Articles Tagged with misrepresentation

On September 7, 2021, the Financial Industry Regulatory Authority (“FINRA”) and Santander Investment Securities Inc. (“Santander”) entered into an agreement whereby Santander consented to a censure and $175,000 fine after FINRA alleged that Santander published and distributed research reports to institutional investors that omitted required disclosures or included inaccurate disclosures.

Iorio Altamirano LLP is investigating claims on behalf of institutional customers of Santander Investment Securities Inc.

Institutional clients of Santander Investment Securities Inc. that have suffered investment losses should contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

On August 20, 2021, the United States Securities and Exchange Commission (“SEC”) filed an emergency action to stop a fraudulent Ponzi scheme allegedly perpetrated by Marietta, Georgia resident John Woods and two entities he controls: registered investment adviser Livingston Group Asset Management Company, d/b/a Southport Capital (“Southport”), and investment fund Horizon Private Equity, III, LLC.

The complaint alleged that John Woods has been running a massive Ponzi scheme for over a decade. At the end of July 2021, Woods and Southport have raised more than $110 million from over 400 investors in 20 states by offering and selling membership units in Horizon Private Equity, III, LLC (“Horizon”).

Many of the victims are elderly retirees preyed upon by investment advisers at Southport Capital (“Southport”), a registered investment advisory firm owned and controlled by Woods.  According to the SEC’s complaint, Woods, Southport, and other Southport investment adviser representatives allegedly told investors that their Horizon investments were safe and they would receive returns of 6-7% interest, guaranteed for two to three years.  Investors were also allegedly told that they could get their principal back without penalty after a short waiting period.

On August 23, 2021, a FINRA Dispute Resolution Services arbitration panel in Baltimore, Maryland, ordered UBS Financial Services, Inc. (“UBS”) to pay $405,000 to customers who invested in UBS’s Yield Enhancement Strategy (“YES”).  The award included $300,000 in compensatory damages, $30,000 in costs, and $75,000 in attorneys’ fees.  The customers alleged that UBS and broker Adam Rogers misrepresented UBS’s Yield Enhancement Strategy, a complex and highly risky options strategy, as a way to obtain marginally higher yield on a portfolio while taking limited risks.  In actuality, the complexity and nature of YES exposed the Claimants to a significant risk of loss.  The Claimants also alleged that UBS and its team of options traders conducted the YES program with virtually no supervision or compliance oversight and with inadequate risk controls.

This order is the third arbitration award against UBS in 2021 concerning YES and the fourth since December 2020.   On March 31, 2021, a FINRA arbitration panel in Columbus, Ohio, ordered UBS to pay customers over $372,000 in compensatory damages and fees.  Earlier in the month, on March 5, 2021, another FINRA arbitration panel in Denver, Colorado, ordered UBS to pay customers over $1 million in compensatory damages.  In December 2020, a FINRA arbitration panel in Boca Raton, Florida, awarded a customer nearly $90,000.

UBS has faced numerous lawsuits from customers in the form of FINRA securities arbitrations related to YES, a complex managed options strategy that UBS marketed as safe and market-neutral. The customers have claimed that the strategy was not suitable for them and that UBS materially misrepresented and omitted the risks of the strategy.

On August 6, 2021, the Chairman and Chief Executive Officer of Energy 11 GP, LLC, the general partner of Energy 11, L.P. (“Energy 11”), sent a letter to investors of Energy 11.  Despite the upbeat and optimistic tone of the letter, as well as the representations made by David Lerner Associates, Inc.’s financial advisors to customers, investors have the right to feel concerned about their investments based on Energy 11’s public filings with the United States Securities and Exchange Commission (“SEC”).  Most notably for investors:

  • Energy 11 has not made distributions to its limited partners since March 2020.
  • Energy 11 owes its limited partners 18 months of unpaid distributions, totaling more than $36 million.

The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Jason Seale from the securities industry for 15 business days.  Mr. Seale consented to the suspension after FINRA alleged that, while associated with American Wealth Management, Inc. in Novato, CA, he engaged in discretionary trading without written authorization in four customer accounts between February 2016 and December 2018.  FINRA also fined Mr. Seale $5,000.

Customers of Mr. Seale or American Wealth Management, Inc. who have suffered financial losses, or suspect that Mr. Seale did not have their best interest in mind when recommending investments or making account transactions, can contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as American Wealth Management, Inc.

The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Kevin McCallum from the securities industry for one year.  Mr. McCallum consented to the suspension after FINRA alleged that from May 2017 through June 2019, while associated with LPL Financial LLC in Birmingham, Alabama, he made unsuitable recommendations to 12 customers, resulting in their overconcentration in a high-risk, publicly-traded business development company (BDC), believed to be Medley Capital Corporation.

Additionally, FINRA alleged that during the same period, Mr. McCallum sent emails to customers about the BDC that contained unwarranted and exaggerated claims, opinions, and forecasts, did not provide fair and balanced treatment of the risks and benefits of the investment, and contained promissory statements in violation of FINRA rules.

In addition to the suspension, Mr. McCallum was ordered to pay a $25,000 fine, disgorge $14,231 of commissions, and pay over $1.2 million in restitution to customers. However, it is unclear whether he will be able to satisfy the restation order and repay customers.

The Financial Industry Regulatory Authority’s Department of Enforcement has filed a disciplinary proceeding complaint against financial advisor Michael Giovannelli, who also goes by the name Michael Anthony.  The complaint alleges that between February and April 2020, while associated with Spartan Capital Securities, LLC, Mr. Giovannelli made 12 unauthorized transactions in the account of an elderly customer.   The complaint also alleges that Mr. Giovannelli attempted to conceal the unauthorized trades from FINRA and testified falsely at his on-the-record interview.

Separately, FINRA alleged that between September 2018 and March 2019, while registered with Richard James & Associates Inc. (“Richard James”), Mr. Giovannelli made 100 trades in the accounts of four Richard James’ customers without obtaining the customers’ prior authorization for the trades.  Mr. Giovannelli did not have written authorization to make discretionary trades in the four customers’ accounts from either the customers or Richard James.

If you or a loved one were a customer of broker Michael Giovannelli, Spartan Capital Securities, LLC, or Richard James & Associates, Inc.,  contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your legal rights.

On June 2, 2021, FINRA’s National Adjudicatory Council modified a FINRA’s Office of Hearing Officers decision from 2019 that was filed by FINRA’s Department of Enforcement against Titan Securities, Brad Brooks, and broker Richard Demetriou.   The modified order has resulted in a one-year suspension of Titan Securities’ CEO and owner Mr. Brooks.

The enforcement action arose out of alleged misconduct of Mr. Demetriou’s involvement with a private placement of preferred units in a limited partnership, RBCP Preferred, LLC (“RBCP”).  RBCP was organized by the owner of Mr. Demetriou’s previous member firm, who employed Mr. Demetriou to solicit investments from Mr. Demetriou’s previous firm, and Mr. Demetrious represented that RBCP was offered to them as a means of recouping those losses.   Mr. Demetriou recommended RBCP, made misrepresentations concerning the supposed collateral securing the investments, and told customers that an investment of 10 percent of their previous losses would result in recovery of their lost investments, plus a profit – alleged returns of more than 1,000 percent.  The investors did not recoup their losses but instead lost an additional $337,000 when RBCP failed, and the alleged collateral was not foreclosed.

FINRA’s National Adjudicatory Council made the following findings:

Financial Industry Regulatory Authority (“FINRA”) Office of Hearing Officers has barred stockbroker James W. Flower from the securities industry for excessively trading in five customers’ accounts, executing 17 unauthorized trades, and mismarking 58 transactions.  According to the findings, although he is based in New York, Mr. Flower generated business by cold calling people all over the country, focusing primarily on senior and elderly customers who are small business owners and retirees. Cold-calling customers is a common tactic for “boiler room” brokerage firms.

Mr. Flower was also ordered to pay restitution plus prejudgment interest to harmed customers.  However, it is unclear whether he will be able to satisfy the judgment.

Mr. Flower was associated with Spartan Capital Securities, LLC since June 2019.  Previously, he was associated with SW Financial from December 2015 to June 2019.

Contact Information