According to some reports, nearly 1/3 of National Securities brokers have had regulatory issues, legal disputes, or personal financial problems that have been disclosed to investors
National Securities Corporation is one of the oldest financial firms in the U.S., dating back over 70 years. Its the main office is in Seattle, Washington, but the company has licenses to operate in every state in the country, as well as the District of Columbia, Puerto Rico, and the Virgin Islands.
National Securities Corporation is registered with the SEC and three self-regulatory organizations: Nasdaq, Cboe BZX Exchanged, Inc., and the Financial Industry Regulatory Authority (FINRA) – and it is with the latter agency that the company has come under intense scrutiny over the last couple of decades.
An analysis of data by Rueters shows that National has been fined more than 20 times since 2000. Plus, around 30 percent of the company’s brokers have had regulatory issues, legal disputes, or personal financial problems that have had to be disclosed to investors.
According to FINRA’s BrokerCheck report, National has 78 disclosures. The numerous allegations against the company include violations of Nasdaq and SEC regulations, failure to supervise, breach of contract, and fraud.
Former National broker Michael Patrick McMahon is accused of churning
Mike McMahon worked for National Securities Corp. out of Westbury, NY, from 2010 to 2014. In a complaint filed with FINRA, his former client Richard Haus alleged that McMahon bought or sold Apple shares nine times in one year, which garnered the broker $27,000 in fees. Haus ended up settling his dispute with National for an undisclosed amount of money. Buying and selling securities for the purpose of generating commission is a violation of FINRA rules known as “churning.”
Excessive trading is not the only allegation that has been levied against McMahon in his career. According to his BrokerCheck report, he has been involved in 16 customer disputes that involved a breach of fiduciary duty, negligence, and misrepresentation. All but two of the disputes were settled, with his clients receiving almost $2 million in damages.
National Securities’ dealings with biotech companies
In 2017, Jonathan Aschoff, an analyst with National Securities Corp., recommended that investors buy stock in three biotech companies: Avenue Therapeutics Inc., Checkpoint Therapeutics Inc., and Mustang Bio Inc. What he didn’t reveal was that National is owned by Fortress Biotech, Inc. which just happens to control Avenue, Checkpoint, and Mustang. Fortress acquired a controlling stake in National Holdings Corp. – the parent company of National Securities – in September of 2016.
This pretty blatant conflict of interest is described thusly by U.S. News and World Report: “National brokers are required under U.S. regulations to ensure that they promote investments deemed appropriate for their clients – the same clients to whom they are marketing securities in their parent company’s ventures in biotech, a notoriously high-risk sector.”
Since Fortress took over, National brokers have raised around $240 million from investors. Filings from the SEC reveal that further deals could bring in an extra $125 million. One former National broker said he learned that he was attempting to raise money for the parent company’s biotech firms only after several months of trying to get people to invest. When he inquired about a possible conflict, he said, “I was told to stop asking questions and get back to dialing.”
These are just two examples of numerous allegations faced by the company and its brokers. If you have had any dealings with National Securities Corp. or made investments in Fortress’ biotech companies, you may be able to reclaim lost money. The first step is to speak with a securities arbitration attorney.
Lawsuits can be long and costly, and arbitration is often the best solution for recovering lost funds. For a free consultation from an experienced securities arbitration lawyer, contact the Silver Law Group. Because we are a contingency-based firm, we don’t ask for a fee unless we help you get money back.
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