Customer Files Suit Against Paulson Investment Company For Securities Fraud

Michael Patrick Nixon (CRD# 2169631), who has been a registered representative of both Newport Coast Securities, Inc. (Leesburg, VA) and Paulson Investment Company, LLC (Tampa, FL), disclosed on Financial Industry Regulatory Authority (“FINRA”) BrokerCheck that he is named in a July 9, 2018 FINRA Arbitration #18-02421 where several customers alleged that Nixon committed securities fraud. The customers are reportedly seeking $3,000,000.00 in damages because of Nixon’s fraudulent activities.

The customers’ claims included the violation of Florida Securities Act and the Virginia Securities Act; a breach of fiduciary duties; unsuitable securities recommendations; inadequate supervision of the transactions effected in the customers’ accounts; and the breach of contractual terms. Apparently, those claims of sales practice violations concerned the customers’ investments in corporate debt products during the period that Nixon was employed by both Paulson Investment Company, LLC and Newport Coast Securities, Inc. The arbitration is pending a resolution.

Another customer arbitration, National Association of Securities Dealers (“NASD”) Arbitration #98-03927 was disclosed on Nixon’s FINRA BrokerCheck file. A customer of American Frontier Financial Corporation (formerly known as RAF Financial Corp.) alleged that Nixon engaged in deceitful conduct; misrepresented information about investments; failed to supervise the customer’s stock transactions; breached fiduciary duties; and violated NASD rules.

Nixon has a history of working for brokerage firms that FINRA has expelled, including Dickinson & Co. (expelled April 7, 1998); Jesup & Lamont Securities Corp. (expelled November 4, 2010); Empire Financial Group, Inc. (expelled March 30, 2009); Meyers Associates, L.P. (expelled May 29, 2018); and Newport Coast Securities, Inc. (expelled June 25, 2018).

Nixon’s employment with Newport Coast Securities, Inc. ended on January 6, 2016. He has been with Paulson Investment Company LLC since December 4, 2015.

If you have suffered losses because of Michael Patrick Nixon, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering investor losses.

Morgan Stanley Broker Terminated For Alleged Outside Business Activities

Michael Schuchman (CRD :# 4437315), who was registered as a general securities representative of Morgan Stanley between June 1, 2009 and June 14, 2018, has voluntarily resigned based on allegations made by Morgan Stanley concerning Schuchman’s possible engagement in outside business activities without notifying the firm as required by the firm’s policies.

FINRA BrokerCheck disclosed that several of Schuchman’s past customers have filed disputes regarding his sales practices. Most recently, Schuchman has been referenced in a pending consumer-initiated, investment-related arbitration from July 2, 2018 in which the customers alleged that Schuchman excessively traded in their accounts between May 2014 and July 2017, during which time Schuchman was employed by Morgan Stanley Smith Barney. (Case #: 18-02223). The complaint is pending.

Another consumer arbitration regarding Schuchman’s conduct had been filed on August 3, 2017. The arbitration concerned a Morgan Stanley customer who alleged that structured products, exchange-traded funds and equities transactions effected in the customer’s account between 2011 and 2017 were not suitable for the customer. That complaint is pending.

In addition, on December 15, 2014, a consumer brought a complaint alleging that that commissions on options and equity investments had been misrepresented to the customer. The customer’s complaint was resolved on May 11, 2015.

If you have suffered losses due to the sales practice violations of Schuchman or another Morgan Stanley broker or financial adviser, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering investor losses.

Wells Fargo’s Laura Cava Barred For Disregarding FINRA Requests

Laura Ann Cava (CRD #: 5092233) has been a registered representative of Wells Fargo Clearing Services, LLC (Lehigh Acres, Florida) between April 11, 2006 and May 5, 2017. Financial Industry Regulatory Authority (“FINRA”) barred Cava in all capacities on October 23, 2017, citing allegations that Cava failed to respond to FINRA’s request for information. FINRA may have been inquiring into Cava’s activities for possible violations of FINRA rules.

Particularly, Cava did not leave Wells Fargo Clearing Services on a good note. She was discharged on May 5, 2017 for allegedly violating company policy by borrowing from several banking customers. FINRA Rule 3240 precludes borrowing arrangements between customers and registered representatives absent the borrowing arrangement meeting certain criteria.

FINRA indicated on Cava’s FINRA BrokerCheck page that Cava was suspended in all capacities on August 11, 2017 for failing to respond to FINRA’s request for information. Cava was provided approximately three months to comply with FINRA’s requests or otherwise seek that her suspension be terminated. Since Cava failed to provide FINRA with the required information by October 22, 2017, she was automatically barred on October 23, 2017. (FINRA Action #: 2017054338601)

If you have suffered losses due to the misconduct of your Wells Fargo broker or financial adviser, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering investor losses.

Merrill Lynch Customers Sue Over Unsuitable Puerto Rican Bonds

Jose E. Gonzalez Pumarada (CRD #: 1571751) is a general securities representative of Merrill Lynch, Pierce, Fenner & Smith Incorporated (Guaynabo, Puerto Rico). FINRA BrokerCheck disclosed that Pumarada is subject of a pending consumer-initiated, investment-related arbitration from October 19, 2017 containing allegations against Pumarada of sales practice violations. The Merrill Lynch customer alleged in the October 19, 2017 arbitration that she was placed in Puerto Rican municipal bonds and closed-end funds that were both unsuitable and misrepresented. At least $250,000.00 in damages has been alleged by the customer. (Case #: 17-02713).

According to FINRA BrokerCheck, allegations of Pumarada’s sales practice violations are referenced in four previous consumer-initiated, investment-related disputes. The first one was a complaint filed by a Salomon Smith Barney customer on February 6, 2001, alleging that the customer’s instructions concerning options investments had not been followed. The customer also alleged that unauthorized options had been purchased for the customer’s account. Salomon Smith Barney denied the complaint on February 6, 2001.

Then, a Merrill Lynch customer filed an arbitration on June 25, 2014, alleging that unsuitable investment recommendations were made concerning the customer’s investments in municipal debt and closed-end funds. Moreover, the customer claimed that there were misrepresentations and omissions of information relating to her investments. Merrill Lynch settled the customer’s complaint for $15,000.00 on March 22, 2016. (Case #: 14-01828)

On September 22, 2015, another customer of Merrill Lynch brought an arbitration alleging omissions and misrepresentations of facts between October 2009 and September 2015 concerning municipal debt and closed-end funds. The customer claimed to have received unsuitable investment recommendations. The arbitration was settled on February 23, 2018 for $50,000.00.

Are you a victim of sales practice violations committed by Jose E. Gonzalez Pumarada or another broker or financial advisor? If so, contact The Law Office of Peter M. Spett at (561) 463-2799 for a free consultation regarding your legal rights and claims.

Customer Alleges National Planning Corporation Provided Poor Advice

Nancy Ellen Biddle (CRD #: 2134532) is a general securities representative who was registered with National Planning Corporation (St. Pete Beach, Florida) between June 19, 2006 and October 24, 2017. FINRA BrokerCheck discloses that Biddle has been subject of consumer-initiated, investment-related complaint from March 17, 2017 containing allegations against Biddle of poor investment advice while registered with National Planning Corporation. The customer alleged that Biddle made unsuitable recommendations concerning the purchase and liquidation of real estate investment trusts, causing the customer to experience damages exceeding $5,000.00.

According to FINRA BrokerCheck, this is the fifth consumer-initiated, investment-related dispute in which Biddle’s sales practices have been called into question. The first complaint was filed by a customer of Locus Street Securities who alleged that real estate investment trust purchases were not suitable given the customer’s age and liquidity needs. In addition, that customer alleged that the account was over-concentrated in real estate investment trusts. The complaint was settled on February 25, 2005 for $171,668.40 in damages.

The second complaint was filed on May 2, 2006, concerning a customer of ING Financial Partners, Inc. who alleged that there were unauthorized stock trades made in the customer’s investment account. The customer demanded $150,000.00 in damages. ING Financial Partners, Inc. denied the complaint on May 11, 2006. The third complaint dated May 9, 2013 involved a National Planning Corporation customer who alleged that a variable annuity was unsuitable for the customer. The firm stated that the customer’s alleged damages are greater than $5,000.00.

Another National Planning Corporation customer brought an arbitration on July 14, 2015, alleging negligence, breach of contract, breach of fiduciary duty and violation of FINRA and NASD rules in connection with the customer's real estate security holdings. National Planning Corporation agreed to pay the customer $12,500.00 to resolve the matter.

On October 18, 2017, Biddle became registered with FSC Securities Corporation in St. Pete Beach, Florida.

If you have incurred investment losses from Nancy Ellen Biddle, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering losses for investors who have been sold unsuitable securities by their brokers or advisors.

Advisor Group Firms Fined For Failure To Supervise Annuity Sales

The Advisor Group Firms (FSC Securities Corporation, SagePoint Financial, Inc., Royal Alliance Associates, Inc. and Woodbury Financial Services, Inc.) consented to being fined and censured by Financial Industry Regulatory Authority (FINRA) according to their submission of a Letter of Acceptance, Waiver and Consent #: 2016047636601, accepted by FINRA on July 24, 2018. FINRA found that the Advisory Group Firms failed to reasonably supervise sales of multi-share class variable annuities.

The AWC stated that SagePoint, FSC and Woodbury (from January 2013 to December 2014) and Royal Alliance (from February 2014 to December 2015) sold variable annuity contracts with the choice of different share classes, which included B-share contracts and L-share contracts.

B-share contracts – the most common share class sold to customers – contain lower fees than L-share contracts but longer surrender periods. Customers typically pay up to 50 basis points more for L-shares in return for increased liquidity. FINRA Department of Enforcement indicated that suitability concerns could arise when L-share contracts are sold to customers who have indicated their plans to hold their investment on a long-term basis. Those concerns, according to FINRA, become more obvious when an L-share contract is purchased with a long-term rider (e.g. Guaranteed Minimum Withdrawal Benefit or Guaranteed Minimum Income Benefit) since those riders require the annuity to be held by the customer for at least five years, if not longer, to provide the customer with the complete benefit.

FINRA stated in the AWC that the Advisor Group Firms had to comply with Rule 2330’s standards, which preclude a registered representative from recommending that a variable annuity be purchased or exchanged unless the representative has a reasonable basis to believe that: the customer has been provided information about the variable annuities’ features, surrender periods, fees, expenses and tax implications; the customer would derive a benefit from some of the variable annuities’ features (e.g. tax-deferral, a guaranteed income stream, or a death benefit); and that the selected variable annuity and rider(s) are suitable for that customer.

The AWC detailed the Advisor Group Firms’ failure to establish and enforce a supervisory systems and written supervisory procedures constructed to ensure registered representatives conformed to Rule 2330. According to the AWC, the procedures failed to identify suitability issues concerning the various surrender periods, costs and fees of the share classes. There was apparently no mention of the suitability issues within the Advisor Group Firms’ procedures concerning L-share contracts being sold with long-term income riders or sold to customers with long-term investment horizons. FINRA cited the Advisor Group Firms for failing to address within their written supervisory procedures any instances in which further scrutiny was justified in the mandated principal review and approval stage due to the suitability issues stemming from the selected variable annuity share class.

The AWC stated that registered representatives and principals were also not provided sufficient training by The Advisor Group Firms to ensure that the variable annuity features were understood. The Advisor Group Firms, according to the AWC, used training modules that were not constructed to confirm that registered representatives and principals understood suitability concerns stemming from L-share contracts being sold with long-term income riders or sold to customers with long-term investment horizons.

FINRA Department of Enforcement found that the Advisor Group Firms violated FINRA Rules 2330(d), 2330(e), 3110, 2010 and NASD Rule 3010 based on their foregoing supervisory failures.

Royal Alliance also consented to findings that it failed to appropriately supervise the rates that variable annuities were exchanged. Specifically, the AWC mentioned that from February 2014 to March 2016, Royal Alliance had not established and maintained a supervisory system and written supervisory procedures appropriately constructed to supervise exchanges of variable annuities. The AWC stated that only a limited number of representatives had been reviewed, and the determination of which representatives were reviewed did not depend on the rates in which annuity recommendations were made. Evidently, there were no surveillance procedures included within the firm’s supervisory procedures that had been constructed to identify alarming rates of exchanges. The AWC stated that Royal Alliance violated FINRA Rules 2330(d), 3110, 2010 and NASD Rule 2010 as a result of its failure to supervise in this regard.

The AWC stated that from January 2013 to December 2014, FSC generated more than $51,500,000.00 in variable annuity sales. $12,200,000.00 of those sales (more than 23% of total variable annuity transactions) consisted of L-share contract sales. FSC was fined $200,000.00 and censured.

SagePoint generated more than $52,700,000.00 in variable annuity sales from January 2013 to December 2014. L-share contracts comprised $11,500,000.00 of those sales (more than 21% of total variable annuity transactions). SagePoint consented to sanctions including a $200,000.00 fine and censure.

From February 2014 to December 2015, $61,900,000.00 in variable annuity sales had been generated by Royal Alliance. $15,600,000.00 in sales were due to sales of L-share contracts (more than 28% of total variable annuity transactions). Royal Alliance consented to sanctions including a $350,000.00 fine and censure.

Woodbury generated more than $107,100,000.00 in variable annuity sales between January 2013 and December 2014. L-share contract sales totaled $18,800,000.00 (19% of total variable annuity transactions). Woodbury consented to sanctions including a censure and $250,000.00 fine.

If you believe that you are a victim of an unsuitable annuity exchange executed by a representative of one of the Advisor Group Firms, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering investor losses.

Morgan Stanley Allegedly Fails To Follow Investment Guidelines

Jack Ezra Kolker (CRD #: 1220600) is a prior Morgan Stanley general securities representative who disclosed a consumer-initiated, investment-related complaint from January 20, 2017. The complaint contained allegations that from December 2015 to December of 2016, investment guidelines and other instructions were not followed in reference to the Morgan Stanley customer’s stock and municipal debt investments. The customer’s damages have not been specified. Morgan Stanley denied the complaint on June 2, 2017.

There are at least two other customers of Kolker who have sought redress for misconduct. According to FINRA BrokerCheck, on April 2, 2008, a UBS Financial Services, Inc. customer filed a complaint alleging to have sustained losses by investing in auction rate securities. Apparently, the customer was one of many investors who suffered from the illiquidity of the auction rate securities market. On December 23, 2008, the customer agreed to settle the matter for $500,000.00, which reportedly represents the gross initial par value of the ARS position(s) held by the customer.

The other dispute consisted of a February 22, 2010 consumer-initiated arbitration proceeding brought on by several customers, one of which included a 91 year-old investor. The customers’ collectively alleged that the equity trading in their accounts was not suitable for them, and transactions had been executed without permission being provided by the customers. UBS settled the customers’ allegations of unsuitability and unauthorized trading for $125,000.00 in damages on September 1, 2010.

FINRA BrokerCheck indicates that Kolker was registered with UBS Financial Services Inc. until January 27, 2009. Between January 9, 2009 and November 2, 2017, he was registered with Morgan Stanley. On November 1, 2017, Kolker commenced employment with J.P. Morgan Securities LLC.

If you believe you are a victim of sales practice violations committed by Jack Ezra Kolker or another representative of Morgan Stanley, call the Law Office of Peter M. Spett at (561) 463-2799 for a free consultation concerning your legal rights and claims. Peter M. Spett has extensive experience recovering investor losses.