CMD Investigating Claims Against Berthel, Fisher & Company Financial Services, Inc. and Jeffrey Paul Dragon for Unsuitable UITs

Securities law firm Carmel, Milazzo & DiChiara LLP (CMD) is investigating claims against Berthel, Fisher & Company Financial Services, Inc. and Jeffrey Paul Dragon for recommending and effecting a pattern of unsuitable short-term trading of UITs (Unit Investment Trusts).

FINRA has alleged that the short-term trading patterns were inconsistent with the design of the securities at issue and required the customers to pay substantial sales charges, most of which came back to the firm and the representative in the form of dealer concessions. Dragon recommended to the customers—many of whom were seniors, unsophisticated investors, or both—that they liquidate UIT positions that they had held for only a few months, and which they had purchased on Dragon’s recommendations, and then use the proceeds to purchase other UITs. Because each UIT purchased carried a new sales load, and because UITs are designed not to be actively traded, Dragon’s recommendations were excessive and unsuitable. Dragon made the recommendations to the customers that they buy and sell UITs without having reasonable grounds for believing that the consistent pattern of short-term UIT trading he recommended was suitable for any of the customers, given their age, personal and financial situations and needs, the nature of the recommended UIT transactions, including the sales charges and other costs associated with them, and the availability of less costly alternatives. Dragon also routinely structured the UIT purchases he recommended to the customers in order to prevent the customers from qualifying for sales-charge discounts, which would have reduced the dealer concessions paid to him and the firm. Dragon made the structured recommendations to the customers without having a reasonable basis to believe that those recommendations, which prevented the customers from receiving available discounts to which they were entitled, were suitable for those customers or for any customer,

FINRA also alleges that Berthel, Fisher allowed this activity to occur, and in fact, profited from it, as a direct result of its inadequate system for supervising UIT trading. Berthel, Fisher failed to establish and maintain a supervisory system that was reasonably designed to ensure compliance with its and its representatives’ suitability obligations under the federal securities laws and FINRA and NASD rules in connection with sales of UITs, and to ensure that customers received sales-charge discounts to which they were entitled on UIT purchases. The firm’s supervisory system was also inadequate because it was not reasonably designed to prevent short-term and potentially excessive trading in mutual funds.

From 2010 through 2014, the firm failed to detect that more than 2,700 of its customers’ UIT purchases did not receive applicable sales-charge discounts. As a result, firm customers paid excessive sales charges of approximately $667,000, nearly all of which was paid to the firm and its registered representatives as dealer concessions

If you or someone you know lost money investing with Jeffrey Paul Dragon and/or Berthel, Fisher & Company Financial Services, 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.

CMD Investigating Claims Against Foothill Securities, Inc. for Unsuitable, Over-Concentration of Customer Accounts in REITs

Securities law firm Carmel, Milazzo & DiChiara LLP (CMD) is investigating claims against Foothill Securities, Inc. for failure to supervise and for  over-concentrating and recommending unsuitable REITs in customer accounts.

FINRA’s findings stated that Foothill Securities, Inc. maintained written guidelines for limiting customers’ investments in non-exchange-traded REITs and other non-liquid investments that stated that no single order in one non-liquid product should equal more than 10 percent of a customer’s investable net worth as of the time the order is placed, and that no order should cause a customer to have more than 20 percent of his or her investable net worth in non-liquid investments.  FINRA found that Foothill Securities, Inc.’s registered representatives recommended these illiquid, non-traded REITs to its customers that exceeded these concentration guidelines.

If you or someone you know lost money investing with Foothill Securities, 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.

CMD Investigating Claims Against Lawson Financial Corporation, Inc. and CEO Robert Lawson for Fraud

Carmel, Milazzo & DiChiara LLP (CMD) is investigating potential claims against Lawson Financial Corporation, Inc., an Arizona based company, and its CEO Robert Lawson for fraud related to municipal bonds.

FINRA has issued a formal complaint against Lawson Financial Corporation, Inc. (LFC), as well as Robert Lawson, the company’s CEO and President with self-dealing – furthermore the regulator has charged LFC with abuse and securities fraud given their role as co-trustees of a charitable remainder trust. In particular, LFC and Lawson were improperly using the trust funds to indirectly prop up the struggling offerings via transfers of millions of dollars from the charitable remainder trust account – the allegations also extend to Pamela Lawson, LFC’s Chief Operating Officer (COO).

The specific municipal bonds at issue in the cited complaint include a $10.5 million bond offering back in October 2014 for bonds relating to an Arizona charter school – this was underwritten by LFC and peddled to LFC customers.  In addition, LFC had also been involved in secondary market bond sales to its clientele in 2015, involving earlier-issued municipal revenue bonds to the same charter school.  Finally, the complaint details secondary market sales to LFC’s customers between early 2013 and July 2015, concerning two separate assisted living facilities in Alabama.

FINRA has alleged that Lawson and LFC were acutely aware of the financial difficulties faced by the municipal revenue bond conduit borrowers, i.e. the Arizona charter school and the assisted living centers, opting to mask the financial woes facing these groups to its customers. This was further compounded by allegations that Lawson and LFC carried out their securities fraud by transferring millions of dollars from a deceased customer’s charitable trust account to cover up any associated risks endemic in the municipal revenue bonds.

Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock, bond or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws. 

Investors are protected against fraudulent securities activities by several different civil laws. First, the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) and Rule 10b-5 protect investors against deceptive and manipulative acts in the purchase or sale of securities. This sweeping legislation is the cornerstone of federal securities laws. Rule 10b-5 makes it unlawful to employ a device or scheme to defraud, to make any untrue statement of material fact or omit to state a material fact not misleading, or to engage in any practice that would operate as a fraud.

If you or someone you know lost money investing in or with Lawson Financial Corporation, 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.

CMD Investigating Claims Against Ridgeway & Conger, Inc., And Securities Brokers Kenley Brisard, Philip Brisard and Leigh McCobb Garber

Carmel, Milazzo & DiChiara LLP (CMD) is investigating potential claims against Ridgeway & Conger, Inc., and securities brokers Kenley Brisard, Philip Brisard and Leigh McCobb Garber.

FINRA’s Department of Enforcement filed a complaint alleging that Ridgeway & Conger, Inc., Kenley Brisard and Philip Brisard sold an unregistered security that consisted of interest-only strips from loans issued by the United States Small Business Association (SBA) meant only for Qualified Institutional Buyers (QIBs) to individual retail investors at undisclosed markups using general solicitation emails that fraudulently misrepresented the product and their role in its development.

The complaint alleges that Kenley Brisard and Philip Brisard willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder when they engaged in fraudulent misrepresentations and omissions of material fact in connection with customer purchases of securities with respect to the emails they sent to customers.  The misrepresentations and omissions in Kenley Brisards’ statements to customers were material because a reasonable investor would consider them important in making investment decisions, because they significantly altered the total mix of information made available to the solicited customers, and because they denied the investors the opportunity to make an informed decision about whether to invest in the SBA interest-only security. The complaint also alleges that Kenley Brisard and Philip Brisard, in connection with offers of the SBA interest-only security, sent false and fraudulent emails containing similar misrepresentations and omissions to additional customers and prospects, and failed to comply with Section 17(a)(1) of the Securities Act of 1933.   FINRA alleges that Kenley Brisard and Philip Brisard knowingly, willfully and/or recklessly ignored and/or contradicted the PPM for the SBA interest-only security to which they had ready access, and they made statements that had no underlying factual basis.  Kenley Brisard and Philip Brisard failed to reasonably and/or independently investigate and understand the SBA interest-only security before they recommended the investment to customers and failed to reasonably consider the information contained in the PPM.

The complaint further alleges that Ridgeway & Conger, Inc. charged excessive markups on customers’ unregistered securities transactions. In each of the transactions, the firm purchased the SBA interest-only security for its own account from a placement agent, and shortly thereafter sold it to individual retail customers. In each of these transactions, the firm already had the order from the customer in hand before it purchased the security from the placement agent. In each instance Leigh McCobb Garber, on the firm’s behalf, signed the trade tickets approving the markup. In total, the firm charged approximately $112,408 in markups for a security which the firm purchased for a total of about $548,722 and sold to customers for a total of about $661,131. Nothing in the nature of the Ridgeway & Conger, Inc.’s or Kenly Brisard or Philip Brisard’s business or the identified purchases of the SBA interest-only security justified the size of the markups on the purchases by the firm’s customers.  In addition, the complaint alleges that the firm fraudulently failed to disclose the excessive markups on trade confirmations or otherwise to purchasers of the SBA interest-only security, thereby willfully violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and violated FINRA Rule 2020. Ridgeway & Conger, Inc.’s misrepresentations and omissions were material because a reasonable investor would consider them important in making investment decisions.

Furthermore, the complaint alleges that Ridgeway & Conger, Inc. and Leigh McCobb Garber failed to establish and maintain proper supervisory systems and procedures for the firm’s sales of Securities Act of 1933 Rule 144A securities, markup and Section 5 activities related to the sales of the interest-only unregistered security.

If you or someone you know has a complaint or lost money investing with Ridgeway & Conger, Inc., and/or securities brokers Kenley Brisard, Philip Brisard and Leigh McCobb Garber, you may be able to recover your losses through securities arbitration. The attorneys at CMD are experienced in representing investors in fraud, suitability, private placements, 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 contact@cmdllp.com for a free and confidential case evaluation.