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Articles Posted in Breach of Fiduciary Duty

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Boca-Raton-Financial-Advisor-Robert-Child-Faces-Yet-Another-Customer-Dispute-300x199Erik Patrick Pica (CRD #4829533) is a currently registered broker employed with Joseph Stone Capital L.L.C. (CRD #159744) of New York, NY. His previous employers include Global Arena Capital Corp (CRD #16871, expelled by FINRA on 4/1/2016), First Midwest Securities, Inc. (CRD #21786), Chicago Investment Group, LLC (CRD #11853, expelled by FINRA on 9/14/2010) and Eastbrook Capital Group LLC (CRD #39781, expelled by FINRA on 9/23/2009), all of New York City. He has been in the industry since 2004.

Pica is the subject of seven disclosures, all customer disputes. The first one was filed on 5/10/2018, alleging “unauthorized trade of 6000 shares Rite Aid Corp unauthorized trade of 550 shares Valeant Pharmaceutical.”  The client requests damages of $7,613.65. This case is currently pending.

The next customer dispute was filed on 5/4/2018, with allegations of negligence, over-concentration and suitability.” This client requests damages of $293,000. This case is also currently “pending.”

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When you purchase insurance from a broker, investment advisor or insurance agent, shouldn’t they have your best interests at heart?

Proposed-Fiduciary-Duty-Rule-Poised-to-Pass-Leaves-Brokers-Seething-300x199New York’s Regulation 187 was designed to do just that, and could take effect as early as August of 2019. In it, agents and brokers are required to have the “best interest” of the consumer in mind when offering recommendations for their life insurance policies and annuities. Agents and brokers are not to consider any financial incentives or compensation that they might receive as a result of the financial products they offer while discussing different options for annuities and policies.

While Regulation 187 is intended to supplement New York’s existing consumer protection laws and “fill in the gaps” of regulations, it isn’t being met with resounding applause by Wall Street. According to one trade industry group, a number of issues exist with the new law that can be problematic.

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Scott Vincent Kaup (CRD #1002907) is a registered broker and investment advisor currently employed with Summit Brokerage Services, Inc. (CRD #34643) of Stuart, NE. His previous employers include VSR Financial Services, Inc. (CRD #14503), also of Stuart, NE and American General Securities Incorporated (CRD #13626) of Phoenix, AZ. He has been in the business since 1981.

Lawrence-LaBine-Under-Fire-for-Alleged-Unsuitable-Recommendations-and-More-300x200Kaup has two disclosures on his record. The first one, filed on 7/13/2018, alleges “unsuitable investment recommendations, material misrepresentations and omissions, and supervisory due diligence failures.”  The client is requesting damages of $2,600,000.00. No additional information is available.

The second dispute was filed on 4/25/2016. This claim alleges that Kaup, from 3/30/2001 to 6/14/2010, breached his fiduciary duty, violated common law fraud regulations, made unsuitable recommendations for investments and committed negligence. The claim was settled for $173,000. Kaup denied all claims.

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Back in October, we told you about Kyusun Kim (CRD #2864085), a broker who was barred by FINRA after it was discovered he approached individuals who were near or at retirement age, and urged them to liquidate their pensions to invest in “alternative investments.” These investments included risky, non-traded real estate investment trusts (REITs.)

Are-or-Were-Unsuitable-Non-Traded-REITs-in-Your-Portfolio-300x224-300x224BrokerCheck now reports that Sandlapper Wealth Management, LLC has discharged him from their employment as of 8/31/2018 after he was barred by FINRA.

The allegations against Kim included wrongful conduct, breaches of fiduciary duty, contract and conduct, violations of securities laws, fraud, financial elder abuse, negligent misrepresentation, inappropriate investments and unsuitable recommendations, as well as one allegation of forged signatures.

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Donna Jean Hines (CRD #4275542, aka “Donna Jean Atchison” or “Donna J. Hines”) is a registered broker and investment advisor who is currently employed with Cetera Advisors LLC (CRD #10299) of Weston, WV. Her previous employers include Investment Planners, Inc. (CRD #18557), also of Weston, WV, Sammons Securities Company, LLC (CRD #115368) of Ann Arbor, MI, and Edward Jones (CRD #250) of St. Louis, MO. She has been in the industry since 2000.

Lawrence-LaBine-Under-Fire-for-Alleged-Unsuitable-Recommendations-and-More-300x200On 06/12/20018, a customer filed a dispute against Hines, alleging unsuitable investments from 2005 through 2018, negligence, common law fraud and other claims, and requested damages of $142,026.00. Hines responded that a motion to compel would be filed to bring the case to arbitration, and reasons why the claims were without basis.

Three previous customer disputes were filed on 12/21/2015, 12/24/2015 and 12/28/2015. The claimants were children of a deceased customer, who each inherited from the customer’s estate. The claims allege misrepresentation, omissions, negligence and breaches in regards to “alternative investment products” that Hines sold the customer. The damages requested were different for each case, but all three claims were settled for $100,000. Hines’ response was that the alternative investments were purchased more than ten years ago. The client passed away in 2011, and the claims were settled to avoid the cost and expense of litigation.

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Michael Patrick Nixon (CRD #216931) is a registered broker and investment advisor currently employed with Paulson Investment Company LLC (CRD #5670) of Tampa, Florida. His previous employers include Newport Coast Securities, Inc. (CRD #16944) and Meyers Associates, L.P. (CRD #34171), both of Leesburg, VA. Six of his previous employers have been expelled by FINRA, including Newport and Meyers. He has been in the industry since 1991.

Chestnut-Exploration-and-Mark-Plummer-Facing-Allegations-of-Securities-Fraud-With-Oil-Gas-Securities-300x225Nixon has a total of four disclosures in his record, the most recent a customer dispute filed on 7/9/2018. The claimants allege that from 2013 to 2018, Nixon violated both the Florida Securities Act and the Virginia Securities Act. They also allege that he committed common law and securities fraud and breached his fiduciary duty, and completely misrepresented multiple unsuitable securities and investments. Additional allegations include failure to supervise on the part of the firm (Paulson Investment.) Claimants are requesting damages in the amount of $3,000,000. The case is currently pending.

His previous customer dispute was filed on 10/9/1998, which included allegations of “misrepresentation and deceit” in relation to a stock liquidation to meet a margin call. The client requested damages of $9,000, and was granted damages of $2,006.95. Nixon denied the allegations.

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Walter Roland Valenzuela (CRD #2280224) is a registered broker and investment advisor currently employed with Hilltop Securities Inc. (CRD #6220) of Del Mar, CA. His only previous employer was M.L. Stern & Co., LLC. (CRD #8327) of San Diego, CA, where he worked until 2008.  He has been in the industry since 1993.

Valenzuela is the subject of seven disclosures, all customer disputes. The most recent dispute was filed on 7/23/20018. Alleging unsuitable recommendations, misrepresentation and excessive trading, the client is requesting damages of $3,000,000. This case is “pending,” and no additional information is available.

Three Individuals Charged by the SEC for Defrauding Elderly Clients on elderfinancialfraudattorneys.comAnother still-pending dispute was filed on 8/24/2017, and will be in securities arbitration. The client lists multiple allegations, including elder abuse, financial exploitation, breach of fiduciary duty, excessive trading and misrepresentation. The damages requested are listed at $9,500,000.00. However the claim has no damage amount listed, and the final sum will be determined in arbitration.

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Sebastian Wyczawski (CRD #2835135) is a registered broker currently employed with Joseph Stone Capital, LLC (CRD #159744) of Holbrook, NY. His previous employers include Cape Securities Inc. (CRD #7072), also of Holbrook,

Bahram-Mirhashemi-Facing-Allegations-of-Elder-Financial-Fraud-300x200Liberty Partners Financial Services, LLC (CRD #130390) of Mount Pleasant, SC, and Milestone Financial Services, Inc. (CRD #43295) of Bohemia, NY. His first employer, Seaboard Securities, Inc. (CRD #755) of Florham Park, NJ, was expelled by FINRA in 2011. He has been in the industry since 1998.

Wyczawski has a total of three disclosures, all customer disputes. The most recent was filed on 7/18/2018, alleging “fraud; negligent misrepresentation; breach of fiduciary duty and breach of the covenants of good faith and fair dealing; negligent supervision; breach of conduct; Section 20 violations.”  This customer is requesting damages in the amount of $100,000.00.

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Roy Joseph Failla (CRD #2786551) is a registered broker who is currently employed with First Standard Financial Company LLC (CRD #168340) of Red Bank, NJ. His previous employers include Alexander Capital, L.P. (CRD #40077), Brookstone Securities, INC. (CRD #13366, expelled by FINRA on 10/09/2012) and J.P. Turner & Company, L.L.C. (CRD #43177), all of Staten Island, NY. He has been in the industry since 1998.

https://www.silverlaw.com/blog/wp-content/uploads/2017/07/FINRA-Permanently-Bars-Honetta-C.-Kao-After-Allegations-of-Unauthorized-Trading-and-Mishandled-Accounts-300x200.jpgA customer dispute filed on 5/29/2018 alleges that Failla engaged in “unauthorized trading and unsuitable investments,” and requests damages of $1,500,000. Failla denies the allegations.

Two of Failla’s previous disputes were filed during Failla’s tenure at Brookstone Securities. The first, filed on 2/19/2010, alleged “excessive and unauthorized trading, fraud, breach of fiduciary duty, misrepresentation and unsuitability.”  This customer requested damages of $299,817.48, and the case settled for $75,000. The second case, filed on 5/25/2010, alleged “churning, unsuitable trades and misrepresentation.”  The client requested damages of $417,000.00, and the case was settled for $40,000.

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In August, we told you about former broker Sean Brady (CRD #4365173) who was recently barred by FINRA and discharged by his employer, First Allied Securities, Inc. (CRD #32444) of St. Louis, MO.

Allegations-of-Sales-Practice-Violations-Cloud-Broker-Kenneth-Dlouhy-‘s-Record-300x200Since our last report, eight more customer disputes were recently filed against Brady, between 6/28/2018 and 07/03/2018. All these cases are pending, and the total of requested damages is an eye-watering $12,575,730.49.

Like the previous disclosures, these clients allege that Brady used the same practices, including:

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