Articles Tagged with investor protection

Although a handful of states have requirements in place, surprisingly few Registered Investment Advisors (RIAs) across the country carry liability insurance to protect clients from their own wrongdoing leaving investors as the only party left to bear the brunt of losses when things go sideways.

The professional liability insurance industry for Registered Investment Advisors (RIAs) has been described by one in the industry as, “the Wild West.” There is immense uncertainty as to the number of independent RIAs who carry professional liability insurance as well as extreme variability within the specifics of the policies offered to RIAs. While there are some states that require RIAs to carry insurance, most states do not have mandates in place, and the federal government has yet to draft any laws on the matter.

At the forefront of requiring RIAs to maintain insurance coverage are Oregon and Oklahoma. In 2018, Oregon became the first state to pass legislation requiring RIAs registered with the state to carry professional liability insurance. The Oregon law requires RIAs to carry at least $1 million in coverage and to show proof of such coverage during the state’s licensing process. Similarly, in 2020, Oklahoma passed legislation requiring RIAs registered with the state to carry professional liability and cybersecurity insurance. Curiously, the Oklahoma law fails to indicate how much insurance coverage is required for RIAs. If you are an investor in Oregon, Oklahoma, or any other state, who believes you have lost money due to your RIA’s wrongdoing, you should consult with a Securities Law Firm like Malecki Law.

The 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.

FINRA’s recently released Regulatory and Examinations Priority Letter made specific mention of multiple critical areas that the regulator will be focused on for the upcoming year.  The one that we will focus on today is the Senior investor and the steps that are and should be taken to prevent elder abuse.

As we have discussed here before, with the growing population of senior aged investors, this demographic is becoming increasingly significant in the retail investor pool nationwide.  Baby boomers are beginning to hit retirement age just as advancements in technology and medicine are leading to longer and longer lifespans.

Per 2012 census data, there are 76.4 million baby boomers which represent close to one-quarter of the then estimated U.S. population of 314 million.  These figures have coupled with longer lifespans across the boards, means that there is the potential for disaster if baby boomers’ retirement savings are not properly managed.  FINRA recognizes that “the consequences of unsuitable investment advice can be particularly severe for this investor group since they rarely can replenish investment portfolios with fresh funds and lack the time to make up losses.”

Shares of OncoMed (OMED) plunged more than 40% today, January 25th, in the wake of a report concerning a pancreatic cancer drug the company had reportedly been working on.  According to Marketwatch, “an independent data safety monitoring board advised ‘of several findings regarding futility’ of a Phase 2 treatment of pancreatic cancer.’”

Investors who have lost money in OncoMed may be legally entitled to recover some or all of their losses and are encouraged to contact the attorneys at Malecki Law to explore their rights.

Unfortunately, issues like the one presently facing OncoMed can happen in the market.  Even more unfortunate is that often times financial advisors will improperly advise their clients to take large positions in advance of the release of a report concerning a company’s prized drug, like Tarextumab.

The securities and investment fraud attorneys are interested in hearing from investors with complaints involving Scott Teich of Raymond James. Per his BrokerCheck Report, maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Teich is a registered stock broker with Raymond James, based out of Florida.

Mr. Teich’s BrokerCheck Report indicates that he has been the subject of at least six customer complaints. He has also reportedly been the subject of an “employment separation after allegations.”

In addition to Raymond James, Mr. Teich has also been registered with Gruntal & Co., First Colonial Securities, Paragon Capital Corp (which FINRA reports was “expelled” from FINRA in 2004).

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Florida-based UBS stockbroker Brian J. Gold.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Gold has been the subject of no less than five customer complaints and was discharged from Morgan Stanley DW in 2004.

In addition to UBS and Morgan Stanley, FINRA reports that Mr. Gold has also been registered with Merrill Lynch in Florida, Advest in Connecticut, and Prudential in New York City.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Robert Emmet Gill.  Mr. Gill is employed and registered with Chelsea Financial Services, a broker-dealer with an office in Tinton Falls, New Jersey, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).  He was also previously registered with J.P. Turner & Company, LLC, Grayson Financial, LLC, M.S. Farrell & Company, Inc. and Investors Associates, Inc.  Grayson and Investors Associates were expelled from FINRA in 2006 and 1998, respectively.

According to his BrokerCheck report, a Letter of Acceptance, Waiver and Consent (AWC) was accepted by FINRA stating that Mr. Gill was fined $5,000 and suspended from associating with any broker-dealer for borrowing $100,000 from a customer without notifying his then-employer J.P. Turner & Company, in violation of industry rules.  Mr. Gill’s BrokerCheck report also discloses that he was “permitted to resign” from J.P. Turner based on the same allegations as those set forth in the AWC.

Mr. Gill’s BrokerCheck report sets forth that he was the subject of four customer disputes involving allegations of unsuitable investment recommendations, misrepresentations made and churning.  Three of those four disputes resulted in settlements of $700,000 (with Mr. Gill contributing $50,000 personally), $32,500 and $35,610, respectively, according to industry records.

The investment fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding former stockbroker Robert H. Potter.  According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Potter has been permanently barred by FINRA.  He has also reportedly been the subject of no less than three customer complaints.

Mr. Potter has reportedly been barred by FINRA for his failure to cooperate with an investigation into allegations that Mr. Potter comingled customer funds with his own personal funds.  Per FINRA, Mr. Potter was discharged from Cambria Capital in August 2015, after the firm questioned the validity of certain transactions involving Mr. Potter and his customers.

In 1997, Mr. Potter was the subject of a customer complaint alleging unauthorized, excessive trading, per FINRA.  FINRA records indicate that the customer recovered more than $66,000 as a result of their complaint.

The Financial Industry Regulatory Authority (“FINRA”) has just approved steps to help protect senior citizens and other potentially vulnerable adults from financial exploitation and abuse.  Referred to by some as a“pause rule,” the proposal would permit brokerage firms to place a temporary hold (or “pause”) a disbursement from a customer’s account if they believed that the customer was being exploited.  After pausing the disbursement, the firm would contact the customer’s “trusted contact” to notify them of the suspicious activity.  While the new rule would not require firms to place a temporary hold on disbursements, it would provide them with a safe harbor if and when the firm did pause suspicious activity.

With the baby boomer generation at or near retirement age, the timing for FINRA could not be better.  FINRA’s CEO specifically referenced the fact that for the next 15 years, roughly 10,000 Americans will be turning 65 each day.

Unfortunately, senior citizens are targeted specifically by financial scammers.  Seniors typically have large amounts of liquid assets in the form of retirement savings.  When coupled with the potential for diminishing mental abilities, this means an easy target and potentially big payday for a con artist with bad intentions.

FINRA reported that it barred 10 former Global Arena Representatives including the former President of Global Arena Capital Corp., Barbara Desiderio, and five former representatives (David Awad a.k.a. David Bennett, James Torres, Peter Snetzko, Alex Wildermuth, and Michael Tannen) in all capacities; barred two former principals, Kevin Hagan and Richard Bohack, for supervisory failures; sanctioned two other former brokers, Niaz Elmazi a.k.a. Nick Morrisey and Andrew Marze, for failing to cooperate with FINRA’s investigation. FINRA had cancelled Global Arena’s membership and barred the owner and three other brokers for fraud in July 2015 in a separate action.

FINRA announced that a 2014 on-site audit and investigation at Global Arena Capital Corp had allegedly revealed several instances of securities fraud including product misrepresentation, use of misleading claims, account churning, unsuitability, and other misconduct like use of high pressure sales tactics to make sales of junk bonds to customers. FINRA reports that their business model involved cold calling vulnerable groups of investors including seniors to make solicited recommendations of securities. These sanctions reiterate FINRA’S focus on tracking down groups of brokers who migrate from one risky and problem-ridden firm to another, with questionable practices. In this instance reported by FINRA, seven of the ten individuals had moved to Global Arena’s new office from HFP Capital Market, a firm that was expelled by FINRA in 2013. Apparently, FINRA’s risk-based approach identified certain brokers who had moved from HFP for heightened regulatory investigation, which confirmed FINRA’s suspicions. In settling the actions, the respondents neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

According to Susan Axelrod, FINRA’s Executive Vice President, Regulatory Operations, FINRA will continue will continue to monitor brokers who move from expelled or high-risk securities firms. They will use data leveraged from their study of broker migration to expedite investigations and sanction brokers who tend to prey on vulnerable investors.

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