Category Archives: Mutual Fund Switching

George Sefanou-Edward Jones Broker-Discloses Settlement of Customer Dispute

August  2016-Orlando / The Villages, Florida

The FINRA records of George Sefanou ,  a  stock broker who is currently employed by Edward Jones  , disclose a recently settled customer dispute.

The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.

In FINRA Case 15-0387, a customer of Edward Jones alleged that Stefanou’s recommendation to transfer their retirement accounts to Edward Jones was unsuitable in that the transfer caused tax consequences and penalties. They also alleged that Stefanou failed to calculate properly IRS Code Section 72T distributions and that a recommendation to purchase mutual funds was unsuitable due to high fees associated with the purchase. That case was recently settled for $50,000.

Stefanou has been employed by Edward Jones since 8/2009.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Unsuitable Mutual Fund Switching Leads to Fine/Suspension for Stuart, FL, Stock Broker

Januray 6, 2016- Stuart, Florida

Jeffrey Davidson entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that while associated with American Portfolio Financial Services in Stuart, FL,  he recommended 49 unsuitable mutual fund switch transactions in 12 customer accounts.

According to the AWC one of the customers involved was 97 years old. Five other customers were 65 years of age or older. All the purchases involved A shares which  Davidson recommended be sold within less than a year of purchase.

Class A shares generally have significant up front costs and are designed to be held long term.

AWC No.  20130394827-02

Davidson  was fined $10,000 and suspended from association with any FINRA member in any and all capacities for three months.

According to FINRA records Davidson has been registered with American Portfolios Financial Services since 1/2009.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Stuart, FLA- American Financial Portfolios Services Broker Sanctioned by Regulators

December 30, 2015- Stuart, Florida

John D. Wiswell entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that while associated with American Portfolio Financial Services in Jensen Beach, FL,  he failed to supervise the activities of a registered representative to prevent unsuitable mutual fund switching.

AWC No.  20130394827-01

Wiswell was fined $5,000 and suspended from association with any FINRA member in any principal capacity for 15 days.

According to FINRA records Wisell has been registered with American Portfolios Financial Services since 9/2007.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Morgan Stanley/Broker Ordered to Pay 92 year old Widow $1 Million for Churning Account

December 8, 2015-Boston, MA

A FINRA arbitration panel ordered Morgan Stanley and broker Justin Amaral to pay  a 92 year old widow over $1 million for churning her account. The victim alleged various causes of action including, undue influence, failure to supervise, breach of fiduciary duty, negligence and breach of covenant of good faith and fair dealing.  Lenehan v Morgan Stanley, FINRA Case #14-3705.

The award included punitive damages of more than $500,000 as well as attorney fees in excess of $226,000.

According to the Investment News, Amaral churned the account, buying and selling closed end funds to generate fees. Investment News reports that Ms. Lenehan had accumulated thousands of shares of General Electric stock working as a secretary at a manufacturing firm beginning during World War II. Amaral put the shares in a ‘wrap account’ so that he could unnecessarily collect fees. In addition, the victim alleged that Amaral purchased and sold annuities for Ms. Lenehan by forging her signature.

Amaral was previously barred from the securities industry for failing to cooperate with a FINRA investigation.

Churning/ Excessive Trading

Excessive trading occurs whcn a registered representative  exercises control over a customer’s account and the level of activity in that account is inconsistent with the customer’s investment objectives, financial situation, and needs. Excessive trading violates FINRA’s suitability standards under NASD Conduct Rule 2310 and FINRA Rule 2 11 1.  Excessive trades recommended with requisite scienter such as a reckless disregard for a customer’s interests – is considered churning.

Excessive trading generally is measured by the turnover rate, which is the number of times the value of the account is turned over within a given period of time, and the cost-to-equity ratio, which represents the percentage of return on the customer’s average net equity needed to pay commissions and other account expenses over a given period of time.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

StockBroker Sanctioned for Mutual Fund Churning

August 4,2015

Ronald J. Benevento of Holbrook, NY entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that he engaged in unsuitable mutual fund switching in three customer accounts from 9/2011-4/2013. In addition, FINRA found that he mismatched 15 order tickets as “unsolicited” causing his member firm to maintain inaccurate books and records in violation of FINRA rules.

With regard to the mutual fund switching, FINRA found that Benevento recommended 29 mutual fund switch transactions in three customer accounts without having reasonable grounds for believing that such transactions were suitable for those customer and causing losses of $45,000.

AWC NO. 20130353695

Benevento was suspended for 60 days and assessed a fine of $5,000.  According to FINRA records Benevento was registered with American Portfolios Financial Services from 3/2010-3/2015. Prior to that he was registered with AXA Advisors.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Justin Amaral, Morgan Stanley Broker, Barred from Securities Industry

June 19, 2015

Justin Amaral  entered into a Letter of Acceptance Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that he refused to appear for on the record testimony pursuant to FINRA Rule 8210 in connection with a FINRA investigation.

According to the AWC, Amaral,  through counsel, contacted FINRA Enforcement and informed them that he would not appear for on the record testimony on June 10, 2015.

Amaral was barred from association with any FINRA member in any capacity.

AWC NO. 2014041397201

According to FINRA records, Amaral’s previous registrations include:

6/2009-5/2014             Morgan Stanley

1/2007-6/2009              Citigroup Global Markets

There are two pending customer disputes on his FINRA record:

  • one customer alleges damages of $500,000 in connection with the investment in closed end funds that were misrepresented and unsuitable
  • another customer alleges unspecified damages for gross mismanagement and misrepresentation involving mutual funds

If you have losses in an account handled by Justin Amaral, call to speak with an experienced securities attorney.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870

Douglas Dannhardt-Former Prospera Financial Broker- Sanctioned for Churning Accounts-San Antonio, TX

April 2, 2015-San Antonio, Texas 

FINRA records report that Douglas Joseph Dannhardt   entered into a Letter of Acceptance, Waiver and Consent  (AWC) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that  he engaged in excessive and unsuitable trading in three IRA accounts of a customer in violation of FINRA and NASD rules.

Excessive trading occurs when  a stockbroker exercises control over a customer’s account and the level of activity in that account is inconsistent with the customer’s investment objectives,  financial situation, and needs.

According to the AWC, Dannhardt caused the execution of over 700 sales in the IRA accounts of closed end funds that had been held less than a year resulting in losses of over $135,000. Each of the accounts was designated as having a ‘conservative’ to ‘moderate’ risk tolerance, however due to the amount of the trading costs a minimum return of 23% was needed just to break even making the nature of the trading unsuitable for these accounts.

In addition to the excessive and unsuitable trading (churning) , Dannhardt also exercised control over the accounts without authority.

Dannhardt was fined $25,000 and suspended for for nine months.

FINRA Case # 2012034106201

According to FINRA records, Dannhardt was registered with Prospera Financial Services from 04/1995-1/2014.

Prospera Financial Services has been a FINRA member since 1982, is headquartered in Dallas, Texas. They have branch offices nationwide. According to FINRA records, Prospera Financial operates under a variety of other names in various states. In Texas they have used the following names:

  • Asset Capital Management
  • Bednarz Financial 
  • Cecil & Co.
  • Cottonwood Capital
  • Day Wealth Management
  • Financial & Insurance Associates
  • Institutional Equities
  • Kingsley Advisors
  • Little & Associates Wealth Management
  • Mahon Financial
  • Matthews Financial Services
  • Michael Dallas Financial Solutions
  • Mossakowski & Nichols
  • Prometheus Wealth Management
  • Provident Strategies Group
  • PSE Wealth Management
  • Rick Whitehurst Asset Management
  • Silver Creek Financial Group
  • Source Rock Capital Management
  • Summit Investments
  • The Optima Group
  • Waits Financial Group
  • Waters Financial 
  • West Texas Independent Financial Services 

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

Nationwide Representation

Rex Securities Law

TollFree: 877-224-3199

Florida-561 391 1900 

Texas-512-329-2870