Articles Posted in Stockbroker Misconduct

Silver Law Group is investigating Woodbury Financial Services (“Woodbury”) broker Daniel J. Dunn (CRD# 3105100) for customer complaints filed with the Financial Industry Regulatory Authority (“FINRA”) against the broker.

According to Dunn’s FINRA BrokerCheck report, there are five customer complaints against him, four of which have settled for a total of $685,000.  The complaints against Dunn allege securities law violations such recommending unsuitable investments and misrepresentations among other claims.

One of the complaints, which has since been settled, was Dunn’s recommendation to a customer to borrow money against the customer’s family home to invest in an investment that was unsuitable for the customer.  According to the report, there are two complaints that allege those same facts, one settled in 2007 and the other settled almost a year later, but it is not clear whether or not the complaints arose out of the same situation.

While it has been argued by investor advocates for a long time that a fiduciary duty applies to those individuals that give investment advice to others, the Department of Labor (DOL) finally put the issue to rest with respect to retirement accounts.  After six years in the making, the DOL put forth a rule that redefines who is a retirement investment advice fiduciary.  The rule is designed to protect investors who obtain investment advice for retirement accounts from stockbrokers, insurance agents and other types of financial advisor who “put their own profits ahead of their clients’ best interest.”  Several provisions of the rule are expected to take effect April 2017 with full compliance required by January 1, 2018.

Under the rule any person that is paid to give advice to a plan sponsor (e.g., an employer with a retirement plan), plan participant or IRA owner is now to be considered a fiduciary.  The fiduciary standard would also apply to advisors that provide advice as to whether to rollover money from an employer-sponsored retirement plan (e.g., 401(k)) to an IRA.  The new rule is meant to do away with possible conflict of interests by increasing fee disclosures and requiring the investment adviser to always put the investors’ best interest first.  Previously, a financial advisor’s recommendation was only required to be “suitable” meaning that if there were a couple of products that fit the investor’s investment objectives and risk tolerance, the advisor could pick the one with the higher commissions and fees which would lower the possible return instead of what was in the best interest of the investor.

Legal challenges to the rule from the Securities Industry are expected.  However, according to several news stories the DOL is confident that the new rule will survive legal challenges

The Financial Industry Regulatory Authority Inc. (“FINRA”) charged a broker for lying to a Native American tribe about $11 million in commissions he accumulated when he sold the tribe $190 million in nontraded real estate investment trusts and business development companies.

According to the complaint, Gopi Krishna Vungarala (CRD# 4856193), the broker, served as the unnamed tribe’s registered representative as well as its treasury investment manager. Vungarala used his position to fraudulently induce the tribe to invest hundreds of millions of dollars in nontraded REITs and BDCs and repeatedly lied about whether he and his firm received commissions for the sales.

The complaint alleges that Vungarala falsely represented to the tribe that he would not receive any commissions on purchases of the non-traded REITs and BDCs made in the tribe’s accounts in order to induce the tribe to make the purchases.

Silver Law Group is investigating allegations made by the Financial Industry Regulatory Authority (“FINRA”) against former Hollywood, Florida broker Daniel G. Kasbar (CRD# 5869994).

FINRA barred Kasbar from the securities industry for failing to respond to FINRA’s requests for documents and information. FINRA was investigating Kasbar for allegedly engaging in outside business activities beyond the scope of the approval provided by his FINRA member firms, HD Vest Investment Services (“HD Vest”) and LPL Financial, LLC (“LPL”), between 2010 and 2015.

Kasbar entered the securities industry in February 2011 when he became registered with HD Vest. In March 2014, Kasbar voluntarily resigned from HD Vest and became registered with LPL as a General Securities representative.  On May 29, 2015, LPL discharged Kasbar alleging the same conduct in the FINRA investigation.

Dallas securities broker Wade Lawrence was given a three-year prison sentence January 20, 2015 by a Texas federal judge after pleading guilty to offering false investments that defrauded his friends and business associates out of more than $1.5 million for his own benefit.

The federal court also ordered Lawrence, 43, to pay $1,542,966 in restitution and forfeit $126,074 in proceeds in light of his August admission to a single charge of securities fraud at the time the criminal indictment was filed.

Beginning in January 2012 and continuing through September 2013, Lawrence engaged in a scheme to defraud to obtain funds from individuals, many of which had longstanding personal and business relationships and trusted him while he was working as a stockbroker at Southwest Securities, now part of Hilltop Securities Inc.