, New York alleging that Securities America, Inc. failed to supervise its registered representative Hector May and failed to audit his remote Securities America office, which it is alleged in essence allowed his alleged Ponzi-type fraud to persist for many years. Through these alleged supervisory shortcomings, it is alleged that Securities America’s Inc. aided and abetted fraudulent practices conducted by its registered representative as well as in his disclosed, approved SEC-registered investment advisor, Executive Compensation Planners, Inc. “At some point, a license to sell securities can become a license to steal when there is inadequate supervision of these remote brokerage firm offices,” offered well-known securities attorney Jenice Malecki.
Executive Compensation Planners was supposed to solicit wrap fee programs through Securities America, according to its Form ADV filed with the SEC. Instead, as alleged in the FINRA pleading, Hector May had wires sent and checks written directly to Executive Compensation Planners; created fictitious statements; and pocketed client funds. Hector May reported managing $18 million in his Form ADV. Mr. May’s FINRA BrokerCheck report indicates that Hector May, who had been with Securities America since 1998, was terminated for misappropriation of clients’ assets just after the Department of Justice initiated a criminal investigation into his suspected felony, along with investigations by the U.S. Postal Inspectors and the United States Securities and Exchange Commission.
Prior to his alleged conduct coming to light, Hector May was widely known with an excellent reputation within his New York Community, often sponsoring charities – “clients now want to know if he was using their money to be charitable,” said Jenice L. Malecki, Esq., a securities lawyer in New York. Mr. May’s wife, daughter and other family members are alleged to have worked with him.
On June 6, 2018, the United States Attorney in the Southern District of New York, Mr. May and his wife agreed to an asset freeze on consent, including his company assets.
“Securities America has no less than 52 Regulatory actions reported on its FINRA BrokerCheck record, 29 arbitrations and 5 of the regulatory matters appear to relate to remote office promissory note schemes involving apparent failures to supervise. What are the regulators waiting for in charging Securities America, Inc., more victims? Malecki Law is not waiting, we are filing today!” said securities fraud attorney Jenice Malecki.
The nine victims range from a 32-year-old man who inherited the money he gave to Mr. May when his mother and grandfather died to a severely ill couple in their late 70s who lost their entire life savings and may have to sell their house and live with their children now. Mr. May’s apparent victims also include people who perceived him as their very best friend. “In my opinion, he looted from anyone that trusted him and lacked the sophistication to catch the fraud. We also have evidence that suggests his family was involved. Like Madoff, we allege that he created fictitious ‘bond account’ statements and it is hard to believe that Mr. May, himself a senior, could have conducted this operation all on his own or that a supervising and auditing broker-dealer could have missed this,” securities fraud attorney Jenice Malecki comments.
Malecki Law securities fraud attorneys have requested expedited treatment of the case since some of the victims are much older and battling severe health issues while over a million dollars are at stake. Additionally, the case calls for the arbitration panel to exert their authority in the provision of punitive damages, costs and attorneys’ fees for the gross, reckless, wanton, and willful manner of this misconduct.
As alleged in the complaint, Securities America failed to perform due diligence in properly supervising Hector May’s activities with customer accounts. Brokerage firms must have a proper supervisory system in place to oversee any licensed employee’s activities with customers. Yet, Securities America apparently missed many obvious red flags indicative that Hector May had been engaging in fraudulent activity. It appears that Securities America did not consider Hector May’s businesses, emails, files, computers, bank accounts and other evidence of the fraud.
Many FINRA and SEC issued securities industry reminders about remote office supervision were issued during Hector May’s twenty plus years registered unemployment under Securities America. In just 2012, FINRA issued Regulatory Notice 01-79 which warned firms to review their procedures for fraud detection given the rise in Ponzi-related schemes.
Just a few years ago, Malecki Law attorneys successfully filed a very similar complaint against several major brokerage firms for their failure to supervise Robert H. Van Zandt in the Bronx, who engaged in practices that appear to be similar to that executed by Hector May. Malecki Law represented over 100 victims. Previous related experiences have led us to believe that Hector May’s alleged activities have impacted an even higher number of investors than the number that have already come forward. Malecki Law securities attorneys hope that a favorable case outcome will help deter future similar broker misconduct as well as send the message to brokerage firms that remote offices need better supervision.
Malecki Law stands ready to aggressively help more investors recoup their lost funds, even if they have not yet come forward. Investors or employees with knowledge of the events at Securities America or Executive Compensation Planners or taken advantage of by Hector May who seek further information should contact Malecki Law by e-mail or phone.