Maddox Hargett & Caruso, P.C., based in Indianapolis, is looking into financial advisors and brokers that trade excessively in client accounts. One of the most common securities industry abuses is “churning,” or trading excessively to generate broker commissions. Due to these methods, investors have lost millions of dollars.

The Securities and Exchange Commission of the United States has ordered Aegis Capital Corp. of New York City to pay “approximately $2.8 million, including $1.7 million in restitution to 68 customers whose accounts were potentially excessively and unsuitably traded by the firm’s representatives,” according to FINRA. According to fa-mag.com, FINRA also fined Aegis $1.1 million for supervisory violations.

“Aegis supervisors failed to detect or act on information that eight Aegis reps traded customer accounts excessively and unsuitably over a four-year period, generating $2.9 million in trading costs that would have required investments to generate more than 71 percent returns to offset costs,” according to FINRA. “Aegis failed to create a supervisory system reasonably tailored to comply with FINRA’s suitability rule from July 2014 to December 2018,” according to FINRA. As a result, Aegis failed to detect and resolve possibly excessive and unsuitable trading in customer accounts by its representatives, including trading by eight Aegis representatives who unduly traded 31 customers’ accounts, according to the regulator.

According to FINRA, Aegis had information of broker churning reports. “The firm failed to act on more than 900 ‘exception reports’ provided by its clearing firm that highlighted possibly unsuitable trading, as well as more than 50 client complaints alleging excessive, unsuitable, or unlawful trading in their accounts,” according to FINRA. According to fa-mag, Aegis, which was founded in 1984, has 37 compliance and enforcement declarations for sales and best execution violations in the BrokerCheck database.

“The hallmark of appropriate supervision is recognizing and responding to red signals, and it’s a vital component in preventing excessive and improper trading in customer accounts,” said Jessica Hopper, executive vice president and head of FINRA’s Department of Enforcement. According to the regulator, Aegis and two of its supervisors agreed to “accept and consent to the entry of FINRA’s findings without acknowledging or disputing them.”

Excessive trading in one’s account should be avoided by all investors. Churning is traditionally measured using two metrics. The “2-4-6” rule is the first of these. This statistic has been utilized by courts and regulators for many years. There is a “inference” of churning if your account is turned-over (meaning total trades equal total equity in the account being traded or turned-over one time) two times every year. There is a “presumption” of churning if the account is turned over four times each year; and if the account is turned over six times or more per year, it is “conclusive” of churning. The cost-to-equity ratio is also taken into account by courts and regulators. Simply put, the S&P 500 has historically returned around 13% every year. You’re being ripped off if your account has to earn 13% just to pay the cost of trading.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com.

Maddox Hargett & Caruso is looking into allegations that William LeBoeuf, an Ohio-based financial adviser, acted inappropriately in the sale of private placements to clients of his previous employers, Merrill (formerly Merrill Lynch) and Cetera Advisor Networks.

LeBoeuf was suspended for a year by FINRA last week after it was discovered that he inappropriately participated in the sale of private shares in a real estate investment fund and a software company. LeBoeuf allegedly failed to fully communicate the illiquidity and hazards of some transactions to potential investors, according to FINRA. LeBoeuf has been fired by Cetera.

Securities offered in a non-public sale are known as private placements. These investments are often illiquid, meaning they can’t be purchased and sold quickly, and they’re also very risky. We’d like to hear from you if you sustained losses as a result of LeBoeuf’s investing advice.

Contact us immediately for a free consultation to discuss your legal options if you believe LeBoeuf offered unsuitable private placements to you. Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their investment losses. If your financial advisor was William LeBoeuf, we may be able to help you recover some or most of your losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com

Muntin is accused of stealing more than $314,000 from one of his clients.

The SEC charged Michigan resident Steven F. Muntin with cheating one of his financial counseling clients out of almost $314,000 on November 5, 2021.

Muntin allegedly worked for an SEC-registered investment adviser and also ran his own company, Executive Asset Management, Inc., where he allegedly managed certain investments for his clients outside of that adviser. Executive Asset Management was formerly registered as an investment adviser with the state of Michigan, according to the SEC’s complaint. Muntin allegedly recruited one of his elderly advice customers to submit cheques totaling $305,750 to Executive Asset Management for putative securities investments between March 2016 and February 2020, according to the allegations. Muntin, on the other hand, did not invest the client’s money in stocks, instead using it to pay his mortgage, real estate taxes, health insurance, boat and auto loans, and credit card payments, according to the complaint. Muntin is also accused of overcharging the customer for at least $9,000 in asset management fees, according to the complaint.

Muntin is accused of violating Section 17(a) of the Securities Act of 1933, 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, and the SEC is seeking injunctive relief, disgorgement with pre-judgment interest, and civil penalties.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com.

 

After converting $26,579 from an elderly NYLife customer and using the cash for personal needs, FINRA prohibited former NYLife Securities LLC broker Jeffrey Scott Anderson from the securities profession.

On August 2, 2021, Jeffrey Scott Anderson and FINRA signed an Acceptance, Waiver, and Consent (“AWC”) letter.

According to the AWC, Mr. Anderson stole $26,579 from his senior NYLife customer between October and December 2019 by enticing him to write five cheques to him personally to buy investments or insurance for the customer. Mr. Anderson put the customer’s cash into his personal bank account and utilized the funds to pay for personal costs such as household expenses, food, gas, and automobile payments, rather than investing or insuring them.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com.

Have you ever lost money with Alan Price, a financial advisor? We’re looking into charges made against Alan Price, a Frankfort, Indiana resident. Price has been barred from the securities sector by FINRA (the Financial Industry Regulatory Authority). Price allegedly failed to reply to FINRA’s probe after allegedly borrowing money from a customer, according to FINRA. Financial advisors are not permitted to borrow money from customers without prior written authorization, unless one of the few exceptions applies.\

From 2007 to February 2020, Alan Price worked as a financial advisor and registered agent for Edward Jones. He is now employed by Thurston Springer. In Frankfort, Indiana, he worked in a branch office. Edward Jones also fired Price as a result of the allegations.

Brokerage firms, such as Edward Jones, are responsible for properly supervising all representatives who are registered with them. Brokerage firms must also guarantee that its financial advisors adhere to all securities rules and regulations, as well as internal business standards. Customers may be held accountable for investment losses if brokerage firms fail to effectively oversee their licensed representatives.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com.

Maddox Hargett and Caruso is investigating claims against various DeepRoot Funds third parties to recoup losses. The Securities and Exchange Commission filed a complaint on August 20, 2021, alleging that Robert J. Mueller, DeepRoot Funds, LLC, Policy Services, Inc., and several other “relief defendants” abused their roles as investment advisors to the two primary DeepRoot funds, the 575 Fund, LLC, and the Growth Runs Deep Fund, LLC. The SEC contends that Mueller used these monies as his personal piggy bank, paying for weddings for wives 2 and 3 as well as paying for his divorce from wife 2. Investors are most likely looking at a total loss of approximately $58 million. Because the SEC has already pursued Mueller and the Funds, investors must search for viable third parties who may be liable for damages.

The first and most apparent target for investors in this situation would be the financial or investing advisor who initially solicited the transactions. It’s clear that your RIA or broker recruited you to invest in DeepRoot, and that this solicitation was a breach of fiduciary duty. With a straight face, RIAs will rhetorically ask clients in similar cases, “How could we know?” The investment advisor is paid to know because they have the necessary licenses, training, education, and statutory fiduciary duties to their clients. Whether your advisor is a FINRA-registered broker or a Registered Investment Advisor (RIA), they owe it to their clients to grasp and know the products they sell. These DeepRoot Funds appeared to be unregistered, private, unproven, and speculative private-investment plays on the surface. Almost every retail investor in America would be disqualified from investing in these funds based on the information available right now.

To put it clearly, fiduciary investment advisors are required by law to comprehend the risks and characteristics of the products they recommend to their customers. Failure to do so is a breach of a fundamental and basic responsibility. For this fundamental violation of duty, investment advisors may be held accountable to their clients. What are they expected to do if they don’t know? They are paid to know and are licensed experts who are required to know if the fund they are suggesting utilizes investor cash to invest properly or, as in the case of DeepRoot, utilized investor monies to pay for divorces, weddings, and other abuses.

There could be more targets in this area as well. Accounting firms who were auditing DeepRoot’s financials should have understood how investor funds were being misappropriated. Banks utilized by DeepRoot, law firms, and any other professionals hired to conduct services for DeepRoot and their investors are all possible targets.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their DeepRoot losses. If your financial advisor recommended that you invest in DeepRoot Funds, we may be able to help you recover some or most of your losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com

Maddox Hargett & Caruso is looking into charges that W.A. Smith Financial Group, a Cleveland-based investment advisory business, advised customers to invest in risky, non-traded real estate investment trusts (REITs).

Investors can’t receive their money back until the underlying real estate is sold because REITs aren’t traded on a public exchange. As a result, they are extremely dangerous for investors. As a result, regulators have issued a warning that REITs are unsuitable for the average retail investor, particularly the elderly.

Investment advisers, such as W.A. Smith, have a fiduciary duty to their clients and must operate solely in their best interests. We want to hear from you if you lost money as a result of W.A. Smith’s account management, including any non-traded REITs.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their investment losses. If your financial advisor was with W.A. Smith Financial Group, we may be able to help you recover some or most of your losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com

Maddox Hargett and Caruso is now representing investors who have lost millions of dollars due to former JP Morgan broker Edward Turley’s management of their accounts. Please contact us today for a free examination of your case if you lost money in a Turley-managed account.

Turley, who was fired from JP Morgan recently, has amassed almost $63 million in damages from five ongoing customer cases. According to public records, each of the current cases involves charges of unlawful and improper trading as well as excessive margin usage. Turley was managing $1.6 billion in client assets and generating nearly to $30 million in yearly revenue, according to AdvisorHub in August.

According to FINRA guidelines, brokerage firms like JP Morgan must closely monitor their agents to ensure that they are not engaging in excessive, unlawful, or improper trading. If they don’t, they risk being held accountable for damages caused by their agents’ negligence.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their investment losses. If your financial advisor was Edward Turley, we may be able to help you recover some or most of your losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2043 or email him at mmaddox@mhclaw.com

On February 4, 2021, the SEC charged GPB Capital Holdings and its owners with securities fraud and referred to it as a Ponzi scheme that raised over $1.7 billion from investors. Additionally, at least seven state securities regulators have filed state regulatory actions against GPB alleging a securities fraud that has defrauded approximately 17,000 American investors.

Criminal charges have also been filed by the US Attorney’s office against GPB’s owners and affiliates in federal court in New York.

Maddox Hargett & Caruso, P.C. represents investors nationwide who are trying to recover their GPB losses. If your financial advisor recommended that you invest in GPB, we may be able to help you recover some or most of your losses. You can call or email our senior partner Mark Maddox to have your potential case evaluated at no charge. Please call 317-598-2040 or email him at mmaddox@mhclaw.com.

On May 15, 2020, the Financial Industry Regulatory Authority (FINRA) issued a Regulatory Notice (“Oil-Linked Exchange-Traded Products”), which highlighted the fact that Exchange-Traded Products (ETPs), which provide different types of exposure to the oil market through several product structures, might not be understood by investors or investment professionals and that the performance of such products may be linked to unfamiliar indices or reference benchmarks, making them difficult for the average investor to comprehend.

An ETP is “a security listed on an exchange that seeks to provide exposure to the performance of an index, benchmark or actively-managed strategy. The most common type of ETP is the exchange-traded fund (ETF).”

This Regulatory Notice noted that oil-linked ETPs are not only “complex products that may not be suitable for some investors, such as retail investors with conservative investment objectives and long-time horizons,” but that they “are complex products that could be easily misunderstood and improperly sold by registered representatives” who may not fully understand “the heightened risks that these products raise.”

To demonstrate the volatility and risks that are associated with oil-linked ETPs, an example cited by FINRA in its Regulatory Notice is that “as of April 22, 2020, the largest oil-related ETP had lost 41 percent of its value in one week.”

Moreover, in this Regulatory Notice, FINRA has reminded “firms of their sales practice obligations in connection with oil-linked ETPs, including that recommendations to customers must be based on a full understanding of the terms, features, and risks of the product recommended; communications with the public must be fair and accurate; firms must have reasonably designed supervisory procedures in place to ensure that these obligations are met; and firms that offer oil-linked ETPs must train registered representatives who sell these products about the terms, features and risks of these products.”

In addition, all “communications regarding oil-linked ETPs that present the benefits of the products must be balanced by a clear description of the risks, and may not omit any material fact or qualification that would cause such a communication to be misleading. For example, communications that present the benefits of oil-linked ETPs must include key risks such as the inherent fluctuations of oil prices and the speculative nature of futures investments, and must explain clearly that the ETP’s price will not track directly the spot price of oil.”

If you are an investor who has any concerns about your ETP investments with any brokerage firm, please contact attorney Steven B. Caruso in the New York City office of our firm at (212) 837-7908 for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).