FINRA arbitration case

Do I Need an Attorney to Represent Me in a FINRA Arbitration Case?

Dec 23, 2019

It is completely understandable to be very protective of the money that you worked hard, day in and day out, to earn. In fact, your nest egg is the culmination of years of focus, discipline, and time spent in your life’s work. Your nest egg is something to be very proud of. It is the thing that helps your kids get through college and will be there for you in your sunset years. That is why coming across an unscrupulous investment professional or financial advisor is so emotionally, as well as financially, hurtful. It is hard to find out that the person or brokerage company in which you trusted your hard-earned savings is improperly using that which is rightfully yours.  Therefore, if you find evidence that your financial advisor is unfairly taking your money, then you need to take action. Of course, investing your money always has risks. But if you have a legitimate concern that your financial advisor is abusing his or her trust in administering your finances, then you need to consider a FINRA arbitration or FINRA mediation.   Then the important question becomes: Do you need an attorney to represent you in the FINRA arbitration or FINRA mediation? The answer is that you do not need an attorney, but you will definitely want one once you realize the stakes.  This article will discuss those stakes with you. We will first talk about some securities arbitration fundamentals, and then we can consider whether it is a good idea to hire a securities attorney. Of course, if you have additional questions about your own circumstances after reading this article, we welcome you to contact us today on our online contact form, or by calling 888-768-2499. We are the investment fraud lawyers who can help you.    The Fundamentals of Securities Arbitration First and foremost, FINRA stands for the Financial Industry Regulatory Authority. It is a government-authorized, not-for-profit organization that regulates financial broker-dealers in the United States. The mission of FINRA is to: 1. Provide investors with basic protections; 2. Ensure that securities sellers are tested, qualified, and licensed; 3. See that securities advertisements are truthful and not misleading; and 4. Make sure that securities products sold to an investor are suitable for that investor.   FINRA is a regulatory body that protects the investing public through investigations and enforcement actions. It also provides an exclusive forum for resolving disputes between investors and their brokers. If you have opened a brokerage account at a FINRA member firm ( which is basically all major brokerage firms)–you have agreed to have FINRA be the sole forum to file any claims you have regarding your brokerage account. Now, you have likely heard the terms “arbitration” and “mediation” before. They are essentially less formal ways in which to resolve disputes, in which a court of law is not involved. Specifically, with regard to securities disputes, FINRA provides the forum for those arbitrations and mediations.   While less formal, arbitration is very similar to a court proceeding. Yet, the difference is in the fact that arbitrations do not generally have depositions, are concluded more quickly, and are generally cheaper […]

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investment fraud

How to Recover Losses from Investment Fraud?

Dec 9, 2019

Investment fraud can be hard to detect, and once detected can reveal significant financial losses to you. That is what makes investment fraud so insidious. The wrongdoing is not always obvious, and the results can be substantial. Indeed, investment fraud can come in various forms that are not always easy to recognize when you are a victim. While there is outright fraud such as non-existent investments or strategies, fake investments, and Ponzi schemes, there are also things that look like legitimate investments that are also types of investment fraud. Those include: Misrepresentations or Omissions. Fraud may occur when an investment client is not fully and fairly informed about the major aspects of an investment strategy or a particular investment. Churning. It can be fraud for a financial advisor to engage in transactions, trades, or other account activity simply to generate more commissions. Unauthorized Trades. An advisor may be guilty of fraud if he or she uses discretion without a client’s permission in order to engage in trades that are not approved by the client. Inappropriate Investments. A finding of fraud is possible when an advisor suggests or agrees to an investment strategy that is not proper based on the client’s age, financial situation, or risk tolerance.   Once you learn that you are a victim of fraud, however, the next question is whether you are able to recover those losses based on the fraud.   In this article, we will discuss one way in which you can recover some of those losses that are the result of investment fraud. Of course, if you have additional questions about your own circumstances after reading this article, we welcome you to contact us today on our online contact form, or by calling 1-888-768-2499. We are the investment fraud lawyers who can help you.    FINRA Arbitration As a general rule, if you are a customer of a FINRA member brokerage firm (most well-known firms are FINRA members) you are required to arbitrate your claim before the Financial Industry Regulatory Authority, or FINRA.  What is FINRA?  FINRA is a self-regulatory organization that regulates broker-dealers in the United States.The mission of FINRA is to: Provide investors with basic protections;  Ensure that securities sellers are tested, qualified, and licensed;  See that securities advertisements are truthful and not misleading; and  Make sure that securities products sold to an investor are suitable for that investor.   Who is Eligible for a FINRA Arbitration? With regard to FINRA arbitration, FINRA provides a forum to arbitrate matters at a relatively low cost for customers of member brokerage firms who have been wronged. To be eligible for a FINRA arbitration, the case must involve an investor and an individual or entity registered with FINRA, and the occurrence or event giving rise to the claim must have happened within the last six years. This occurrence or event does not mean the date of purchase but may be actions such as actively concealing the fraud, continued misrepresentations or continued purchases, or misstatements of value on monthly statements within the past six years. An investor must arbitrate at FINRA if there is a written agreement between investor and […]

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Penny Stock Scheme

SEC Stops Penny Stock Scheme by NIT Enterprises

Dec 4, 2019

The Securities and Exchange Commission recently announced an emergency action to stop a South Florida-based penny stock investment fraud. This scheme affected over 100 retail investors nationwide and in Canada.  According to the recently unsealed SEC complaint Defendants NIT Enterprises, Inc., NIT’s CEO Gary R. Smith, Jason M. Ganton, and James E. Cleary, Jr., made misrepresentations in order to raise $4.9 million from investors. Many of the investment fraud victims were seniors. Defendants Ganton and Cleary were previously barred by the SEC from acting as brokers and offering penny stocks to investors. As alleged by the SEC in its complaint, NIT consists of three entities: NIT Delaware, NIT Enterprises, and NIT Florida, NIT’s principal place of business is in Palm Beach Gardens, Florida. Until March 2016, NIT Delaware was majority-owned by a Florida public microcap issuer. The SEC complaint alleges that the defendants represented that NIT was raising money to fund the company’s development of radiation protection products for medical and military use, which would generate significant investment returns. Instead, according to the SEC’s complaint, Smith misappropriated $1.25 million, or 25% of the total investor proceeds to pay his personal expenses. The SEC also alleges that  NIT and Smith have paid 25% of the proceeds as undisclosed commissions. The SEC’s complaint further alleges that the defendants falsely promised NIT’s future profitability and told investors that there would be a soon to come initial public offering (“IPO”). The Defendants allegedly told the investors that they could “double or triple” their investment. Defendants Ganton and Cleary also allegedly concealed their regulatory disciplinary histories and prior SEC actions and bars, in part done through Ganton’s use of an alias name when soliciting investors. The SEC’s complaint charges all defendants with violating the anti-fraud and registration provisions of the federal securities laws and also charges the individual defendants for, either directly or indirectly, acting as unregistered broker-dealers and violating past Commission orders. According to the SEC, the term “penny stock” generally refers to a security issued by a small company that trades at less than $5 per share. Penny stocks generally are quoted over-the-counter, such as on the OTC Bulletin Board. Penny stocks may, however, also trade on securities exchanges, including foreign securities exchanges. Penny stocks may trade infrequently, which means that it may be difficult to sell penny stock shares once you own them creating a liquidity problem for investors who need access to their money. Moreover, because it may be difficult to find price quotations for certain penny stocks, they may be difficult, or even impossible, to accurately price. For these, and other reasons, penny stocks are generally considered speculative investments. Because of their speculative nature, Congress prohibited broker-dealers from effecting transactions in penny stocks unless they comply with the requirements of Section 15(h) of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules thereunder. These SEC rules provide, among other things, that a broker-dealer must (1) approve the customer for the specific penny stock transaction and receive from the customer a written agreement to the transaction; (2) furnish the customer a disclosure document describing the risks of investing in penny stocks; […]

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Securities fraud attorneys

The 5 Essential Factors to Consider When Finding a Securities Fraud Attorney

Nov 25, 2019

Choosing an attorney can be a challenging prospect. Indeed, there are myriad factors that come into play when you begin the search for an attorney.   Whether it is a family lawyer to handle a divorce, a trusts and estates lawyer to handle drafting a will, or a criminal defense lawyer to represent you in a criminal case, there are some things that are universal to the search, and some things that are particular to that specific area of practice.   The search for a securities fraud attorney is no different. The things that you want to see in all lawyers – integrity, experience – you will want in a securities fraud lawyer. Yet, there are also some characteristics that you want to see specifically with regard to a securities fraud attorney. If you are currently looking for a securities fraud attorney because you were the victim of investor fraud, then this article is for you. Here, we will discuss the things to look for in general, and specifically with regard to a securities fraud attorney.   Of course, if you have additional questions about your own circumstances after reading this article, we welcome you to contact us today on our online contact form, or by calling 888-768-2499.  1.The Basics for Any Attorney Search: Choice and Rapport Before delving into the criterion specific to securities fraud attorneys, there are just some basics that you should expect with every attorney. First, do not jump at the first attorney you meet or speak to over the phone. While you may feel that you are comfortable with the first lawyer you encounter, try to pause and meet a few lawyers before deciding. Remember, your lawyer will likely be working with you for a long period of time, will have access to your personal information, and will need to assist you through a difficult time. That is a substantial responsibility, and you will want to be informed about who is out there before making a final decision on representation.   Second, keep an eye out for the rapport you have when you meet with an attorney for the first time. While there might be many lawyers out there who are technically proficient, or have the highest honors from law school, but may not necessarily “click” with you. Again, take the time to meet with several attorneys to see with whom you can establish the best working relationship.  2.Type of Securities Fraud Experience You will, of course, want some amount of experience with any attorney you hire. With securities fraud, however, you will want to make sure that the attorney you choose has considerable experience in this area such as being a former Wall Street lawyer or representing Wall Street firms. Why do you want someone with that type of background? You want that experience because lawyers who have been “on the other side of the aisle,” so to speak, are far better able to assess your case and anticipate the counterarguments that will be coming back in your direction if you pursue a securities fraud lawsuit. With someone who has such experience, that person has already spent a […]

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Investment Fraud Attorneys

The SEC Freezes Palm Financial and Shore Financial In Ponzi Scheme

Nov 20, 2019

Yesterday, the Securities and Exchange Commission (“SEC”) announced its filing of an emergency action for a temporary restraining order and asset freeze against Neil Burkholz of Boca Raton, Florida, and Frank Bianco, of Pembroke Pines, Florida, and their companies Palm Financial Management LLC and Shore Management Systems LLC, for an alleged $6 million Ponzi scheme. Many of the investor victims are senior citizens between the ages of 65 and 100, including several Florida small-business owners. At least some have liquidated their retirement savings and other assets to invest with Defendants. According to the SEC’s complaint, the defendants falsely touted their proprietary options trading strategies as highly profitable. In reality, as alleged in the complaint, Defendants did not properly invest victim assets, nor where the invested assets profitable. Instead, Bianco and Burkholz knowingly channeled new money obtained from the investor victims in three ways: to pay other investors purported profits or redemptions, to pay themselves, and to invest the money in a calamitous trading strategy that has incurred years of material, undisclosed losses. Much of the money was not in fact invested and, as alleged in the Complaint,  the defendants misappropriated the remaining cash which was not invested by using it to repay other investors (a classic Ponzi scheme hallmark) and by transferring approximately $880,000 of investor funds to themselves and their spouses for personal use. According to the SEC’s complaint, the Defendants sent false reports to investors to conceal their fraudulent conduct and give the investors the false impression they were generating positive returns. As stated in the Complaint, to perpetuate their scheme, Defendants employed a variety of methods to discourage withdrawals. These tactics included providing redemption payments funded from other investors’ money and sending false investment reports intended to reassure investors that their assets continued to grow. The SEC’s complaint, filed in federal court in Miami on Nov. 14 and unsealed Monday, Nov. 18, charges the defendants with securities fraud and seeks certain emergency relief as well as permanent injunctions, the return of allegedly ill-gotten gains with prejudgment interest, and civil penalties. The complaint also names Burkholz’s wife, Rhoda Burkholz, and Bianco’s wife, Suzanne Bianco, as relief defendants. 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 you believe you are the victim of a Ponzi scheme or other financial fraud you may have a claim for damages. For a free consultation, contact us by filling out our online contact form, or calling 888-768-2499.

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investment fraud attorneys

How Do You Select the Right Investment Fraud Attorney?

Nov 11, 2019

You have been the victim of investment fraud. What do you do now?   Without question, your first order of business is to retain the services of an experienced, qualified attorney to handle your investment fraud matter. Yet, having suffered a loss at the hands of an investment “professional,” it is perfectly understandable that you may be a little reluctant to start wading through an endless choice of lawyers to prosecute an investment fraud case. Indeed, it can be difficult to know who might be the best investment fraud lawyer for you under the circumstances. In this blog, we hope to assuage some of those fears. While selecting any type of attorney is always a subjective process that relies on your own judgment and preferences, we will discuss a few important tips to help you be better prepared to select the investment fraud attorney who is right for you. Tip #1 – Do Your Research, Avoid Snap Decisions There is a phrase that goes back to the children’s stories we all remember: “Slow and steady wins the race.” Yes, to garner a little wisdom from the old Tortoise and the Hare story, faster is not always better. More to the point, do not jump at the first attorney you meet. Take your time – slow and steady – to speak with several attorneys before making a decision. While that advice is good for the selection of an attorney in any field, it is vital when you are pursuing a case against a person who purported to be a “financial professional.” That is because you need to find an attorney who is both seasoned in dealing with the complexity of investment fraud cases and is someone with whom you feel comfortable.   Accordingly, in the research phase, you want to start by getting some personal referrals. Ask friends, colleagues, and neighbors for recommendations. You may be surprised that you will get the names of a few attorneys right away. Then, check with state bar associations and, of course, do your online research to find the investment fraud attorneys in your area.   Once you have compiled a list of attorneys who you think would be able to help you, then move into the evaluation phase. That is what the next series of tips is all about. Tip #2 – Experience, Experience, Experience The number one consideration in selecting an investment fraud attorney is – you guessed it – experience. There are attorneys and firms that focus on a number of legal fields, and there are others that specialize in only one. It is very possible that a law firm with a more diverse practice could still effectively help you when acting as your investment fraud attorney. Yet, all things being equal, you might be better off with an attorney who focuses solely on investment fraud matters. Why is that? That is because a person laser-focused on investment fraud cases will have seen every possible fact pattern that could come up in an investment fraud case. Thus, an attorney who has, so to speak, “seen it all,” will be that much better at knowing how […]

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professional athletes scam

Retired NFL Players are Victims in Alleged Financial Fraud by Cambridge

Sep 2, 2019

The Securities and Exchange Commission (“SEC”) recently charged a Florida-based investment adviser firm and its principals with defrauding investors who have mostly retired NFL players who were part of a class-action suit against the NFL relating to concussion-related brain injuries. The SEC complaint charges Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors, LLC), its president Phillip Timothy Howard, who was a Florida attorney representing the retired players in the class action lawsuit, and Don Warner Reinhard, a former registered investment adviser previously barred by the SEC. Howard and Reinhard allegedly raised $4 million from the retired NFL players, about half of whom rolled over their NFL 401(k) accounts into hedge funds run by the defendants. According to the SEC complaint, the defendants defrauded 20 investors in two proprietary hedge funds operating out of Howard’s law offices by representing that the hedge funds would invest in a variety of instruments. However, unbeknownst to investors, the funds were almost exclusively invested in settlement advance loans to more than 70 of Howard’s NFL class-action clients. The SEC alleges that the defendants promoted Reinhard as an “extremely successful investment manager,” while concealing that he served jail time for bankruptcy and tax fraud, and had been barred by the SEC from working for any investment adviser firm. Additionally, the complaint alleges that Howard borrowed $612,000 in undisclosed personal mortgage loans from the funds, which he never repaid and that Howard and Reinhard used investor funds to pay themselves fabricated “broker fees” on settlement advance loans to Howard’s legal clients. Most egregiously, the victims of this alleged fraud allegedly sought the advice of Howard, their attorney, as concussion victims and were particularly vulnerable. Many rolled over their retirement money to make their investments into the funds. Professional athletes are often the victims of financial scams. If you or someone you know has been the subject of a financial fraud any other type of investment fraud, we may be able to help. 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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digital currency fraud

SEC Freezes Assets in Digital Securities Scam

Aug 14, 2019

Today the Securities and Exchange Commission (“SEC”) announced fraud charges against Reginald “Reggie” Middleton, a self-described“financial guru,” and two entities he controls, Veritaseum, Inc. and Veritaseum, LLC (collectively Veritaseum) for allegedly engaging in a fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities. A federal court in Brooklyn entered an emergency freeze order on Aug. 12, 2019 to preserve at least $8 million of the $14.8 million raised in 2017 and 2018 in an offering of digital securities. According to the SEC, the complaint “alleges that the Defendants marketed and sold securities called “VERI” tokens on the internet, inducing retail investors to invest based on multiple material misrepresentations and omissions. Among other things, Defendants allegedly knowingly misled investors about their prior business venture and the use of offering proceeds, touted oversized – but fictitious – investor demand for VERI, and claimed to have a product ready to generate revenue when no such product existed. The complaint further alleges that Middleton manipulated the price of the VERI tokens trading on an unregistered digital asset platform. The complaint also alleges that Middleton recently moved a significant amount of investor assets and then dissipated a portion of those assets, transferring them to Middleton’s personal account.” The complaint seeks permanent injunctions, disgorgement plus interest and penalties, and a bar from offering digital securities. For Middleton, the SEC also seeks an officer-and-director bar. Investopedia reports that investors lose approximately 9 million each day in cryptocurrency scams. If you believe you have been the subject of digital currency fraud or any other type of investment fraud, we may be able to help. 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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charles kenahan churning case

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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