New York Securities Fraud Lawyers Blog

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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

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New York Securities Fraud Lawyers Blog

UBS Fined for Sales of Complex Investments

October 7, 2016 | Malecki Law Team

According to news reports, the SEC has fined UBS more than $15 million for its failures to properly supervise employees who sold complex investment products to unsophisticated and inexperienced clients of the firm. Complex products are traditionally reserved for only sophisticated investors who have a full understanding of the product and are appreciative and willing to take the risks involved. These are not typically appropriate or suitable for unsophisticated “mom and pop” investors.

Nonetheless, reports indicated that UBS’s financial advisors sold more than half a billion dollars’ worth of these complex products to more than 8,000 inexperienced investors. Making matters worse, reports reveal that many of these investors had moderate or conservative risk profiles. The products sold to investors are said to have included reverse convertible notes, some of which had derivatives that were tied to implied volatility.

This is not new for UBS, which just paid $19.5 million last year in connection with the firm’s sale of complex structured notes.

Morgan Stanley Charged for Unethical High-Pressure Sales Contests

October 4, 2016 | Malecki Law Team

First Wells Fargo, now Morgan Stanley.

On the heels of Wells Fargo’s cross-selling scandal, the broker-dealer Morgan Stanley has been accused of inappropriately promoting “securities based loans” to customers, according to an article published in the Wall Street Journal on October 3, 2016. The complaint, filed by Massachusetts securities regulators, alleges that Morgan Stanley’s lax compliance and supervisory oversight led the broker-dealer to breach their own fiduciary duties owed to their wealth management customers by pushing the loans and minimizing the risks associated with the accounts.

If the allegations turn out to be true, the Massachusetts allegations would further exemplify the conflict of interest between broker-dealers pushing risky products on their clients without providing the balanced view of the products that industry rules require, which could be breaches of duties to certain of their customers. At the very least, FINRA Rule 2111 requires that broker-dealers ensure that recommendations of products are suitable for each customer, which requires a careful assessment of each customer’s respective investment objectives, risk tolerance, age, tax bracket, other investments, liquidity needs, as well as other factors.

Jenice Malecki Speaks at PLI’s Securities Arbitration 2016

October 4, 2016 | Malecki Law Team

Ms. Malecki was a panelist recently at the Practising Law Institute’s (PLI) Securities Arbitration 2016 all-day seminar, where she spoke about ethical and other issues in securities arbitration. Ms. Malecki has spoken at PLI consistently for many years. Her panel Practicum on Experts and Closings focused on expert witnesses and closing arguments. The panel and the seminar had other distinguished securities industry members from the FINRA Dispute Resolution office, professors of law, litigators, mediators and wealth managers. Ms. Malecki is invited every year to participate in PLI’s securities arbitration seminars.

The SEC Has Brought Charges Against Two Executives for Accounting Fraud in Nicholas Schorch’s flagship REIT Company

September 15, 2016 | Malecki Law Team

According to published materials, two years ago the SEC started investigating, American Realty Capital Properties Inc (ARCP) and its executives, for allegedly overstating financial results and deliberate concealment of financial mistakes, which rattled the REIT brokerage empire built by Nicholas Schorsch. After investigations, the SEC reported that it recently brought charges against Brian S. Block and Lisa P. McAlister, the former chief financial and chief accounting officers of American Realty Capital Properties Inc.

The FBI announced Block’s arrest at his home in Pennsylvania on charges of securities fraud and conspiracy. In June, McAlister reportedly pled guilty to four securities fraud and false filing counts. According to the charges brought by the SEC, they are alleged to have intentionally inflated a key metric to make sure that the REIT met analysts’ estimates for the first two quarters of 2014. As per AdvisorHub, Block’s attorney was quoted saying “[t]here is little precedent for the notion that criminal charges are appropriate when accountants make decisions involving these sorts of accounting principles [non-GAAP principles applicable only to REITs].”

After ARCP, with apparent market capitalization of $11.5 billion, publicly disclosed its intentional errors and result inflation in 2014, Schorsch controlled REITs and holding companies lost billions of dollars and ten broker dealers filed for Chapter 11 bankruptcy.

BROKER REPORT: Anthony Librizzi Suspended By FINRA

September 7, 2016 | Malecki Law Team

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding L.O. Thomas & Co , Inc. financial advisor Anthony Librizzi.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Librizzi was most recently with Wells Fargo Advisors LLC before resigning amid allegations.

FINRA records indicate that Mr. Librizzi resigned from Wells Fargo voluntarily in 2013 amid allegations that he “accepted $8,000 from a client.”

BROKER REPORT: Financial Advisor Megan Resch

September 6, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Megan Resch. Ms. Resch is currently registered to sell securities with LPL Financial LLC in the broker-dealer’s Morristown, New Jersey office, according to her publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA). Ms. Resch has been registered with LPL Financial since November 2010, and before then was registered to sell securities with Multi-Financial Securities Corporation in Martinsville, New Jersey from January 2006 to November 2010, according to her BrokerCheck records.

Ms. Resch’s BrokerCheck records indicate that two customers have raised disputes regarding her recommendations, including 2014 allegations of an unsuitable limited partnership investment that causes losses, which was settled for $78,400. Additionally, a customer alleged in 2011 that there were misrepresentation and suitability issues on investments from April 2007 to December 2010, which dispute was settled for $105,000, according to the BrokerCheck records.

Generally speaking, FINRA Rules require that recommendations made by the broker to the customer be suitable. This means that the broker must consider the investor’s age, investment experience, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

BROKER REPORT: Financial Advisor Robert Austin McAllister

September 1, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Robert A. McAllister. Mr. McAllister was formerly registered to sell securities from December 2011 to February 2016 with Edward Jones a broker-dealer in Ocean City, New Jersey, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

In 2016, Mr. McAllister was 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. 2016048831201 (AWC). According to the AWC, Mr. McAllister violated FINRA Rule 3240 (Borrowing from or Lending to Customers) and 2010 (Standards of Commercial Honor and Principles of Trade) because in May 2015, he borrowed $8,500 from a family friend and customer of Edward Jones. According to the AWC, Mr. McAllister did not provide written notice to his registering firm of the loan with the customer, and did not receive approval to participate in the transaction.

According to Mr. McAllister’s publicly available BrokerCheck records, he was discharged from his employment with Edward Jones on January 12, 2016 amid allegations that his “employment was terminated for violating Firm policy by soliciting and accepting a loan from a client without approval from the Firm.”

Potential Claims for Investors in Merrill Lynch Structured Notes

August 30, 2016 | Malecki Law Team

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have purchased structured notes or other complex products from Merrill Lynch or its parent company, Bank of America.

According to a recent SEC press release, “Merrill Lynch has agreed to pay a $10 million penalty to settle charges that it was responsible for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index.” The issues surrounding the notes stemmed, at least in part, from disclosure of the fees paid by investors and the fee structure related to the “volatility index” to which the notes were linked, per the SEC.

For example, the notes reportedly were subject to a 2% sales commission and 0.75% annual fee. According to the SEC, for investors to earn back their original investment on the maturity date, the index would need to increase by at least 5.93%. The SEC also alleged that the offering materials failed to “adequately disclose” the 1.5% execution factor, which was an additional cost.

BROKER REPORT: Financial Advisor Christopher B. Ariola

August 29, 2016 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Christopher B Ariola. Mr. Ariola was last employed and registered with Financial Telesis, Inc., an Aliso Viejo broker-dealer, from November 2012 to September 2014, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA). He was previously registered with Bay Mutual Financial LLC from September 2004 to September 2012, according to BrokerCheck records.

FINRA filed Disciplinary Proceeding No. 2012034139101 against Mr. Ariola on August 25, 2016 alleging that he recommended that three elderly retiree investors invest a “substantial portion of their limited retirement assets in certain gold and energy stocks.” The Complaint further alleged that these recommendations were unsuitable because they were not appropriate given each investor’s respective financial circumstances, investment objectives and low risk tolerances, and because the recommendations resulted in each account becoming concentrated in gold and energy stocks. Gold is a commodity, which like energy stocks, can be traded. Both commodities and energy stocks tend tobe risky investments and can lead to large losses.

According to his BrokerCheck report, Mr. Ariola has been the subject of four customer complaints. The latest customer complaint led to a FINRA arbitration proceeding, according to BrokerCheck records. The BrokerCheck records reveal that the customer alleged churning and unsuitability. Churning is generally defined as excessive trading by the broker in the client’s account to generate commissions. FINRA Rules require that recommendations made by the broker to the customer be suitable. This means that the broker must consider the investor’s age, investment experience, age, tax status, other investments, as well as other factors when making a recommendation to buy or sell securities.

BROKER REPORT: Anthony Joslin

August 26, 2016 | Malecki Law Team

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding Garden State Securities financial advisor Anthony Joslin.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Joslin was most recently with JP Turner & Co and Grayson Financial. Grayson Financial has since been expelled by FINRA according to industry records.

Mr. Joslin has at least seven customer disputes and 2 regulatory events in his history, per FINRA.