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
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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

SEC Investigating Inland American REIT

According to the recent quarterly report (10Q for Q1), a copy of which can be found here on the company website, Inland American REIT is currently under investigation by the Securities & Exchange Commission (SEC).

According to the report, the SEC investigation is to determine if there have been violations of federal securities laws related to:

  • business manager fees
  • property management fees
  • transactions with affiliates
  • timing and amount of distributions to investors
  • determination of property impairments

The report states that at the current time the company has not been accused of any wrongdoing and that they are cooperating fully in the investigation.

Considered to be the largest nontraded real estate investment trust in the industry, Inland American Real Estate Trust Inc., has over $11 billion in real estate assets.

The nontraded-REIT industry recently has seen a number of REITs cut
their estimated values and drawing increased scrutiny from securities
regulators over that issue.We have previously addressed the declining values of other non exchange-traded REITs including a related entity, Retail Properties of America Inc.
Formerly known as Inland Western Retail Real Estate Trust Inc., Retail
Properties of America (RPAI) had an initial public offering last month (following a reverse merger with Inland Western) in which
its shares, which were initially sold at $10, were listed at an equivalent of $3.20 per share.

Many non exchange-traded REITs were sold by retail brokerage firms to retirees and others with the promise of steady and dependable distributions and a promise of liquidity in the not too distant future. Many have ceased making distributions and have cancelled buyback programs while watching values drop dramatically.

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

Retail Properties of America (formerly Inland Western REIT) Investors Pursue Broker Dealers

As we have previously reported, Inland Western Real Estate Investment Trust was recently converted, via a reverse merger,  from its status as a non exchange-traded REIT to a publicly traded company-Retail Properties of America (RPAI).

Before getting too excited about the fact that the  investment can now be readily sold on a public exchange, investors need to be aware of what has occurred with regard to the original value of their investment. Inland Western came out at $10 a share and after  the reverse merger into Retail Properties of America, shares of that company trade at less than $9.

This equates to about $3 per share on the original $10 investment. A 70% loss.

Investors should check the terms of the merger as not all of the stock can be sold immediately.

Investors were initially told by many selling brokers that it was a low risk, safe investment that would maintain  value while paying out regular and dependable distributions of income. If you bought Inland Western on the basis of similar representations, you may be able to recover  your losses.

We have recently counseled a number of investors who purchased Inland Western REIT from LPL Financial and Ameriprise Financial and are in the process of filing FINRA arbitration on their behalf.

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

 

ETFs Under Examination by Senate Committee & Regulators

It is becoming apparent that exchange traded funds (ETFs) continue to arouse the attention of Washington and securities regulators.

Early in the week FINRA levied over $9 million in fines and restitution for the sale of ETFs to retail customers against UBS, Citgroup, Morgan Stanley and Wells Fargo. Here is a prior discussion on that topic. For all of the prior articles on exchange traded funds, see this.

The Securities & Exchange Commission (SEC) began looking at ETFs following the “flash crash” in 2010 when the Dow Jones average plummeted 1000 points in minutes, and then quickly rebounded. Reuters reported in February 2012 that the SEC as well as regulators are concerned about ETFs and a possible connection between high-frequency traders and hedge funds who trade in and out of the investments. This trading has resulted in instances where the ETF trades fail to settle on time.

In November 2011, Senator Jack Reed chaired a hearing by the US Senate Committee on Banking, Housing and Urban Affairs entitled Market Microstructure: Examination of Exchange-Traded Funds. The committee and the SEC are concerned about transparency of ETFs and their affect on market volatility. If you are inclined to do so, here is a link to the archive of the hearing testimony. This week Reed confirmed  the concern his committee continues to have about ETFs and their commitment to continue the investigation:

“My hearing last fall shined a light on these products, which may be
affecting market structure, volatility and price discovery and has the
potential to harm investors,” Mr. Reed said. “I think this market
deserves more attention from both domestic and foreign regulators, and I
plan to hold another hearing on ETFs and related issues in the near
future.”

The FINRA sanction against UBS,Wells Fargo, Citigroup and Morgan  Stanley this week focused on the fact that these complex investments are being sold by brokers who do not understand what they are selling and they are not suitable for the investors they are being sold to.

Brad Bennett, Finra executive vice president and chief of enforcement, said in a statement:

“The added complexity of leveraged and inverse exchange-traded products
makes it essential that brokerage firms have an adequate understanding
of the products and sufficiently train their sales force before the
products are offered to retail customers. Firms
must conduct reasonable due diligence and ensure that their
representatives have an understanding of these products.”

We have spoken to a number of investors who have suffered losses on ETFs who purchased them on the advice of their broker who did not adequately explain the nature of the investment nor the risks associated with it. If you purchased exchange traded funds or exchange traded notes and have suffered losses, you may be able to recover some or all of the losses.

Contact us at 561 391 1900. We have been helping investors recover stock market losses for over 20 years.

Nationwide representation
Free consultation

Rex Securities Law

Wonder What Worst Performing ETFs for 2011 Were?

It has been a big week for revelations in the world of exchange traded funds (ETFs) . The SEC hit Citigroup, Morgan Stanley , UBS  and Wells Fargo with penalties over over $9 million and the State of Massachusetts slammed RBC Capital Markets with $3 million in fines and restitution. Regulators are concerned that ETFs are being sold by brokers who don’t understand what they are selling to retail investors who don’t understand what they are buying.

The ETF Database maintains a free internet database that provides a wealth of information of exchange traded funds.  At the end of 2011, they published an article profiling the ten worst performing ETFs of 2011.

They are:

  • SEA- Guggenheim Shipping ETF, down 46%
  • CVOL-C-Tracks ETN Citi Volatility Index Total Return, down 48%
  • EGPT-Market Vectors Egypt Index ETF, down 48%
  • GAZ-UBS Natural Gas Total Return ETN, down 49%
  • PLTM-ISE Global Platinum Index Fund, down 49%
  • PBW-WilderHill Clean Energy Portfolio, down 52%
  • SCIF-India Small Cap ETF, down 53%
  • GRN-iPath Global Carbon ETN, down 56%
  • URA-Global X Uranium ETF, down 60%
  • KWT-Market Vectors Solar Energy ETF, down 67%

If you have losses on any of these exchange traded funds or notes or any other  ETF or ETN, you may be able to recover your losses. We have been helping investors recover stock market losses due to negligence or fraud for more than 20 years.

Free Consultation
Nationwide representation
561 391 1900

Rex Securities Law

RBC Capital Markets Agrees to Pay $2.9 Million on ETF Losses

RBC Capital Markets, the brokerage unit of Royal Bank of Canada (RBC) agreed to pay investors $2.9 million to cover losses on leveraged and inverse leveraged exchange traded funds to settle an action brought by Massachusetts securities regulators who found that highly volatile, nontraditional funds did not fit with some clients’ investment objectives. In addition, the firm was fined $250,000.

“This settlement details an inexcusable set of facts where the company
was selling products it did not understand, and when it finally realized
the risk and pitfalls of these investments it did not immediately
restrict their marketing,”
Mr. Galvin, a Massachusetts regulator,   said.

A related action against agent Michael Zukowski, who left RBC in November 2010 has not been resolved.

Leveraged and inverse ETFs ampligy short-term market movements daily using sophisticated securities known as derivatives and are not generally suitable for anyone except professional traders with a high risk profile.

We have warned about these investments in the past, here and here, as has the SEC.

If you have suffered losses on exchange traded funds, ETFs, you may be able to recover those losses. We have been helping investors recover stock market losses for over twenty years.

Nationwide representation.
Free consultation.
561 391 1900

Rex Securities Law

 

Nationwide representation of victims of stockbroker fraud and the malpractice of investment professionals.

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