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Securities Fraud

Wells Fargo Broker Banned for Undisclosed Business Interests

Aaron Parthemer, a Wells Fargo adviser, has been barred by the Financial Industry Regulatory Authority Inc. (FINRA) for engaging in a number of undisclosed businesses, including running a dance club in South Beach, Fla., plus running an Internet branding startup and a tequila marketing operation. Undisclosed loans and business involvements FINRA alleges that Parthemer managed operations at the club, and loaned just under $400,000 to three professional athletes who were owners at the club. The loans were to pay for operating expenses at the club, but they violated Wells Fargo’s policy against brokers lending money to clients. James Sallah, an attorney representing Parthemer,...

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FINRA Focusing on Protecting Elderly Investors

While brokers and investment advisers are targeting older clients to build their book of business, regulators are attempting to protect graying investors. Misrepresentation of company strength Recently, the Financial Industry Regulatory Authority Inc. (FINRA) filed a cease-and-desist order against Avenir Financial Group for sales of equity in the firm. FINRA claims Avenir lied about the health of the firm and raised more than $730,000 over three years in sales mostly to elderly investors. Avenir registered representative, Cesar Rodriguez, was also barred for personal use of $77,000 in investor funds. Toll-free FINRA Securities Helpline The filing against Avenir comes just over a week after FINRA set...

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Starr Austen Helped Secure Huge Recovery for Fraud Victims

In a better-than-average outcome, more than 90 investors who lost $9.7 million in a securities fraud debacle will recover a very substantial percentage of their losses. The investors had put money in a hedge fund, Samex Capital Partners, run by a Fishers, Ind., hedge fund manager Keenan Hauke. The court appointed William Wendling, Senior Partner with Campbell Kyle Proffitt in Carmel, Ind., to act as receiver. Wendling then hired Starr Austen & Miller to act as lead securities litigation counsel because of their experience in representing victims of securities fraud. Broker misconduct In 2012, Hauke pleaded guilty to securities fraud and was...

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Investor Awarded $1.3 Million in Churning and Breach of Fiduciary Duty Case

A three-person Financial Industry Regulation Authority Inc. (FINRA) panel awarded Mississippi investor Tracy Noble Gilbert $1.29 million in compensatory damages and $250,000 in attorneys' fees over the handling of her finances by a former broker for Stifel Nicolaus & Co. Inc. Churning and breach of fiduciary duty Gilbert accused her former father-in-law, Lanis Dale Noble, then with Stifel, of churning and breach of fiduciary duty, among other charges, in the case filed in August 2012. The case involves buying on margin, and Nobel purchasing variable annuities from SunLife, ManuLife, and Friedman Billings Ramsey real estate investment trust. Buying on margin involves borrowing money...

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SEC Panel Recommends Single Database to Run Background Checks

magine being able to get information about any financial professional in the United States by visiting one web site. Investor protection To make it easier for investors to track securities violations by advisers and brokers, the Securities and Exchange Commission (SEC) Investor Advisory Committee (IAC) pitched the idea that the SEC work with other federal and state financial regulators to develop a single website to house disciplinary information about investment advisers, brokers and other financial professionals. The committee also recommended that a single portal be provided for investors to access information in SEC and Financial Industry Regulatory Authority Inc. (FINRA) databases. Anne Sheehan, director...

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Make Sure You Discuss Wealth Transfer With Your Adviser

If your financial adviser has never broached the subject of passing on your assets to the next generation, you have lots of company. A J.D. Power 2015 U.S. Full Service Investor Satisfaction Study finds that only 42 percent of investors say their advisers have asked them what will happen to their money when they die. The report finds that 71 percent of investors tell their advisers who they have named as beneficiaries, and are willing to discuss passing their assets on to them. Missed wealth transfer opportunities Discussing the passing of wealth to the next generation gives investors a golden opportunity to retain...

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Study Suggests Investment Advisers Often Act in Their Own Interest

Many investment advisers reinforce client behaviors that are in the advisers’ best interest, and fail to discourage financial errors by investors. These findings were reported in a working paper published by the National Bureau of Economic Research. The paper grew out of research at Harvard University, MIT and the University of Hamburg. In the study, auditors went on 284 client visits in which they gathered information from advisers. The auditors presented one of four investment strategies: Chasing returns by attempting to beat the market via identifying industries that performed the best in the recent past; Allocating 30 percent of their portfolio into...

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Top Financial Adviser, Tom Buck, Fired By Merrill Lynch

Thomas J. Buck, a senior vice president of investments at Merrill Lynch, was fired last month due to the company's loss of confidence following Buck's mislabeling a bond trade, failing to disclose key information to a client, and giving inaccurate information to his managers - all according to recent reports. Tom Buck, 61, spent over 33 years at Merrill Lynch in Indianapolis, Indiana, while becoming one of the country's top financial advisers. Barron's ranked Buck as the top financial adviser in Indiana every year since 2009, reporting that he had $1.5 billion in client assets under management. Barron's also reported that...

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Financial Adviser Sued By NBA Star

Tim Duncan, San Antonio Spurs 15-time All Star, recently sued his adviser in Texas state court, claiming he was pushed into investments despite conflicts of interest that ultimately caused him substantial losses. In his complaint filed in San Antonio, Duncan claims that his Atlanta-based financial adviser, Charlie Banks, hid his own interest in investment opportunities that Banks recommended to Duncan. The NBA star said that Banks exploited his good intentions and their relationship for his personal gain, and that he has joined the long list of professional athletes taken to the cleaners by investment advisers. Adviser conflict of interest The NBA star claims that...

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Institutional Investors Sue American Realty Capital Properties

TIAA-CREF, New York City Retirement Systems (NYCRS) and other investors recently filed complaints in the U.S. District Court in New York against American Realty Capital Properties (ARCP), a real estate investment trust. Deceiving the market The suit alleges that ARCP violated securities law by misrepresenting the company's business and prospects, deceiving the market and artificially inflating prices of its securities. According to the NYCRS’s filing, ARCP misstated its adjusted funds from operations by about $23 million in the first and second quarters of 2014. The filing also claims that at the end of October, the company acknowledged the errors and senior executives knew...

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