Archive for October 2010
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Attention Goldman Sachs investors. If you were sold a call option by Goldman Sachs in the Goldman Sachs Multi-Strategy Portfolio XI, LLC, hedge fund you may have a potential claim for monetary damages. Some investors were led to believe that the call option that they were purchasing in the Multi-Strategy fund was liquid. Investors may not have been informed of the lock up provision or the fact that there may have been no market for resale of the option other than back to Goldman Sachs. Some investors were forced to sell their option back to Goldman Sachs at a significant loss, the very firm that in many instances sold the option and was responsible for setting all the pricing. Some investors were also not given the opportunity to purchase puts on this fund to offset the dramatic decline of the fund.
Investors feel that they may have been mislead due to the fact that since the Multi-Strategy Portfolio is a hedge fund that isn’t traded on any public exchange, investors were not able to correctly assess the value of the hedge fund that they were purchasing the option on. This may lead investors to believe that the premiums charged to purchase the call option were exorbitant and no matter how high the value of the Multi-Strategy fund climbs, investors could not have made a profit on this transaction. Evidence of this may be reflected in the fact that during the market rally into 2010 the value of the options only increased 1%.
If you feel that you were mislead by purchasing a call option on the Multi-Strategy Fund from Goldman Sachs and then later had sold it back to Goldman Sachs at a loss, you may have a potential claim for recovery. To discuss your options further feel free to contact a securities attorney at 888-760-6552 or on the web at http://www.stockmarketlawsuit.com. Our main office is located in Fort Lauderdale, Florida, but we represent investors nationwide before the Financial Industry Regulatory Authority. All consultations are free and there is no fee unless there is a recovery.
Financial Industry Regulatory Authority · FINRA · finra lawyer · finra securities arbitration · Florida Securities Lawyer · Ft. Lauderdale Securities Lawyer · Goldman Sachs call option · Goldman Sachs Hedge Fund · Goldman Sachs Lawsuit · Goldman Sachs multi-strategy portfolio · lock up provision · Mulit-strategy Portfolio XI · multi srategy portfolio · Multi-Strategy Portfolio · multi-strategy Portfolio XI LLC · SEC · Securities and Exchange Commission · securities arbitration · securities arbitraton lawyer · securities fraud lawyer · Stock fraud lawyer · stockbroker misconduct
SEC Charges Georgia-Based Hedge Fund Managers With Fraud in Valuing a “Side Pocket” and Theft of Investor Assets
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Washington, D.C., — On October 19th., 2010, the Securities and Exchange Commission (SEC) charged two hedge fund portfolio managers and their investment advisory businesses with defrauding investors in the Palisades Master Fund, L.P. by overvaluing illiquid fund assets they placed in a “side pocket.” The SEC alleges that the hedge fund managers also stole investor money to pay for their own personal investments and made material misrepresentations in connection with a private securities transaction.
SEC alleges that Paul T. Mannion, Jr., of Norcross, Ga., and Andrews S. Reckles of Milton, Ga., placed the Palisades hedge fund’s investments in World Health Alternatives Inc. in a side pocket and valued those investments in a manner that was inconsistent with fund policy and contrary to an undisclosed internal assessment. A side pocket is a type of account that hedge funds use to separate particular investments that are typically illiquid from the remainder of the investments in the fund. The SEC’s Asset Management Unit has been probing whether funds have overvalued assets in side pockets while charging investors higher fees based on those inflated values.
In the complaint, the SEC further alleges that Mannion and Reckles stole more than approximately $1.6 million worth of warrants belonging to the fund. They also improperly used investors’ cash on at least two occasions to make personal investments, and they deceived a securities issuer by making false representations about their trading positions in order to participate in a private offering by the issuer.
“Mannion and Reckles put their own selfish interests ahead of Palisades’ investors, treating the fund like their own personal bank account by stealing and improperly borrowing millions of dollars in fund assets,” said Scott W. Friestad, Associate Director of the SEC’s Division of Enforcement.
Robert B. Kaplan, Co-Chief of the SEC’s Asset Management Unit, added, “Side pockets are not supposed to be a dumping ground for hedge fund managers to conceal overvalued assets. Mannion and Reckles deceived investors about the fund’s performance and extracted excessive management fees based on the inflated asset values in a side pocket.”
In the SEC’s complaint filed in the U.S. District Court for the Northern District of Georgia, Mannion and Reckles defrauded investors for at least a three-month period in 2005 through PEF Advisors LLC and PEF Advisors Ltd., two investment adviser entities they controlled. The fraudulent valuations of a convertible debenture, restricted stock, and bridge loans enabled Mannion and Reckles to report to investors misleadingly inflated net asset values, allowing them to take excessive management fees from the fund.
SEC’s complaint alleges that Mannion and Reckles stole more than one million warrants in World Health that belonged to the fund. At the time Mannion and Reckles exercised those warrants, they were worth $1.6 million. In July 2005, Mannion and Reckles took an undisclosed $2 million from the fund as an apparent short-term loan to finance their personal investments. They separately used approximately $13,000 from the fund to pay for services not rendered to the fund.
In the SEC’s complaint it is alledged that Mannion and Reckles also made material misrepresentations in connection with a PIPE (private investment in public equity) offering conducted by Radyne ComStream Inc. in February 2004.
The SEC complaint charges defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.
This information was obtained from the SEC’s website.
If you feel you are a victim of these alleged fraudulent schemes of these individuals or companies, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
Andrews S Reckles · Financial Industry Regulatory Authority · FINRA · FINRA arbitration · finra lawyer · Florida Securities Lawyer · Ft. Lauderdale Securities Lawyer · hedge fund managers · investment fraud · manipulating hedge fund · overvalued assets · Palisades Master Fund LP · Paul T Mannion Jr · PEF Advisors LLC · PEF Advisors Ltd · PIPE · private investments in public equities · Radyne ComStream Inc · SEC · Securities and Exchange Commission · securities arbitraton lawyer · side pocket · Stock fraud lawyer · World Health Alternatives Inc
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Former quarterback, John Elway, and a business partner invested $15 million with a hedge fund manager, who was recently arrested for running a Ponzi scheme.
There were about 65 people who invested $71 million over the past decade. Yet in April, only had $9.5 million was left, according to the state investigator. The broker turned himself in to authorities on Wednesday on charges of alledged racketeering, securities fraud and theft, and is being held in prison on $2 million bond.
John Elway and his partner have asked that their claim be processed ahead of any other investors’ because their $15 million was supposed to be placed in a trust, not with the money of the rest of the hedge fund. According to an April filing, $12 million of Elway’s money was placed into a trust account, as expected. The other $3 million has gone missing.
If you were an alledged victim of this ponzi scheme, you may be able to recover your losses. Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
Denver Ponzi Scheme · Financial Industry Regulatory Authority · FINRA · Florida Securities Lawyer · Ft. Lauderdale fraud Lawyer · Ft. Lauderdale Securities Lawyer · investment fraud · John Elway lost in ponzi scheme · Ponzi scheme · SEC · securities arbitraton lawyer · securities fraud · securities fraud lawyer · Stock fraud lawyer · stockbroker misconduct
It is well known that the greatest-yielding investments usually carry the highest levels of risk. One high yielding interest-paying investment is the promissory note. The notes are means by which companies raise capital. Legitimate promissory notes are marketed to sophisticated or corporate investors that have the resources to research thoroughly the companies issuing the notes. They then determine whether the issuers have the capacity to pay the promised interest and principal.
Promissory notes can be a good investment for sophisticated or corporate investors. These notes provide a reasonable reward for those who are willing to accept the risk. However, promissory notes that are marketed to the general public often turn out to be scams. Even legitimate notes carry some risk that the issuers may not be able to meet their obligations.
There have been many instances of unscrupulous individuals pushing bogus promissory notes. They’re being sold as instruments that guarantee above-market, fixed interest rates, while safeguarding their principal. While fraudulent promissory notes appear to give investors the two things they desire most — higher returns and safety — they may not be worth the paper they’re printed on. Remember, if something sounds too good to be true, it probably is.
Fraud Can Cost Some Investors Their Life Savings
Here are two unfortunate examples of how investors lost their money:
Fraud. Investors in Georgia lost more than $2.5 million after purchasing promissory notes that, according to the salespersons promoting the product to earn high commissions, would pay for new ambulances for a start-up company. The investors were told that their investments were “risk free.” After the ambulances were purchased, they would be leased to pay back the money the company borrowed. The ambulances would also be used as collateral for each investor’s promissory note. But the company never purchased the ambulances with the money it received. Instead, it pledged the same fictitious ambulance as collateral.
Business Risk. At least 100 investors nationwide invested more than $4 million in promissory notes that promised to pay an interest rate of 13 percent over nine months. The funds were for a company selling premium coffee at drive-through kiosks. Savvy, slick marketing materials hyped the company and its products. The promissory notes were sold by individuals who were neither registered or licensed to sell securities. The company collapsed, defaulting on its notes. Investors lost all of their principal, including $200,000 in life savings of an Oregon resident.
In both cases, the notes were sold by unregistered salespersons. The law requires that anyone selling securities must be registered or licensed. (Some states require licensing while others require registration.) That’s why you should verify the registration or license of the person who wants you to invest with them.
How Does a Promissory Note Work?
The legitimate promissory notes are a form of debt that is similar to a loan or even an IOU. Companies issue these notes to finance any aspect of their business, from launching new products to repaying more expensive debt. In return for the loan, companies agree to pay investors a fixed return over a set period of time.
Even legitimate promissory notes are not risk-free. These notes are only as sound as the companies or projects they’re financing. Promising, smart public companies can stumble because of competition, bad management decisions, or unfavorable market conditions. If a company’s financial health weakens suddenly, it may not be able to pay interest and principal to investors.
Who Can Sell Promissory Notes?
The salespeople who market promissory notes include securities brokers, insurance agents, financial planners, and investment advisers. Since promissory notes are usually securities, they must be sold by salespeople who have the appropriate securities license or registration.
Do Promissory Notes Need To Be Registered?
Most promissory notes must be registered as securities with the SEC and the states in which they’re being sold. But remember that some promissory notes, such as those that have nine-month or shorter terms, may be “exempt.” That means that they don’t have to be registered. Since these notes fly under the radar screen of securities regulatory review, they have been the major source of investor complaints and fraudulent activity.
Registration is important because the process generally involves what is known as “due diligence.” In short, that means that financial professionals, including lawyers and accountants, have looked into the notes and companies behind the notes. While due diligence does not guarantee that you will be repaid, it means that you are much more likely to be given accurate information that will help you make an informed decision.
How Promissory Note Scams Work
Promissory notes have become a vehicle for fraud primarily because there is a growing investor appetite for above-market interest rates with little risk. The sellers of bogus notes promise high, fixed-rate returns — ranging as high as 15 percent to 20 percent — coupled with “guaranteed safety.” They market these notes to individual investors, hoping to lure buyers who won’t ask how such a high-yield investment could carry such low risk.
In a far-reaching regulatory crackdown on the fraudulent sales of promissory notes in mid-2000, securities regulators nationwide brought 370 actions against firms that defrauded more than 4,500 investors out of $170 million. It’s important to remember that in many of these cases, investors won’t get their money back because the fraudsters have already spent it.
In one case, promoters of fraudulent promissory notes said the funds were earmarked for projects that ranged from the digging of sandpits to developing resorts in the Caribbean, but the investors’ dollars were used instead to finance the high-flying lifestyles of the individuals behind the issuers and to pay high commissions.
Some Telltale Signs of Promissory Note Fraud
What are the red flags you should look for when being offered a promissory note investment?
Here’s a list:
“Insured” or “guaranteed” returns. To create a false sense of safety, the sellers of these notes may say they “insure” the payment of interest and principal, using either nonexistent insurers or those that reside offshore and may not be legitimate or registered to offer insurance within the United States.
“Risk-free” notes. Your risk with promissory notes is that the issuing company will not be able to make principal and interest payments. Since risk and reward are intrinsically related, it pays to remember that there is no such thing as a low-risk, high-reward investment.
A start-up’s notes that are labeled “prime quality.” In the securities industry, prime quality investments require that a company have an established history of operations and earnings. So if the company issuing the so-called “prime” notes is a start-up or new company, steer clear.
Short-term notes. Notes with a nine-month term may be exempt from securities registration.
The promise of above-market returns. Returns that are higher than those of similar investments should raise questions.
Notes from a stranger. A call or visit from a stranger hawking promissory notes is usually a good sign that the investment is fraudulent. But, remember, too, that only an investment professional familiar with your financial situation is in a position to determine if this investment is appropriate for you.
Steer clear of nine-month promissory notes.These short-term notes, which are sometimes exempt from securities registration, have been the source of most – but not all – of the fraudulent activity unearthed by securities regulators in the promissory note area. Since these notes are sometimes exempt from registration, you might not be entitled to some of the redress that the securities laws or regulators provide.
Buy only from licensed or registered securities brokers. Insurance agents, financial planners, and investment advisers cannot sell securities – including promissory notes – without a securities license or registration. You should make sure the broker selling the note is registered or licensed by contacting your state securities regulator or the Public Disclosure Program of NASD Regulation. Call 800-289-9999 or log on to www.nasdr.com and click on “About Your Broker” to verify a broker’s license or registration and obtain a background report on the broker detailing any existing legal or regulatory problems.
Ask yourself: Does this investment make sense for me? Before making any investment, determine what you are looking for and whether it fits into your portfolio. Investigate before you invest. And don’t forget to consider the risk-reward ratio the investment is offering – a higher yield generally means higher risk. Then comparison-shop. Look for similar or nearly as high returns with less risk whenever possible.
Fully research each opportunity.Check with your state securities regulator or the SEC’s EDGAR database (www.sec.gov) to determine if a promissory note is properly registered – or whether it’s exempt from registration. To find your state regulator, check with the North American Securities Administrators Association (www.nasaa.org). If you suspect that your investment is a fraud, be sure to alert your state regulators or the SEC.
This information comes from the SEC’s website.
Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Washington, D.C., —On October 7, 2010, the (SEC) Securities and Exchange Commission charged more than a dozen penny stock promoters and their companies with securities fraud for their roles in various illicit kickback schemes to manipulate the volume and price of microcap stocks and illegally generate stock sales. One of the schemes was perpetrated by an actor who starred as a police officer on the long-running television show CHiPs.
SEC worked closely with the U.S. Attorney’s Office for the Southern District of Florida and the Federal Bureau of Investigation as the separate schemes were uncovered through FBI undercover operations conducted in such a way that no investors suffered harm. The U.S. Attorney today announced criminal charges against some of the same individuals facing SEC civil charges.
In the SEC’s complaints filed in U.S. District Court for the Southern District of Florida, the schemes generally involved the payment of kickbacks to purportedly corrupt pension fund managers or stockbrokers, who would use their clients’ accounts to purchase the publicly traded stock of microcap issuers controlled or promoted by the individuals and companies charged today. What the promoters and insiders did not know was that the people with whom they arranged these illegal transactions were actually undercover FBI agents or confidential sources participating in undercover operations.
“These corrupt promoters meticulously planned their schemes down to the last detail, except for the possibility that they were walking into an undercover operation,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This joint law enforcement effort is a stark warning to those who embark on securities fraud schemes that we may be listening and we may be watching.”
Eric I. Bustillo, Director of the SEC’s Miami Regional Office, added, “These penny stock promoters paid illicit kickbacks to people who they thought would help them profit at the expense of unsuspecting investors by manipulating the price of their stock or fraudulently selling their shares.”
The SEC’s complaints allege the following individuals and companies perpetrated various kickback schemes:
- Larry Wilcox, who lives in West Hills, Calif., and played Officer Jonathan “Jon” Baker on CHiPs, perpetrated interrelated kickback schemes with two other penny stock company executives. Anthony Mellone, who lives in Fort Lauderdale and was CEO of Tri-Star Holdings Inc., began the process by paying an illegal kickback to a purported employee pension fund trustee who was to purchase 40 million restricted shares of Tri-Star stock. Days later, Mellone paid another kickback for a purchase of 50 million restricted shares of stock. Unbeknownst to Mellone, the corrupt trustee and the trustee’s business associate were undercover FBI agents, and another middleman was an FBI cooperating witness. Mellone, satisfied how the deal worked for his own company, sought to implement the same fraud with others. He informed Wilcox and Alex Parsinia of Calabasas, Calif., about the purportedly corrupt trustee, and both agreed to replicate the scheme for their own companies. Mellone demanded and received a $1,000 kickback from the witness for each completed restricted stock transaction he initiated. In each instance, the three attempted to conceal the kickback by entering into a consulting agreement with a phony company the trustee purportedly created to receive the kickback. Parsinia’s company is Zcom Networks Inc. and Wilcox’s company is The UC Hub Group.
- Jean R. Charbit and Tzemach David Netzer Korem engaged in a fraudulent kickback scheme to manipulate the stock of a microcap company so they could then sell their own shares at an artificially inflated price. Charbit, a stock promoter, paid an illegal kickback to a purported corrupt stock broker (actually an undercover FBI agent) to induce him to purchase $300,000 worth of stock in the microcap company for his clients’ discretionary accounts. Korem drafted press releases for the penny stock company and served as its transfer agent through his company, First Public Securities Transfer. Korem, as the penny stock company’s transfer agent, issued the stock certificate for the kickback. Charbit is a French citizen with a residence in Miami. Korem is believed to reside in Los Altos, Calif., and has several aliases. He also created a fictitious country, the Dominion of Melchizedek, which claims “ecclesiastical sovereignty” on an island in the South Pacific and has been the subject of criminal prosecutions in several countries.
- Scott R. Sand, the CEO and Chairman of Ingen Technologies, paid illegal kickbacks to an FBI undercover agent portraying an employee pension fund manager and to a cooperating witness portraying the manager’s associate. The kickbacks were to induce the employee pension fund manager and his associate to purchase millions of restricted shares of Ingen stock. Sand also issued millions of shares of Ingen stock to the associate in exchange for acting as a middleman in the scheme. Sand told the purported manager and associate that he was trying to generate the appearance of market interest in his company, induce public purchases of its stock, and ultimately increase the stock’s trading price. Sand lives in Calimesa, Calif.
- Jeffrey Galpern, a stock promoter who lives in Boca Raton, Fla., told a cooperating FBI witness that he held four million shares of stock in a Las Vegas-based microcap company and wanted to increase its value. Once the price spiked, Galpern planned to sell his own shares of the stock. He offered to promote the stock through a promotional website, and indicated that properly-timed press releases would sufficiently disguise any spike in trading volume by making it appear they were the reason behind it. Galpern intended to repeat the scheme at larger volumes and told the cooperating witness they could “continuously make money” through such a fraud.
- Bruce Palmer and his company AccessKey IP Inc. paid an illegal kickback of 30 million shares of restricted AccessKey stock to a purported corrupt stock broker (who was actually an undercover FBI agent) so he would purchase 90 million shares of AccessKey stock in order to generate the appearance of market interest in Palmer’s company. Palmer attempted to conceal the kickback by issuing the shares to the broker’s girlfriend and drafting three AccessKey press releases to provide a reason for the anticipated higher-than-normal trading volume created by the large purchase. Palmer did not know the broker’s girlfriend was a fictional character created by the FBI. Palmer resides in Placitas, N.M.
- A pair of executives at Texas-based penny stock companies Earthworks Entertainment Inc. and The Fight Zone Inc. paid illegal kickbacks to a purported trustee of an employee pension fund so the trustee would purchase 40 million restricted shares of Earthworks and 200 million restricted shares of Fight Zone stock. John “Buckeye” Epstein and Steven E. Humphries attempted to conceal the kickback by entering into a consulting agreement with a phony company the trustee purportedly created solely for the fraud. However, the corrupt fund trustee and the trustee’s friend who helped arrange the deal were actually undercover FBI agents. The company was actually a fictional entity created by the FBI for the sting operation. Epstein resides in Addison, Texas, and Humphries lives in Plano, Texas.
SEC alleges that the promoters in some of these schemes understood that they needed to disguise the kickbacks as payments to phony consulting companies, which they knew would perform no actual work. In other instances, they knew that the purported corrupt fund managers and brokers would be violating their fiduciary duties to their clients by taking part in the kickback schemes.
These SEC’s complaints allege the defendants violated Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions and financial penalties against all defendants; disgorgement plus prejudgment interest against defendants that received ill-gotten gains; officer-and-director bars against the individuals who served as officers or directors of the microcap companies involved; and penny stock bars against all individual defendants.
This information was obtained from the SEC’s website.
If you feel you are a victim of these alleged fraudulent schemes of these individuals or companies, call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
AccessKey IP Inc · Alex Parsinia · Anthony Mellone · Bruce Palmer · Earthworks Entertainment Inc · Financial Industry Regulatory Authority · FINRA · finra lawyer · Florida Securities Lawyer · Ft. Lauderdale Securities Lawyer · illicit kickback schemes · Ingen Technologies · Jean R Charbit · Jeffrey Galpern · John Buckeye Epstein · kickbacks to pension fund managers · kickbacks to stockbrokers · Larry Wilcox · manipulate volume and price of microcrap stocks · Penny stock fraud · Scott R Sand · Steve E Humphries · Stock fraud lawyer · stockbroker misconduct · The Fight Zone Inc. · The UC Hub Group · Tri-Star Holdings Inc · Tzemach David Netzer Korem · Zcom Networks Inc
The United States Securities and Exchange Commission (SEC), September 22, 2008, filed a civil complaint in the United States District Court for the Southern District of Florida, against former Axiom Capital Management, Inc. (Axiom) registered representative, Gary J. Gross The Complaint alleged that from early 2004 through approximately September 2006, Gross defrauded several of his customers by
- making material misrepresentations and omissions about the risks and suitability of securities he bought for them,
- churning customer accounts, and
- fabricating customer account values.
When Gross reaped more than $700,000 in ill-gotten gains, his customers lost more than $2.7 million. Many of Gross’ customers often were elderly, unsophisticated investors, who wanted only to preserve their principal and grow their portfolio while investing with minimal risk.
Among the allegations, the SEC particularly focused on Gross’ playing up the profit potential of various private placements and investments known as PIPEs (private investments in public equities) to his customers. Gross told his customers the private placements and PIPEs were riskless and the issuers were high-quality companies. Gross promised some customers they would be able to sell these investments within months and reap large profits. Gross failed to disclose the risks accompanying these investments.
Contrary to Gross’s representations, the PIPEs transactions he was pushing involved start-up ventures in search of funding, with little or no track record. Gross also did not tell customers they would receive restricted stock they could not trade until the issuers’ registration statements were declared effective. Additionally, Gross did not tell his customers that the issuers’ registration statements could be delayed, and that customers would consequently be unable to convert their restricted shares into free-trading common stock within the time Gross promised.
When hiring Gross, Axiom established its first branch office in Boca Raton, Florida. The office was staffed primarily by Gross, his branch manager David A. Siegel, and a sales assistant. However, Gross arrived at Axiom in December 2002 as damaged goods, due to customer complaints about Gross at previous firms. In fact, the State of Florida required, among other things, that Axiom place Gross on strict supervision (under which he remained until terminated in January 2007).
In May 2003, Axiom hired Siegel as branch manager for its Boca Raton branch office and to supervise Gross. Siegel’s compensation was based on commissions he generated from his own customers and a two percent he received of the branch office’s net commissions.
The SEC alleges that Branch Manger Siegel failed reasonably to supervise Gross by failing to follow both Axiom’s written supervisory procedures manual and an internal Axiom memorandum entitled “Heightened Supervision of Gary Gross.” As a consequence, the SEC alleges that Siegel failed to notice on numerous occasions when several of Gross’ customers entered unsolicited orders to purchase or sell the same securities, often on the same day. Further alleged, is that Siegel also failed to regularly use the firm’s monthly Active Account Report, review monthly customer account statements, or take other reasonable action to monitor for churning by Gross. The SEC’s final shot is the allegation that Siegel profited from Gross’ violations of the federal securities laws in the form of commissions he received based on Gross’ commissions.
On November 25, 2008, the United States District Court for the Southern District of Florida entered a judgment by consent against former Axiom Capital Management, Inc. registered representative Gary J. Gross.
- permanently enjoining him from violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Exchange Act,
- ordering him to pay disgorgement and a civil penalty pursuant to Section 20(d) of the Securities Act and Section 21(d) of the Exchange Act, and
- barring him from participating in an offering of penny stock as defined by Exchange Act Rule 3a51-1.
Pursuant to an offer of settlement from Gross in which he was barred from association with any broker, dealer, or investment adviser, the Securities and Exchange Commission entered an Order Instituting Public Administrative Proceedings and Imposed Remedial Sanctions.
Besides going after Branch Manager Siegel, the SEC proposed to proceed against Axiom, citing the firm’s failure reasonably to supervise Gross in connection with his sale of private placement offerings and private issuances of public entities (PIPEs) (collectively “private placements”), from approximately January 2005 through at least September 2006. The SEC alleged that Axiom failed reasonably to supervise Gross because it failed to devise a reasonable system to implement the firm’s policies and procedures regarding review for suitability of private placement investments and review of subsequent transactions to determine suitability of the transaction in light of the customer’s current holdings.
Two years after Gross settled with the SEC, Axiom submitted an Offer of Settlement.
The SEC determined that Axiom’s written supervisory procedures manual (“WSP”) required the registered representative to determine whether a private placement was a suitable investment to recommend to a customer; however, it failed to provide a clear mechanism for supervisory oversight of these determinations. Elsewhere, the WSP provided that the supervisor was responsible for reviewing transactions for suitability “where appropriate,” but failed to define appropriate circumstances for this suitability review.
In settling with the SEC, Axiom agreed to several undertakings. The firm will retain an Independent Consultant to (i) review Axiom’s written supervisory policies and procedures concerning suitability review of private placements; and (ii) review Axiom’s systems to implement its written supervisory policies and procedures concerning suitability review of private placements and suitability reviews subsequent to the purchase of a private placement.The Independent Consultant is required upon concluding the review (or within 120 days at the most) to submit a report to Axiom and the SEC in which the supervisory issues noted are addressed through recommended changes or improvements to policies, procedures, and practices. It is anticipated that Axiom will adopt, implement, and maintain such recommendations or reach a mutual resolution of any disputes with the Independent Consultant. Finally, pursuant to Axiom’s Offer of Settlement, the SEC imposed a Censure and a $60,000 civil penalty.
If you feel you are a victim of these alleged fraudulent schemes of Gary J. Gross and/or Axiom Capital Mangement, Inc., call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
Axiom · Axiom Capital Mangement Boca Raton Florida · Axiom Capital Mangement inc · churning · David A Siegel · fabricating customer account values · Financial Industry Regulatory Authority · FINRA · Florida Securities Lawyer · Ft. Lauderdale Securities Lawyer · Gary J Gross · investment fraud · PIPEs · private investments in public equities · SEC · Securities and Exchange Commission · securities arbitration · securities fraud · securities fraud lawyer · Stock fraud lawyer · stock loss · stockbroker misconduct · unauthorized trades
J.P. Turner & Company is a relatively new firm. It was founded in 1997 by Tim McAfee and Bill Mello. It has 160 independent branch offices and more than 530 financial advisors throughout the country.
In FINRA’s broker reports, J.P. Turner & Company has been named in numerous regulatory and customer complaints. Through August 12, 2009, J.P. Turner & Company had been named in 21 arbitrations and was the subject of 15 “regulatory events.” As an example, in June 2009, they had a fine of $525,000 and findings that J.P. Turner & Company failed to establish and implement policies and procedures reasonable designed to detect and cause the reporting of suspicious activity as if related to the activities of one former broker. It also found that J.P. Turner & Company failed to obtain required customer information.
Customer complaints against J.P. Turner & Company vary but they include alledged allegations of securities fraud regarding claims of unsuitability, churning, margin, negligence, and breach of fiduciary duty.
Many of these investments were sold by stock brokers and financial advisors around the country. This allows us to pursue a claim on your behalf before the Financial Industry Regulatory Authority nationwide. Call now for a free consultation.
If you feel you are a victim of these alleged fraudulent schemes of J.P. Turner & Company LLC, call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA and the Financial Industry Regulatory Authority.
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