TAG | unregistered private placements
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In a March 2, 2011, article from Investment News, Bruce Kelly writes that Ameriprise Financial Inc. has reached a $27 million settlement with investors who bought private placements that have gone bust from reps at its independent broker-dealer subsidiary, Securities America Inc., according to an attorney with knowledge of the matter.
Securities America is also being sued by securities regulators from Massachusetts and Montana but the status of those suits is not clear in the light of the proposed settlements. Mr. Furgeson will hold a hearing in federal court in Dallas on the proposed settlements on March 18. Lawyers for the plaintiffs in arbitration plan to argue vigorously against any settlement that would freeze investors’ arbitration claims against Securities America.
The InvestmentNews article states that the proposed settlement, which must be approved by a federal judge later this month to become final, comes two weeks after Securities America reached a $21 million potential settlement with the class action plaintiffs who sued Securities America and Ameriprise in 2009.
The article goes on to state that in one allegation from the suit, C. Richard Toomey, et al. v. Securities America Inc., et al, plaintiffs claimed that Securities America handed private placement memorandum to clients that contained untrue statements about the deals and omitted other material information about the deals.
This is all part of a labyrinth of litigation before federal judge W. Royal Furgeson Jr. in Dallas, stemming from dozens of independent broker-dealers, including Securities America, selling two series of private placement deals that have left investors with tens of millions of dollars of losses.
The Securities and Exchange Commission charged both Medical Capital and Provident Royalties with fraud in 2009.
Chris Reese, a spokesman for Ameriprise, said on Wednesday evening he could not confirm or deny the settlement. In its annual report earlier this week, Ameriprise said Securities America clients were facing almost $400 million in losses from the Medical Capital and Provident investments, and the firm also said it had set aside about $40 million in legal reserves for the claims.
It was noted that a key part of the potential Securities America settlement is the fact that it requires investors who have sued the firm through arbitration under the Financial Industry Regulatory Authority Inc. will have those claims halted. Investors would become part of the class. This has infuriated some investors, along with their attorneys, who want their claims to go forward through arbitration with hopes of winning 100 cents on the dollar, plus the potential for damages.
The firm was dealt a costly legal blow on New Year’s Eve when a Finra arbitration panel awarded almost $1.2 million in damages and legal fees to a client who sued the firm and a broker over the sale of Medical Capital private placements. The award included $250,000 in punitive damages.
“A class action settlement treats everyone fairly,” Mr. Girard said. He added that some plaintiff’s attorneys representing clients in Finra arbitration have a “conflict of interest” over the matter because they have clients at the front and the back of the long line of litigation against Securities America. Those at the back of the line run the risk of getting nothing if the firm runs out of money, he said.
InvestmentNews states that threat is substantial. Small to mid-sized independent broker-dealers that sold high risk private placements have gone out of business due to lawsuits and legal costs over the past two years. None have been as substantial as Securities America, which has about 1,800 reps and advisers who generated about $500 million in fees and commissions last year.
If you feel you have been a victim of the alleged broker-dealer private placement fraudulent schemes of Ameriprise Financial Inc ., Securities America, Inc., or any other broker-dealer, 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.
Ameriprise Financial Inc · Financial Industry Regulatory Authority · FINRA · FINRA arbitration · finra lawyer · finra securities arbitration · finra securities arbitration lawyer · fraud · Ft. Lauderdale Securities Lawyer · investment fraud · life insurance lawyer · Medical Capital · private placement fraud · private placement losses · private placement of securities · private placements · Provident Royalties · SEC · Securities America · Securities America Inc. · Securities and Exchange Commission · securities arbitration · securities arbitraton lawyer · securities fraud lawyer · Soreide Law Group PLLC · Stock fraud lawyer · stockbroker misconduct · unregistered private placements
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Yesterday, Bruce Kelly’s article from InvestmentNews stated that National Securities Corp. is the latest broker-dealer to face disciplinary action from Finra over the sale of private placements gone bust.
According to National Securities’ profile on Finra’s BrokerCheck system, the firm received a Wells notice last month from the Financial Industry Regulatory Authority Inc. A Wells notice indicates that the regulator intends to bring an enforcement action against an individual or a firm.
Kelly goes on to say that National Securities reps sold investors about $3.7 million of notes issued by Provident Royalties LLC, according to the latter’s bankruptcy court filings. The Regulation D offering from Provident involved a series of oil and gas private placements that the Securities and Exchange Commission in 2009 claimed were fraudulent,Mark Roth, the firm’s general counsel for National Holdings Corp., the parent of National Securities, did not return phone calls Tuesday seeking comment.
In the Investment News article they say that National Securities received the Wells notice regarding violations of product suitability rules, e-mail supervision rules, and standards of commercial honor and principles-of-trade rules, according to the BrokerCheck report. The product mentioned in the report was a “private placement.”
The Finra officials have made broker-dealers’ sale of private placements that failed during the market collapse their No. 1 enforcement priority this year.
Broker-dealers have begun to feel the pinch. Workman Securities Corp. this month reached an agreement with Finra to pay $700,000 for partial restitution to more than a dozen clients who had sued the firm over investments in Medical Capital Holdings Inc. and Provident Royalties. Like Provident, the SEC charged Medical Capital with fraud in 2009.
In a meeting of brokerage executives this month in Phoenix, James Shorris, executive vice president and executive director of enforcement with Finra, said Reg D private placements and non-traded real estate investment trusts are listed as the first and second areas of focus for Finra, respectively.
If you feel you have been a victim of the alleged broker-dealer private placement fraudulent schemes of the brokerages listed above , National Securities Corp., Medical Capital Holdings, Workman’s Securities Corp.,or Provident Royalties,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.
broker-dealer sale of private placements · broker-dealers · brokercheck · Financial Industry Regulatory Authority · FINRA · FINRA arbitration · FINRA brokercheck · finra lawyer · Ft. Lauderdale Securities Lawyer · investment fraud · Medical Capital Holdings Inc · national securities corporation · non-traded real estate investment trusts · private placement fraud · private placement losses · private placements · Provident Royalties · Regulation D private placements · SEC · Securities and Exchange Commission · securities arbitraton lawyer · securities fraud lawyer · Soreide Law Group PLLC · stock broker fraud · Stock fraud lawyer · stockbroker misconduct · unregistered private placements · workman securities corporation
Cease-and-Desist Ordered by FINRA to Halt Ongoing Fraud and Misuse of Funds by Pinnacle Partners and its President Brian Alfaro
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WASHINGTON — On December 3, 2010, FINRA announced that it filed a notice seeking a Temporary Cease and Desist Order (TCDO) against San Antonio-based brokerage Pinnacle Partners Financial Corporation and its President, Brian K. Alfaro. The TCDO would halt allegedly fraudulent and illegal sales activities at the firm relating to eight unregistered private placement offerings selling interests in oil and gas joint ventures. FINRA is seeking the order based on belief that customer harm and depletion of customer assets will likely continue before a formal disciplinary proceeding against Pinnacle and Alfaro can be completed.
FINRA alleges that from August 2008 to the present Alfaro and Pinnacle have operated a “boiler room” in which numerous brokers place thousands of cold calls every week to solicit investments in Alfaro’s oil and gas drilling joint ventures. The operators of the ventures are entities owned or controlled by Alfaro. Through the boiler room Alfaro and Pinnacle have raised more than $10 million from over 100 investors for offerings that are alleged to materially misrepresent or omit material facts. In addition, FINRA charges Alfaro with misusing customer funds by collecting funds from investors for drilling and testing of wells, and then spending those funds for unrelated business and personal expenses.
FINRA has also charged Pinnacle and Alfaro with the sale of unregistered securities; the destruction of documents and the maintenance of inaccurate books and records; and the failure to report numerous customer complaints.
Additionally, FINRA charges that Pinnacle and Alfaro provided investors with investment summaries for eight separate oil and gas offerings that included numerous misrepresentations and omissions including grossly inflated natural gas prices, projected natural gas reserves, estimated gross returns and estimated monthly cash flows.
Under the FINRA rules, a hearing shall be conducted not later than 15 days after service of the notice and filing that initiates the temporary cease and desist proceeding, unless extended, and the Hearing Panel shall issue a decision not later than 10 days after receipt of the hearing transcript. If the temporary cease and desist order is granted, it will generally remain in effect until the underlying disciplinary action against the firm for this misconduct has been resolved. FINRA may seek to suspend or expel a firm for violating a TCDO.
As to the related underlying complaint, under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, an order to pay restitution, censure, suspension, or bar from the securities industry.
This information was obtained from FINRA’s website.
If you feel you have been a victim of these alleged fraudulent schemes of Pinnacle Partners Financial Corporation and Brian Alfaro, 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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