Articles Posted in SEC News

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The Securities and Exchange Commission (SEC) has charged a Massachusetts-based portfolio manager, Kevin J. Amell, with fraud amid allegations that he diverted nearly $2 million from an account over which he had trading authority (the Fund) to his personal brokerage account.  In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts has also filed criminal charges against Mr. Amell.

According to the SEC complaint, Kevin Amell abused his trading authority at least 265 times by pre-arranging the purchase or sale of call options between his personal brokerage account and the Fund’s brokerage accounts.  The complaint alleges that Mr. Amell matched trades wherein he profited by either buying call options at artificially lower prices and selling them shortly thereafter at higher prices to third parties; or by purchasing call options from third parties and selling them shortly thereafter to the Fund at artificially high prices.  In one example, the SEC’s complaint alleges that, in a series of trades involving Amazon securities, Mr. Amell allegedly generated a profit of $23,000 for himself in less than 23 minutes at the Fund’s expense. Continue reading →

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The Securities and Exchange Commission (SEC) announced that it has accepted an Offer of Settlement submitted by Levi Lindemann in which he is barred from the securities industry for allegedly operating a fraudulent scheme through his private company, Gershwin Financial, Inc. and his sole proprietorship, Alternative Wealth Solutions.  The SEC alleged in its complaint that Levi Lindemann, of West Lakeland, Minnesota, raised approximately $976,000 from six investors, including elderly individuals, and told the investors that their money would be used to purchase various investments including notes and interests in a unit investment trust (UIT).  The SEC complaint alleged that in reality, none of Mr. Lindemann’s purported investments were ever made.

Mr. Lindemann is a former registered representative with J.P. Turner & Company, LLC (J.P. Turner).  His BrokerCheck report shows that Mr. Lindemann is currently involved in four (4) pending customer disputes while he was employed by J.P. Turner for allegations including breach of fiduciary duty, misrepresentations, violation of Minnesota Uniform Securities Act, and negligence. Continue reading →

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The Securities and Exchange Commission (SEC) has charged Broidy Wealth Advisors and its owner, Marc D. Broidy, with fraudulently overbilling clients and misappropriating their assets for personal expenses. According to the SEC complaint, Marc Broidy and his Los Angeles-based investment advisory firm allegedly billed his clients approximately $643,000 in excess fees and covered it up by altering management fees on documents before sending them to clients.

Marc Broidy, of Beverly Hills, California, is the Principal and sole owner of Broidy Wealth Advisors.  The SEC’s complaint alleges that Mr. Broidy overbilled several clients.  In one case, even after they had terminated their relationship with him, Mr. Broidy allegedly deducted an additional $6,000 in fees from one of his client’s accounts.  To cover up the alleged overbilling scheme, the complaint notes that Mr. Broidy altered his clients’ 1099 Forms to eliminate or decrease the advisory fees he had allegedly deducted from their accounts.  According to the complaint, Mr. Broidy allegedly used fraudulently obtained money, $865,000, to pay his personal expenses such as his mortgage, trips overseas and leases on two Mercedes-Benz’s. Continue reading →

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Paul T. Rampoldi and William S. Blythe III, were named Respondents in a Securities and Exchange Commission (SEC) complaint that alleges the two participated in an insider trading scheme to profit in advance of two major pharmaceutical company announcements. The insider trading case involved the securities Ardea Biosciences, Inc. (Ardea), a California-based biotechnology company.

The SEC alleged, in advance of several announcements between April 2009 and April 2012, Michael J. Fefferman, who was Ardea’s Senior Director of Information Technology, tipped his brother-in-law nonpublic information concerning an agreement between Ardea and another company to license a cancer drug and an acquisition of Ardea by AstraZeneca PLC (AstraZeneca). This information eventually came to Mr. Rampoldi, for which the SEC alleges, he used along with his friend Mr. Blythe to illicit profits by trading ahead of the pharmaceutical announcements. Hopefully, Mr. Rampoldi and Mr. Blythe have obtained skilled representation because they have a battle on their hands.

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Matrix Capital Markets (Matrix) and firm representative, Nicholas Mitsakos of San Francisco, California were named Respondents in a Securities and Exchange Commission (SEC) complaint that alleges the firm, acting through Mr. Mitsakos, falsely marketed themselves and used clients’ funds for their own personal use. The SEC alleges from approximately the spring of 2014 to the present, the Respondents made false and misleading statements to prospective investors and financial institutions in order to raise funds and increase clientele.

The SEC alleged that Mr. Mitsakos made numerous false and misleading statements included lying about investment returns and their broker and auditor relationships. According to the SEC, the Respondents marketed themselves as experienced money managers with a highly successful track record. They claimed to be managing millions, when in fact they did not manage client assets at all, and allegedly fabricated a hypothetical portfolio of investments earning 20-66% annual returns.

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Shearson Financial Services, LLC (SFS) of Boca Raton, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly maintaining inaccurate books and records.

FINRA investigators found between June 10,2013 through October 6,2015, SFS maintained inaccurate books and records reflecting that 1,873 transactions were unsolicited, when in fact, the transactions were solicited, in violation of FINRA Rules 451 1(a), 2010, and Section 17(a) and SEC Rule 17a-3 of the Securities Exchange Act. In addition, during this period, SFS, acting through 15 registered representatives, exercised discretion in 231 transactions in 56 customer accounts, without written authorization from the account holders, in violation of NASD Rule 2510(b) and FINRA Rule 2010.

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David Miller of Columbus, Ohio was named Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleged he made negligent misrepresentations and omissions of material fact in connection with customers’ purchases of UITs. FINRA alleged that Mr. Miller recommended 140 UIT purchases totaling over $5.3 million in 129 customer accounts without having a reasonable basis to make the recommendations, in violation of FINRA Rules 2111 and 2010.

From June 2008 through August 2013, Mr. Miller was registered as a General Securities Representative (GSR) with The Huntington Investment Company (Huntington), the broker-dealer affiliate of The Huntington National Bank (Huntington Bank). The FINRA complaint originated after Huntington filed a Form U5 on August 27, 2013, disclosing that Mr. Miller had “violated industry standards of conduct.” Upon investigation, FINRA found that Mr. Miller engaged in a pattern of recommending unsuitable UITs without having a reasonable basis for the recommendations, causing his customers to lose a total of $1,019,656.83.

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Ali Radfar of New York, New York submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly participating in an undisclosed private securities transaction in violation of NASD Rule 3040 and FINRA Rule 2010. Radfar entered the securities industry in July 2006 and was associates with FINRA member firm UBS Securities, LLC (UBS) from August 2012 through March 2015.

From August through October 2014, Mr. Radfar, with the help of another UBS member, participated in an undisclosed private securities transaction. FINRA alleged Mr. Radfar and the other firm member pooled personal funds with those of 12 other individuals whose investment they solicited. FINRA found a collective total of $300,000 was invested in SMS, an application-based game company. This investment, a private securities transaction, was made through two outside investment vehicles that were also formed by Mr. Radfar and the UBS representative.

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Feltl & Company (Feltl) of Minneapolis, Minnesota submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement for the Financial Industry Regulatory Authority (FINRA) for allegedly failing to apply sales-charge discounts to certain customers’ eligible purchases of unit investment trusts (UITs) and for failing to establish, maintain, and enforce a proper supervisory system. Feltl has been registered with FINRA and the NASD since 1975 and has faced three similar FINRA disciplinary actions in the past.

UITs are generally issued by a firm representative that assembles the UIT’s portfolio of securities, deposits the securities in a trust, and sells units of the UIT in a public offering. UIT units are redeemable securities that are issued for a specific term, and entitle an investor to receive his or her proportionate share of the UIT’s net assets on redemption or at termination.

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CP Capital Securities, Inc. (CP) of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to maintain proper supervisory procedures in connection with private placement offerings. FINRA noted that CP had participated in several minimum contingency private placement offerings without “adequate supervisory procedures.”

A private placement is generally an offering between only a select few investors in order to raise capital without registration. Private placement offerings must satisfy certain conditions to avoid registration with the Securities and Exchange Commission (SEC).  CP’s failure to supervise those offerings put the exemptions in jeopardy.

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