Last week, Matthew A. Bell, a former WFG Investments, Inc. stockbroker was arrested for engaging in a penny stock fraud scheme involving many securities, including CodeSmart Holdings, Cubed, Inc., StarStream Entertainment, Inc. and The Staffing Group, LTD. He was indicted along with A.J. Discala, Marc E. Wexler, Kyleen Cane, Victor Azrak and Ira Schapiro for allegedly defrauding investors and potential investors in the 4 public companies. The alleged scheme was “built on lies, deceit and manipulated trading activity to defraud the securities markets and investing public,” according to the US Attorney’s office for the Eastern District of New York. The defendants alleged “pump and dump” scheme included false and misleading press releases and SEC filings, stock market manipulation techniques such as “wash trades,” “matched trades,” “marking the close,” and unauthorized trading for clients who it entrusted the stockbrokers with their life savings. As in all such schemes, the price of the various public corporations climbs for no real reason and then falls from the sky with the investors holding worthless stock. According to the FBI, some of Mr. Bell’s victims had no idea that the stock was being purchased in their accounts by the stockbroker.
Mr. Bell has a history of customer complaints. A recent FINRA report indicates over 25 customer disputes, some of which are still pending, and two terminations by stock brokerage firms. It appears that during the relevant period Mr. Bell was working for WFG Investments, Inc. and Securities America, Inc. However, Securities America reports that none of Mr. Bell’s clients ever actually transferred their accounts to the brokerage firm and that he did no business there because the State of Texas did not approve him being licensed. Most of the customer complaints are for unsuitable recommendations, breach of fiduciary duty, misrepresentations, and unauthorized trading in many different securities products. Several complaints relate to the offer and sale of private placements known as California Proton Treatment Center, Maryland Proton Center, Virtus Student Housing, LP and Pamaz Scientific, Inc. which were of illiquid and unsuitable investments for many customers. The most recent claims, however, relate to purchases of small, high risk penny stocks, such as those stocks which are the subject of the indictment.
Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of fraudulent and unlawful behavior which violate industry rules and procedures. In order to protect investors from such misconduct, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system. The implementation of the rules requires supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors do not establish and implement these protective measures, they may be a liable to account holders for losses flowing from the misconduct. As a result, account holders who have suffered losses stemming from misrepresentations, omissions, and other broker misconduct can bring forth claims to recover damages against broker-dealers like WFG Investments, which have a duty to supervise its employees in order to prevent the above-described misconduct.
Have you suffered losses in your WFG Investments account due to fraudulent activity by your broker? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against WFG Investments stockbrokers who may have engaged in misconduct and caused investment losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , 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 protecting investors’ rights 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.