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Daniel A. Contreras (CRD #4151950, Registered Principal, Ontario, California) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Contreras consented to the described sanction and to the entry of findings that he engaged in private securities transactions by recommending that customers invest in promissory notes, which were not approved investments of his member firm.
The FINRA findings stated that Contreras failed to provide written notice to his firm describing in detail the proposed transactions and his proposed role therein, and stating whether he had received, or might receive, selling compensation in connection with the transactions.
The findings also stated that the company that issued the promissory notes filed for Chapter 13 Bankruptcy, and all of Contreras’ customers lost their entire investment. The findings also included that Contreras borrowed approximately $65,000 from his customers, contrary to his firm’s written procedures prohibiting registered representatives from borrowing money or securities from any prospects or customers, including non-firm prospects/customers, and Contreras failed to pay back the money he borrowed.
This information was obtained on FINRA’s website.
If you have been a victim of these alleged fraudulent schemes of Daniel A. Contreras, 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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The United States Securities and Exchange Commission(SEC) filed a civil action against California-resident Paul N. Nicholson, and his former firm, Professional Investment Exchange, Inc. (“PIE”), on April 7, 2011, alleging that they directed two fraudulent oil-and-gas offerings. According to the complaint, from May 2007 through October 2009, Nicholson and PIE fraudulently raised approximately $8.2 million from investors through two limited partnerships, Energy Opportunity Fund — VI, LLLP and Energy Opportunity Fund — VII, LLLP.
The SEC article goes on to say that the Commission’s complaint alleges, in particular, that Nicholson, who formerly operated broker-dealer Macarthur Strategies, Inc. (“Macarthur”), and PIE, an entity Nicholson controlled, misused and misappropriated investor funds, including, among other things, using investor funds to pay undisclosed commissions to unlicensed salespeople, to pay Macarthur’s expenses and to pay undisclosed personal salary and expenses. The complaint also alleges that in communications with potential and existing investors, Nicholson engaged in conduct that operated as a fraud and deceit on investors, including by omitting material information about the use of investor proceeds and about the past performance of Nicholson’s and PIE’s oil-and-gas ventures. The complaint further alleges that Nicholson sold unregistered securities and that he operated PIE as an unregistered broker-dealer. In early 2010, Nicholson transferred control of PIE to new management and deregistered Macarthur.
We learn through the SEC article that without admitting or denying the allegations in the Commission’s complaint, and subject to court approval, Nicholson and PIE have consented to the entry of judgments that would enjoin them from future violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Nicholson has also agreed to pay disgorgement of $234,081 with prejudgment interest of $10,722. The Commission will ask the Court to impose a civil money penalty against Nicholson. Nicholson has also agreed to entry of a Commission order barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, or from participating in an offering of penny stock.
This article is 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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submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 45 days. Without admitting or denying the findings, McCullough consented to the described sanctions and to the entry of findings that he devised a strategy for allowing customers who owned shares in his member firm’s Asset Strategy Mutual Fund to avoid tax liability for a capital-gains distribution and instead to realize a tax loss on their mutual fund holdings for the year. The findings stated that on McCullough’s recommendation, customers liquidated their holdings in the Asset Strategy Fund before the fund made a distribution. The findings also stated that at McCullough’s recommendation, the customers held the liquidation proceeds in cash for a brief period before reinvesting those moneys in other firm mutual funds. The findings also included that McCullough believed that it was necessary to structure the transaction this way to achieve the desired tax benefit.
FINRA found that the customers collectively paid $27,239 in sales charges on their new mutual-fund purchases, of which McCullough received $13,650 as commissions. FINRA also found that these sales charges largely—but not entirely—negated the tax benefit to each customers of avoiding capital-gains liability. In addition, FINRA determined that had the customers simply exchanged their Asset Strategy Fund shares for shares of other funds within the same family of funds, they would not have incurred any sales charges, and their net gain would have been substantially larger. Moreover, FINRA found that at the time of the transactions at issue, McCullough was unaware that the affected customers could have achieved the desired tax savings through a mutual fund exchange, while also avoiding any sales charges. Furthermore, FINRA found that although this information was readily available, McCullough neglected to review relevant IRS publications or to consult with anyone else at his firm about more cost-effective ways of achieving the desired tax benefits. The findings also stated that McCullough provided misleading information to his firm in a Purchase Account Service Request that he prepared in connection with each of the customers’ mutual-fund repurchases; McCullough answered “no” on each customer’s form as to whether the proceeds from the sale of another security were being used to open the account despite the fact that each customer’s purchase occurred within a matter of days of the customer’s liquidation, and in amounts either equal or nearly equal to the liquidation amounts.
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|Firm name||Total sales||Total commission paid to BD|
|Advisory Group Equity Services Ltd.||$110,000||$70,650|
|AFA Financial Group LLC||$2,455,000||$456,150|
|American Portfolios Financial Services Inc.||$585,000||$66,650|
|Asset Management Strategies LLC||$220,000||$2,250|
|Ausdal Financial Partners Inc.||$100,000||$2,250|
|Barron Moore Inc.||$250,000||$96,750|
|Boogie Investment Group Inc.||$410,000||$110,150|
|Brookstone Securities Inc.||$460,000||$76,500|
|Callaway Financial Services Inc.||-||$22,500|
|Calton & Associates Inc.||$300,000||$40,750|
|Capital Financial Services Inc.||$33,655,000||$5,510,725|
|CapWest Securities Inc.||$21,745,000||$3,058,700|
|Chester Harris & Co.||$340,000||$297,500|
|Community Bankers Securities LLC||$2,780,000||$355,950|
|Crescent Securities Group||-||$9,375|
|David Harris & Co. Inc.||$850,000||$94,000|
|DeWaay Financial Network LLC||$850,000||$134,525|
|Eagle One Investments LLC||$360,000||$42,500|
|Empire Financial Group Inc.||$2,750,000||$234,200|
|Empire Securities Corp.||$205,000||-|
|E-Planning.com Securities Inc.||$3,765,000||$483,925|
|First Allied Securities Inc.||$380,000||$11,250|
|Gk Securities LLC||$50,000||-|
|Grant Bettingen Inc.||$215,000||$19,350|
|GunnAllen Financial Inc.||$22,255,000||-|
|Harrison Douglas Inc.||$1,830,000||$569,900|
|Independent Financial Group||$495,000||-|
|INVEST Financial Corp.||$100,000||-|
|Investlinc Securities LLC||$2,095,000||$183,275|
|Investors Capital Corp.||$3,400,000||$427,975|
|J.P. Turner & Co. LLC||$11,600,000||-|
|Jesup & Lamont Securities Corp.||$100,000||$13,500|
|Kaiser & Co.||$100,000||$160,650|
|Lighthouse Capital Corp.||$250,000||$33,750|
|Main Street Securities LLC||$205,000||$45,450|
|Matheson Securities LLC||$100,000||$37,800|
|Milkie Ferguson Investments Inc.||$4,145,000||$480,350|
|Morrow Wealth Management||$30,000||-|
|National Securities Corp.||$3,665,000||$437,250|
|Newbridge Securities Corp.||$25,000||$15,750|
|NEXT Financial Group Inc.||$33,485,000||$3,190,200|
|Okoboji Financial Services Inc,||$21,910,000||$2,261,225|
|Private Asset Group Inc.||$2,015,000||$204,150|
|Provident Asset Management||$50,000||-|
|QA3 Financial Corp.||$32,585,000||$6,974,450|
|Questar Capital Corp.||$250,000||$24,125|
|Securian Financial Services Inc.||$50,000||-|
|Securities America Inc.||$17,995,000||$3,723,475|
|Securities Network LLC||$215,000||$89,550|
|SII Investments Inc.||$100,000||-|
|Sterling Enterprises Group Inc.||$100,000||$13,000|
|Summit Brokerage Services Inc.||$560,000||$81,000|
|United Equity Securities LLC||$660,000||$173,200|
|United Securities Alliance Inc.||$550,000||$401,850|
|Waterford Investor Services Inc.||-||$2,250|
|Wedbush Morgan Securities Inc.||$325,000||-|
|WestPark Capital Inc.||$785,000||$114,250|
|WFP Securities Corp.||$6,755,000||$1,286,775|
|Williams Financial Group Inc.||$175,000||-|
|Workman Securities Corp.||$9,045,000||$1,239,025|
Source: U.S. Bankruptcy court filings, Northern District of Texas, case # 09-33886
Obtained from InvestmentNews.com
If you feel you have been an alleged victim of these broker-dealers and were sold Provident Royalties private placements, 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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Paul Edward Burkemper (CRD # 2222925, Registered Principal, St. Louis, Missouri) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Burkemper consented to the described sanction and to the entry of findings that he engaged in private securities transactions when he sold $1,898,975 in ownership interests of an entity to individuals, who included his member firm’s customers. The findings stated that Burkemper sold the ownership interests without providing written notice to the firm of these sales and without receiving the firm’s written approval or acknowledgement for these sales.
This information was obtained from FINRA’s website.
If you feel you have been a victim of these alleged fraudulent schemes of Paul Edward Burkemper, 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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Investment advisors and mislead clients and prospects by comparing their account performances improperly with indexes. This is not a story I enjoy telling, but it unfortunately happens all too frequently in the advisor marketplace.
I recently participated in a conference for retiring airline pilots. My company was there as a sponsor and I was a speaker on index fund investing. There were several other investment advisor firms at the conference, also as sponsors and speakers.
I happened to strike up a conversation with a principal from one of these competing firms. After some pleasantries, I asked what strategy his firm used to manage portfolios. He said his firm was an active manager and that they used a variety of strategies.
“How’s your performance been?” I asked.
“We beat the S&P 500 by 5% over the past decade.”
“The S&P 500?” I asked. “I assume your firm is a large-cap U.S. stock manager?”
“No. We invest in bonds as well as commodities and foreign stocks.”
“Then why are you using the S&P 500 as a benchmark?” I asked. “That’s a large-cap U.S. stock index. You should use a blended benchmark of global stocks, bonds and commodities.”
Stunned that I would say such a thing, he shot back, “Because that’s the index our clients want us to use!”
He went on to defend his position, “Look, you and I both know the people at this conference are not sophisticated. They only want to know if we ‘beat the market.’ So that’s what we tell them.”
“So you report what makes your returns look good even though the S&P 500 has little relevance to what you are actually doing,” I said. “And then you say this is what your clients want rather than trying to educate them.”
With that, our conversation abruptly ended.
It’s very common for advisors to use inappropriate benchmarks in client reports since advisor performance reporting practices are largely unregulated by the Securities and Exchange Commission. Results are often reported before deducting management fees and then measured against an easy-to-beat index that may change–if any index data is shown at all. By design many clients are kept underinformed. They never really know how well or how poorly they are performing. It’s really a sad situation.
Red flags should go up when an advisor claims to be outperforming his stated benchmark by 4 or 5 percentage points per year, because that just doesn’t happen; no manager is that brilliant. More often the index being used is inappropriate.
a favorite index for advisors has been the S&P 500, because its performance has been below every other major asset class over the past decade. Virtually any portfolio diversification away from large-cap U.S. stocks would have outperformed the predominantly large-cap S&P 500. All an investor needed was a small allocation to international stocks, small-cap stocks, REITs or bonds–or even cash–and his portfolio would have “beaten the market.”
Ethical advisors use appropriate indexes. If an account is holding bonds, then the benchmark for the account includes bonds. If an account has a foreign stock allocation, then the benchmark includes a foreign stock allocation. If a benchmark doesn’t exist that mirrors a client’s investment strategy, then the advisor creates a custom blend based on an appropriate mix of indexes to match how an account is being managed.
Every advisor knows the proper way to report client performance, and which indexes make an appropriate benchmark. All it takes is for the advisor to be ethical and report the right way. It is a matter of choice. It’s a matter of professionalism.
If this story sounds familiar and your poor account performance is being hailed as a great compared to a wrong index this may be a sign you have a claim against your advisor. Call (888) 760-6552 to speak to an investment fraud lawyer today or visit www.stockmarketlawsuit.com