Charles Kenahan Churning Case settled by Merrill Lynch for 40 million

Jul 30, 2019

Charles Kenahan was fired by Merrill Lynch in July 2019. Kenahan, who previously worked in the Boston, Massachusetts office, was terminated regarding allegations that he churned his customers’ accounts as well as making unsuitable investments for his customers. Merrill recently settled his claims for 40 million.  According to FINRA broker check, Kenahan has been the subject of 4 customer complaints, all of which were filed within the last two years. FINRA Rule 2111 and its predecessor, NASD Rule 2310, require brokerage firms and their brokers to have a reasonable basis to believe that a recommended securities transaction is suitable in light of the customer’s investment profile. Recommended securities transactions may be unsuitable if, when taken together, they are excessive, the level of trading is inconsistent with the customer’s investment profile, and the registered representative exercises control over the customer’s account. No single test defines when trading is excessive, but factors such as the turnover rate and the cost-to-equity ratio are considered in determining whether a member firm or associated person has violated FINRA’s suitability rule. If you believe your brokerage account has been excessively traded or that unsuitable investments have been sold to you, you may have a claim for damages. Call us today for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-768-2499 or complete our contact form for a free consultation.  

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Boca Raton Based Summit Brokerage Services Fined For Broker’s Excessive Trading

Jul 5, 2019

Boca Raton Based Summit Brokerage Services Fined For Broker’s Excessive TradingFINRA announced this week that it fined Summit Brokerage Services, Inc. approximately $880,000 for supervisory failures, including about $558,000 in restitution to customers whose accounts were excessively traded by a former broker of the firm barred by FINRA. FINRA Press Release FINRA found that between January 2012 through March 2017, Summit, which had over 700 brokers, failed to review certain automated trade alerts used to identify excessive trading. One representative identified as “CJ,” was singled out by FINRA for excessively trading securities in the accounts of 14 customers. Most egregiously, FINRA found that CJ placed 533 trades for a retiree over a three-year period, causing her to pay more than $171,000 in commissions. FINRA also fined Summit for inadequate supervision of its brokers. Although CJ’s trading for 14 customers generated more than 150 alerts for potentially excessive trading,  FINRA found that Summit did not review them. Summit agreed to pay restitution to affected customers in the amount of the commissions they were charged as a result of the excessive trading in their accounts. FINRA previously barred CJ in a separate disciplinary action. In the  FINRA AWC   FINRA found that from June 2015 through March 2018, Summit failed to reasonably supervise its representatives’ use of “consolidated reports,” documents provided to customers summarizing the customer’s financial holdings, including assets held away from the firm. FINRA found that one such report sent by a registered representative of the firm to a customer materially misstated the value of the customer’s investment. FINRA Rule 2111 and its predecessor, NASD Rule 2310, require brokerage firms and their brokers to have a reasonable basis to believe that a recommended securities transaction is suitable in light of the customer’s investment profile. Recommended securities transactions may be unsuitable if, when taken together, they are excessive, the level of trading is inconsistent with the customer’s investment profile, and the registered representative exercises control over the customer’s account. No single test defines when trading is excessive, but factors such as the turnover rate and the cost-to-equity ratio are considered in determining whether a member firm or associated person has violated FINRA’s suitability rule. If you believe your brokerage account has been excessively traded or that unsuitable investments have been sold to you or a loved one, you may have a claim for damages. Please call us at 888-768-2499 or complete our contact form for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing.  

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SEC Charges Ponzi Scheme Run out of Frat House

Jun 10, 2019

Former College Student Charged with Running Ponzi Scheme out of Frat House On June 3, 2019, the Securities and Exchange Commission announced an emergency action charging a recent college graduate with orchestrating a Ponzi scheme that targeted college students and their families.The SEC’s complaint https://www.sec.gov/litigation/complaints/2019/comp-pr2019-84.pdf alleges that Syed Arham Arbab, 22, ran his scheme out of a fraternity house near the University of Georgia campus. According to the SEC’s complaint, Arbab allegedly offered  hedge fund investments in “Artis Proficio Capital,” which he claimed had generated past annual returns of as much as 56% and for which the investments were guaranteed up to $15,000 in principal. Arbab also allegedly sold guaranteed “bond agreements” with a fixed rate of return. The SEC alleges that at least eight college students, recent graduates, or their family members invested more than $269,000 in these investments. The SEC’s complaint charges Arbab, Artis Proficio Capital Investments LLC, and Artis Proficio Capital Management LLC, with violating the antifraud provisions of the federal securities laws. According to the SEC’s complaint, there was no hedge fund at all, and Arbab created fake performance returns which he used to sell the fund to investors. Instead of investing the money in the hedge fund , Arbab allegedly invested the funds in his personal bank and brokerage accounts, which he used for his own benefit for shopping, entertainment and  travel to Las Vegas. As is the case with most Ponzi schemes, Arbab also allegedly used portions of new investor money to pay earlier investors who had asked for their money back. The SEC alleges that Arbab even instructed some new investors to send their money – unknowingly – to earlier investors through payment apps such as Venmo, Zelle, and Cash App, by representing that these payees were either a “partner” or “manager” in the fund. According to Richard R. Best of the Atlanta office of the SEC “[w]e allege that Mr. Arbab used his college affiliations to operate a Ponzi scheme that drained valuable resources from current and former students. This is a reminder that investors of all ages and experience levels—whether long-time investors or recent graduates investing funds from their first few paychecks—should carefully research investment opportunities and the people offering them.” Investors of all ages can fall victim to a Ponzi scheme, especially in situations where they know the perpetrator through a club or other social group, such as the fraternity in this case. If you or someone you know is a victim of a Ponzi scheme or other investment scam, call us today for a free consultation. Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-768-2499 or complete our contact form for a free consultation.

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Oasis International & Others Charged in $75 Million FOREX scheme

Apr 23, 2019

The Commodities Futures Trading Commission announced yesterday that it has filed a civil enforcement action in federal court in Florida against Sarasota area defendants Oasis International Group, Limited, Oasis Management, LLC, Satellite Holdings Company, Michael J. DaCorta, Joseph S. Anile, II, Raymond P. Montie, III, Francisco “Frank” L. Duran , and John J. Haas . The Complaint alleges that the defendants received approximately $75 million from pool participants for investment in two commodity pools—Oasis Global FX, Limited and Oasis Global FX, SA (collectively, the “Oasis Pools”)—that would purportedly trade in foreign currency exchange (“forex”). The defendants falsely represented that, among other things participants would receive a minimum 12% guaranteed annual return; the Oasis Pools had never had a losing month; there was no risk of loss with the Oasis Pools; and forex trading returns for the Oasis Pools were 22% in 2017 and 21% in 2018.  The defendants misappropriated the majority of pool funds and lost the remainder trading forex. As further alleged, of the approximately $75 million the defendants received from pool participants between mid-April 2014 and the present, the defendants deposited only $21 million into Oasis Pools’ forex trading accounts and lost all of those funds trading.  The defendants used over $28 million to make Ponzi-like payments to other pool participants, as well as spending over $18 million for unauthorized personal or business expenses such as real estate purchases in Florida, exotic vacations, sports tickets, pet supplies, loans to family members, and college and study abroad tuition.  The defendants also allegedly created and issued false account statements to conceal their trading losses and misappropriation from pool participants by inflating and misrepresenting the value of the pool participants’ investments in the Oasis Pools and the Oasis Pools’ trading returns. See the full CFTC press release https://www.cftc.gov/PressRoom/PressReleases/7915-19 If you believe that you are the victim or a Ponzi scheme or other investment scam, call us today for a free consultation.Former Wall Street Attorney Melanie S. Cherdack represents investors in the United States and the Caribbean in claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-768-2499 or complete our contact form for a free consultation.  

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Did Your Broker Suddenly Leave and No One Told You?

Apr 17, 2019

FINRA Announces New Standard for Informing Customers about a Broker’s Move to a New Firm Have you ever called your broker only to be told that he or she is no longer with the firm? Have you been reassigned to another broker with no choice in the matter? FINRA has just released a Notice to Members (NTM 19-10) which gives brokerage customers the right to receive truthful information regarding where the departing broker has moved to as well as requiring disclosure to the customers of their rights to move their account to the departing broker’s new firm. https://www.finra.org/file/regulatory-notice-10-19 Additionally, FINRA has emphasized that “a member firm should communicate clearly, and without obfuscation, when asked questions by customers about the departing registered representative. “ Presumably, this could mean that if the broker was fired for a reportable reason, the firm might have an obligation to disclose this to the customers. Registered Representative Departures Registered representatives move with some frequency between member firms and across financial firms under various regulatory jurisdictions, such as investment advisory firms and insurance companies. In addition, registered representatives may leave the financial industry entirely. A registered representative’s departure may prompt customer questions about the departing representative and the status of their accounts following the departure. FINRA recognizes that member firms’ different business models give rise to different approaches to managing the customer relationship, and that the expectations regarding a member firm’s handling of a departing registered representative will vary accordingly. For instance, the departure of a registered representative who works closely with customers in a one-on-one relationship will likely be handled differently than the departure of a registered representative in a customer advisory center model or a group service model. While member firms have flexibility in reassigning customer accounts and communicating with customers about the reassignments, they should provide timely and complete answers, if known, to all customer questions resulting from a departing representative, so that customers may make informed decisions about their accounts. Communications with Customers Customers should not experience an interruption in service as a result of a registered representative’s departure. FINRA understands that decisions about the reassignment of customer accounts, if applicable, are typically made promptly following the departure ofa registered representative. In the event of a registered representative’s departure, FINRA expects that the member firm will have policies and procedures reasonably designed to assure that the customers serviced by that registered representative are aware of how the customers’ account will be serviced at the member firm, including how and to whom the customer may direct questions and trade instructions following the representative’s departure and, if and when assigned, the representative to whom the customer is now assigned at the member firm. In addition, a member firm should communicate clearly, and without obfuscation, when asked questions by customers about the departing registered representative. Consistent with privacy and other legal requirements, these communications may include, when asked by a customer: Clarifying that the customer has the choice to retain his or her assets at the current firm and be serviced by the newly assigned registered representative or a different registered representative or transfer the assets […]

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Signs You May Be A Ponzi Scheme Victim

Apr 11, 2019

The Securities and Exchange Commission (“SEC”) has set out the warning signs or red flags that should alert investors that an investment might be a Ponzi Scheme. Many Ponzi schemes share common characteristics. Look for these warning signs: High investment returns with little or no risk. Every investment carries some degree of risk, and investments yielding higher returns typically involve more risk. Be highly suspicious of any “guaranteed” investment opportunity. Overly consistent returns. Investment values tend to go up and down over time, especially those offering potentially high returns. Be suspect of an investment that continues to generate regular, positive returns regardless of overall market conditions. Unregistered investments. Ponzi schemes typically involve investments that have not been registered with the SEC or with state regulators. Registration is important because it provides investors with access to key information about the company’s management, products, services, and finances. Unlicensed sellers. Federal and state securities laws require investment professionals and their firms to be licensed or registered. Most Ponzi schemes involve unlicensed individuals or unregistered firms. Secretive and/or complex strategies. Avoiding investments you do not understand, or for which you cannot get complete information, is a good rule of thumb. Issues with paperwork. Do not accept excuses regarding why you cannot review information about an investment in writing. Also, account statement errors and inconsistencies may be signs that funds are not being invested as promised. Difficulty receiving payments. Be suspicious if you do not receive a payment or have difficulty cashing out your investment. Keep in mind that Ponzi scheme promoters routinely encourage participants to “roll over” investments and sometimes promise returns offering even higher returns on the amount rolled over. For more details, please visit the SEC website.  These are the SEC’s suggested steps to avoid Ponzi schemes and other investment frauds. Below are some basic questions you should always ask before you commit your hard-earned money to an investment. Is the seller licensed? Is the investment registered? How do the risks compare with the potential rewards? Do I understand the investment? Where do I turn for help? If you do not understand an investment, its features, risks and/or the seller or investment is not registered, these are reasons to not buy the investment. Sometimes, a multi-level marketing scheme is in actuality a Ponzi scheme. As explained by the SEC, Pyramid schemes masquerading as multi-level marketing (“MLM”) programs often violate the federal securities laws, such as laws prohibiting fraud and requiring the registration of securities offerings and broker-dealers. In a pyramid scheme, money from new participants is used to pay recruiting commissions (that may take any form, including the form of securities) to earlier participants just like how, in classic Ponzi schemes, money from new investors is used to pay fake “profits” to earlier investors. Recently, the SEC has sued the alleged operators of large-scale pyramid schemes for violating the federal securities laws through the guise of MLM programs. When considering joining an MLM program, the SEC has warned investors to beware of these hallmarks of a pyramid scheme: No genuine product or service. MLM programs involve selling a genuine product or service […]

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FINRA Files Action Against Success Trade, Just2Trade, Faud Ahmad

Apr 26, 2013

The Financial Industry Regulatory Authority (FINRA) announced that it has filed a Temporary Cease-and-Desist Order (TCDO) to halt further fraudulent activities by Washington, D.C.-based Success Trade Securities, Inc. and its CEO & President, Fuad Ahmed, as well as the misuse of investors’ funds and assets. FINRA also issued a complaint against Success Trade Securities and Ahmed charging fraud in the sales of promissory notes issued by the firm’s parent company, Success Trade, Inc., in which Ahmed holds a majority ownership interest. FINRA filed the TCDO, to which Ahmed and the company agreed, thus immediately freezing their activities, based on the belief that ongoing customer harm and depletion of investor assets are likely to continue before a formal disciplinary proceeding against Success Trade Securities and Ahmed will be completed. Success Trade Securities is an online broker-dealer that operates through Just2Trade and LowTrades. In its complaint, FINRA alleges that Success Trade Securities, Ahmed and other registered representatives at the firm sold more than $18 million in Success Trade promissory notes to 58 investors, many of whom are current or former NFL and NBA players, while misrepresenting or omitting material facts. Specifically, FINRA’s complaint alleges that Ahmed and Success Trade Securities misrepresented that they were raising $5 million through the sale of promissory notes and continued to make this representation, even as the sales exceeded the original offering by more than 300 percent. Most of the notes promised to pay an annual interest rate of 12.5 percent on a monthly basis over three years, with some notes promising to pay interest as high as 26 percent. FINRA also alleges that Ahmed and Success Trade Securities failed to disclose the amount of the company’s existing debt to investors and that it was unable to make future interest payments without raising money from new investors. In addition, FINRA charges that Ahmed and Success Trade Securities misrepresented how the proceeds would be used, instead improperly using the funds to make unsecured loans to Ahmed and to make interest payments to existing noteholders. FINRA further alleges that Ahmed and Success Trade Securities misrepresented the rate of return and exempt status of the private placement offering through which the notes were sold. TO VIEW THE COMPLAINT GO TO http://disciplinaryactions.finra.org/viewdocument.aspx?DocNB=31831 OUR LAW FIRM HAS EXPERIENCE REPRESENTING PROFESSIONAL ATHLETES AGAINST THEIR BROKERS. IF YOU HAVE BEEN THE VICTIM OF THIS SCAM, CONTACT US AT WWW.INVESTORFRAUDLAW.COM.

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Private equity firms investigated for tax strategy

Sep 1, 2012

Financial Firms Face Subpoenas on Tax Strategy The New York attorney general is investigating whether some of the nation’s biggest private equity firms have abused a tax strategy in order to slice hundreds of millions of dollars from their tax bills, according to executives with direct knowledge of the inquiry. The attorney general, Eric T. Schneiderman, has subpoenaed more than a dozen firms seeking documents that would reveal whether they converted certain management fees into fund investments, which are taxed at a far lower rate than ordinary income. Among the firms to receive subpoenas are Kohlberg Kravis Roberts & Company, TPG Capital, Sun Capital Partners, Apollo Global Management, Silver Lake Partners and Bain Capital, which was founded by Mitt Romney, the Republican nominee for president. Executives at some firms said they feared that Mr. Schneiderman, a Democrat with ties to the Obama administration, was seeking to embarrass the industry because of Mr. Romney’s roots at Bain. Others suggested the subpoenas might be part of an effort to recover more tax revenue for New York. Read More: http://www.nytimes.com/2012/09/02/business/inquiry-on-tax-strategy-adds-to-scrutiny-of-finance-firms.html?emc=na

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Elder Investor Fraud: The Crime Of The 21st Century

Jun 29, 2012

A Task Force has revealed that one out of five citizens over the age of 65 has been the victim of financial fraud. To detect the early signs of fraud and protect the older population from fallling prey to fraudulent schemes, the Elder Investment Fraud and Financial Exploitation Prevention Program (EIFFE Prevention Program) has teamed up the North American Securities Administrators Assocation (NASAA) and various medical associations to create safeguards. According to NASAA, there are common investment scenarios which elders and their families should be on the lookout for: Common Investment Scam Scenarios UNSUITABLE INVESTMENTS — What might be suitable for one investor might not be right for another. Securities professionals must not recommend investments that are inappropriate for a customer’s age, risk tolerance and need for access to the money. PONZI SCHEMES — Ponzi schemes amount to robbing an army of Peters to pay a handful of Pauls. As the number of initial investors grows and the supply of potential new investors dwindles, the Ponzi bubble bursts with the vast majority of investors losing all or most of their money. AFFINITY FRAUD — In affinity fraud, the senior makes an investment because of a recommendation by a “trusted” friend based on similar backgrounds. UNREGISTERED INVESTMENTS — The senior is sold a stake in a new company or enterprise and is told that the investment “does not need to be registered” with the state or federal government. UNLICENSED SALESPEOPLE — Those who sell securities or provide investment advice must be appropriately licensed. If not, chances are they aren’t qualified to offer investments or advice. FREE LUNCH/DINNER SEMINARS — Regulators find the majority of these seminars are actually sales pitches. SENIOR DESIGNATIONS — Individuals may call themselves “senior specialists” to create a false level of comfort among seniors and then get them to invest. ANY SALES PITCH ACCOMPANIED BY PRESSURE OR COERCION   If you or a loved one has been the victim of elder investment fraud or elder securities fraud, you may have rights to recover your money back. The attorneys at InvestorFraudLaw.com are here to help. Contact us at 800-806-1614 for a free consultation or visit us at www.investorfraudlaw.com.

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South Florida Is A Hotbed For Investment Fraud

Jun 16, 2012

As reported by the miami herald below, florida is a haven for securities fraud. The sec can prosecute the criminals, but often the only way you can recover your lost investment funds is to hire a private attorney. Our securities arbitration group, headed by a former in house brokerage firm lawyer, can help you recover your losses. Find out more at www.Investorfraudlaw.Com. A federal task force has produced 85 prosecutions, including 15 new cases, since late 2010. Authorities say the region ranks No. 2 in the nation for investment probes. BY JAY WEAVER JWEAVER@MIAMIHERALD.COM South Florida may not be as fertile ground as Wall Street on the securities-fraud front, but federal authorities said the region is giving the nation’s investment capital a run for its money. Standing side by side, South Florida’s U.S. attorney and top FBI agent said the region ranks No. 2 for securities and investment fraud investigations in the country, leading to prosecutions of 85 defendants over the past year and a half — including 15 announced Monday. In late 2010, U.S. Attorney Wifredo Ferrer launched a federal securities fraud task force to operate like other law enforcement partnerships targeting South Florida’s No. 1 scourges — runaway healthcare and mortgage rackets. Ferrer, in a press conference at the U.S. attorney’s office, said the main goal of the latest fraud task force is “try to restore the integrity of the securities market.” He said that an ever-rising number of investors, from the savvy to the elderly, have lost millions of dollars in penny-stock, market-manipulation and Ponzi schemes since the economy’s boom-bust cycle of the past decade. “Prevention is the key,” he said, urging investors to educate themselves and contact the FBI or the Securities and Exchange Commission if they suspect fraud. FBI special agent in charge John Gillies said the majority of the new securities fraud cases resulted from undercover operations targeting penny-stock companies headed by executives who allegedly conspired to carry out traditional “pump and dump” schemes. Such scams artificially inflate, or pump, the price of the penny stocks so that the perpetrators can sell, or dump, their shares for a profit. Among those recently charged: Scott Haire, 42, of Coral Springs, who was president of a Texas corporation called Wound Management Technologies, Inc., which purportedly developed advanced wound-care products. Haire, who is expected to surrender to authorities on Wednesday, was charged with scheming to manipulate the publicly quoted share price and trading volume of WNDM common stock. “The fraud from these stock market manipulation schemes could have defrauded numerous innocent investors out of millions of dollars,” Gillies said. But “there were no victims” because the FBI’s sting operations disrupted the scams early on, he said. Eric Bustillo, a former Miami federal prosecutor who heads the SEC’s regional office, said he has tried to be more aggressive in civil prosecutions and in sharing information with the U.S. attorney’s office for parallel criminal cases. “When we say we’re determined to stamp out microcap fraud, that’s not a slogan,” Bustillo said. “That’s a pledge.” Both the SEC and U.S. attorney’s office have also worked closely in cracking down on […]

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