Investor Lawyers Blog
Investors in VGTel, Inc. (“VGTel”) (OTC PINK: VGTL) may be able to recover their losses through initiating a securities arbitration proceeding with the Financial Industry Regulatory Authority (“FINRA”) if they were sold VGTel shares via misrepresentations or if a stockbroker or financial advisor made an unsuitable recommendation to purchase VGTel shares.
VGTel has been the subject of a recent SEC Complaint in the Southern District of New York (as of January 2016). Specifically, the SEC has alleged that, from 2012-2014, Mr. Edward Durante defrauded at least fifty unsophisticated investors in New England, Ohio and California of at least $11 million through the sale of VGTel securities. The Complaint alleges that Durante essentially controlled VGTel (which was little more than a shell company), and in furtherance of a fraudulent scheme, sold approximately six million shares of VGTel stock using several false names, including ‘Efran Eisenberg’ and ‘Ted Wise.’ Further, the SEC Complaint alleges that Mr. Durante bribed certain financial advisors in order to encourage these brokers to steer their clients into purchasing VGTel stock.
FINRA rules mandate that member firms implement and act upon reasonable safeguards and compliance programs designed to ensure proper supervision of a broker’s activities during the time a broker is associated with that particular brokerage firm. Accordingly, a brokerage firm that fails to properly supervise its registered representatives may well be liable for investment losses sustained due to the malfeasance or misconduct of certain brokers.