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Articles Posted in Securities Arbitration

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The future is uncertain for GPB Capital Holdings and its investors. As state and federal agencies investigate the troubled alternative asset management company, investors wait, unable to sell, wondering if the money they invested will evaporate. It wasn’t supposed to be this way. Clients were told by their brokers that GPB had solid assets and that investing in the company was low-risk. Sure a private placement in GPB was illiquid, but it would provide a healthy income stream for years to come, and one day the company could go public and make them a healthy profit, they said. Many investors did not appreciate that one of the primary guarantees for the selling brokerage firms was the substantial commission that GPB offered to pay the financial advisors who sold GPB Capital Notes. The future is uncertain for GPB Capital Holdings and its investors. As state and federal agencies investigate the troubled alternative asset management company, investors wait, unable to sell, wondering if the money they invested will evaporate.

It wasn’t supposed to be this way. Clients were told by their brokers that GPB had solid assets and that investing in the company was low-risk. Sure a private placement in GPB was illiquid, but it would provide a healthy income stream for years to come, and one day the company could go public and make them a healthy profit, they said.

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Robert Charles High II (CRD: #4568165) is a former registered broker and investment advisor whose last employer was First Financial Equity Corporation (CRD#:16507) of Scottsdale, AZ. His previous employers include Chase Investment Services Corp. (CRD#:25574) and Banc One Securities Corporation (CRD#:16999.) He has been in the industry since 2002.The FBI opened an investigation on 2/14/2019 into Robert High over allegations of potential forgery and misappropriation of funds. On 2/20/2019, First Financial Equity Corporation discharged High for “violations of firm policies.” Robert Charles High II (CRD: #4568165) is a former registered broker and investment advisor whose last employer was First Financial Equity Corporation (CRD#:16507) of Scottsdale, AZ. His previous employers include Chase Investment Services Corp. (CRD#:25574) and Banc One Securities Corporation (CRD#:16999.) He has been in the industry since 2002.

The FBI opened an investigation on 2/14/2019 into Robert High over allegations of potential forgery and misappropriation of funds. On 2/20/2019, First Financial Equity Corporation discharged High for “violations of firm policies.” Continue reading

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James Bradley Schwartz (CRD# 3043085) is a former registered broker whose last employer was Joseph Gunnar & Co. LLC (CRD#:24795) of New York, NY. Previous employers include First Standard Financial Company LLC (CRD#:168340) of Garden City, NY, and Aegis Capital Corp. (CRD#:15007) of Melville, NY.  He has been in the industry since 1998.During his tenure with Aegis (2013 through 2016), Schwartz was the subject of six customer disputes, all of which were settled by the firm. The allegations against Schwartz were similar: unauthorized and excessive trading, unsuitable recommendations, breach of fiduciary duty, negligence, misrepresentation, and others. The damages requested for these six disputes totaled $6,861,954.47, and the damages awarded totaled $2,730,286.36.James Schwartz (CRD# 3043085) is a former registered broker whose last employer was Joseph Gunnar & Co. LLC (CRD#:24795) of New York, NY. Previous employers include First Standard Financial Company LLC (CRD#:168340) of Garden City, NY, and Aegis Capital Corp. (CRD#:15007) of Melville, NY.  He has been in the industry since 1998. Continue reading

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Barry Garapedian (CRD #1039251) is a currently-registered broker employed by Morgan Stanley (CRD #149777) of Westlake Village, CA. He has been with Morgan Stanley since 2009. He was previously employed by Citigroup Global Markets (CRD #7059), Lehman Brothers (CRD #7506), and E. F. Hutton & Company (CRD #235) He has been in the industry since 1982. Garapedian’s FINRA BrokerCheck report lists 14 disclosures starting in 1992, all customer disputes. He was the subject of three FINRA customer disputes in 2018, all with similar allegations of “unsuitability”. The first, in March 2018 was denied. The second was also filed in March 2018 and involves the period 2013 to 2015, and is listed as “pending.” The third claim, filed on 4/01/18, alleged excessive fees and overconcentration and was settled for $110,000. Garapedian’s statement denies the allegations, and maintains that everything was discussed with the customer prior to any transactions, and the investments recommended were suitable for the client.Barry Garapedian (CRD #1039251) is a currently-registered broker employed by Morgan Stanley (CRD #149777) of Westlake Village, CA. He has been with Morgan Stanley since 2009. He was previously employed by Citigroup Global Markets (CRD #7059), Lehman Brothers (CRD #7506), and E. F. Hutton & Company (CRD #235) He has been in the industry since 1982. Continue reading

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It seems like a way to get justice against fraud: requesting an arbitration hearing with FINRA after losing money in a fraudulent or shady investment your broker insisted was solid. A defrauded investor then files a complaint with FINRA, who arranges an arbitration hearing, and money damages are awarded to the investor, paid by the broker and/or the broker dealer.Sounds fair, right?While many investors have been able to recover at least some of their losses, about 25% of these judgments go unpaid. FINRA arbitration panels awarded $84 million to investors in 2017 alone. Of that sum, $21 million of it remains unpaid. So what good is arbitration if you’re still waiting to receive your award from a “deadbeat?” Most of these awards are against small brokerage firms which are out of business and did not carry insurance.It seems like a way to get justice against fraud: requesting an arbitration hearing with FINRA after losing money in a fraudulent or shady investment your broker insisted was solid. A defrauded investor then files a complaint with FINRA, who arranges an arbitration hearing, and money damages are awarded to the investor, paid by the broker and/or the broker dealer.

Sounds fair, right?

While many investors have been able to recover at least some of their losses, about 25% of these judgments go unpaid. FINRA arbitration panels awarded $84 million to investors in 2017 alone. Of that sum, $21 million of it remains unpaid. So what good is arbitration if you’re still waiting to receive your award from a “deadbeat?” Most of these awards are against small brokerage firms which are out of business and did not carry insurance. Continue reading

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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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Zachary-Bader-Suspended-After-Multiple-Allegations-of-Churning-300x232A man whose account was churned down to $10,000 was awarded both compensatory damages of $375,000 for his original investment plus an additional $700,000 in punitive damages. The client, Herbert W. Voss, was awarded $1.075 million by FINRA.

Mr. Voss’ attorney was quoted as saying that “It was like the Wild, Wild West in terms of lack of controls at the firm. It was unconscionable.”

Legend Securities, expelled by FINRA in April of 2017, was also known as Marlin Trading, Inc. and SPC Securities, Inc. The company’s record lists 32 disclosures. Many of these are similar to Mr. Voss as well as multiple fines and censures.

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Francisco Jose Faraco (CRD #5095972) is a former registered broker and investment advisor whose last employer was Morgan Stanley (CRD #149777) of New York, NY. His previous employers include J.P. Morgan Securities LLC (CRD #79), also of New York, NY, Santander Securities (CRD #41791) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (CRD #7691) both of Miami, FL. No other employment information is available, and he is not currently registered with any FINRA member firm. He has been in the industry since 2006.

FINRA-Permanently-Bars-Broker-Richard-McGuire-for-Taking-Funds-and-Forging-Signatures-300x200Faraco is the subject of three disclosures. Two are for one specific incident.

In January of 2016, Faraco allegedly began assisting an institutional customer obtain a $15M loan from Morgan Stanley Private Bank. In the course of applying, he attempted to keep the process moving after two roadblocks—an expired passport for one individual, and forging two signatures on two assurance documents for collateral. Faraco felt the documents were duplicates. Those signatures were representatives of affiliated companies. The bank approved the loan, and the forgeries were discovered only after one of the affiliates complained.

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Marijuana is still an illegal substance in a number of states (and on the federal level.) But with the increased evidence of medical benefits, many states have begun legalization for medical use. Some, like California and Colorado, have also legalized it for recreational use. Companies are now looking for ways to cash in on this new “green” industry, from growing to manufacturing and processing, as well as associated industries like equipment, real estate and legal services.

FINRA-Permanently-Bars-Gary-Eugene-Donovan-for-Stock-Manipulation-300x200One company that began dealing with acquiring and leasing land for growing marijuana is CannaBusiness Group out of California. CannaBusiness was founded in 1985, and became a publicly traded company (CBGI) in 2005. CannaBusiness is in the business of the marijuana industry support services, not growing, harvesting and processing. However, the company seems to have fallen off the radar.

According to the company’s Facebook page and other pages that discuss it, CannaBusiness is about “real estate acquisition, leasing, and management firm whose primary focus is on zoning issues.”  Calling itself “services for the medical marijuana industry,” the description includes that the company has: “also developed an acquisition plan to acquire companies that sell products and services to include security services, e-commerce store fronts for both grow and dispensary operations, technology solutions, software solutions, and miscellaneous solutions. It is actively involved in the capitalization, development and acquisition of marijuana based consumer products as well as the supporting technologies.”

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Frequently, investment and securities fraud cases are only limited by Wall Street’s ability to find new and creative ways to abuse investors.

This type of fraud arises out of allegations that losses are due to misconduct or causes unrelated to market forces and is governed by the Securities Exchange Commission, also known as the SEC.

Attorney Scott Silver, of the Silver Law Group says:

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