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Legend Securities Stockbroker Receives Complaint for Fraud

FINRA has filed a complaint against Richard Gomez of Jackson Heights, New York for allegedly defrauding investors of close to half a million dollars. Gomez, who was a registered representative with Legend Securities Inc. between June and December 2011, allegedly offered investors the opportunity to purchase membership interests in Praetorian Global Fund, Ltd. (Praetorian) and its affiliate companies. According to the U.S. Securities and Exchange Commission (SEC), Praetorian Global Fund was supposed to grant investors an opportunity to invest in a pre-initial public offering (IPO) with shares of Facebook, Groupon and Zynga. Gomez allegedly sold $394,000 worth of shares of the fraudulent company and made at least $22,000 in commissions.

Gomez allegedly failed to conduct proper due diligence and missed multiple red flags regarding Praetorian. The “principal place of business” for Praetorian was a residential apartment in Boca Raton, Florida but the mailing address was that of “The UPS Store” in Boca Raton. In addition, Praetorian’s fund manager had a lengthy criminal record that included multiple convictions of grand theft, and other members affiliated with the company have been named defendants in multiple lawsuits alleging fraudulent business practices.

In addition, Mr. Gomez also allegedly took part in a second scheme by inducing investors to buy shares in U.S. Coal Corporation Inc. (US Coal) by telling them US Coal was planning an IPO in the “near future” while US Coal had no intentions and never did have an IPO. Gomez consequently sold $105,000 worth of shares in US Coal that netted him at least $14,950 in commissions. FINRA alleges that Gomez failed to disclose numerous material, adverse facts relating to US Coal.

FINRA believes that Gomez misrepresented material facts about both the Praetorian and U.S. Coal and thereby violated the Securities and Exchange Act. FINRA alleges that Gomez “failed to conduct a reasonable investigation of Praetorian and its affiliated entities”. The FINRA Department of Enforcement has requested that the Panel make specific findings on Gomez’s alleged fraud and require Mr. Gomez to pay full restitution to investors for an amount in excess of $499,000.

Attorney Pearce began his career at the SEC as an enforcement attorney more than 35 years ago. His SEC and FINRA defense law practice clients have included public companies and their officers and directors, broker-dealers, investment advisors, and individuals being investigated in connection with their personal securities transactions. He has broad, extensive experience in matters arising from alleged 10b-5 fraud violations including, “insider trading,” Section 16(b) “short swing profit,” and Section 14 “proxy rule” violations as well as Section 9 “market manipulation” cases.

Have you have been contacted by the SEC or FINRA and believe that you may be subject of an investigation? If so, call Mr. Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce defends various entities and individuals who may be the subject of an SEC and FINRA investigation or enforcement action regarding their alleged involvement in securities laws violations.

This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to representing investors and financial industry professionals throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.