Unauthorized Trading

Published on: February 23, 2015

Investors Over-Concentrated In Funds Exposed To Losses Due To Drops In Oil Prices May Have Viable Arbitration Claims

Oil prices have rapidly tumbled to under $50 a barrel, from well over $100 a barrel, leaving prices at their lowest level since 2009. As a result of the plummet in oil prices, some investors whose portfolios were concentrated in investments whose value is linked to the price of oil or other energy products have lost significant sums. Such investments may include private placements, stocks, and ETFs. On the private placement side alone the Securities Exchange Commission (SEC), has stated that since 2008, approximately 4,000 oil and gas private placements have attempted to raise nearly $122 billion in investor capital. However, research has shown that some of these oil and gas private placements pose enormous risks and, a significant majority of the oil and gas funds offered by some sponsors have lost money (even before the recent drop in oil prices).

Leveraged ETFs

In addition to the inherent risks of such investments, some investors’ portfolios may be over-concentrated in oil and gas stocks or ETFs. Some of these ETFs may be leveraged or non-traditional ETFs. These types of funds will tend to rise or fall in value even more rapidly than the price of oil and gas, due to internal leverage, or the borrowing of money by the funds to increase their exposure energy prices.

Published on: June 10, 2014

David Zeng, Most Recently of Merrill Lynch, is Barred from Financial Industry

by InvestorLawyers

David Zeng was recently barred from working within the securities industry after he failed to respond to inquiries concerning over a dozen customer complaints about his investment activities. These complaints alleged misrepresenting an investment, unauthorized stock trading, unsuitable investment advice and fraud.

investment fraud lawyers

Prior to starting with Merrill Lynch in 2009, Zeng worked for UBS Financial Services and before that for Morgan Stanley.

If you suffered significant losses as a result of doing business with David Zeng or received an unsuitable recommendation in any of the mentioned investment categories from another stockbroker or financial advisor, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Published on: March 25, 2014

Clients of 3 Rockwell Global Capital Financial Advisors Seek Damages for Churning, Unsuitable Recommendations

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Douglas Guarino, Lawrence Lee or Robert E. Lee and Rockwell Global Capital. The investigations are regarding fraud, unsuitable recommendations and churning that the three men allegedly conducted while registered with Rockwell Global Capital as financial advisors.

According to stock fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. Churning, on the other hand, is a form of broker misconduct in which the broker performs excessive trading to generate personal profit.

In addition, a firm has an obligation to properly supervise brokers and financial advisors while they are registered with the firm. If it fails in this duty, securities fraud attorneys say it may be held liable for customer losses. One Statement of Claim has already been filed with the Financial Industry Regulatory Authority against the firm, alleging that Douglas Guarino, Lawrence Lee and Robert E. Lee had churned a client’s account. The claim is seeking damages for excessive trading, churning, fraud and unsuitable recommendations.

Published on: February 27, 2014

LaRue Customer Loss Recovery for Unsuitable Exchange-traded Fund Transactions Possible

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with William Wayne LaRue, a former Stephens Inc. stockbroker. The claims are regarding unauthorized and/or unsuitable trades in inverse and leveraged exchange-traded funds, or ETFs, as well as other products.

LaRue Customer Loss Recovery for Unsuitable Exchange-traded Fund Transactions Possible

Reportedly, in early 2012, one of LaRue’s clients made a complaint that LaRue had executed a series of unauthorized trades on her account prior to his departure. As a result of the complaint, the Arkansas Securities Department reportedly discovered similar problems in other customer accounts, as well as other violations.

“The unauthorized trading was occurring in margin accounts,” says Scott Freydl of the ASD. “In looking at this, we saw there were leveraged and inverse exchange traded funds. That’s when the issue of suitability came up.”

Published on: February 25, 2014

Customers of Wade James Lawrence Could Recover Losses

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Wade James Lawrence. Lawrence, a former broker for Lubbock Investments, recently surrendered his securities license because the Financial Industry Regulatory Authority (FINRA) requested he give testimony regarding his conduct and Lawrence failed to appear for the on-the-record interview.

Customers of Wade James Lawrence, Merrill Lynch, Oppenheimer Could Recover Losses

Lawrence is also the defendant in two lawsuits filed in November. According to the allegations in these lawsuits, Lawrence failed to repay $1 million in loans made by private individuals. Reportedly, Lawrence stated in November 2013 that he would turn himself over to regulators “regarding allegations of illegal securities trading practices.”

According to FINRA reports, Lawrence has been accused of causing $140,000 in customer losses because of inappropriate trades during the time he worked with Southwest Securities and $71,000 in customer losses because of unauthorized trading when he was with Oppenheimer.

Published on: December 10, 2013

SEC Investigates Two Firms for Failure to Disclose or Obtain Permission for Principal Transactions

by InvestorLawyers

Securities fraud attorneys are currently investigating claims on behalf of investors who have suffered significant losses because their broker, adviser or firm did not notify or obtain their permission before executing trades on their account. According to the Securities and Exchange Commission, Parallax Investments LLC and Tri-Star Advisors allegedly executed thousands of transactions through their affiliated broker-dealer without disclosing their actions to clients.

SEC Investigates Two Firms for Failure to Disclose or Obtain Permission for Principal Transactions

According to stock fraud lawyers, principal transactions usually involve an investment adviser who uses affiliate brokerage firms to act on behalf of its account. However, conflicts of interest frequently arise between adviser and client. Therefore, securities fraud attorneys say that advisers must disclose any monetary interest or conflicted role in written form when advising the client and obtaining permission.

Parallax Investments LLC, Tri-Star Advisors and three executives — John P. Bott II, Jon C. Vaughan and William T. Payne — all based in Houston, Texas, face securities charges regarding the unauthorized transactions. According to the SEC’s orders of administrative proceedings, Bott made at least 2,000 principal transactions without disclosing or receiving permission from clients from 2009 to 2011. Furthermore, for each transaction, the broker-dealer affiliate bought mortgage-backed bonds with its inventory account and placed them in the client accounts. Bott gained almost half the $1.9 million in sales credits the firm received on the transactions. Vaughan and Payne executed similar trades and received similar benefits.

Published on: July 23, 2013

Scottrade Fined for Alleged Failure to Supervise $8.4 Million in Sales of Unregistered Stock

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of the customers of James W. Margulies and Scottrade Inc. in light of a recent Financial Industry Regulatory Authority decision. Reportedly, Scottrade has agreed to pay a fine of $100,000 to FINRA for failing to supervise Margulies, the former Industrial Enterprises of America Inc. chief financial officer, general counsel and board member.

Scottrade Fined for Failure to Supervise 8.4 Million in Sales of Unregistered Stock

Reportedly, Margulies was allowed to improperly sell unregistered stock to investors between February 2005 and October 2007. Securities arbitration lawyers say he reportedly sold $8.4 million worth of unregistered stock. According to FINRA, “Scottrade failed to conduct an independent inquiry to determine whether the shares deposited were freely tradable.”

According to investment fraud lawyers, Margulies was convicted in 2011 of stealing more than $20 million from investors and looting over $90 million in illegally-issued securities by the Manhattan district attorney. He reportedly used more than $7 million of that money for luxury items such as jewelry for his wife, a vacation club membership, expensive homes and travel on a private jet.

Published on: April 25, 2013

Morgan Stanley Broker Allegedly Traded on Customer Accounts without Permission

by InvestorLawyers

Investment fraud lawyers are currently investigating claims on behalf of customers of Morgan Stanley and other full-service brokerage firms who were the victim of unauthorized trading or discretionary trading on a non-discretionary account without receiving prior written authorization.

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According to FINRA’s discretionary rule, “No member or registered representative shall exercise any discretionary power in a customer’s account unless such customer has given prior written authorization to a stated individual or individuals and the account has been accepted by the member, as evidenced in writing by the member or the partner, officer or manager, duly designated by the member, in accordance with Rule 3010.” However, according to securities arbitration lawyers, this rule doesn’t stop all brokers.

As an example, James Harman McNeill, a Morgan Stanley broker, recently was cited for unsolicited trades and discretion. Allegedly, McNeill violated FINRA Rule 2010 in November 2011 when he exercised discretionary power in Morgan Stanley customer accounts without receiving written authorization prior to doing so. Furthermore, later that month McNeill allegedly marked non-traditional Exchange Traded Fund purchase orders as “unsolicited” even though they were solicited, according to the allegations listed in the Letter of Acceptance, Wavier and Consent that was submitted in March of this year. The Financial Industry Regulatory Authority imposed a 9-month suspension and a $15,000 fine upon McNeill. According to investment fraud lawyers, mis-marked tickets can raise issues regarding inaccurate books and determining if a broker made an unsuitable recommendation.

Published on: March 21, 2013

Firm May Be Liable for Actions of Tracy Morgan Spaeth

by InvestorLawyers

Stock fraud lawyers are currently investigating claims on behalf of customers of Tracy Morgan Spaeth in relation to his sales of ProfitStars Int’l Corp. Spaeth, a former broker with BrokersXpress LLC, entered into a Letter of Acceptance, Wavier and Consent regarding his ProfitStars sales. According to the Financial Industry Regulatory Authority, Spaeth did not receive written approval, nor did he provide written notice to BrokersXpress, a FINRA member firm, prior to participating in private securities transactions. The alleged misconduct occurred from October 2010 through December 2010. During this time, Spaeth promoted ProfitStars Int’l Corp. limited partnership interests and assisted around 115 clients with the purchasing of the security. Investments in the security amounted to more than $8,000,000.

Firm May Be Liable for Actions of Tracy Morgan Spaeth

FINRA also alleged that “in connection with the private securities transaction described above, Spaeth provided a webinar to his clients regarding foreign exchange currency trading software. The webinar failed to provide a sound basis for evaluating the products and services being offered, failed to disclose the risks of the software and strategy being promoted, was exaggerated and misleading, and contained performance forecasts, all in violation of NASD Rule 2210 and FINRA Rule 2010.”

Securities arbitration lawyers say that according to FINRA rules, BrokersXpress LLC was obligated to adequately supervise Spaeth from July 2009 through December 2010, the entire time he was registered with the FINRA-registered firm. Spaeth’s alleged misconduct occurred during the time he was registered with the firm and, as a result, stock fraud lawyers say that BrokersXpress may be held liable for customer losses resulting from Spaeth’s alleged misconduct.

Published on: November 22, 2012

FINRA Bars CEO; Victims of Unauthorized Trading Could Recover Losses

by InvestorLawyers

On November 8, 2012, the Financial Industry Regulatory Authority issued a news release stating that it has barred Mark Gillis, Chief Executive Officer for Hudson Valley Capital Management, and expelled the firm itself for defrauding its customers. The fraud occurred when funds and securities were used to cover losses incurred by manipulative day trading executed by Gillis. Securities fraud attorneys are following this and other unauthorized trading cases for potential arbitration claims to recover losses for investors.

FINRA Bars CEO: Victims of Unauthorized Trading Could Recover Losses

According to FINRA’s findings, in 2012, Hudson Valley, through Gillis, improperly day traded stock worth millions using the firm’s Average Price Account. Following the improper trades, Gillis manipulated the stocks’ share prices and withdrew his day trading proceeds using accounts under his control. Following significant losses caused by this fraudulent trading, Gillis made unauthorized trades in customer accounts in order to cover the losses. Thousands of shares in securities were purchased by Gillis and then allocated to customers at excessive markups from 177 percent to 280 percent. In addition, he paid for an unauthorized purchase of stock by converting customer funds. One customer suffered losses of around $400,000 because of Gillis’ fraudulent activity.

When two customers became aware of unauthorized trading in their accounts, they confronted Gillis, who attempted to hide his misconduct by lying to them. He later lied during sworn testimony to FINRA staff. Investment fraud lawyers stress to investors the importance of diligently monitoring their accounts and statements for fraudulent activity. If investors suspect unauthorized trading or any other type of securities fraud has occurred in their accounts, they should contact a securities fraud attorney immediately.