Super Lawyers
AVVO
Million Dollar Advocates Forum
Martindale-Hubbell

Securities AmericaPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on October 4, 2018 indicate that Nebraska-based brokerage firm Securities America was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Securities America (CRD# 10205).

Established in Delaware in 1984, Securities America is headquartered in La Vista, Nebraska and registered with 53 US states and territories. According to the firm’s BrokerCheck report, it has been involved in 53 regulatory events and 27 customer complaints that evolved into arbitration.

In September 2018 FINRA sanctioned the firm in connection to allegations it failed to maintain and enforce a supervisory system and written supervisory procedures that were reasonably designed to ensure that its representatives recommendations of variable annuity investments were in compliance with relevant laws, rules and regulations. FINRA’s findings stated additionally that though the firm sold variable annuity contracts with options for different share classes, its procedures “did not specifically address the suitability issues pertaining to the fees and costs or surrender periods of the different variable annuity share classes,” and that they also failed to address when “additional scrutiny” might be necessary during the firm’s principal review and approval process for variable annuity transactions. In connection with these and other findings, the firm was censured and issued a fine of $175,000.

BrokerBank Securities Public records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on October 4, 2018 indicate that Minnesota-based broker-dealer firm BrokerBank Securities was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints BrokerBank Securities (CRD# 10641).

Established in Minnesota in 2003, BrokerBank Securities is headquartered in Minnetonka, Minnesota and registered with nine US states and territories: Arizona, California, Florida, Georgia, Michigan, Minnesota, Ohio, Texas, and Utah. According to the firm’s BrokerCheck report, it has been involved in three regulatory events.

In September 2108 FINRA sanctioned BrokerBank Securities in connection to allegations it failed to perform and record reasonable due diligence of a private placement security sold by a firm representative and additional allegations that its supervisory system was not reasonably designed to ensure compliance with due diligence obligations. According to FINRA’s findings, the firm’s written supervisory procedures required it to meet certain due diligence standards that assessed an issuer’s offering prior to the firm’s agreement to participated in that offering. The findings go on to state that the firm “served as a placement agent for a Regulation D private placement offering of securities issued by a corporation,” and the corporation raised a little more than $2.5 million in that offering, “of which $2,220,000 was raised by the firm’s sales to 24 accredited investors.” However, the firm allegedly “failed to conduct a reasonable due diligence investigation of the corporation, and also failed to document the findings of its due diligence investigation.” It also allegedly failed to obtain and document certain customer information which it was required to obtain. In connection with these and other findings, the firm was censured and issued a fine of $5,000.

Cadaret Grant & CompanyPublicly available records published by the Financial Industry Regulatory Authority (FINRA) and accessed on October 4, 2018 indicate that New York-based broker-dealer firm Cadaret Grant & Company was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints Cadaret Grant & Company (CRD# 10641).

Established in Delaware in 1981, Cadaret Grant & Company is headquartered in Syracuse, New York and registered with 52 US states and territories. According to its BrokerCheck report, it has been involved in 14 regulatory events and four customer complaints that evolved into arbitration.

In September 2018 FINRA sanctioned the firm in connection to allegations it failed to establish reasonably designed supervisory systems and procedures “with respect to numerous areas of its business.” Among other findings, FINRA stated that the firm’s supervisory failures were in part due to its failure to dedicate sufficient resources to the supervision of firm personnel, and that it failed to create and maintain a system that was reasonably designed to ensure that representatives made investment recommendations that were suitable for customers and that complied with relevant securities rules and regulations. In connection to these allegations, the firm was censured and issued a fine of $800,000.

Stifel Nicolaus & Company

Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on October 4, 2018 indicate that Missouri-based broker-dealer firm Stifel Nicolaus & Company was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints Stifel Nicolaus & Company (CRD# 793).

Established in Missouri in 1900, Stifel Niclaus & Company is headquartered in St. Louis, Missouri and registered with 53 US states and territories. According to its BrokerCheck report, it has been involved in 128 regulatory events and 48 customer complaints that evolved into arbitration.

In September 2018 FINRA sanctioned the firm in connection to allegations it “accepted and held customer orders in over-the-counter (OTC) securities… for its own account and prices that would have satisfied the customer orders, and failed to execute or immediately execute the customer orders up to the size and at the same price at which it traded for its own account or at a better price.” FINRA’s findings state additionally that as many as 45,024 of the firm’s order audit trail system (OATS) reports were inaccurate, in that they contained an “inaccurate information barrier identifier.” FINRA alleged further that the firm’s supervisory system failed to provide for supervision that was not reasonably designed to achieve compliance with relevant securities laws and regulations. The firm was censured, issued a fine of $37,500, and ordered to pay restitution to affected customers.

Lincoln Investment PlanningPublicly available records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on October 4, 2018 indicate that Pennsylvania-based broker-dealer firm Lincoln Investment Planning was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Lincoln Investment Planning (CRD# 519).

Established in Pennsylvania in 2015, Lincoln Investment Planning is headquartered in Fort Washington, Pennsylvania and registered with 53 US states and territories. According to its BrokerCheck report, it has received six regulatory sanctions.

In September 2018 FINRA sanctioned the firm in connection to allegations it failed to implement surveillance procedures that were reasonably designed to monitor the firm’s representatives’ “rates of effecting variable annuity exchanges.” According to FINRA’s findings, the firm only engaged in tracking of exchanges where the firm was the annuity’s broker of record, and overlooked exchanges where the firm was not the annuity’s broker of record. FINRA also stated that over 50% of the ~2,800 annuity exchanges conducted by its representatives were not included in its surveillance report because of these oversights. The firm was censured and issued a fine of $35,000, in addition to correcting its surveillance report such that it includes all variable annuity exchanges.

William Skelley and Sohin Shah

Publicly available records provided by the Securities and Excange Commission on September 26, 2018 report that the SEC has filed charges against William Skelley and Sohin Shah, in connection to allegations that the crowdfunding platform they co-founded, iFunding LLC, misappropriated more than $1 million in investor funds.

In its complaint, the SEC alleges that that Mr. Skelley and Mr. Shah employed “fraudulent claims” when they raised “$3 million from 42 investors in 17 states,” representing that their investors’ funds would be used to create an internet-based crowdfunding platform for real estate equity, when in fact they used more than $1 million of those funds “for their personal use.” The SEC alleges additionally that Mr. Skelley “made materially false and misleading oral statements” to his investors, and that in the process of soliciting investors, both iFunding and Mr. Skelley disseminated private placement memoranda that featured “false statements about the use of funds and misrepresented the number of real estate projects” funded by the company, as well as the sum of the funding raised on it.

With respect to the allegations that Mr. Skelley and Mr. Shah diverted investor funds for their own personal use, the complaint states that such use included “personal rent, trips, food, beverages, and entertainment and to make cash withdrawals.” The complaint goes on to allege that they used investor funds on expenses such as “dry cleaning and massages,” as well as “personal utilities such as cable and telephone.” Per the SEC’s complaint, “none of these purchases or cash withdrawals were for iFunding’s business operations,” and they were “far in excess of any salary or deferred compensation” the defendants were owed.

MerrillPublicly available records provided by the Securities and Exchange Commission on September 19, 2018 indicate that the SEC has obtained a court order halting “an ongoing Ponzi-like scheme” operated by Kevin B. Merrill, Jay B. Ledford and Cameron Jezierski. According to an SEC news release, the scheme raised more than $345 million in funds from more than 230 investors.

The SEC’s complaint, filed in a federal district court in Maryland, alleges that Messrs. Merrill, Ledford and Jezierski promised investors that they would make “significant profits” via the purchase and resale of consumer debt portfolios. In reality, according to the SEC, the scheme involved “a web of lies,” as well as falsified documents and forged signatures that were used to entice investors. Per the SEC, “Rather than direct investor funds to the acquisition and servicing of debt portfolios as promised, the defendants allegedly used the funds to make Ponzi-like payments to earlier investors.” The complaint alleges that Mr. Merrill and Mr. Ledford stole $85 million or more of their investors’ funds and directed them toward the upkeep of their “lavish lifestyles,” for instance, directing $10.2 million on “at least 25 high-end cars,” $300,000 on a diamond ring, and “millions of dollars on luxury homes.”

According to the complaint, Mr. Merrill himself misappropriated “at least $45 million,” including the purchase of a home in Naples, Florida using $5.5 million of investors’ funds; over $2 million for home renovations; half a million dollars “for an interest” in a private jet; and “transferring approximately $1 million to casinos.” The complaint states additionally that the defendants paid about $197 million to their investors, and that these funds mostly “consisted of money received from investors,” consequently leading their investors to believe they were making a profit from their investments when in fact they were receiving other investors’ money. “As a result, many unsuspecting investors were victimized repeatedly and referred other prospective investors,” according to the complaint.

GPBWilliam Galvin, the Massachusetts secretary of state, has initiated a probe into the activities of broker-dealer firms who sold private placements sponsored by GPB Capital Holdings, according to news reports. The Massachusetts Securities Division has reportedly received information regarding the sales practice of a certain firm, and has requested information from a total of 63 involved in the sales of GPB Capital Holdings private placements. The probe follows an announcement that they have “temporarily stopped bringing in new funds and suspended redemptions” as it turns to examine accounting and financial reporting practices, according to ThinkAdvisor.

These reports also state that two of the private placements in question failed to meet filing deadlines with the Securities and Exchange Commission, despite requirements otherwise. Those private placements are GPB Automotive Portfolio and GPB Holdings II, according to InvestmentNews. Meanwhile GPB is involved in a lawsuit against “a former business partner who allegedly failed to follow through” in connection to a multimillion-dollar car dealership transaction, per ThinkAdvisor. The Securities Division will consequently scrutinize sales activity, disclosure and marketing data from 63 broker-dealers that sell GPB’s private placements.

Massachusetts Secretary of State William Galvin said in a statement: “While my Securities Division’s investigation is in the very nascent stages, recent activity within the company raises red flags of potential problems. These red flags, coupled with the fact that sales of private placements by independent broker-dealers have been an ongoing source of investor harm, have led to this investigation… I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt.”

Adam DerbyshireAccording to a news release issued by the Securities and Exchange Commission on October 1, 2018, the SEC has issued charges against Salix Pharmaceuticals, as well as its former CFO, Adam Derbyshire, in connection to allegations the defendants misled analysts and investors on multiple occasions in regard to the company’s prospects. Mr. Derbyshire has agreed to pay over $1 million to settle these charges.

The SEC’s complaints allege against Mr. Derbyshire and Salix Pharmaceuticals allege specifically that they “made false statements to analysts and investors during quarterly earnings calls by significantly understating the amount of Salix drugs that wholesaler customers held in inventory.” The company allegedly had long taken actions to create “a short-term revenue bump” by “flooding the distribution channel” with incentives that induced customers to buy additional products; in spite of the short-term bump, according to the SEC, the practice created “excess supply that imperiled future sales.” According to the complaint against Salix, “wholesalers’ inventory levels of Salix’s products eventually grew so high that wholesalers did not need to purchase Salix products each quarter to keep up with prescription or retail demand.” At the beginning of 2013, the complaint notes, wholesalers had inventory levels exceeding “two or three months on hand” for the company’s two “key products,” Apriso and Xifaxan; the company’s overselling in the first quarter of 2013 resulted in those levels reaching nine months on hand.

As the overselling continued during 2013, wholesalers “cut back significantly on purchases” of these products during the first quarter of 2014, which led to Salix’s failure to meet that quarter’s earning targets. The SEC also alleges that Mr. Derbyshire and Salix Pharmaceuticals failed to disclose in reports to the SEC that this practice affected earnings and posed a substantial risk to investors in the company, which is currently a subsidiary of Bausch Health Companies, a company formerly known as Valeant Pharmaceuticals International; the SEC notes that the conduct alleged in its complaints took place before the Valeant’s acquisition of the company.

Mark ZaharskiPublicly available records published by the Financial Industry Regulatory Authority (FINRA) and accessed on September 26, 2018 indicate that Illinois-based UBS Financial Services broker/adviser Mark Zaharski is involved in a pending customer dispute. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Mr. Zaharski (CRD# 1345372).

Mark Zaharski has spent thirty-three years in the securities industry and has been registered with UBS Financial Services in Chicago, Illinois since 1990. He was previously registered with Shearson Lehman Hutton in New York, New York (1985-1990). He has passed five securities industry examinations: Series 65 (Uniform Investment Adviser Law Examination), which he obtained on October 13, 1994; Series 63 (Uniform Securities Agent State Law Examination), which he obtained on March 25, 1985; Series 3 (National Commodity Futures Examination), which he obtained on April 22, 1985; Series 7 (General Securities Representative Examination), which he obtained on March 16, 1985; and Series 8 (General Securities Sales Supervisor Examination [Options Module & General Module]), which he obtained on December 16, 1992. He is a registered broker and investment adviser with 39 US states and territories and with nine self-regulatory organizations (SROs): BOX Exchange LLC, Cboe Exchange Inc., FINRA, NYSE American LLC, NYSE Arca Inc., Nasdaq ISE LLC, Nasdaq PHLX LLC, the Nasdaq Stock Market, and the New York Stock Exchange.

According to his BrokerCheck report, he has received one pending customer complaint.