Articles Posted in Problem Brokers

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Forbes recently published a list of America’s Top Wealth Advisors. This list is published annually and rates thousands of advisors based on asset under their management, revenue, experience, and compliance. The Malecki Law team noticed that some top managers have several disclosure events in their BrokerCheck record. BrokerCheck is a free tool from FINRA (Financial Industry Regulatory Authority) that helps investors’ research brokers, investment advisors, and their firms.

Here is a list of a few of the top advisors with disclosure events for unauthorized trading, unsuitability, and more. (Not all top advisors on their list had reported events or all of the above reported events on BrokerCheck and the list below does not comprehensively include all top advisors with such disclosure events).

Lyon Polk ranked at #24 has 4 disclosure events between 1992-1994, according to Broker Check, they include allegations by customers of alleged unauthorized trading, misrepresentation, unsuitability, excessive trading, violation of commissions discount agreement. Each of these customer dispute was settled. In 1992, Lyon Polk was the subject of a regulatory disciplinary action, where he was sanctioned with suspension, censure, and a fine amounting to $27,500, per BrokerCheck.

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The securities attorneys at Malecki Law are interested in hearing from customers who have complaints against Joseph L. Bess, II.  Mr. Bess was recently registered to sell securities with Waddell & Reed, in Edmond, Oklahoma, From April 2014 to July 2016, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).  Mr. Bess was registered by J.P. Morgan Securities, LLC from October 2012 to April 2014, according to BrokerCheck records.

Mr. Bess has 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. 2014041059901 (AWC).  According to the AWC, Mr. Bess violated FINRA Rules 4511 (General Requirements) and 2010 (Standards of Commercial Honor and Principles of Trade) because from “January 2013 through January 2014, Mr. Bess marked a total of 139 order tickets for the purchase of exchange traded funds in the accounts of 21 customers as ‘unsolicited’ when, in fact, Bess had solicited each order by bringing the relevant ETF transaction to the attention of each customer.”

The AWC makes clear that pursuant to FINRA Rule 4511, broker-dealers must make and preserve books and records, and inherent in the Rule is the obligation that the records be accurate.  The AWC confirmed that “by mismarking the order tickets, Bess caused his member firm to keep inaccurate books and records.”

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The Financial Industry Regulatory Authority (FINRA) announced on July 19, 2016 in a News Release that it had fined Prudential Annuities Distributors, Inc. $950,000 for “failing to detect and prevent a scheme that resulted in the theft of approximately $1.3 million from an 89-year-old customer’s variable annuity account.  Prudential Annuities Distributors acts as a principal underwriter and distributing broker-dealer for life and annuity products issued by its affiliates.

According to the News Release, a former registered Sales Assistant named Travis Wetzel, who worked at LPL Financial, stole money from the elderly customer’s account by submitting to Prudential Annuities Distributors 14 forged annuity withdrawal requests.  The News Release detailed that each month, from July 2010 to September 2012, Mr. Wetzel submitted 4 to 5 withdrawal requests totaling approximately $50,000.  The News Alert detailed that all withdrawn funds were deposited into an account in Mr. Wetzel’s wife’s maiden name that was controlled by Mr. Wetzel.

Prudential Annuities Distributors consented to the fine by submitting a Letter of Acceptance, Waiver and Consent No. 2012034423502 (AWC).  According to the AWC, each transaction submitted by Mr. Wetzel triggered an alert, or a “red flag,” putting Prudential Annuities Distributors on notice that his requests may be fraudulent.  Each alert required that a person manually review and confirm each transaction, and for each transaction, personnel determined the activity appeared legitimate, according to the AWC.  The AWC also noted that for 44 transfers, Prudential Annuities Distributors also determined that the withdrawn funds were paid to the customer, when they were not actually sent to the customer.

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The investment fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Oppenheimer & Co. broker Joseph Iovino. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Iovino has been the subject of seven reportable disclosure events, including customer complaints.

Per FINRA records, Mr. Iovino has been involved in two regulatory events, four customer complaints and an employment separation after allegations.

According to his BrokerCheck, in 1992, Mr. Iovino was terminated by Prudential Securities for violating firm policy.

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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:

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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.

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The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Walter Marino.  Mr. Marino is currently employed and registered with Lincoln Investment, a broker-dealer, working out of the Dix Hills, New York office, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Marino was previously employed by Legend Securities from 2002 to August 2015, when he was discharged after the “Firm discovered what [Mr. Marino] represented as a non-replacement [variable annuity] sale was in fact a replacement.”  Prior to his employment and subsequent termination from Legend Securities, Mr. Marino left Brill Securities in 2001 by “voluntary resignation” amid allegations of unauthorized trading activity and disregarding a customer’s investments, according to BrokerCheck.

Currently, according to BrokerCheck records, it appears Mr. Marino is a registered broker in Connecticut, New Jersey, New York and South Carolina.

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Trust Funds are an especially susceptible vehicle for fraud committed by FINRA registered stock brokers and financial advisors.  Two of the primary issues in such cases are “conflict of interest” and “breach of fiduciary duty.”

Trust funds can be created for a wide variety of reasons.  Frequently, though, they are used as a means to afford an orderly transfer of wealth to a younger generation.  They can offer a whole host of benefits that would make a trust fund the preferred choice over an outright gift.  For example, the recipient/beneficiary may be very young, and the trust could afford some level of control or stability to prevent the beneficiary from squandering the money.   Another reason may be certain tax advantages offered by the trust structure that would not be available in an outright give.

Regardless of the reason or reasons for its creation, a trust is going to need a trustee.  The trustee is the party responsible for overseeing the trust and managing its assets.  While trusts can hold different types of assets, they frequently contain securities, like as stocks and bonds. Therefore, such trusts would, by necessity, involve brokerage accounts.  In that case, clients will oftentimes look to their stockbroker/financial advisor to put on a “second hat” and serve as trustee.  The logic being “I already trust him/her with my money so why not let them be the trustee.”  However, this is where significant problems can be created.

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In February 2016, academics Mark Egan, Gregor Matvos and Amit Seru at the University of Minnesota and University of Chicago business schools released a report titled “The Market for Financial Adviser Misconduct” on financial advisers in the United States. The report reveals how rampant securities fraud and broker misconduct is throughout the country. For the purpose of the study, these academics have analyzed the full set of disclosures of approximately 10% of employees in the finance and insurance sectors between 2005 and 2015, and taken in to account customer complaints, arbitrations, regulatory actions, terminations, bankruptcy filings and criminal proceedings. Based on this study, 7% of advisers were reported to have engaged in misconduct. The actual unreported cases may add to this number.

Here at Malecki Law, it is our mission to protect individuals who have been victimized by unscrupulous brokers. Here are some excerpts highlighting the important findings from this study:

  • According to the report, prior offenders are five times more likely to repeat their misconduct as compared to an average adviser. Approximately one-third of advisers with misconduct reports are repeat offenders. That is why we encourage all investors to investigate their broker on FINRA’s BrokerCheck
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 The securities fraud attorneys at Malecki Law would like to hear from investors who have complaints against John T. Keyser of Dawson James Securities in Florida. In the past, Keyser has been the subject of a FINRA suspension and customer dispute, as well as an outstanding tax lien. Since 1986 he has been at 16 brokerage firms, including 3 that were expelled from the industry. His current firm has 7 regulatory and 1 arbitration disclosure. Two other firms he has worked with had a combined 30 regulatory & 9 arbitration disclosures on BrokerCheck.

According to FINRA’s BrokerCheck, there were customer dispute cases against him in 2010, 2006, and 2002. Further, as per FINRA’s BrokerCheck, in 2010 there were allegations made against him for churning, intentional and negligent misrepresentation, unsuitability, breach of fiduciary duty, and unauthorized trading, seeking damages for $650,000. As per BrokerCheck, the firm and Keyser denied the wrongdoings and refuted the allegations. FINRA’s BrokerCheck shows that in 2006 there was another customer dispute against him, alleging that a stop loss order had not been executed timely to cover his client’s position. The same FINRA site reveals that in 2002, there was an unauthorized trading complaint made against him, demanding damages of 80,000.

There are other disclosure events, regulatory investment and judgement liens, against his records on BrokerCheck, one of which resulted in NASD suspending his license for failure to pay an arbitration award, which was resolved upon award payment. It is noteworthy that on BrokerCheck several Florida firms Mr. Keyser has worked for in the past have been expelled by FINRA including Sterling Financial Investment Group and Barron Chase Securities.

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