New York Securities Fraud Lawyers Blog

Banner picture of a key atop a balance sheet

EMPLOYEE RECOVERY $2M FOR A WHISTLEBLOWING TRADER

INVESTOR RECOVERY $7.2+M FOR PONZI SCHEME VICTIMS

INVESTOR RECOVERY $3.9M FOR TAX SHELTER FRAUD VICTIMS

BROKER PONZI SCHEME $7.4 MILLION

FAILURE TO SUPERVISE $4+ MILLION

BROKERAGE THEFT $3.8 MILLION

PONZI AT MAJOR FIRM $4+ MILLION

FAILED PRODUCT 28 EXPUNGEMENTS

WHISTLEBLOWER AWARD MAX 30% BOUNTY

NO ACTION INSIDER TRADING CASE

NO ACTION EMBEZZLEMENT CASE

NO ACTION MARKET MANIPULATION

Successful, Strategic & Straight-Talking SECURITIES LAWYERS

START WITH A FREE CONSULTATIONReferrals Welcome

Representing investors, financial professionals, whistleblowers, witnesses
and commercial clients around THE US and the world since 1999

New York Securities Fraud Lawyers Blog

Common Types of SEC Investigations That May Result in You Receiving a Subpoena

February 9, 2017 | Malecki Law Team

We frequently represent individuals who have received an SEC Subpoena, and often the first question asked is, “Why did I get this subpoena? I did nothing wrong.” The SEC investigates many kinds of misconduct, and the people they seek information and documents from (through the use of Subpoenas) very often are not “targets” of the investigation, but the SEC may believe they could be a “witness,” or may have useful information that could aid the investigation. Understanding the common investigations the SEC may commence is a good first step to understanding what prompted the Subpoena.

According to the SEC, the most common types of investigations of potential securities violations include:

Misrepresentation or omission of important information about securities – when promoting the sale of securities, brokers, broker-dealers and other securities professionals should ensure that promotional materials accurately reflect the characteristics and risks of the securities.

How Long Does The SEC Subpoena Process Take?

February 8, 2017 | Malecki Law Team

When you receive an SEC subpoena, one of the first things that you want to know is “how long before this is over?” While that is an important question, it unfortunately is not one that has a definite answer.

Frequently, the time to produce materials will range from weeks to about a month. As we said yesterday in our post about what materials are required to be produced, an extension of time to produce documents may be negotiated. Also, if the materials requested are more difficult to obtain or require forensic computing, the time to produce may be longer as well.

Once you have produced documents, the waiting game begins. Before anything else happens, the Commission usually will review the materials you have provided. Typically, once they have reviewed your production, the Commission will either: 1. Make a supplemental request of you for more documents, 2. Call you in for testimony, or 3. Choose not to have you in for testimony.

I Received a Subpoena from the SEC – What Will I have to Produce?

February 7, 2017 | Malecki Law Team

You just received a Subpoena from the Securities and Exchange Commission (SEC). What will you have to produce? We regularly represent securities industry professionals and investors who have gotten these Subpoenas, and the reaction is usually the same: people are nervous and concerned. How will this affect your business, and how what will it take the comply?

Getting an SEC Subpoena is a serious matter, and it is imperative that you carefully comply in a timely manner. Subpoenas will typically require you to produce documents or testify, or both. Your goal should always to limit your involvement with the federal authorities, and this begins with your production of documents in response to the Subpoena.

The first step is to remember that just because you received a Subpoena does not mean you automatically did something wrong. You may not be the SEC’s target, but may be someone the Commission believes has information related to another person or business. The SEC is not obligated to tell you whether they view you as a target or a witness, and you should not assume you are a target.

6 Telltale Signs of a Bad Investment

February 6, 2017 | Malecki Law Team

Salesperson seems to openly live a lavish lifestyle: The most famous Ponzi schemers have been infamous for their extravagant lifestyles. Scott Rothstein, the mastermind in a $1.2million Ponzi scheme said, “We were living like rock stars; private jets, massive amounts of money. There were lots of things that kept fueling that,” in his 2011 deposition testimony (reported in Forbes 2014). Be cautious if you are approached by a broker or advisor who fits the bill. As an extra precautionary measure, check your broker out on FINRA’s BrokerCheck.

Their marketing/ sales documents look like they could have come out of a printer in their home! Robert Van Zandt, known as the Bernie Madoff of Bronx, who was criminally prosecuted for running a Ponzi scheme, distributed homespun brochures that said “Learn to Earn 9% On Your Investment.” The quality of their marketing materials could be a good indication of the credibility of the investment.

“Guarantees” with high returns: If it sounds too good to be true, it probably is. Look out for buzzwords like “High Return” or “Risk-Free” Investments. But in reality no investment is risk-free. In fact, higher probability of return is usually associated with higher risks, according to the risk-reward tradeoff principle. So if you are offered a guaranteed high return investment with no risks, the chances are that you are dealing with a financial scam.

BROKER REPORT: Financial Advisor Solomon David Krispeal

February 2, 2017 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Solomon David Krispeal. Since January 2016, Mr. Krispeal has been employed and registered with PHX Financial, Inc., a Hauppauge, New York broker-dealer, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA). He was previously registered with Legend Securities, Inc. from March 2013 to February 2016, Aegis Capital Corp. from April 2012 to March 2013 and with John Thomas Financial from January 2008 to April 2012, according to BrokerCheck records.

In 2017, Mr. Krispeal was fined and suspended from association with any FINRA member broker-dealer for 30 days by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014042764601. According to the AWC, Mr. Krispeal violated FINRA Rule 1122 (Filing of Misleading Information as to Membership or Registration) and Rule 2010 (Standards of Commercial Honor and Principles of Trade) because he did not disclose an arbitration he was named as a respondent in, and when he did make the disclosure, he “inaccurately disclosed that the matter was ‘withdrawn,’ rather than ‘settled.’” FINRA Rule 1122 require that brokers and brokerage firms accurately disclose information regarding membership and registration to FINRA and correct any filings when required.

In addition to this regulatory matter, Mr. Krispeal has been made the subject of seven customer complaints, including two matter that have resulted in a settlement or an award, according to BrokerCheck records. In one case (FINRA Case No. 13-00830) where which Mr. Krispeal was listed as a respondent and the customer made allegations of unauthorized trading, unsuitability and churning, the customer was awarded $75,000 (nearly all of the stated damages of $95,000), according to FINRA Dispute Resolution records. Mr. Krispeal’s BrokerCheck Report also disclosed that the second case resulting in settlement concerned a customer’s allegations of unauthorized trading and alleged forgery.

Windsor Street Capital and AML Officer Charged By SEC

February 2, 2017 | Malecki Law Team

Windsor Street Capital (formerly known as Meyers Associates) and its anti-money laundering (AML) officer, John D. Telfer, have been charged with securities violations by SEC, according to a recent report. Windsor allegedly failed to report at least $24.8 million in questionable penny stock sales. The violations cited by the SEC relate to the unregistered sale of hundreds of millions with insufficient due diligence, per InvestmentNews.

The suspicious transactions allegedly date back to June 2013 and resulted in nearly $500,000 in commissions and fees for Windsor, according to the SEC. InvestmentNews reports that Mr. Telfer has been charged with aiding and abetting by virtue of his alleged failure to properly monitor the transactions at issue.

FINRA Sanctions Broker James Speno

January 31, 2017 | Malecki Law Team

According to publicly available BrokerCheck records, James Carolan Speno (CRD#431912), a New York based securities broker, formerly associated with Morgan Stanley, was recently barred by FINRA. Attorneys at Malecki Law are interested in hearing from investors who have complaints against James Speno.

Mr. Speno has spent over 45 years as a securities advisor. His most recent registration was with Morgan Stanley in New York. Prior to that he was registered with Oppenheimer & Co.; RBC Capital Markets Corporation; Salomon Smith Barney Inc.; Lehman Brothers Corp.; Merrill Lynch, Pierce, Fenner & Smith Inc., Sussex Securities Incorporated; Lehman Brothers Incorporated.

Mr. Speno is currently not registered with any firm.

SEC Bars Registered Representative Ane Plate For Theft of Client Funds

January 27, 2017 | Malecki Law Team

AdvisorHub reported on January 23, 2017 that the SEC permanently barred Ane Plate from the securities industry for stealing from her elderly clients. Ms. Plate was most recently registered as a broker from May 2005 to June 2014 with Wells Fargo Advisors Financial Network, LLC out of the broker-dealer’s Orlando, Florida office.

The Securities and Exchange Commission (SEC) Order detailed that from October 2013 to April 2014, she made 15 unauthorized sales of securities from her elderly clients’ accounts totaling over $176,000. In a regulatory action brought by the Financial Industry Regulatory Authority (FINRA), Ms. Plate submitted a Letter of Acceptance, Waiver and Consent No. 2014041705101 (AWC) where she accepted and consented to findings by FINRA that she facilitated the $176,000 to be transferred to her client’s bank account where she then arranged for 15 checks to be issued from the customer’s account, payable to her. The AWC detailed that in total, Ms. Plate converted $140,058 from her brokerage customer, and that this conduct violated FINRA Rules 2150 (Improper Use of Customers’ Securities or Funds) and 2010 (Standards of Commercial Honor and Principles of Trade). Ms. Plate was terminated from her employment with Wells Fargo for this same conduct, according to her publicly available BrokerCheck report as maintained by FINRA.

The SEC Order stated that on May 20, 2015, Ms. Plate pled guilty to one count of Theft, Embezzlement, or Misapplication by a Bank Officer or Employee, in violation of Title 18, United States Code, Section 656, in the United States District Court for the Middle District of Florida. Ms. Plate’s criminal case is titled United States v. Ane Plate, Case No. 6:15-cr-00084-GKS-GJK (M.D. Fla).

SEC Bars Michael Breton for “Cherry-Picking”

January 26, 2017 | Malecki Law Team

Michael J. Breton of Massachusetts was banned from the securities industry by the SEC according to a recent InvestmentNews report. According to the report, Mr. Breton cost his clients $1.3 million by “cherry-picking” trades – i.e., placing trades through one central account then allocating the profitable trades to himself and the losing trades to clients. This practice reportedly continued from 2011 to July of this past year.

On Wednesday, the SEC filed charges against Mr. Breton and Strategic Capital Management, Mr. Breton’s firm, in federal court in Massachusetts. Mr. Breton has agreed to plead guilty to criminal securities fraud and forfeit $1.3 million, per the report. According to InvestmentNews, the US Attorney’s Office has agreed to recommend a maximum sentence of no more than three years.

Morgan Stanley Reportedly Terminates Three High Producing Brokers

January 25, 2017 | Malecki Law Team

It was reported by AdvisorHub on January 24, 2017 that the firm terminated three high producing brokers who were being investigated internally. The three brokers were members of the PC Wealth Management Group.

The first broker, Michael Paesano, was reported to

have been terminated over “concerns” of his “exercise of discretion and investment strategy,” according to the AdvisorHub article. According to Mr. Paesano’s publicly available BrokerCheck report, as maintained by the Financial Industry Regulatory Authority (FINRA), he has been the subject of 15 customer complaints, spanning his employment and registration at two broker-dealers, including Morgan Stanley from May 2011 to January 2017 and UBS Financial Services, Inc. from August 2005 to May 2011. According to Mr. Paesano’s BrokerCheck report and the AdvisorHub article, the most recent customer complaint, alleging unsuitable investments and $1,000,000 in damages, resulted in a settlement of $245,000 to the customer.