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On September 9, 2015 the Securities and Exchange Commission (SEC) charged financial advisor Dawn J. Bennett with exaggerating the amount of assets managed by her firm, Bennett Group Financial Services, LLC, as well as the investment returns the firm obtained for investors.

Bennett began working in the securities industry in 1987. From 2006, until 2009, Bennett was registered with Royal Alliance Associates, Inc. From 2009, to the present Bennett has been registered with Western International Securities, Inc.

According to the SEC, Bennett has been inflating her firm’s numbers from at least 2009 to February 2011 in order to lure clients to her new firm. The SEC alleged that Bennett inflated the assets managed by her firm by as much as five (5) times the actual assets managed. Bennett claimed to have $2 billion in assets when in reality her firm managed no more than $407 million at any given time.

John P. Jones (Jones) was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) alleging that Jones engaged in trading five unsuitable, speculative private placements securities in a customer’s account. Jones was suspended for six months and fined $15,000.

Jones entered the securities industry in 1986, from August 2003 to December 2007 he was registered with Jones, Byrd, & Attkisson, Inc.; from December 2007 to February 2010 he was registered with First Legacy Securities, LLC; and from February 2010 to present he was registered with Moloney Securities Co., Inc.

According to FINRA, Jones made unsuitable recommendations to a client who had a moderate risk tolerance and an investment goal of preservation of capital. Despite the client’s moderate risk tolerance, Jones still put the majority of her liquid net worth into the five speculative private placements. The customer’s investment in the private placements allegedly constituted more than 50% of her liquid net worth. FINRA further alleges that there were no reasonable grounds for Jones to believe that the recommendations were suitable for the customer.

The Financial Industry Regulatory Authority has charged former J.P. Turner & Company, LLC (J.P. Turner) broker, Leonard Allen Goldberg with multiple forms of securities fraud including: unsuitable mutual fund switching/trading, exercising of discretion without written authorization, falsification of electronic records, mutual fund switch forms, and new account documents, and forgery of customer signatures.

Goldberg first became registered with FINRA in 1972. Goldberg was registered with J.P. Turner from July 2007 until October 2010, and with Newport Coast Securities, Inc. from October 2010 to December 2014. He is not currently affiliated with any brokerage firm.

According to the complaint, from August 2007 through August 2014, Goldberg caused over $123,600 in losses to five customers while making over $77,900 for himself and his firms by using discretion without the requisite written authorization in connection with 300 mutual fund and Exchange Trading Fund (“ETF”) transactions to his benefit. Goldberg allegedly bought his clients class “A” mutual funds, held on to them for a few months, and then sold and repurchased additional mutual funds with the funds. The client would incur upfront sales charges with each transaction.

The Financial Industry Regulatory Authority (FINRA) suspended California based broker Walter Rae Chao (Chao) for two years and fined him $30,000 for participating in unauthorized private transactions while he was employed with LPL Financial (LPL). Specifically, according to FINRA, Chao solicited investments from LPL clients to purchase interests in a Facebook special purchase vehicle (SPV), in order to purchase pre-initial public offering shares of the Facebook IPO.

Chao, who has been in the securities industry since 2003, was discharged from LPL in 2012 following allegations he violated firm policies and procedures related to his participation in private securities transactions without firm authorization. According to FINRA, Chao requested approval from LPL in 2011 to solicit his clients to invest in the SPV, LPL denied his request. Between February and May 2012, Chao solicited thirteen of his clients to invest into the SPV despite the fact that LPL denied his request. Nine of the thirteen clients he solicited participated in the transactions which reportedly generated a total of $1.27 million in investments.

Chao allegedly attempted to cover up these private transactions by using an unapproved email address to conduct the transactions, lying and providing misleading statements in his compliance questionnaire, and providing false and misleading information to FINRA regarding the transactions.

Law Office of Christopher J. Gray, P.C. is currently investigating claims against Sigma Financial Corporation (“Sigma”) regarding unsuitable sales of Mission Residential (now Middleburg Management) TIC (Tenant-In-Common) and DST (Delaware Statutory Trust) investments. Sigma is an independent broker dealer, headquartered in Ann Arbor, Michigan. The firm offers comprehensive investment planning services, including estate planning and tax reduction strategy services.

Mission Residential was founded in 2004 by owner, Chris Finlay. Recently, Mission Residential changed its name to Middleburg Management and owns properties in Texas, Utah, Tennessee and North Carolina. Some of the Mission Residential investment products Sigma offered its customers are: Mission Millbrook, DST; Mission Antioch, DST; Mission Capital Crossing, DST; Mission Durham, DST; Mission Courtyard Villa, DST; Mission Meadowbrook, DST. Many of these investments have since been foreclosed.

Some investors may have incurred losses in the following Mission Residential TICs and DSTs:

On September 24, 2015, LPL Financial (“LPL”) reached a settlement with the North American Securities Administration Association (“NSAA”) to pay a $1.43 million fine for failure to implement an adequate supervisory system and failure to enforce it’s written rules regarding non-traded REITs. The $1.43 million fine will be distributed among 48 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

As part of the settlement, LPL also agreed to reimburse investors for losses involving non-traded REITs sold by the firm from January 1, 2008 through December 31, 2008. The total amount to be returned to investors will be determined by a third-party review of approximately 2,000 sales. Some of the REITs LPL sold during the relevant time period include: ACAP Strategic Fund, Eaton Vance Funds, Hines Securities and Inland American REIT.

The settlement was a result of a multi-state investigation led by the NSAA. In addition to failure to enforce an adequate supervisory system, the investigation concluded that LPL agents sold non-traded REITS in excess of the REIT’s prospectus standards, various state concentration limits or LPL’s Alternative Investment Guidelines.

The Financial Industry Regulatory Authority (FINRA) recently sanctioned broker Daniel Grieco based allegations that Grieco made unsuitable recommendations of non-traditional exchange-traded funds (ETFs) to customers.

Non-traditional and “leveraged” ETFs can pose significant risks not presented by ordinary ETFs. Traditional ETFs often seek to mirror an index or benchmark, and track the performance of the asset class as well as possible, Non-traditional ETFs, by contrast, may use a combination of derivatives instruments and debt to multiply returns on underlining assets, often attempting to generate 2 to 3 times the return of the underlining asset class.

Some non-traditional ETFs also attempt to track the inverse result of the return of the benchmark asset class- for example, rising in value when oil prices or the overall stock market decline, and declining in value when the underlying referenced asset class increases in value.