New York Securities Fraud Lawyers Blog

BROKER REPORT: Former Financial Advisor Manuel Dopazo

August 25, 2015 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in investigated possible claims on behalf of investors who have complaints regarding former stockbroker Manuel Dopazo. According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Dopazo has been the subject of multiple customer disputes in just the past ten years.

Per FINRA, in 2015 a customer complaint involving Mr. Dopazo alleged misrepresentations, omissions, failure to supervise, and the recommendation of unsuitable investments seeking $640,000 in damages.

In 2009, Mr. Dopazo was involved with another customer dispute alleging a $30,000 loss, per BrokerCheck. Another customer complaint, in 2008, alleged more than $50,000 in losses stemming from suitability violations.

Are We Still At A “Sweet Spot” for SEC Whistleblowers?

August 21, 2015 | Malecki Law Team

According to an article by Rob Lenihan of Thomson Reuters, published in August 2014, Sean McKessey, head of the SEC’s whistleblower program, was quoted by the Wall Street Journal as saying that the numbers [of whistleblower complaints] will soon grow and “we’re getting close to the sweet spot.” Malecki Law had reported on this Wall Street Journal article and examined the state of Dodd-Frank Whistleblower program, as it existed then, in this blog post. A year into it, let’s examine where we are at with the growing numbers.

During the 2014 fiscal year, the number of whistleblower tips and complaints received by the Commission grew 10.1 % from the year before to 3,620. The Dodd- Frank Whistleblower program, which promises cash rewards for those whose tips lead to a successful investigation by the SEC, has witnessed many milestones in past four years. In a recent development, SEC paid a handsome $3 million to a company insider in July 2015, who helped crack a complex fraud case.

According to Andrew Ceresney, Director of the SEC’s Division of Enforcement. “Insiders may hold the key to helping our investigators unlock intricate fraudulent schemes,” and “by providing significant financial incentives for people to come forward, the SEC’s whistleblower program continues to be profoundly effective in helping us protect investors and hold wrongdoers accountable.” The SEC’s whistleblower program has already paid more than $50 million to 18 whistleblowers, since its inception in 2011, including $30 million in awards in 2014, more than doubling the $14 million rewards it paid in 2013. Let’s hope the trend continues!

BROKER REPORT: Over Ten Customer Complaints Against Michael Fasciglione

August 20, 2015 | Malecki Law Team

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Michael Fasciglione. Mr. Fasciglione is believed to be registered with National Securities Corporation, based out of Mineola, NY. He has also recently been registered with Oppenheimer & Co. and First Montauk Securities, according to industry records.

According to BrokerCheck, as maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Fasciglione has been the subject of more than 10 customer complaints. Stretching back as far as 1995, Mr. Fasciglione has been accused of recommending unsuitable investments to customers, breach of fiduciary duty, churning, excessive trading, fraud, unauthorized trading, taking excessive risk, misrepresentations, allowing a customer’s account to exceed comfortable margin balances, and charging excessive commissions, per FINRA records.

Of these customer disputes, FINRA records indicate that some customers received back tens of thousands of dollars in connection with their complaints. One customer reportedly received back $300,000 in connection with an unauthorized trading complaint, while another reportedly received $120,000 in a suitability claim.

Former Raymond James Financial Broker Paul F. Gans Jr. Suspended For Loaning Money to Clients

August 19, 2015 | Malecki Law Team

One of the well-known and strictly enforced rules in the securities industry is that brokers should not enter into undisclosed private loan transactions with their clients. A Letter of Acceptance, Waiver and Consent (AWC) was recently accepted by the Financial Industry Regulatory Authority’s (FINRA’s) Department of Enforcement from Paul F. Gans, Jr., who was employed as a registered broker by Raymond James Financial, Inc. up until November 2014. According the AWC, Mr. Gans inappropriately loaned money to a “family friend” in exchange for a three-year promissory note bearing 8% annual interest, without disclosing the transaction to his employer and ensuring it complied with his employer’s policies and procedures. Mr. Gans was accused by FINRA of violating FINRA Rule 3240 (Borrowing from or Lending to Customers) and Rule 2010 (Standards of Commercial Honor and Principles of Trade).

Rule 3240 prohibits brokers from borrowing from or lending to customers, unless the transaction is permitted by the employing firm after disclosure and in compliance with the firm’s policies and procedures. According to the AWC, Mr. Gans did not disclose the promissory note transaction to his employer.

As detailed in the AWC, Mr. Gans was suspended from association with any FINRA member for ten business days, and fined $5,000. The firm, Raymond James Financial, Inc., disclosed on FINRA BrokerCheck that Mr. Gans was discharged for his lack of disclosure of an outside business activity, which may or may not refer to the promissory note transaction. It was also disclosed on FINRA BrokerCheck that Mr. Gans was also discharged from his prior employer Morgan Stanley Dean Witter in 2000 for also violating that firm’s policies and procedures, that time for mailing correspondence without prior approval. FINRA BrokerCheck also revealed that Mr. Gans was the subject of one customer complaint in 1994 for allegedly failing to inform a client in the decline in value of a “mutual investment,” which claim was settled by Morgan Stanley Dean Witter.

Citigroup Affiliates Charged With Defrauding Investors Settle with SEC For $180 Million

August 18, 2015 | Jenice L. Malecki, Esq.

The Securities and Exchange Commission (SEC) announced this week that two Citigroup Affiliates, Citigroup Global Markets Inc. (CGMI) and Citigroup Alternative Investments LLC (CAI), agreed to pay $180 million to settle charges of defrauding investors with false and misleading claims. According to allegations, these Citigroup affiliates had claimed that their hedge funds, Falcon fund and ASTA/MAT, were low-risk products safe for traditional bond investors, however, these funds collapsed during the financial crisis.

According to SEC’s investigations, the above mentioned Citigroup affiliates raised almost $3 billion from 4,000 investors by making false and misleading representations for their hedge funds. They are reported as having continued to claim that these funds were low-risk and made false assurances about liquidity even as the funds started collapsing. The investigation also revealed that CAI raised $110 million in additional investments even when the fund was in dire situation and Citigroup employees presented the funds to investors in a manner that was at odds with the fine print in the written and marketing materials provided to investors. The Citigroup affiliates consented to settle without admitting or denying the findings that they willfully violated Sections 17(a)(2) and (3) of the Securities Act of 1933, GCMI willfully violated Section 206(2) of the Investment Advisers Act of 1940, and CAI willfully violated Section 206(4) of the Advisers Act and Rules 206(4)-7 and 206(4)-8. The firms have also consented to censure and will cease and desist from future violations.

Malecki Law takes a proactive and informed approach to national and international financial news of today. This represents a classic case of Securities Fraud where investors are misled into investing in unsuitable products. SEC holds investment firms and brokers accountable for looking out for investors’ best interests and the team at Malecki Law represents and guides investors who have been victimized by false claims, false assurances and misrepresentations. For a comprehensive list of kinds of Securities Fraud please click here and contact us if you feel you have suffered similar losses.

BROKER REPORT: Churning Complaints Regarding Dwarka Persaud

August 18, 2015 | Malecki Law Team

The securities fraud attorneys are interested in hearing from investors with complaints involving Dwarka Persaud. Per his BrokerCheck Report, maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Persaud is a registered stock broker with Buckman, Buckman & Reid, based out of Shrewsbury, NJ.

Mr. Persaud’s BrokerCheck Report indicates that he has been the subject of at least six customer complaints. At the center of several of these complaints was churning and excessive commissions. Churning is the frequent,over-trading of a customer’s account by the broker to generate high commissions paid by the customer, benefitting the broker and the firm. Churning is against the law and industry regulations.

Mr. Persaud is reportedly the subject of at least two currently pending customer complaints, each alleging and “unauthorized trading.” One of these complaints also alleges churning. The other alleges that the unauthorized trading caused more than $45,000 in losses.

Former Caldwell Broker, Richard Adams, Barred by FINRA for Churning Customer Accounts

August 14, 2015 | Malecki Law Team

Per Financial Industry Regulatory Authority’s (FINRA) announcement this week, a former registered representative of Caldwell International Securities Corp., Richard Adams aka Rasheed Aree Adams, has been barred permanently from the securities industry for churning customer accounts, other securities violations, and failure to report many unsatisfied judgments and liens on his U4 Registration Form as stipulated in FINRA rules. In addition to Caldwell, he was also previously registered with PHD Capital and E1 Asset Management Inc. from 2002 to 2011.

FINRA’s investigation revealed that Adams excessively traded the accounts of two customers, between July 2013 and June 2014, resulting in profits and commissions in the excess of $57,000 for himself while resulting in losses amounting to over $37,000 for customers. The findings stated that as a result Adams willfully violated section 10(B) of the Securities Exchange Act of 1934 and rule 10B-5, willfully failed to amend Form U4, and failed to provide documents requested by FINRA. Adams neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

Richard Adams is no stranger to regulatory and legal proceedings and has a reported history of customer disputes and violations. According to the CRD 13 judgement/liens, 5 customer disputes, 2 investigations and 1 regulatory disclosures have been reported against him. In 2001 there were allegations of unsuitability, unauthorized trading, and churning made against him while he was employed at The Golden Lender Financial Group, Inc, and this customer dispute was finally settled for $10,000. Currently, there is a pending FINRA investigation against Adams for potential violation of FINRA rules 2010 and 2111, and willful violations of Article V, section 2 from 2014.

Malecki Law Announces Investigation into Dennis C. Lee, Former AXA Advisors Broker

August 13, 2015 | Malecki Law Team

Malecki Law is investigating potential claims by investors relating to Dennis C. Lee, a former AXA Advisors, LLC broker who was recently terminated by the firm in April 2015. According to Mr. Lee’s publicly available Financial Industry Regulatory Authority (FINRA) BrokerCheck report, he was “discharged for failing to disclose financial issues requiring Form U4 amendments, mismarking trade tickets, and placing securities trades away from AXA.” If substantiated, each of these failings could be potentially serious violations of securities laws and rules.

According to Mr. Lee’s BrokerCheck report, he has had other legal issues, including one FINRA Arbitration proceeding that was filed by a customer in February 2015 alleging that he made unsuitable investment recommendations, transferred funds to a new account without the customer’s knowledge or consent, engaged in unauthorized trading and submitted policy documents containing a forged signature. The BrokerCheck report also details two settlements between Mr. Lee and American Express and Ballys Park Place Casino Resort.

It is believed that other investors may have been misinformed about trading that may have taken place in their accounts that were managed by Mr. Lee. It is further believed that Mr. Lee may have used his ethnicity and religious background to obtain clients. The SEC has cautioned investors against affinity fraud, which refers to investment scams that prey on members of religious or ethnic communities, the elderly or other professional groups. More information regarding affinity and other investment-related fraud can be found on the Malecki Law website.

Former Park Avenue Securities, LLC Broker Robert Michael Diehl Suspended by FINRA

August 5, 2015 | Malecki Law Team

Beware of alternative investments. A Letter of Acceptance, Waiver and Consent (AWC) was recently accepted by the Financial Industry Regulatory Authority’s (FINRA’s) Department of Enforcement from Robert Michael Diehl. Mr. Diehl was accused of bypassing firm policy in order to sell equity indexed annuities (“EIAs”) while a registered representative of Park Avenue Securities LLC. Specifically, Mr. Diehl was accused of violating FINRA Rules 2010 (Standards of Commercial Honor and Principles of Trade) and 3270 (Outside Business Activities of Registered Persons).

Equity indexed annuities are alternatives to fixed rate or variable rate annuities. They are characterized by yielding interest returns at least partially based on equity indexes, such as the S&P 500, rather than mutual funds that are used in variable annuities. They are generally considered complex investments that typically yield high commissions to the selling brokers and high penalties to investors for early termination.

According to the AWC, between September and October 2014, Mr. Diehl sold EIAs to two customers. The AWC detailed that according to the firm’s compliance manual, Mr. Diehl was required to have the customers complete a non-brokerage account application for the EIAs sales, provide the customers with an Explanation of Investment form for EIAs, and submit these completed forms to his supervisor for review.

Aegis Capital Fined By FINRA; Senior Management Suspended

August 4, 2015 | Malecki Law Team

FINRA has announced that it has fined Aegis Capital Corp. $950,000 for sales of unregistered penny stocks and anti-money laundering violations. According to FINRA, this fine was also related to supervisory failures within the firm.

The firm was not the only one that FINRA appears to have come down hard upon. Reports show that Charles D. Smulevitz and Kevin C. McKenna, who each served as the firm’s Chief Compliance and AML Compliance Offices were given 30-day and 60-day principal suspensions and fined $5,000 and $10,000, respectively, per FINRA. Aegis’ president, Robert Eide, was also reportedly given a “time-out” in the form of a 15-day suspension for failing to disclosed more than a half-million dollars in outstanding liens, in violation of FINRA rules.

FINRA reportedly found that from April of 2009 through June of 2011, Aegis liquidated almost 4 billion shares of penny stocks which were neither properly registered nor exempted from registration with the US Securities and Exchanges Commission. According to FINRA, Aegis committed these violations in spite of a multitude of “red flags” or warning signs that something was amiss.