FINRA Arbitration Panel Orders Morgan Stanley to Pay $519K for Client Losses

Timothy J. Prouty

A couple from New Mexico claiming that a Morgan Stanley financial advisor, Timothy J. Prouty, persuaded them to buy complex financial instruments were awarded $519,089, plus interest by a FINRA Arbitration Panel.

In 2016, a couple alleged that Morgan Stanley’s broker engaged in unauthorized trading, among other things, resulting in losses of within their eight accounts. The couple’s main allegation focused on suitability violations.

Suitability violations occur when brokers fail to conduct reasonable due diligence and understand the potential risks and rewards of a recommended strategy. A broker is required to analyze a customer specific factors before making a determination that a particular investment is suitable to a customer. In other words, an investment recommendation must be consistent with client’s age, income, investment objectives and/or investment risk tolerance.

In this instance, the couple alleged that Timothy J. Prouty, their broker, persuaded them to purchase junk bonds, options and ETFs that were invested in derivates and futures.
A FINRA panel ruled in favor of the couple. The award found Morgan Stanley liable in the amount of $519,089, plus interest at the rate of 8.75% per annum from April 5, 2019 until paid in full. The broker’s request for expungement of his CRD record was denied.

If you or someone you know lost money due to suitability violations with Morgan Stanley and/or Timothy J. Prouty you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid. Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

Christhian Palacios of Garden State Securities Subject to Two Customer Complaints

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Christhian Palacios (Palacios) has been subject to two customer complaints and four tax liens during the course of his career.  Palacios is currently employed by Garden State Securities, Inc. (Garden State Securities).  One of the customer complaints against Palacios concern allegations of high frequency trading activity also referred to as churning and unsuitable investments.

In June 2018 a customer filed a complaint alleging their account was excessively traded and unsuitable from January 2009 until March 2016.  The claim alleged $298,109 in damages and is currently pending.

In July 2016 Palacios disclosed a tax lien of $140,000.

If you or someone you know lost money investing with Christhian Palacios and/or Garden State Securities you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

Scott Mass of David Lerner Associates has been subject to five customer complaints

According to BrokerCheck records financial advisor Scott Mass (Mass), currently employed by David Lerner Associates, Inc. (David Lerner) has been subject to five customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA), most of Mass’ customer complaints allege that Mass made unsuitable recommendations in a variety of investments including REITs, Puerto Rico bonds, and mutual funds.

In July 2018 a customer complained that Mass violated the securities laws by recommending unsuitable investments, breach of fiduciary duty, negligence, fraud and breach of contract in connection with the sale of Puerto Rico Bonds.  The customer alleges $500,000 in damages.  The claim is currently pending.

In December 2016 a customer complained that Mass violated the securities laws by recommending unsuitable investments from June 2007 through July 2015 causing $90,000 in damages.  The claim settled for $15,000.

If you or someone you know lost money investing with Scott Mass and/or David Lerner Associates you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

Mitchell Rock of Wells Fargo Subject to Numerous Customer Complaints

According to BrokerCheck records financial advisor Mitchell Rock (Rock), currently employed by Wells Fargo Clearing Services, LLC (Wells Fargo) has been subject to nine customer complaints.  According to records kept by The Financial Industry Regulatory Authority (FINRA), most of Rock’s customer complaints allege that Rock made unsuitable recommendations in a variety of investments structured products.

In July 2018 a customer complained that Rock violated the securities laws by telling the client that the accounts were subject to a certain rate for fees and commissions that were not correct and that his accounts were charged more than the rate that was told to him.  The customer alleges $500,000 in damages.  The claim was denied by the firm.

In November 2012 a customer complained that Rock violated the securities laws by making an investment that the broker represented would make a profit.  The claim was denied by the firm.

In September 2012 a customer complained that Rock violated the securities laws by making unsuitable investments in structured products causing $175,000 in damages.  The claim settled for $61,000.

If you or someone you know lost money investing with Mitchell Rock and/or Wells Fargo you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

Thomas Williams of IFS Securities has been subject to five customer complaints

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Thomas Williams (Williams) has been subject to five customer complaints and one termination for cause during his career.  Williams is currently employed by IFS Securities.  Several of the the customer complaints against Williams concern allegations of high frequency trading activity also referred to as churning and unsuitable investments.

In October 2018 a customer filed a complaint alleging their account was excessively traded, churning, and unsuitable investments.  The claim alleged $50,000 in damages and is currently pending.

In August 2010 Williams was terminated by First Allied Securities, Inc. (First Allied) in connection with allegations that a customer complained over unsuitable investments, misrepresentation, and breach of fiduciary duty.

If you or someone you know lost money investing with Thomas Williams and/or IFS Securities you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

 

Lynn Faust of Stifel Nicolaus

According to BrokerCheck records financial advisor Lynn Faust (Faust), currently employed by Stifel, Nicolaus & Company, Inc. (Stifel Nicolaus) has been subject to at least three customer complaints and one employment termination for cause during her career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), the complaints against Faust concern allegations of unsuitable investments in market linked notes.

In November 2018 a customer complained that Faust recommended investments that violated the securities laws concerning misrepresented market linked notes.  The complaint alleges $59,000 in damages and is currently pending.

In October 2018 Faust was terminated by Raymond James & Associates, Inc. (Raymond James) due to allegations that the firm had concerns relating to the nature of advisor’s UIT activity.

If you or someone you know lost money investing with Lynn Faust and/or Stifel, Nicolaus & Company, Inc. you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

Advisor Wenjinn Chang subject to complaints over alternative investments and REITs

Advisor Wenjinn Chang (Chang), currently employed by Independent Financial Group, LLC (Independent Financial) has been subject to at least two customer complaints.  According to a BrokerCheck report the customer complaints concern alternative investments and direct participation products (DPPs) such as non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and equipment leasing programs.

In October 2018 a customer filed a complaint alleging that Chang violated the securities laws by alleging over-concentration of non-traded REITs that were not suitable and that resulted in losses. The claim alleged $50,000 in damages and the claim is currently pending.

In September 2018 a customer filed a complaint alleging that Chang violated the securities laws by Alleging that the broker failed to advise of the risks of the investments made and that the Claimant has suffered losses as a result of the investments made.  The claim alleged $75,000 in damages and the claim settled for $10,000.

If you or someone you know lost money investing with Wenjinn Chang and/or Independent Financial Group, LLC you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.

CMD Partner Ross D. Carmel Wins Over $2.7 Million in Damages, Including Punitive Damages

Press Release – New York, NY – December 12, 2017 – Securities and corporate law firm Carmel, Milazzo & DiChiara LLP announced today that attorney Ross D. Carmel successfully represented four clients in an AAA Arbitration which awarded over $2.7 million dollars in damages.

The underlying case involved four former employees, who were also investors in their employer. The employees alleged that the employer and its principals were engaged in an employment-investment Ponzi scheme, and sought damages for, amongst other things, wages due and fraud.

The decision of the Arbitrator awarded $1,665,210.54 in compensatory damages, which included an affirmative finding of fraud. The decision also awarded an additional $1,109,444.97 in punitive damages. The defendant companies and officers were found jointly and severally liable.

Mr. Carmel has extensive experience representing broker-dealers and individuals, as well as publicly traded and private companies. Mr. Carmel has been recognized as a Super Lawyer, Rising Star.

About Carmel, Milazzo & DiChiara LLP
Carmel, Milazzo & DiChiara LLP is a nationally recognized securities and corporate law firm that provides experienced representation in all matters involving the securities industry. Our attorneys specialize in advising clients on private placements, initial (IPOs) and secondary public offerings, alternative public offerings, preparation of SEC filings and listings on the NYSE, NASDAQ and OTCMarkets. In addition, our litigation and arbitration attorneys are highly skilled in representing clients from routine lawsuits to complex cases before the SEC, FINRA, and other tribunals, as well as State and Federal Courts.

Investors Harmed By Faulty Variable Annuity Exchanges Have Recourse

Two recent enforcement actions from the Financial Industry Regulatory Authority Inc. demonstrate FINRA’s attention on variable annuities, especially faulty annuity exchanges.

Brokers typically recommend clients replace annuities under Section 1035 of the tax code. That provides a tax-free transfer for the client, but also generates additional commission for the broker. As such, 1035 exchanges are typically how abusive account churning occurs with annuity products.

Clients can incur higher annuity fees and surrender charges due to the exchanges, but they also can have significant tax liabilities because the brokers, in trying to conceal their abuse, don’t categorize the annuity replacements as 1035 exchanges.

FINRA levied $30.3 million in fines among 30 variable annuity cases in 2016, including a $25 million penalty against MetLife Securities Inc. in May for negligent behavior regarding variable annuity replacements.

If you or someone you know lost money in a variable annuity exchange, you may be entitled to recover your investment losses through FINRA arbitration. CMD accepts cases on a contingency fee basis, which means we only get paid if you get paid.  Your time to file a claim may be limited, so contact us today at (212) 658-0458 or contact@cmdllp.com for a free and confidential case evaluation.