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Moe Azizi (CRD#: 2154719), a broker with Centaurus Financial, is currently involved in a customer dispute over unsuitable investments, according to his BrokerCheck report accessed on October 24, 2019. If your broker recommended securities that were not suitable given your investment goals, you may have a suitability claim and might benefit from seeking the counsel of the securities attorneys of Fitapelli Kurta.

Moe Azizi
On September 20, 2019, clients alleged that Moe Azizi “facilitated unsuitable, high-risk and illiquid investments.” Illiquid investments cannot be sold and are unsuitable for investors who would like easy access to cash. Unscrupulous brokers, however, may convince investors to invest in illiquid investments because of the high commissions they generate for themselves. On October 15, 2018, a customer alleged that their financial advisor, Moe Azizi, “recommended unsuitable investments.”

Moe Azizi is no stranger to the securities industry. Over his 28-year career in the securities industry, Moe Azizi has worked for six broker-dealers. In addition to his current position with Centaurus Financial, Inc. (CRD#: 30833) in San Jose, California, he has worked for five other broker-dealers:

Joseph Pratt (CRD#: 719416), formerly a registered representative with Stifel, Nicolaus & Company, Incorporated (CRD#: 793), has been barred by FINRA for alleged insider trading, according to his BrokerCheck report accessed on October 23, 2019.

On September 5, 2019, Joseph Pratt entered into an AWC in which he consented to the findings that he “obtained confidential information that he received from insiders at a public biopharmaceutical company, and misused the confidential information by communicating it to several of his member firm’s customers.” An AWC is a Letter of Acceptance, Waiver, and Consent in which a broker accepts the allegations against them without admitting or denying them, and in which a broker waives their right to appeal the decision. For more information about AWCs, please see our article “What is FINRA AWC?”

Joseph Pratt also “sold away” from his member firm by selling private securities, convincing individuals (including his firm’s customers) to invest a total of $436,000. This is a violation of FINRA Rule 2010. He consented to a bar from the securities industry. On September 24, 2019, FINRA accepted the AWC.

Richard PittmanRichard Pittman (CRD#: 2845145), a registered representative with Cetera Advisors LLC in Memphis, Tennessee, is currently involved in a pending customer dispute in which a client alleges that Richard Pittman recommended unsuitable investments in 2008, according to his BrokerCheck record accessed on October 23, 2019. The investments in question involve oil and gas, as well as limited partnerships (in which an investor’s liability is limited to the amount they invested in a given business venture). The client, who filed the complaint on September 24, 2019, is seeking $150,000 in damages; the matter is pending.

This is not the only instance in which a client has alleged that Richard Pittman recommended unsuitable investments in 2008. The other three disclosures on Richard Pittman’s BrokerCheck involve the same allegations. On October 19, 2016, another client sued Richard Pittman for $200,000. The matter was ultimately settled for $75,000. On August 9, 2018, a client filed a complaint against Richard Pittman, requesting $736,000 in damages. The dispute was settled for $95,000. Just three months later, on October 31, 2018, a client sought $200,000 in damages, and the matter was settled for $75,000. All the investments involved oil and gas, as well as real estate. Real Estate Investment Trusts (REITs) are illiquid and are not suitable for investors who want to be able to easily convert their assets to cash should the need arise.

What does Richard Pittman have to say in response to these allegations? According to his Broker Comment, he “asserts that the investments were suitable at the point of sale, when suitability is determined. Later performance does not and cannot affect the initial suitability determination. Matter settled by the prior BD as a business decision.” Registered representatives have a responsibility to recommend suitable investments to their clients, considering their risk tolerance, long-term goals, and need for liquidity, along with other factors. If the recommended investments later performed such that a client lost a significant amount of money, it is possible that the registered representative placed the client in investments that were too risky given their unique goals and needs.

Kevin Fretz
Kevin Fretz (CRD#: 4128808), a former registered representative with LPL Financial LLC (CRD#: 6413), was terminated from his job on September 12, 2019. According to his BrokerCheck report accessed on October 28, 2019, “Representative maintained blank customer signed forms, failed to report customer complaints and failed to follow customer instructions to deposit funds to investments.” This is not the only disclosure on Kevin Fretz’s BrokerCheck report. On August 27, 2019, a customer alleged that Kevin Fretz engaged in forgery and misrepresented investment recommendations.

Why would a broker keep forms pre-signed by customers? While brokers might ask clients to pre-sign sign forms as a “matter of convenience,” clients should never agree to this because unscrupulous brokers can take advantage of the situation. Blank forms pre-signed by clients can end up as “blank checks” for brokers to facilitate whatever transactions they want, regardless of your best interests. If you later dispute a transaction, your stamp of approval will be on the form, making an unwanted transaction that much harder to contest.

Over his 19-year career in the securities industry, he has worked for six firms, three of which have had their registration status terminated by the SEC:

Yvonne SilgueroYvonne Silguero (CRD#: 3211495), a registered representative with LPL Financial LLC in McAllen, Texas and Brownsville, Texas, is currently involved in a $500,000 dispute over misrepresentation, according to her BrokerCheck report accessed on October 2, 2019. A client, who filed a complaint on August 9, 2019, alleges that Yvonne Silguero engaged in “negligence, gross negligence, misrepresentation, omission of material facts, breach of fiduciary duty through failure to supervise, and breach of contract” from July 2014 to October 2018.

Yvonne Silguero is also currently involved in a second customer dispute. Filing a complaint on April 12, 2017, a customer alleged that he was sold “unsuitable products for which he was not eligible.”

Yvonne Silguero has enjoyed a 20-year career in the securities industry. Before joining LPL Financial LLC (CRD#: 6413) in 2008, Yvonne Silguero worked for Raymond James Financial Services, Inc. (CRD#: 6694) in Pharr, Texas.

David Miller (CRD#: 4648882), a registered representative with PeachCap Securities, is currently involved in a $1.2 million dispute after a client, who filed the dispute on August 8, 2019, complained about investment performance, according to his BrokerCheck report accessed on October 2, 2019. The investments in question are Direct Participation Programs (DPPs) and limited partnerships (LPs). DPPs are non-traded pooled investments in real estate or energy. DPPs allow investors to access a venture’s cash flow and tax benefits. This allows average investors to access investments normally reserved for wealthy investors. Most DPPs, however, are Real Estate Investment Trusts (REITs); REITs are illiquid and thus are not suitable for all investors.  A limited partnership is established when two or more individuals partner to conduct a business venture. Limited partners are partial owners of a company; they can only be held liable up to the amount that they invested.

David Miller

Atlanta, Georgia skyline

This $1.2 million dispute over Direct Participation Programs and limited partnerships is not the only disclosure on David Miller’s BrokerCheck record.  On June 18, 2019, a customer complained about the performance of his DPPs and LPs, requesting $150,000 in damages. The matter was settled for $50,000. On April 5, 2019, a client filed a complaint regarding the performance of their DPPs. They requested $315,000 in damages; the matter was settled for the same sum. On December 17, 2018, a customer filed a complaint regarding the performance of DPPs and LP interests. The dispute was settled for $100,000.

Maria Hendershott (CRD#: 818681), a registered representative with Raymond James & Associates in Houston, Texas, is currently engaged in a customer dispute in which a client alleges “unsuitable investments, misrepresentations and omissions, [and] overconcentration,” among other allegations, according to her BrokerCheck report accessed on October 3, 2019. The client, who filed the complaint on August 5, 2019, is seeking $175,000 in damages. This is not the only disclosure on Maria Hendershott’s BrokerCheck record. This is an update to our previous article on Maria Hendershott.

Maria Hendershott
To review, one of Maria Hendershott’s clients filed a complaint on November 27, 2018, alleging that she engaged in “breach of contract and warranties, promissory estoppel, [and violated] provisions of the Texas state securities statues,” among other allegations. The client originally requested $500,000 in damages, but the matter was settled for $55,000.

On October 3, 2017, a client alleged “gross mismanagement of accounts, investor abuse, churning, breach of fiduciary duty, negligence, [and] violation of industry rules.” The client requested $100,000 in damages, but the matter was settled for $75,000.

Rob Burns (CRD#: 4066393), a registered representative with Cetera Advisor Networks in Greenwood Village, Colorado, is currently involved in a pending customer dispute in which a client alleges that Rob Burns overconcentrated their portfolio and recommended unsuitable investments in alternative products, according to Rob Burns’ BrokerCheck record accessed on October 2, 2019. They also alleged that Rob Burns’ firm failed to do proper due diligence regarding the alternative investments. The client, who filed the customer dispute on August 9, 2019, is seeking $500,000 in damages.

Rob BurnsAlso known as private placements, alternative investments are only suitable for a small percentage of investors. “Accredited investors” have a high degree of financial literacy and at least an annual income of $200,000 or more. A problem has arisen, however, because these income and net worth guidelines have not changed since 1983. Thus, many individuals and families qualify as accredited investors based on their income but may find themselves in over their heads when it comes to these investments.

On August 3, 2018, a client alleged that Rob Burns recommended unsuitable investments, acted negligently, and breached his fiduciary duty.

iStock_sad-ppl-1-300x229Many people are surprised to learn that their investment losses are not covered by SIPC insurance. SIPC insurance may cover you in specific cases, but it’s important to know exactly what the Securities Investor Protection Corporation (SIPC) does and does not do.

From 1968 to 1970, confidence in the securities market plummeted as many broker-dealers went out of business. To restore faith in the market, in 1970 Congress passed the Securities Investor Protection Act. Against this backdrop, SIPC was formed—as a non-profit membership organization with no regulatory authority.

Spearheaded by its new CEO, Josephine Wang, and funded by the financial services industry itself, SIPC does not rely on taxpayer funds and is not a government agency.

KushCo Holdings

Publicly available records indicate that a class action lawsuit has been filed on behalf of investors in KushCo Holdings (OTC:KSHB) in connection to alleged securities law violations by KSHB. Fitapelli Kurta is interested in hearing from investors who have complaints regarding investments made in KushCo Holdings between July 13, 2017 and April 9, 2019.

The class action complaint specifically alleges that during the period in question, KSHB provided false and/or misleading material information and/or failed to disclose adverse material information to the public, chiefly: that during its acquisitions of three companies—CMP Wellness LLC, Summit Innovations, LLC, and The Hybrid Creative—the company made accounting mistakes; that financial statements released earlier by the company, for fiscal years ending on August 31, 2018 and August 31, 2018, were not reliable; that the company’s net loss for that latter year, ending August 31, 2018, more than doubled what the company had reported in its previous statement; that representations made by the company and its managing officers that those previously released statements were accurate could no longer be relied upon either; and that consequently the company’s statements to the public during the relevant period were false and misleading. The complaint alleges that when true facts emerged, investors suffered losses.

According to the company’s website, KushCo Holdings is the parent company of brands involved in “specialized solutions for the cannabis market.” These brands include Kush Supply Company, a platform for the distribution of packaging, supplies, and accessories for the cannabis and CBD industry; Kush Energy, a provider of hydrocarbon gases and solvents; Hybrid Creative, a design agency “for clients across several industries”; and Koleto Innovations, which performs research and development “driving intellectual property development and acquisitions.” The company was founded in 2010 and describes itself as having sold more than one billion units, with customers comprising “more than 5,000 legally operated medical and adult-use dispensaries, growers, and producers” in three continents: North America, South America, and Europe. The company states that it has facilities in the US’s five largest cannabis markets and sales operations in every major US cannabis market; it also clarifies that “it has no direct involvement with the cannabis plant” and that none of its products contain THC or CBD. The company trades over-the-counter under the symbol KSHB.