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Tuesday, April 21, 2015

Options for Victims of Souza Barros Securities

Stoltmann Law Offices is investigating Souza Barros Securities, a Miami-based securities brokerage firm. The Financial Industry Regulatory Authority (FINRA) claimed that Souza Barros Securities entered into an agreement with the regulator, who claimed that they failed to implement an anti-money laundering program. According to FINRA, securities transactions were conducted for international institutional customers by Souza Barros, but some of those transactions took place in tax havens and the transactions generated much revenue for the firm. These transactions were conducted between August 2009 and July 2013.
Some of the transactions were high-volume, high-turnover with frequent cash movements that were at risk to be labeled money laundering. Some engaged in trading U.S. dollar denominating foreign bonds, but the firm did not monitor or investigate the transactions in question. FINRA censured and fined the firm $75,000. If you invested money with Souza Barros Securities out of Miami, Florida, you may have a case against them to recover your investment losses. Please call Stoltmann Law Offices at 312-332-4200 to speak to one of our attorneys. The call is free with no obligation.

For Victims of Boiler Room Scam Targeting Older Investors; eCareer Holdings, Inc.

The Securities and Exchange Commission (SEC) filed charges recently against a firm who was running a microcap scheme. The Commission also barred an accounting officer who was involved with unauthorized trading and tried to hide his illegal activities in that scheme. The SEC charge included the operators of a South Florida boiler room, alleging that its brokers made cold calls to investors in an attempt to sell them unregistered stock. Many of the unsuspecting investors were elderly individuals.
A boiler room operation refers to the use of high pressure sales tactics to sell stocks to clients who are cold called, or called randomly, most likely after being picked out of a phone directory. They are often set up in inexpensive spaces, where telemarketers make the calls. While the stocks they sell may be real (usually a microcap stock) the information the salespeople use to hype the product can be false or misleading because of the commissions garnered. The SEC also found that the heads of the boiler room, Dean Esposito, Joseph DeVito and Frederick Birks, hid the fact from investors that they had all been barred from the industry, and were therefore not allowed to be hawking the microcap stocks. Joseph Azzata of Boca Raton, Florida hired the brokers. They were hired to sell unregistered stock shares in the company, eCareer Holdings, Inc., of which Azzata was CEO. 30% of the money invested in eCareer Holdings went into commissions and fees for the brokers and sales agents, instead of into working capital to develop the company's online job staffing business, as they were led to believe. The payments were hidden as corporate filings to third parties for consulting and advisory services.
Materials put out by the company states that the shares would be sold only to accredited investors, but many of the targets were nonaccredited investors ages 85 to 98 years old. The SEC alleges that Azzata, Esposito, DeVito and Birks raised over $11 million from over 400 investors, with $3.5 million of that money going to "fees" for the brokers. Azzata also used $650,000 to pay personal expenses, such as his children's private school tuition and his wife's shopping bills.
 If you have been a victim of Azzata, Esposito, DeVito or Birks in their eCareer Holdings, Inc. scheme, please call our securities law firm based in Chicago, Illinois at 312-332-4200. We are securities fraud attorneys who represent victims of fraud just like the eCareer Holdings boiler room ones. We may be able to help you recover your money losses.

On CNBC's Closing Bell, Andrew Stoltmann Discussed MF Global and Jon Corzine...

and whether Corzine should be allowed to manage client funds again.  Corzine, head of MF Global, presided over the firm while $1 billion of client funds disappeared.  Edited segments of the interview can be viewed below.  

Why FINRA Arbitration For Michael Oppenheim Losses

People who were victimized by financial adviser Michael Oppenheim might be considering filing a lawsuit or class action lawsuit to recover stolen funds.  Unfortunately, victims cannot do so.  Rather, they must file their claims in arbitration through a group called FINRA, the Financial Industry Regulatory Authority. The FIRNA arbitration process is usually faster that court (about 12-14 months) and many of the devices in court simply arent available in the FIRNA arbitration forum.  For example, there are no interrogatories or depositions in arbitration like there would be in court.  The main claim to be adjudicated in the FIRNA arbitration forum would be issues related to the supervision, or lack there of, of Mr. Oppenheim.  JP Morgan Securities had an absolute duty to supervise Oppenheim while he was affiliated with the firm.  Failure to do so can make the firm liable for those losses.  To learn about all legal options for suing JP Morgan Securities for converted or stolen funds by Mike Oppenheim, please call our Chicago based securities fraud law firm.

Monday, April 20, 2015

Suing National Securities Corp For Investment Losses: Chicago Tribune Profile

Like most brokerage firms, National Securities Corp. has a binding arbitration clause in its new account agreements with clients.  This means if an investor wants to sue the brokerage firm for activities like churning, unsuitable investment recommendations, selling away or fraud, they must do so in the binding arbitration FINRA forum.  Recently, the Chicago Tribune did a profile piece on a client of Stoltmann Law Offices that lost in excess of $100,000 while their accounts were maintained at National Securities Corp through Navisis Financial   The brokers at issue for the client profiled in the Chicago Tribune, Mike Arnsman, Trevor Wurtzebach Mick Bishop. To learn about suing Navisis Financial or National Securities Corp., please call our securities fraud law firm in Chicago, Illinois at 312.332.4200 U.S. agency wants brokers held to higher standards In September 2008, as the financial crisis emerged, a retirement account of Al and Karin Betz slumped in value to $130,000 from about $160,000. "I got a cold call saying, 'Would you have some money to invest?'" Al Betz, 66, recalled. "I said, 'If you can do better, I'll give it a try.'" The Crystal Lake couple said they were told that their principal would be protected and that they'd get high returns thanks to a "unique system." After the account dwindled to about $3,000, the Betzes filed a claim against the brokerage, accusing it of putting their money in unsuitable investments, such as penny stocks, which can be risky, and making excessive trades. "When they were selling or buying, they got a certain fee," Karin Betz, 64, said. "They got richer when we got poorer." A lawyer representing National Securities said the firm did nothing wrong. The Betzes' situation is illustrative of confusion in the marketplace over the responsibility of brokers handling retirement accounts — something the U.S. Department of Labor is trying to remedy. The agency, at the behest of President Barack Obama, wants a more demanding "fiduciary" standard required of brokers who make investment recommendations, meaning they would have to act in the client's best interest. Currently, brokers need only consider whether investments are "suitable," taking into consideration such factors as customers' ages, income and appetite for risk. cComments Hard to believe in 2015 the Betz family had no idea of how to check out their broker. Just a couple tips: ask a trusted friend for a referral if you are unhappy with your current advisor. Don't just rely on unsubstantiated claims from a telephone cold caller. Use FINRA's brokercheck... JoeBone at 11:39 AM April 05, 2015 Add a comment See all comments 2 At an AARP meeting in February, Obama said some advisers "receive backdoor payments or hidden fees for steering people into retirement investments that have high fees and low returns." Such practices, he said, strip about $17 billion a year from peoples' retirement savings. "The challenge we've got right now: There are no uniform rules of the road that require retirement advisers to act in the best interests of their clients," Obama said. Obama mentioned Merlin and Elaine Toffel, a retired Lindenhurst couple that "got bad advice to invest in expensive annuities that made it hard for them to access their money." "They were taken advantage of by an adviser of an institution where they had been longtime clients, and it was an institution they trusted," Obama said. "They're not alone." On average, conflicts of interest in retirement advice results in annual losses of 1 percentage point for affected persons, Obama said. "I know 1 percent may not sound like a lot, but the whole concept of compounding interest — it adds up," Obama said. A 30-page report from the White House Council of Economic Advisers titled "Effects of Conflicted Advice on Retirement Savings," also released in February, said people receiving conflicted advice reduce what would be a 6 percent return to a 5 percent return. "Such savers hold about $1.7 trillion of IRA assets," the council said. "Thus, we estimate the aggregate annual cost of conflicted advice is about $17 billion each year." Even a more conservative estimate — say, a half of a percentage point — would reflect losses of more than $8 billion a year, the council said. Just last month, Securities and Exchange Commission Chair Mary Jo White told a U.S. House financial services committee that broker-dealers should be subject to the same fiduciary standard as registered investment advisers when dealing with retail investors. Breach of fiduciary duty is the single most common cause of action alleged in arbitration cases, according to statistics from the Financial Industry Regulatory Authority, an independent, nonprofit body authorized by Congress to protect U.S. investors by ensuring the securities industry operates fairly. "To the extent that fiduciary duties are imposed on all brokers, there's a very good chance that might put me out of business," said Andrew Stoltmann, a Chicago securities lawyer representing the Betzes. In 2014, for example, 3,822 arbitration cases were filed with the Financial Industry Regulatory Authority. Of those, 2,106 alleged breach of fiduciary duty. "Unfortunately, it is more difficult to determine how often breach of fiduciary duty claims are successful, since cases usually have multiple causes of action and arbitrators rarely state the basis on which they decide the case," says Richard Ryder, president of Securities Arbitration Commentator, a New Jersey-based research service that tracks data from arbitration awards. Indeed, the claim filed by Al and Karin Betz has numerous allegations, including breach of fiduciary duty, excessive trading, negligence, failure to supervise and breach of contract. "It is clear that brokers are fiduciaries, owing their customers a duty of utmost good faith," their claim says. Claims of breach of fiduciary duty in securities cases have hit some household names. In December 2013, the brokerage unit of Wells Fargo was ordered by a FINRA arbitration panel to buy back $94 million in auction-rate securities from a group of investors. A request for $20 million in damages was denied, however, FINRA records show. Allegations in both cases included breach of fiduciary duty, negligence and breach of contract. Many brokers' questionable activities would cease if they were held to a fiduciary standard, Stoltmann, their lawyer, said. Of the 1,000 arbitration cases he has filed for investors, 98 percent have been against brokers, he said, with the rest being against registered investment advisers, who are fiduciaries. "You want to talk about cleaning up the business, eliminating excessive trading and unsuitable investments — impose a fiduciary duty on those guys," Stoltmann said. The Betzes, who were born and raised in Germany, came to the United States in 1980 for Al Betz's job. An engineer by training, he worked for a global environmental technologies company for 32 years, first in Detroit and then in Crystal Lake. Al Betz retired from the company more than 10 years ago. At that point he and his wife started Northwestern Sunrooms, which designs and builds sunrooms, and Betz Design, which makes clothing and window treatments. They became U.S. citizens in 2010. The businesses are doing "OK," Al Betz said. Al Betz said the couple trusted the brokerage, including their advice to buy more shares when they were in a steep decline. "I was not about to try to second guess them," he said. As their accounts dwindled to about $60,000, the couple said they showed up at the brokerage's downtown office in 2009 and reiterated that they needed the money for their retirement, "which we thought to be just a couple of years away," Al Betz said. When the value dwindled to $3,000 by the end of 2013, he said he ordered the brokers to never again sell at a loss. Last year, the couple filed a claim against the brokerage with the Financial Industry Regulatory Authority. "The 'superior investment method,' which in reality was nothing more than excessively trading the claimants' accounts, wiped out virtually their entire portfolio at a time when the equity markets made significant gains," their claim said. The couple's investments also were heavily weighted into "small capitalization" stocks and the portfolio wasn't diversified, their claim said. "Diversification is one of the most important strategies to decrease risk in a portfolio, which was completely necessary for customers like Mr. and Mrs. Betz, who were nearing retirement and couldn't afford to lose these funds," their claim with FINRA says. "The importance of diversification across different asset classes and within asset classes to decrease risk is a well-established" investment principle. cComments Al Betz said he trusted the brokers and didn't consider checking them out. "I didn't know how to go about doing that," he said. Relatively few investors check out their brokers, Stoltmann said. "You can do it online, but most people aren't aware of that," he said. "People think brokers, like doctors, CPAs and lawyers, have a duty to act in their clients' best interest, but there's a real disconnect between what people get and what they think they're getting." Most people don't second-guess their doctors, accountants, lawyers or brokers, he said. The home page of includes a feature called BrokerCheck in which the public can type in names of firms or individuals to see if they've been the subject of complaints. The Committee for the Fiduciary Standard, which was formed in June 2009 by a group of investment professionals and fiduciary watchdogs, on its website has an oath that investors can ask advisers and brokers to sign, vowing that they're acting as a fiduciary. Investors should ask their brokers to sign it, Stoltmann said. According to the report by the White House Council of Economic Advisers, certain professionals "can switch back and forth" between being a broker and a registered investment adviser, "a practice known as dual hatting." "As a result, consumers may not know" whether they're receiving advice under "fiduciary" or "suitable" standards "at any moment," it said in its report. Even if someone signs the pledge or is in fact a fiduciary doesn't mean problems can't occur. Last year, Seattle investment adviser Mark Spangler, a former chairman of the National Association of Personal Financial Advisors, was sentenced to 16 years in prison for wire fraud, money laundering and investment adviser fraud. "The evidence at trial demonstrated that Spangler repeatedly violated his fiduciary duty as an investment adviser by hiding where his clients' money was invested and by providing them with false account statements which, among other things, drastically inflated the value of their investments," a Justice Department press release said. The three brokers who handled the money of Al and Karin Betz aren't formally named as parties in the arbitration action against National Securities, but combined have been named in about 20 customer complaints, including allegations of excessive trading and recommending unsuitable investments, according to FINRA. One had personal financial problems on his record, FINRA records show. "National Securities denies all allegations contained in the statement of claim and intends to vigorously defend this action," said the firm's Chicago lawyer, Gara Seagraves of Baugh Dalton. The Betzes' claim alleges that National Securities failed to "reasonably supervise" the advisers and that the high turnover rate of their investment holdings should have been a red flag. "A turnover rate of six and above in all three retirement accounts should have led National Securities to shut these accounts down and review its agents' conduct," their claim said. The turnover rate in the Betz accounts, in their names individually and as a married couple, ranged from 6.3 to 9.2, the number reflecting how often their investment holdings were replaced in a year, their claim said. Mutual funds that seek aggressive growth might have a turnover ratio of 1.2 a year, Stoltmann, their lawyer, said. High turnover rates generate more fees and commissions for brokerages and, in turn, reduce returns for investors. The Betzes, who have two sons and two grandchildren, said the money they lost equals about a quarter of their retirement savings. The rest of the couple's retirement funds are in investment vehicles mirroring the Standard & Poor's 500. The couple also receives Social Security. Still, the losses have "pushed back our retirement," Al Betz said in an interview. The couple said they believe they're entitled to damages of nearly $215,000, the amount they think their accounts would be worth had they not been mismanaged.

Suing Wells Fargo Broker Philip Earl Brunson

Stoltmann Law Offices is investigating former Wells Fargo broker Philip Earl Brunson, who has been accused by the Financial Industry Regulatory Authority (FINRA) of converting customer funds. He also failed to provide FINRA with information in regards to his investigation. He entered into a Letter of Acceptance Waiver and Consent, and was subsequently barred from the securities industry.
Mr. Brunson worked for PNC Investments in Decatur, Illinois as a stockbroker and they discharged him because he "admitted to violating policy at his former firm by accepting cash gifts from his clients. Before PNC, he was employed as an investment advisor at Wells Fargo in Champaign, Illinois. A former client accused him of misappropriating funds from an investment account on January 16, 2013. The complaint was settled for $43,000. Mr. Brunson has also worked for Proactive Financial Services in Pleasantville, New York and A.G. Edwards & Sons in Champaign, Illinois. He has one customer dispute against him and was barred permanently from the industry.
 If you would like to bring investment claims against Philip Earl Brunson, please contact our law offices at 312-332-4200 to speak to an attorney. We concentrate on suing brokerage firms such as Wells Fargo for failure to supervise their employees. The call is free with no obligation.

Bringing Claims Against Vito James Balsamo and National Securities Corporation

Stoltmann Law Offices is investigating Vito James Balsamo, a former registered representative with National Securities Corporation. Allegedly, Balsamo solicited securities to three investors, who were also his clients. The securities involved ownership interests in V.W. Industries. The Financial Industry Regulatory Authority (FINRA) alleged that the securities offerings were outside the scope of National Securities Corporation, but that the company wanted Balsamo to sell interests in the company by promising him ownership interests.
Balsamo was able to secure $475,000 from the three investors without the knowledge or approval of his firm. This is known as selling away, and is when a broker solicits a client to purchase securities not held or offered by the brokerage firm he is associated with. This activity is a violation of securities regulations. Mr. Balsamo was registered with D.H. Blair & Co., Thomas James Associates, Barington Capital Group, Joseph Stevens & Company, LCP Capital Corp., and National Securities Corporation. He has four customer disputes against him, one of which is pending. He is not currently associated with any FINRA member firm, nor is he licensed to act as a broker or investment advisor. If you invested money with Vito James Balsamo, his former firm, National Securities Corporation, can be sued for investment losses. They had a duty to reasonably supervise him while he was employed there, and since they did not, they can be held liable for monetary losses. Please call our securities law firm in Chicago at 312-332-4200 to speak to an attorney.

Investigating Daniel R. Murphy and Chadbourn Partners

Did you lose money with financial advisor Daniel R. Murphy and Chadbourn Partners? If so, please call Stoltmann Law Offices, a securities law firm based in Chicago, Illinois, for a free consultation with one of our attorneys at 312-332-4200. We may be able to help you recover your investment losses by suing Mr. Murphy and his firm, Chadbourn Partners in the Financial Industry Regulatory Authority (FINRA) arbitration process. We sue brokers and brokerage firms all the time for fraud and failure to reasonably supervise.
Stoltmann Law Offices is investigating allegations made by the Securities and Exchange Commission (SEC) that Mr. Murphy committed fraud through the sale of unregistered securities. The SEC and the Colorado Division of Securities claim that Mr. Murphy sold debentures of his company, Chadbourn Partners, to investors, including some elderly ones. Both the SEC and the Division obtained a $879,000 judgment against Murphy, and he was subsequently barred from the securities industry. Mr. Murphy was a registered representative with Blackstock & Co., Inc., Providence Securities, North American Investment Corp., Daiwa Securities America Inc., Anderson & Strudwick, Brenner Securities Corp., Coleman & Company Securities Inc., Chadbourn Securities, Colorado Financial Service Corp., Eastgate Securities and Oak Street Securities. He is not currently licensed with any firm because the SEC barred him from acting as a broker or financial advisor, or otherwise associating with firms that sell securities or provide investment advice to the public.

Recovering Investment Losses with James E. Nielsen, Tradition Asiel Securities, Sound Securities and Longship Alternative Asset Management

Stoltmann Law Offices is investigating James E. Nielsen, a former registered representative who allegedly sold old unregistered securities in the form of notes and investment agreements to investors. Neilsen is said to have made misrepresentations and omissions of fact to the investors. An Order on March 31, 2015 by the Connecticut Bankruptcy Commission stated that "Neilsen induced the investors to enter the Investment Agreements by representing that the investment would generate a nine percent return. Neilsen also represented to at least one of the investors that the investor would not incur any loss." Neilsen did not provide investors with any written disclosures related to the investments, and also used some of the money to fund his own personal expenses.
Mr. Neilsen was registered with Tradition Asiel Securities Inc in Chicago, Illinois from November 2004 until July 2007, Sound Securities LLC in Jericho, New York from August 2008 until December 2009, and Longship Alternative Asset Management in Port Washington, New York from January 2010 until January 2011. He is not currently registered with any firm. If you would like to bring claims against James E. Neilsen, please call us at 312-332-4200 to find out how to do so. We are securities attorneys based in Chicago, Illinois.

Update for Victims of Brenda Ashcraft

Stoltmann Law Offices continues to investigate former Ohio realtor Brenda Ashcraft, who recently pled guilty to defrauding investors out of $15 million between 2009 and 2013. Ashcraft was involved in a real estate investment trust (REIT) scheme as owner and manager of French Manor Properties. She promised investors that their money would be secured by real estate and that they would receive a 40% return of investment annually. Subsequently, she was not able to deliver on that promise. She used some of the money on personal expenses including season baseball tickets. Ashcraft pleaded guilty to one count of wire fraud, one count of securities fraud, one count of destruction of evidence and one count of money laundering. Please call our securities law firm based in Chicago, Illinois if you lost money with Brenda Ashcraft. We are investment fraud attorneys. The call is free and with no obligation. 312-332-4200.