Carmel, Milazzo & DiChiara LLP (CMD) is investigating potential claims against Caldwell International Securities Corporation, and securities brokers Greg Allen Caldwell, Alex Evan Etter, Alain J. Florestan, Lennie Simmons Freiman, Paul Joseph Jacobs, Richard Andrew Lee, Lucas Dylan Lichtman and Richard Lim.
FINRA’s Department of Enforcement filed a complaint alleging that alleging that Caldwell International Securities Corporation, by and through one or more of its registered representatives and principals, put profits before customers, growth before compliance and subterfuge before transparency. The complaint alleges that the Caldwell International Securities Corporation’s culture of non-compliance led to serious sales practice, supervisory and reporting violations at its home office and multiple branches. Alex Evan Etter, Alain J. Florestan, Richard Andrew Lee, Lucas Dylan Lichtman and Richard Lim made unsuitable recommendations of an active trading investment strategy to their customers despite the fact these representatives failed to understand the risks of the investment strategy being recommended, or the impact the staggering commissions and fees generated by this active trading investment strategy would have on their customers’ accounts. These representatives had no reasonable basis to recommend such a strategy to their customers. As a result of the recommendation of an unsuitable active investment trading strategy, customer accounts suffered more than $1.1 million in realized trading losses while paying over $1 million in commissions and fees.
The complaint alleged that Caldwell International Securities Corporation and its brokers are liable for the unsuitable recommendations of an active trading investment strategy made by Etter, Florestan, Lee, Lichtman and Lim under the doctrine of respondeat superior because each representative was an agent of the firm acting within the scope of his duties when he engaged in this misconduct. Caldwell International Securities Corporation, acting by and through its registered representatives, made unsuitable recommendations involving inverse and/or leveraged Exchange Traded Funds (ETFs) without a reasonable basis for believing these investments were suitable for their customers.
The complaint also alleges that the Caldwell International Securities Corporation, Caldwell, Freiman and Jacobs failed to establish and maintain a system to supervise the activities alleged that was reasonably designed to achieve compliance with applicable securities laws and regulations and NASD/FINRA rules. Caldwell International Securities Corporation, Caldwell, Freiman and Jacobs failed to monitor for, detect and, when detected, investigate multiple instances of potential misconduct by the firm’s brokers involving unsuitable active trading investment strategies, unsuitable ETFs, discretionary trading without written authorization and excessive trading/churning in multiple customer accounts across multiple branches of the firm. In addition, the firm, Caldwell, Freiman and Jacobs failed to implement a reasonable supervisory system to adequately review trades for unsuitable recommendations, such as ETFs, and to adequately monitor whether the firm’s representatives understood the risks and benefits of the active trading investment strategy they were recommending, nor did the firm monitor whether the representatives had done any due diligence on the recommended active trading investment strategy. This grossly inadequate supervisory system resulted in many firm customers suffering significant losses and paying staggering commissions and fees. Caldwell International Securities Corporation, Caldwell, and Freiman failed to establish and maintain a system to supervise the firm’s activities that was reasonably designed to achieve compliance with applicable securities laws and regulations and NASD/FINRA rules and/or the firm’s written supervisory procedures in multiple other ways. Caldwell International Securities Corporation, Caldwell, and Freiman failed to place representatives on heightened supervision, review all electronic correspondence to and from customers, identify and report customer complaints received, and apply right of reinvestment/right of reinstatement fee waivers, resulting in overcharges of $107,367.08 to customers’ accounts. Moreover, the complaint alleges that the firm willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-10 by charging customers misleading and/or discriminatory miscellaneous fees in several transactions.
If you or someone you know has a complaint or lost money investing with Caldwell International Securities Corporation, and/or securities brokers Greg Allen Caldwell, Alex Evan Etter, Alain J. Florestan, Lennie Simmons Freiman, Paul Joseph Jacobs, Richard Andrew Lee, Lucas Dylan Lichtman and Richard Lim, you may be able to recover your losses through securities arbitration. The attorneys at CMD are experienced in representing investors in fraud, suitability, unauthorized trading, excessive commissions, excessive fees, ETFs and failure to supervise actions against brokers and brokerage firms. 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 firstname.lastname@example.org for a free and confidential case evaluation.