The Financial Industry Regulatory Authority (FINRA) has ordered Brookville Capital Partners to pay a total of $1.5 million and barred its president, Anthony Lodati, as a result of alleged fraudulent conduct. FINRA believes that Brookville, under the supervision of Lodati, deceptively offered and sold 29 clients over a million dollars worth of shares in a private placement called Wilshire Capital Partners Group LLC. FINRA claimed that Lodati was aware that Wilshire was operated by individuals with felony convictions and intentionally withheld that information from Brookville costumers.
Former Stifel broker, Lanis Dale Noble, received an unfavorable FINRA award after his former daughter-in-law accused him of churning and breaching his fiduciary duty. The panel awarded the claimant, Tracy Noble Gilbert, $1.29 million in compensatory damages and an additional $250,000 in attorneys' fees. Gilbert alleged that Noble unreasonably used margin to purchase a real estate trust along with multiple variable annuities. Noble is no longer registered with FINRA.
Former NFL player for the Green Bay Packers, Bruce Wilkerson, recently received a $2 million arbitration award against Resource Horizons Group. Unfortunately for Mr. Wilkerson, Resource Horizons Group is out of business and has a total of $6 million in unpaid FINRA arbitration award against the now defunct firm. Wilkerson initially lost $650,000 in a Ponzi scheme that was allegedly carried out by Robert Gist. According to an SEC complaint, Gist fabricated account statements for about 32 clients over a ten year period. To settle the allegations made by the SEC, Gist agreed to pay $5.4 million.
Newbridge Securities Corporation, a Fort Lauderdale-based broker dealer, was fined $50,000 by FINRA in January 2013 for issues dealing with improper and undisclosed postage and handling charges to customers. These accusations led to a class action suit which resulted in Newbridge making an $850,000 payment to settle the case. This wasn't the first time Newbridge was fined by FINRA. FINRA also fined Newbridge $138,000 for violating industry rules related to the offer and sale of corporate bonds.
A class action suit against Northwestern Mutual has ended after it agreed to pay $84 million to over 30,000 customers. The past and present annuity owners claimed that Northwestern had breached the terms of their fixed and deferred annuity contracts by altering dividend calculations.
The Securities and Exchange Commission (SEC) has sued a broker from Palo Alto, California for allegedly operating a stock scam that defrauded investors out of $900,000. According to the SEC, Vinay Kumar Nevatia sold shares of CSS Corp. Technologies (Mauritius) Limited to his clients in 2008 and then he allegedly, without the investors' knowledge, resold the shares to new investors. Kumar was able to conceal his wrong doing by falsely telling the transfer agent for CSS that the original stock certificates had been lost and new ones needed to be issued. According to the Complaint, before the investors could figure out the scam, Kumar "...absconded with the original proceeds." In the fall of 2013, Kumar's brokerage firm, KBR Capital Markets, closed due to its failure to satisfy FINRA's financial requirements.
Jeffrey M. Knutsen, a financial advisor from Bellingham, Washington, was sentenced to 51 months in prison with three years of supervised release after accusations of wire fraud. Along with prison time, U.S. District Judge James L. Robart also ordered Knutsen to pay $251,892 in restitution to the clients from whom he embezzled money. Knutsen owned and operated his own firm, Bellwether Financial Services, which he told clients was switching to an online approach sometime after 2005. In 2005, FINRA barred him for allegedly converting $89,973.16 of client funds to his own use. Knutsen did not disclose to his clients that he had been barred from the securities industry. He continued to mislead investors by trading through online sites such as E*Trade and TD Ameritrade. Knutsen set up accounts in his clients' names and had complete control over the account and made sure each account would allow him check writing privileges. Over a period of almost eight years, without his clients' knowledge or consent, he wrote more than 200 checks on their accounts.
National Planning Corp., along with their financial advisor, Joseph Russo, was ordered to pay $1.2 million in damages after Russo allegedly recommended a risky real estate investment to an elderly client. In 2003, the investor and his wife invested $2.5 million, which was practically all of their savings, in a commercial building with a single tenant lease. A decade after the initial investment there was no tenant, which meant no income for the investors. The property ended up going into foreclosure and the investor received $141,000 from the sale of the property. National Planning claimed that the investor made $1.8 in income from the property and received tax deferrals from owning it. The investor's lawyer argued that the real estate investment was too speculative and concentrated for an elderly couple.
A Financial Industry Regulatory Authority (FINRA) panel expelled both John Carris Investments, LLC and its CEO, George Carris, for fraud and suitability violations. The allegations of wrongdoing related to a scam which involved the sale of stock and promissory notes in a JCI subsidiary known as "Invictus Capital." Some John Carris employees were also disciplined and fined by the arbitration panel. In their decision, the panel noted that John Carris had violated numerous industry rules, failed to remit employee payroll taxes, and that the testimony of George Carris was not credible.
NBA All-Star, Tim Duncan, sued his Atlanta-based financial advisor, Charles Banks, last month after alleging Banks advised him to purchase highly speculative investments which resulted in extreme losses. Banks acted as Duncan's financial advisor for over fifteen years. Duncan is claiming losses of $7.5 million. Duncan believes that Banks forged his signature on a $6 million bank loan. Additionally, Duncan claims that Banks advised him to invest in companies in which Banks held a personal interest and for which Banks received a direct financial benefit. Duncan expressed his disappointment and frustration in a news conference by saying, "I'm saddened that my name will join the list of athletes to fall victim to this sort of misconduct."