H. Beck Ordered to Repay $1 Million to Elderly Widow

 On May 17, 2012,  the Securities  Division of Massachusetts ordered H. Beck to guarantee the recovery of $1 million for an 82 year old  woman, with early stage Alzheimer, who was convinced to cash in CDs and buy annuities by one of their brokers. In addition H. Beck was fined $90,000. A copy of the order can be viewed here.

The broker, Paul Dumouchel, who earned over $63,000 in commissions for his acts, convinced the elderly lady to purchase annuities which could not be accessed without a penalty for ten years. In addition, over $5,000 in penalties was incurred for cashing in the CDs.

In his testimony Dumouchel acknowledged that:

“at the investors age, it was not the easiest thing in the world to find suitable investments because many companies would not sell an annuity to someone over 80 years of age…”

We have warned in the past that there are unscrupulous brokers who will take advantage of the elderly. All firms, including H.Beck have a duty to oversee and supervise their brokers to prevent such abuse.

The investigation found that H. Beck failed to supervise its broker allowing the broker to shift her nest egg to wholly inappropriate investments. In addition to a cease and desist order, the administrative fine and the compensation of the elderly lady victim, the order requires H. Beck to:

  • Retain an independent consultant review and monitor their supervisory policies and procedures, including their inspection procedures for a period of two years
  • H. Beck shall not have authority to terminate the consultant with approval of the Massachusetts Division of Securities
  • Contact all of Dumochel’s clients to determine if there are other victims and to compensate any other victims

H. Beck, Inc.
is the securities arm of The Capital Financial Group and is an
independently operating subsidiary of Securian Financial Group, Inc.

Brokers have a duty to make recommendations that are suitable for the investor. If you have suffered losses on investments that you feel are unsuitable for you or that you do not understand, you may be able to recover those losses through FINRA arbitration. We have been helping investors recover stock market losses for more than 20 years. Call us at 561 391 1900.

Free consultation.
Nationwide representation.

Rex Securities Law


 

Rex Securities Law Files KBS REIT Claim vs. Ameriprise

Rex Securities Law is in the process of filing a FINRA arbitration claim against Ameriprise Financial for losses suffered by a retiree from Florida’s west coast who has suffered significant losses as a result of investing in KBS Real Estate Investment Trust upon his retirement in 2007.

The arbitration claim alleges that Ameriprise’s broker touted KBS REIT by claiming that the investment was very similar to an investment in a bond, that the value would not fall below the $10 per share purchase price, that the investment could be liquidated if necessary and that the monthly distributions were guaranteed.

Shortly after the purchase, KBS cancelled their share redemption program and ceased the monthly distributions. After recent regulatory pressure, KBS was forced to let investors know that the shares are worth far less than the $10 purchase price. For more on the decline of KBS REIT value, see our prior post. As we have previously discussed, time will soon be running out for investors who were misled to pursue claims related to the purchase of KBS.

If you have losses in KBS and were misled as to the nature of the investment, you may be able to recover those losses. Contact us at 561 391 1900.

Free consultation.
Nationwide representation.

Rex Securities Law

FINRA Warns Investors to Be Wary of Nutraceutical Stock Scams

On May 26, 2012, the Financial Industry Regulatory Authority (FINRA) warned investors about potential scams related to natural medicines, fortified foods and other products claiming to improve potency, extend your life or to fight the common cold. Here is a link to FINRA’s Investor Alert.

FINRA warns that the solicitations for these potential scams can arrive by phone, fax, emails, text messages, tweets, blogs or message board posts. Scam signals include:

  • Predictions of swift of exponential growth
  • Unsolicited communications promoting the opportunity

You should read the entire FINRA alert if you are tempted to respond to one of these solicitations and remember:

If it looks too good to be true, it probably is.


If you have questions about how your brokerage acccount is being handled or have stock market losses that are unexplained, contact us at 561 391 1900. We have been helping investors recover investment losses for more than 20 years.

Free consultation


Rex Securities Law


SEC Charges Quantek Asset Management for Deceiving Investors

On May 29, 2012, the Securities & Exchange Commission charged a hedge fund adviser from Miami for deceiving investors by leading them to believe that Quantek executives had made personal investments in a Latin-American focused hedge fund. Here is a link to the SEC release.

Think about it, what is more  convincing to a prospective investor than to hear from the selling broker that the broker (or his mother, father, etc) has personally invested in the investment he is pitching? It is a time worn technique that no doubt will continue to be used by unscrupulous brokers. In this case, investors were told that fund managers had “skin in the game”.

The SEC found that Quantek lead executive Javier Guerra, operations director Ralph Patino and former parent company Bulltick Capital Markets Holdings LP misled investors about the investment process as well as certain related-party transactions.

They agreed to pay more than $3.1 million in disgorement and penalties to settle the charges. Guerra and Patino agreed to securities industry bars. 

“When making an investment decision, private fund investors are entitled
to the unvarnished truth about material information such as
management’s skin in the game or the adviser’s handling of related-party
transactions,” said Bruce Karpati, Co-Chief of the SEC Enforcement
Division’s Asset Management Unit. “Quantek’s investors deserved better
than the misleading information they received in marketing materials,
side letters, and other fund documents.”

Brokers owe a duty to investors to tell the whole truth about potential investments they are recommending and to make only suggestions that are suitable for the particular investor. Age, health and financial sophistication, or lack thereof, are all to be taken into consideration by the broker.

If you have questions about losses in your brokerage account, do not hesitate to contact us. You may be able to recover your losses through FINRA arbitration.

Free consultation.
Nationwide representation.
561 391 1900

Rex Securities Law

FINRA Rules Against Lerner in First Apple Non-Exchange Traded REIT Case

The first of what may be potentially hundreds of arbitration cases relating to the sale of Apple REITs by David Lerner & Associates Inc. was recently decided in favor of the claimants. A single FINRA arbitrator ordered Lerner Associates to give the customers their money back in exchange for their Apple REIT nine shares.

As we have previously reported here, here and here, David Lerner and his company have been in the regulatory spotlight for the past year in connection with the sale of almost $7 billion worth of the Apple REITs. According to industry sources, Lerner’s company has collected $600 million in commissions for the sales which comprise over half of the firm’s business.

In June 2011, class action suits were filed against David Lerner & Associates over misrepresentations in connection with sales of Apple REITs. Later during the year FINRA filed actions against Lerner’s company , then against  Lerner himself for  misleading investors about the Apple REITs.

If you purchased Apple REITs and have suffered losses, you may be able to recover those losses. Brokers have a duty to make suitable recommendations to investors. Please do not hesitate to contact us to discuss your legal rights.

Nationwide representation.
Free consultation.
561 391 1900

Rex Securities Law

Geneos Wealth Management Stockbroker Barred by FINRA

Investors were unaware that the nest eggs they had entrusted their broker with were being used to for his personal expenses, including his gambling debts.

While working as a registered broker for Geneos Wealth Management, Inc. from 2005-2011, former broker Marc Duda, age 37,  bilked  more than 10 , mostly elderly, investors out of millions, possibly as much as ten million. Duda told these unsuspecting victims that he was purchasing secure investments while he was actually using their life savings to purchase a plane, a boat, a car, a motorcycle and to make mortgage payments, pay child care expenses and even to fund gambling trips to Las Vegas.

He was able to continue the fraud using the time tested ponzi technique of paying off old investors with money raised from new  victims. He operated two outside businesses KAD Capital Group, LLC and Capistrano  Beach Funding Corporation, where some of the stolen money was directed.

He agreed to a permanent bar from association with any FINRA member. That is the least of his concerns. He was sentenced to 78 months in prison and begins serving his time on June 22, 2012. According to Federal Law, Duda will serve a minimum of 85% of his sentence.

Brokerage firms have a duty to supervise and oversee the activities of their brokers, however it appears that Duda’s firm was negligent in overseeing his activities, resulting in financial devastation for many retirees.

If you have a question about the way your brokerage account has been handled or have stock market losses that are unexplained, please contact us.
561 391 1900
Free Consultation.
Nationwide Representation.

Rex Securities Law

FINRA Issues May 2012 Disciplinary Actions

The
Financial Industry Regulatory Authority (FINRA) issues a report on
disciplinary and other actions involving registered brokers, investment
advisers and brokerage firms every month.

Follow this link to the FINRA website for the entire report for the month of May 2012 as well as to access  earlier time periods.

Here are the Florida related actions for May 2012.

Global Transition Solutions, Inc. (CRD #21622, Peoria Heights, Illinois) and James Edward Zogby (CRD #2549557, Registered Principal, Placida, Florida)  were censured and fined $10,000, jointly and severally. The firm and Zogby consented to the described sanctions and to the entry of findings that the firm entered into an operating agreement with a non-registered entity by which the nonregistered entity would provide executive management services and administrative support for which the member firm would pay for these services. According to the report, the firm paid approximately $1,050,000 in commissions and
fees to the non-registered entity, and Zogby received a $4,000 monthly fee from the entity for compliance-related services. The firm improperly paid the non-registered entity rather than paying compensation, commissionsor fees directly to the registered representatives who owned the non-registered entity.

Raymond James Financial Services, Inc. ( St. Petersburg, Florida)  the firm was censured, fined $400,000,
and is required to undertake to conduct a comprehensive review of the adequacy of its AML (anti money laundering) policies and procedures. The firm consented to the described sanctions and to the entry of findings that it failed to implement procedures reasonably designed to detect and cause the reporting of suspicious transactions in the
accounts of its customer who used his brokerage accounts at the firm to conduct a Ponzi scheme that resulted in losses of approximately $17.8 million to the individuals who provided funds to him. The findings also stated that the firm
failed to devote adequate resources to its AML program, failed to adequately investigate suspicious activity in the customer’s accounts, failed to implement its AML program to
adequately consider numerous red flags related to the customer’s accounts, and failed to conduct adequate due diligence or monitoring of the customer’s accounts.

Ultralat Capital Markets, Inc. ( Miami, Florida)  the firm was censured and fined $20,000 and the firm consented to the described sanctions and to the entry of findings that for approximately 10 months, it allowed an individual to serve as its president and CEO and to act in a General Securities Principal (GSP) capacity without being so registered or qualified. The findings stated that although the individual had a General Securities Representative (GSR) license and had registered to take the GSP exam, he did not pass it until after he had left the firm. The findings also stated that for approximately four months, the firm allowed another individual to serve as its president and CEO, and to act in a GSP capacity without being so registered. The findings also included that for a total of approximately 15 months, the firm operated with only one officer or partner who was registered or authorized to function as a GSP, without a waiver of the two principal requirement and, for almost a month, the firm operated without any officer or partner who was registered or authorized to function as a GSP.

Jose Vicente Alvarado ( Registered Representative, Key Biscayne, Florida): was fined $10,000 and suspended from association with any FINRA member in any capacity for 10 business days. Alvarado consented to the described sanctions and to the entry of findings that for approximately 10 months, he served as the president and CEO of, and acted in the capacity of, a GSP for his member firm, without being registered or qualified as a GSP.

John Brian Busacca III (Registered Principal, Orlando, Florida) fined $30,000 and suspended from association with any FINRA member in any principal capacity for six months. The SEC sustained the sanctions following appeal of a NAC decision. The U.S. Court of Appeals denied Busacca’s petition for review. The sanctions were based on findings that Busacca failed to reasonably supervise the firm’s operations system conversion and its operations activities to detect and/or prevent certain violations, including, but not limited to, inaccurate box counts, erroneous records of customer
securities, failure to timely validate or take exception to transfer instructions, failure to make timely buy-ins, failure to timely liquidate unpaid-for customer securities positions
in cash accounts in violation of Regulation T of the Federal Reserve Board and FINRA rules. The findings stated that Busacca failed to reasonably supervise the firm’s operations
considering his extensive travel and focus on business development despite his knowledge of the firm’s significant operational problems, the lack of adequate personnel in place to address the firm’s problems, and Busacca’s failure to diligently and promptly address all of the firm’s operational issues. The suspension is in effect from April 16, 2012, through October 15, 2012.

Philip Christopher Crescimanno ( Registered Representative, Land O’Lakes, Florida) was barred from association with any FINRA member in any capacity.
Crescimanno consented to the described sanction and to the entry of findings that he operated an outside business without providing prompt written notice to his member firm and failed to obtain the firm’s approval. The findings stated that by failing to report that he was an officer of his company and was involved in its operation, Crescimanno failed to comply with firm policies and procedures. The findings also stated that Crescimanno failed to provide on-the-record testimony, materially impeding FINRA’s investigation.

Paul Andrew Fischetti (Registered Supervisor, Palm Harbor, Florida) was fined $5,000 and suspended from association with any FINRA member in any capacity for six months. Fischetti consented to the described sanctions and to the entry of findings that he failed to timely respond to FINRA requests for information. The suspension is in effect from April 2, 2012, through October 1, 2012.

Harrison A. Hatzis (Registered Principal, Hallandale, Florida) was fined $30,000 and suspended from association with any FINRA member in any capacity for two
years. The NAC imposed the sanctions following appeal of an Office of Hearing Officers (OHO) decision. The sanctions were based on findings that Hatzis provided incomplete
and inaccurate information concerning his firm’s application for FINRA membership and misled FINRA. The findings stated that Hatzis was responsible for the firm’s filing
of incomplete and inaccurate membership information and the resultant misleading of FINRA. The firm failed to accurately, completely and timely disclose the source and nature of its initial funding and ownership. The firm’s membership application and Application for Broker-
Dealer Registration (Form BD) also inaccurately indicated that Hatzis solely owned the firm, when in fact an entity was the firm’s sole, direct owner. The findings also included that the firm misled FINRA concerning a $250,000 payment under an Investment Agreement and sought to shield the Investment Agreement from regulatory review.
executed the Investment Agreement.  FINRA found that the firm’s obligation to forego $285,000 in net commissions otherwise due from another firm alone affected a significant aspect of the firm’s financing and revenues, and raised considerable questions concerning the firm’s ability to maintain adequate net capital. Nonetheless, the firm never disclosed these key terms to FINRA.

The decision has been appealed to the SEC and the sanctions are not in effect pending the appeal.

< b>Rudolf Lucian Molnar (Registered Representative, Windermere, Florida) was fined $5,000 and suspended from association with any FINRA member in any capacity for one month. Molnar consented to the described sanctions
and to the entry of findings that he impersonated customers in order to expedite the transfer of their accounts from his former broker-dealer to his new one. The findings stated
that in each instance, Molnar placed a telephone call to his former broker-dealer, identified himself as the customer, and proceeded to impersonate the customer, sometimes using
the customer’s personal information. The findings also stated that the customers had authorized the transfer of their accounts, but did not authorize the impersonations.
The suspension is in effect from April 16, 2012, through May 15, 2012.

Sean Donald Premock (Registered Representative, Fort Lauderdale, Florida) was barred from association with any FINRA member in any capacity.  Premock consented to the described sanction and to the entry of findings that
he facilitated private securities transactions away from his member firm. The findings stated that Premock was paid commissions from the sales totaling $18,820 without
providing written notice to, or obtaining approval from, his firm prior to facilitating any of the investments. The findings also stated that Premock made a series of material
misrepresentations and omissions of fact in connection with the offering and selling of investment notes, including promising a monthly minimum rate of return, claiming
that the investors’ principal was safe and would be repaid in its entirety after a period ranging from nine to 12 months, and representing that investor funds would be pooled and invested in a fund for the purpose of executing a unique trading strategy that would protect investor principal by employing a hedging strategy using reversible convertible
notes (RCNs). Premock did not purchase RCNs, and he used some of the investment funds for his personal benefit. The findings also included that Premock prepared and issued monthly and quarterly fund statements that showed inflated account values. The statements uniformly showed steady account appreciation based on the accrual of fictitious monthly interest and cash bonuses. In addition, FINRA determined that Premock failed to fully respond
to FINRA requests for information and documents. Premock stated that he was unwilling to provide a response to all of the requested items and that he intended not to comply any further.

We have been helping investors recovery  stock market and investment losses for more than twenty years. If you have a question about your account, please do not hesitate to contact us.
Nationwide representation
Free consultation
561391 1900

Rex Securities Law