Financial Counsel by Eccleston Law

Eccleston Law Offices Continues to Investigate World Group Securities and Others

The attorneys at Eccleston Law are continuing their investigation of World Group Securities n/k/a Transamerica Financial Advisors, including representatives like Michael McCurdy. In particular, Eccleston Law Offices is investigating World Group Securities’ for securities fraud and/or mortgage fraud. The suitability of investments, insurance products and negative amortization loans are in question.

If you are an individual who has suffered through World Group Securities n/k/a Transamerica Financial Advisors, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccelston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, and breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

Riskier Master Limited Partnerships Tempt Yield Hungry

Increasingly, private-equity firms are turning mountains of sand, gas stations, and coal mines into a unique type of security that offers investors annual yields as high as 19 percent. The yield is appealing but what are the risks to these MLPs?

Because these new securities are rising in popularity, they are sending the prices soaring. And they may not have been adequately described. According to Chris Eades of ClearBridge Energy Funds, some people have the impression that they are buying the equivalent to a toll road, but MLPs are usually under contracts and revenue is passed to investors which means some could pay out zero income in some quarters. Additionally, some MLP's have not done so well. PetroLogistics LP, which processes propane gas, has fallen about a third since its IPO as refining profits have narrowed. Many investors warn that less-traditional MLPs may not be all that they promise to be and will run into trouble should there be another economic downturn. Several newer partnerships based on the gathering of oil and gas have cut their payouts. Investors need to beward of MLPs.

We represent invidividual and institutional investors to recover their investment losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors. Our work with advisers sets us apart from our competition as wel have gained insight and knowledge of the financial services industry and the respect of lawyers nationwide on "both sides of the aisle."

Key Reasons for Joining an OSJ Group

Recently, I read a very interesting Investment News article written by Jodie Papike, a recruiter based in New York. She discussed how financial advisors are increasingly making the move to independence, but are often faced with a number of important decisions, one of them being whether to join an existing OSJ group to provide supervision and additional support. There are many benefits of joining an OSJ including high-reaching and high-service capabilities, a better financial deal, lead generation and coaching programs. Affiliation with an OSJ group can provide the familiarity of a smaller firm while providing the strength and dependability of a large broker dealer. This is important in areas such as increased transition services, operational efficiencies and quicker compliance reviews. It give financial advisors a great amount of guidance on how to suceed in today's market. Many financial advisors feel that an OSJ group represents a better deal financially. In addition, some OSJ offer a variety of programs not offered directly by broker-dealers such as referrals and access to attorneys, certified public accountants as well as coaching and conferences.

She points out that deciding to join an OSJ group requires advisors to research and evaluate all options based on their own business, finances and relationships. Although OSJ groups provide these benefits, they come at a cost. Generally, using an OSJ incurs a 2 to 10 percent override for supervision and another 10 to 25 percent for additional benefits. Many advisors feel that the fees are well worth the costs. In addition, when choosing an OSJ group, it is important to find one that fits your business model and culture. Last, it is important to note that affiliating with a group such as an OSJ usually involves taking precautions to make sure you will be protected if you decide to leave -one of our key practice areas in assisting advisers who transition. Always,remember to review your contract with OSJ you choose. OSJ's are not for everyone, so making sure you do your homework and evaluate all possible options for you and your business is the best way to ensure success.

Advisors Choosing to Sell and Stay for Succession Planning

Since the 2008 economic downturn, much has changed for advisors in the market. Today, they are increasingly turning to a new strategy which supports argue is more satisfying and profitable than selling out and moving on. Advisors are now merging with another firm and continuing to work, but at a much slower pace. Before 2008, private-equity firms and aggregators were more interested in buying assets than keeping previous principals around on a part-time basis. Since then, capital for acquisitions has been tighter, and buyers are more concerned about the risk that clients may leave once their advisor is no longer with the firm. With the new strategy, internal successions and mergers with continued owner involvement now demand a higher price than standard or all cash deals. Recently, Savant Capital LLC added $461 million in assets after the merger with The Monitor Group Inc. In addition, The Monitor Group's price is now 25 to 30 percent higher because all of the advisors are fully committed. According to FB Transitions, all cash acquisitions generally sell for about 4.6 times revenue, while internal deals receive the highest multiple, at up to about 6.25 times revenue. The "sell-and-stay merger" strategy creates more value because it is better accepted by clients who are paying closer attention than they were before 2008.

We counsel, represent and defend financial advisors nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisors as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

FINRA pushing to make broker records more accessible to investors

The Financial Industry Regulator Authority (FINRA) has proposed to the SEC that it expand information on reps available through the BrokerCheck system for investors to obtain.  BrokerCheck is a free online tool through FINRA’s website that enables the public to access current and former registered brokers as well as brokerage firms.  In addition, the public is able to download information.

One proposed expansion on BrokerCheck will be that dismissed investment-related civil action permanently will be made public. Likewise, another specific proposal is that FINRA will require member firms to include a reference and link to BrokerCheck on the company’s home page and any related websites.

Riskier Master Limited Partnerships Tempt Yield Hungry

Increasingly, private-equity firms are turning mountains of sand, gas stations, and coal mines into a unique type of security that offers investors annual yields as high as 19 percent.  The yield is appealing but what are the risks to these MLPs?

Because these new securities are rising in popularity, they are sending the prices soaring.  And they may not have been adequately described.  According to Chris Eades of ClearBridge Energy Funds, some people have the impression that they are buying the equivalent to a toll road, but MLPs are usually under contracts and revenue is passed to investors which means some could pay out zero income in some quarters.  Additionally, some MLP’s have not done so well. PetroLogistics LP, which processes propane gas, has fallen about a third since its IPO as refining profits have narrowed.  Many investors warn that less-traditional MLPs may not be all that they promise to be and will run into trouble should there be another economic downturn.  Several newer partnerships based on the gathering of oil and gas have cut their payouts.   Investors need to beware of MLPs.

Eccleston Law Offices represents individual and institutional investors to recover their investment
losses caused by unsuitable investment recommendations, breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors. Our work with advisers sets us apart from our competition as we
have gained insight and knowledge of the financial services industry and the respect of lawyers nationwide on "both sides of the aisle."

Eccleston Law Offices Continues to Investigate World Group Securities

The attorneys at Eccleston Law have continued their investigation of World Group Securities n/k/a Transamerica Financial Advisors.  In particular, Eccleston Law Offices is investigating World Group Securities’ use of home mortgages to purchase investments and insurance products.  The suitability of
these investments and insurance products is also in question.

If you are an investor that has suffered losses investing with World Group Securities n/k/a Transamerica Financial Advisors, please contact one of our attorneys at 312-332-0000 to discuss your
recovery options.

Eccelston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, and breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

SEC Charges Advanced Equities, Inc. and its Co-Founders with Misleading Investors

A broker-dealer and investment advisory firm, Advanced Equities, Inc. and its co-founders Dwight O. Badger and Keith G. Daubenspeck were charged by the SEC in connection with private offerings in 2009 and 2010 on behalf of an alternative energy company in Silicon Valley, California.  The company has been identified in the press as Bloom Energy. 

Daubenspeck co-founded Advanced Equities with Badger and was also the former chief executive of its parent company.  Daubenspeck is the chairman of the parent company’s board.  Daubenspeck
allegedly failed to supervise Badger by letting Badger lead the sales effort for the offerings and make misstatements about the energy company’s finances, which Daubenspeck failed to correct. 

According to the SEC’s order, Badger said in the 2009 offering that the energy company had more than $2billion of order backlogs when the backlog never exceeded $42 million.  Further, he also stated that it had a $1 billion order from a national grocery store chain.  In all reality, the grocery chain store only had placed a $2 million order and signed a non-binding letter of intent for future purchases.  Moreover, Badger also said that the company had been granted a U.S. Department of Energy loan exceeding $250 million when it had applied for a $96.8 million loan, and he again misstated the information about the loan application during the follow-up offering in 2010. 

As for Daubenspeck, the SEC’s order alleges that he participated in at least two internal sales calls with Advanced Equities brokers during the 2009 offering and remained silent after he heard Badger make misstatements about the company’s order backlog, grocery store order, and Department of Energy loan application.  Daubenspeck did not take reasonable steps to correct the misstatements despite the red flags raised by the misstatements and the obvious risk that false information would be repeated to investors.  Thus, it is alleged that Daubenspeck failed to reasonably supervise Badger. 

Advanced Equities agreed to pay a $1 million penalty, and agreed to be censured and to cease and desist from committing or causing any future violations of the securities laws it was found to have violated.  In addition, it also agreed to numerous undertakings including hiring an independent consultant to review its sales policies and procedures.  Badger agreed to pay a $100,000 penalty and be barred for one year from association with any broker, dealer, investment adviser, municipal securities dealer or transfer agent.  Further, Daubenspeck agreed to pay a $50,000 penalty and a one-year supervisory suspension.  Advanced Equities, Badger, and Daubenspeck all consented to the entry of the cease-and-desist order without admitting or denying the SEC's charges.

If you are an investor that has suffered losses investing with Advanced Equities, in Bloom Energy or in other offerings, please contact one of our attorneys at 312-332-0000 to discuss your recovery options.

Eccelston Law represents individual and institutional investors nationwide to recover their investment losses caused by securities fraud, unsuitable investment recommendations, and breach of fiduciary duty, negligence or other misconduct. We have extensive experience representing investors in arbitration and litigation disputes with securities broker-dealers and investment advisory firms, and have recovered tens of millions of dollars for investors.

Stockbroker Fined and Suspended For Service as Executor

Acting as an executor requires advance approval by the firm. That lesson was revealed recently in a FINRA disciplinary matter.

William Blair was a general securities representative with Stephens Inc.  He failed to notify the firm in writing of his acting as a compensated executor for a customer, thereby violating FINRA rules.  He was fined $10,000 and given a three month suspension. 

Stockbroker Undone by Email Trail of Undisclosed Customer Settlement

Barry Pittman served as a stockbroker for John Thomas Financial (JTF) until he was terminated for several violations of the firm’s code and NASD Conduct Rules.  Pittman failed to inform the firm as he was required when an unhappy costumer complained to him about the losses in his account.  Several communications were sent between the client and Pittman’s personal email addresses, a problem because JTF did not permit employees to communicate with clients through personal email addresses.  The two reached an undisclosed settlement, in which Pittman agreed to reimburse the client for losses in the amount of $65,000. However, Pittman never followed through with the payment. 

In accordance with the terms of an AWC, FINRA imposed upon Pittman a fine in the amount of $7,500 and a suspension for 60 days in all capacities.

Lehman Brother Sue Former Broker for Repayment of Promissory Note and Get Nothing

In September 2010, Lehman Brother filed a claim in FINRA seeking to recover the balance due on a promissory note from a former broker.  Specifically, Lehman Brother requested $158,709.88 in compensatory damages, $22.57 daily interest, costs, fees, and expenses.  The former broker counterclaimed for $1.5 million seeking a set-off or recoupment and citing Lehman Brother for enrichment and asserted affirmative defenses. He also sought expungement of the matter.  Ultimately, the arbitration panel denied all parties’ claims.

Eccleston Law counsels, represents and defends financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

Branch Manager Overlooking Unsuitable Transactions and Updating Account Profile

Between October 2009 and July 2010, David Alan Oppenheim served as the New York City Branch Manager of Westrock Advisors, Inc.  In that position, allegedly Oppenheim became aware of numerous instances of unsuitable recommendations being made to customers in light of the investment objective and/or risk tolerance recorded on the customer account form.  When Oppenheim learned of an unsuitable recommendation, instead of following the firm’s policy, he allegedly instructed the broker of record to obtain an updated customer account form.  In many instances, Oppenheim allegedly emailed the broker and specifically instructed him or her to obtain an updated form that reflected a change in the customer’s risk tolerance to aggressive or investment objective to speculation. 

It is alleged that Oppenheim caused the creation of false customer account forms, in violation of FINRA Rule 2010, and also caused Westrock Advisors’ books and records to be inaccurate, in violation
of NASD Rule 3110(a).  Subsequently, FINRA imposed upon Oppenheim a $5,000 fine and a 6-month suspension from associating with any FINRA member in any principal capacity.

Eccelston Law counsels, represents and defends financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.