Investors Topics

BROKER REPORT: Sterne Agee’s Chad Karl

July 11, 2016 | Malecki Law Team

Malecki Law’s team of investment attorneys are interested in hearing from investors who have complaints regarding Wisconsin-based Sterne Agee Financial Advisor Chad Karl.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Karl is currently the subject of a pending customer dispute. The allegations include unsuitable investment recommendations, including an investment into real estate, per FINRA. According to the disclosures on Mr. Karl’s BrokerCheck, the customer is requesting $100,000 in damages.

Mr. Karl’s FINRA records indicate that he has also been the subject of two prior customer disputes since 2010. In 2014, a client alleged that “the non publicly traded REIT sold to her was unsuitable,” per FINRA. This case was reportedly settled for $50,000. The other customer complaint, filed in 2010, alleged $120,000 in damages for failure to “fully explain tax laws regarding the sale of the client’s stock portfolio,” according to BrokerCheck, and was ultimately withdrawn.

Malecki Law Obtains Full Net Out-Of-Pocket Damages for Senior-Aged Client in FINRA Arbitration

July 8, 2016 | Malecki Law Team

We are pleased to announce that after a six-day long arbitration, our client was awarded his full net out-of-pocket damages of $142,168.00 by a Financial Industry Regulatory Authority (FINRA) Arbitration Panel. The story was recently reported by InvestmentNews. The arbitration panel also assessed all forum fees in the amount of $14,400 against the Respondent Garden State Securities, Inc.

The case was brought against Garden State alleging unsuitable investment recommendations, including over-concentration in Chinese stocks, penny stocks and low-priced securities, as well as leveraged exchange traded funds (ETFs). The claims also centered around allegations of churning and excessive trading. In the end, the Panel found Garden State liable. Ultimately, broker-dealers must be held responsible for the recommendations their brokers make.

Our client’s case exemplifies many of the issues facing senior-aged investors today. Many seniors find themselves in situations where they have saved their entire lives for retirement and are seeking a financial professional to help guide them and preserve their nest egg. There is usually a lot of trust in the financial advisor-client relationship. But that trust can be easily and quickly abused. As they grow older, people generally became more conservative, downsizing and limiting expenses. Yet, all-too-frequently brokers recommend more speculative investments to their aging customers – for the broker’s own purposes (commonly higher commissions and fees). Such a situation is not appropriate nor permissible.

BROKER REPORT: Financial Advisor Catherine A. Sheridan Named in Arbitration Proceedings

July 6, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Catherine A. Sheridan. Since April 2015, Ms. Sheridan has been employed and registered with Race Rock Capital, LLC, a broker-dealer, working out of the Boston, Massachusetts office, according to her publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per her BrokerCheck report, Ms. Sheridan was previously employed by North South Capital, LLC from 2010 to 2015, Sound Securities, LLC from 2007 to 2010 and Tradition Asiel Securities, Inc. from 2004 to 2007.

Ms. Sheridan was fined and suspended for two months from association with any FINRA member broker-dealer by FINRA according to a Letter of Acceptance, Waiver and Consent No. 2015044475901 (AWC). According to the AWC, Ms. Sheridan violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010 for failing to timely file amendments to her U-4 to report tax liens. According to the AWC, Ms. Sheridan resigned from North South Capital, LLC two days after she amended her U-4 to report a tax lien. According to FINRA BrokerCheck records, Ms. Sheridan’s suspension started on May 16, 2016 and ends on July 15, 2016.

BROKER REPORT: Wells Fargo’s Robert Ross

July 1, 2016 | Malecki Law Team

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Wells Fargo financial advisor Robert Ross. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Ross recently moved to Wells Fargo after spending 30 years at Merrill Lynch.

Mr. Ross was recently the subject of a customer complaint alleging unsuitable investment recommendations and excessive trading, per FINRA records. BrokerCheck indicates that an arbitration related to this customer complaint is presently pending.

Excessive trading, also known as churning, in the industry can be disastrous for a portfolio. When a broker trades an account excessively, large amounts of commissions and fees may be generated, if the account is commission based (as opposed to fee based). Churning is a classic example of a broker putting his or her own monetary gain above the best interests of his or her customer.

BROKER REPORT: FINRA Files Case Against Financial Advisor Richard William Martin for Recommending Non-Traditional ETFs

June 30, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Richard William Martin. Mr. Martin was most recently employed and registered from July 2009 to July 2015 with G.F. Investment Services, LLC from an office in Penang, Malaysia, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA). According to BrokerCheck records, Mr. Martin was permitted to resign amid allegations concerning FINRA’s Case No. 20150445876 which “appears to be centered around ETF trades.”

According to the FINRA Complaint, Mr. Martin violated FINRA Rules 2310 and 2111 related to suitability of recommendations by “not having a reasonable basis to recommend, for long-term holding, non-traditional exchange traded funds (‘Non-traditional ETFs’).” The FINRA Complaint details that Mr. Martin believed the world economy was “on the precipice of catastrophe and his customers should invest and hold Non-traditional ETFs to hedge against the impending catastrophe.”

The FINRA Complaint detailed that ETF shares generally represent an interest in a portfolio of securities that tracks an underlying benchmark or index, such as the S&P 500. Non-traditional ETFs differ in that they are more complex investment products that rely on strategies, such as interest rate swap agreements, futures contract, and other derivative instruments, to attempt to return a multiple and/or inverse of an underlying benchmark. This would generally make non-traditional ETFs subject to more risk, and therefore may not be suitable for certain investors.

BROKER REPORT: Merrill Lynch’s Paul F. Kane

June 29, 2016 | Malecki Law Team

Malecki Law’s team of investment attorneys are interested in hearing from investors who have complaints regarding long-time Merrill Lynch Financial Advisor Paul F. Kane.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Kane is currently the subject of a pending customer dispute. The allegations include unsuitable investment recommendations, excessive trading and misrepresentation and omission of material facts, per FINRA. According to the disclosures on Mr. Kane’s BrokerCheck, the customer is requesting $1.1 million in damages.

Excessive trading, also known as churning in the industry, can be disastrous for a portfolio. When a broker trades an account excessively, large amounts of commissions and fees may be generated, if the account is commission based (as opposed to fee based). Churning is a classic example of a broker putting his or her own monetary gain above the best interests of his or her customer.

Morgan Stanley Broker Armando Fernandez Suspended by FINRA

June 28, 2016 | Malecki Law Team

Morgan Stanley broker Armando Fernandez has been suspended by the Financial Industry Regulatory Authority (FINRA) for 20 business days, according to publicly available FINRA records. Per a Letter of Acceptance, Waiver and Consent filed with FINRA, Mr. Fernandez was accused of exercising discretion in a customer account without prior written acceptance of the account as discretionary from his member firm. FINRA records indicate that Mr. Fernandez was also fined $7,500.

Generally, brokers are prohibited from placing trades in a customer account without speaking to the customer first, unless an account is a discretionary account. When discretion is given by the customer to the broker, it is typically documented in a signed agreement. When there is not such a signed agreement, and a broker executes transactions on a discretionary basis anyway, violations of FINRA Rules likely have taken place.

Customers who have been the victim of brokers improperly exercising discretion in their accounts (or violating other FINRA Rules) may be entitled to recover their losses in an action against the firm and/or broker responsible.

BROKER REPORT: Financial Advisor Kenneth Daley Barred from Conducting Securities Business

June 28, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Kenneth Daley. Mr. Daley was employed and registered from October 2007 to June 2016 with Merrill Lynch, Pierce, Fenner & Smith, Inc., a Garden City, New York broker-dealer, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA). According to BrokerCheck records, Mr. Daley voluntarily resigned from Merrill Lynch amid allegations that he was involved in “[c]onduct involving improperly receiving money from a client via checks written from an outside account.”

Per his BrokerCheck report, prior to his employment and subsequent resignation from Merrill Lynch, Mr. Daley was employed by Wachovia Securities from 2003 to October 2007.

Subsequent to his resignation, Mr. Daley was barred from association with any FINRA member broker-dealer on June 27, 2016 by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2016050129701 (AWC). According to the AWC, Mr. Daley violated:

BROKER REPORT: Clark Gardner Barred by the SEC and FINRA

June 27, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding former stockbroker Clark Gardner. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Gardner is no longer FINRA licensed to sell investments. He has also reportedly been the subject of no less than six reportable events, including customer complaints and regulatory investigations.

Per FINRA, Mr. Gardner was permanently barred by both FINRA and the SEC from the financial services industry. The FINRA investigation of Mr. Gardner reportedly surrounded the conversion of $243,000 of customer funds. Per his BrokerCheck report, Mr. Gardner also served as an agent for a real estate investment company without required approval of his firm.

Mr. Gardner has been the subject of customer complaints as well. Customers have alleged that Mr. Gardner breached fiduciary duties and recommended unsuitable investments. According to FINRA records, one customer dispute is presently pending, while another was settled for $263,000.

Risky Investments Begin to Show Losses in Wake of Brexit

June 27, 2016 | Malecki Law Team

The Bexit vote in Britain appears to be exposing fault lines across various investments. The Wall Street Journal reported today that emerging market currencies are taking on steep losses a day after Britain voted to leave the European Union, termed Brexit. According to the article, this comes as the British Pound dropped to a thirty year low and Standard & Poor’s downgraded the U.K. down from Triple-A status.

Other investments are also showing strain, including oil, and foreign companies, including European banks. These investments are often packaged into products such as exchange traded funds or limited partnerships, which are generally considered risky and not suitable for certain investors.

For instance, we have commented in recent blog posts that oil and gas limited partnerships are not appropriate for investors that cannot afford to have a significant portion of their portfolio locked up in such an illiquid investment that generally pays high commissions to the brokers who recommend them.