Securities Arbitration Lawyers Blog

FINRA Cancels Global Arena Capital’s License

September 24, 2015 | Silver Law Group

Cancellation is a direct result of alleged failure to pay fees

Global Arena Capital, a New York firm founded in 1985, was stripped of its license by FINRA on July 20. The license cancellation resulted from the firm’s failure to pay outstanding fees of nearly $50,000 to FINRA, but its previous disclosures in the past several years, specifically in dealing with senior investors, may have negatively impacted the firm’s ultimate fate.

The firm’s bad blood with senior investors was first revealed in July 2014, when a complaint was filed because representatives of the firm allegedly deceived and misled a senior investor by falsely promising high rates of return on a risky investment that they represented as a safe investment. According to FINRA, the bonds the representatives sold the investor were “junk bonds,” which are known to be particularly high risk.

David Ledoux Fined and Suspended by FINRA After Failing to Disclose Liens on His Registration

September 24, 2015 | Silver Law Group

Ledoux failed to report six liens between 2004 and 2012

Boca Raton broker David J. Ledoux faced a suspension and fine in June after allegations that he failed to file an updated Form U4 to reflect six liens in a timely manner, according to FINRA. Ledoux, who has been employed in the security industry since 2004, was permitted to resign from National Securities Corporation after allegedly failing to report liens between 2004 and 2012. He didn’t report four of them until 2014 and two were never disclosed.

This resulted in disciplinary action from FINRA, which levied sanctions against him in the form of a 45-day suspension and $5,000 fine. The first lien, which was civil, was in the amount of $369, but the remaining tax liens amounted to a total of more than $184,000, according to FINRA. According to the disclosures made on his FINRA Broker Check report, he is on an installment plan to repay two of them.

Former Morgan Stanley Employees File Suit Alleging Violations of the SEC Whistleblower Protections

September 23, 2015 | Silver Law Group

Couple launches $20 million retaliatory-firing suit against the firm

A husband and wife who were formerly employed by Morgan Stanley launched a $20 million suit against the firm Monday, alleging that it violated whistleblower protection laws by terminating their employment after they made complaints to supervisors about unfair practices occurring at the firm.

Jaime Feldman-Boland and James Boland filed the suit in New York federal court after both were fired in August and October 2011, respectively, due to what the firm considered “poor performance,” according to the complaint.

Securities Industry Lingo May Interfere With Financial Advising

September 22, 2015 | Silver Law Group

Study finds investors are more willing to invest in what they understand

Imagine going somewhere people are supposed to help you, where you’re assured you will be in good hands. Imagine arriving there and realizing everyone speaks a language that’s completely foreign to you. According to a study conducted by Invesco Ltd. in partnership with a firm specializing in language strategy, this hypothetical situation may be similar to how investors feel when meeting with brokers about alternative investments. Brokerage firms have created billions in proprietary products to sell to Main Street. Now, they need a good marketing company to convince the average retail investor that this is what they want to invest in.

The yearlong study, titled The Power of Alternatives, found that certain buzzwords that are generally accepted in the industry, such as “alternative investments” and “derivatives,” may overwhelm investors and turn them off to potentially beneficial investments. According to the Wall Street Journal, only 23 percent of investors would prefer to invest in “liquid alternatives,” while 77 percent chose “alternative mutual funds that are bought and sold like any other fund,” despite the fact that both options mean the same thing.

South Florida Broker Ralph Oelbermann Barred by FINRA

September 21, 2015 | Silver Law Group

Record shows customer disputes and failure to respond to FINRA request

FINRA barred Ralph Oelbermann in February after 23 years in the securities industry. According to FINRA’s website, the bar resulted from Oelbermann allegedly failing to respond to FINRA requests for information.

In 2013, Oelbermann was discharged from his employing firm, LPL Financial LLC, for what the firm claimed was unauthorized trading, according to FINRA. Stockbrokers generally cannot make trades in a customer’s account without first seeking the customer’s permission.

Florida Broker Peter Gouzos Banned by FINRA

September 18, 2015 | Silver Law Group

His most recent employing firm was expelled by FINRA in October

After 22 years in the securities industry, FINRA permanently barred Peter Gouzos in February from acting as a broker or selling securities to the public. The final straw in a career full of customer dispute disclosures was his alleged failure to respond to FINRA requests for information, according to FINRA reports.

Gouzos most recently worked for Hunter Scott Financial in Delray Beach, Florida, which FINRA expelled in October. Before that, he worked for Dawson James Securities in Boca Raton and Emerson Bennett & Associates in Fort Lauderdale. Earlier in his career, he worked at various firms in New York, New Jersey, Georgia and Missouri.

Bryan Carnahan Barred From Practice in Securities Industry Following Allegations of Scheme to Defraud Customers

September 17, 2015 | Silver Law Group

Carnahan allegedly converted almost $170,000 in misappropriated customer funds

After 16 years and five disclosure events in the securities industry, Bryan Andrew Carnahan was barred permanently by FINRA on May 1 following allegations that he converted $169,500 in funds from a customer at his firm, The Huntington Investment Company, between September 2013 and March 2015. Prior to being employed by Huntington, Carnahan worked for John Hancock Distributors, Inc., in 1998.

According to FINRA reports, Carnahan transferred the customer’s funds and asked her to write cashier’s checks that were supposedly to be used for an investment. He then allegedly caused the checks to be re-issued fraudulently in the amount of $169,500. It is purported that he then made those checks payable to his own account and to the accounts of other customers who lost money in investments. FINRA reports that at least 13 additional customers were involved in the alleged scheme.

SEC Report Finds Flaws in the Retail Sales of Structured Securities Products

September 16, 2015 | Silver Law Group

35 percent of structured products at the firms investigated were liquidated below 80 percent of their face value, allegations of unsuitable recommendations and sales limit abuse raised

The Securities and Exchange Commission reported Monday that it has spotted failures in many broker-dealers controlling the retail sales of structured products, leading to unsuitable recommendations and potential abuse of limits to sales.

Structured products, according to Investopedia, are the result of taking traditional securities and replacing their typical payment features with other features that are meant to make an investor’s risk-return objectives more customizable than they would be with only traditional securities.

Timothy DiBlasi Under FINRA Scrutiny for Lack of Compliance Supervision

September 15, 2015 | Silver Law Group

Disciplinary action is pending as DiBlasi’s involvement in the sale of over 74 million shares of unregistered stock is investigated

After 11 years in the securities industry, Timothy D. DiBlasi may be facing a FINRA disciplinary action for his alleged involvement in the sale of more than 74 million unregistered stock shares. As the chief compliance officer at Scottsdale Capital Advisors, FINRA alleged that he failed to enforce a system of supervision and anti-money laundering compliance, leading to the alleged illicit trades.

DiBlasi has been registered with the firm since 2012, and FINRA is implicating him in the case due to his failure to prevent fraud and illicit activity relating to a penny stock, according to the report. Since October 2013, DiBlasi has served as the chief compliance officer at Scottsdale, making him responsible for written supervisory procedures, or WSPs, which detail how supervisors should handle any “red flags” that suggest improper trading activity, particularly in regards to unregistered securities. However, according to FINRA, DiBlasi’s system was not up to par when it came to verifying ownership of securities and their registration exemptions.

FINRA Orders Interactive Brokers LLC to Pay Hedge Fund $667,000

September 15, 2015 | Silver Law Group

Alleged wrongful auto-liquidation made accounts subject to additional margin calls, which continued a death spiral of financial loss.

The turmoil in the market over the last two weeks has likely had significant impact on investors. For investors trading with margin accounts through Interactive Brokers LLC, this could mean even greater financial loss due to the firm’s practice of automatic liquidation.

When trading on margin, an investor borrows funds from the brokerage firm with the agreement that a “maintenance margin,” or minimum account balance must be maintained. If the account value is at risk of falling below the maintenance margin, the firm can require investors to either deposit more funds or make a margin call where the broker exercises their right to sell the stock, or liquidate, to pay down the loan.