Legal Matters

The Financial Industry Regulatory Authority (“FINRA”) has imposed a regulatory fine and a one year suspension against former  Wells Fargo broker Michael David Garris, formerly of Wells Fargo’s Los Angeles, California branch office. According to FINRA’s Acceptance, Waiver and Consent letter, Garris executed twenty-six (26) unauthorized transactions in a deceased customer’s account, over eight months after he had passed. In March 2017, Garris was informed of his client’s February 2017 death and made unauthorized transactions in the account in October and November. The unauthorized transactions involved over $381,000 in trades which generated $9,313.07 in commissions to Garris. Wells Fargo terminated Garris in June 2018 and unwound all unauthorized transactions and refunded the ill-gotten commissions. According to Garris’s FINRA BrokerCheck report, he has been the subject of two other customer allegations, dating back to 2001. Those complaints involved allegations of deception, unsuitability, and unauthorized trading. If you or someone you know lost money as a client of Michael Garris or Wells [...]

Charles Kenahan Former New Hampshire governor Craig Benson has filed a $42.2 million claim against his Merrill Lynch broker, Charles Ernest Kenahan, of Newport, Rhode Island, according to Investment News reporting and Mr. Kenahan’s FINRA BrokerCheck Report. The former governor’s allegations include claims that Kenahan made unsuitable investments, engaged in unauthorized trading and excessive trading (a.k.a. “churning”) in his account from December 2007 to February 2018. Last month, Merrill Lynch paid $40 million to settle similar claims by another former customer, who alleged that Kenahan churned his account and made misrepresentations regarding trades in common and preferred stocks and penny stocks. His BrokerCheck report discloses another pending claim filed last year alleging $700,000 in losses due to unsuitable investments and churning. Kenahan was fired by Merrill Lynch on July 9 based on customer allegations of unauthorized trading, unsuitable investment recommendations, and churning. If you or someone you know lost money as a client of Charles E. Kenahan or Merrill [...]

GPB CAPITAL HOLDINGS The Frankowski Firm is investigating claims related to the GPB Capital Holdings family of investment funds. Last month, GPB Capital reported “significant losses” in its funds with its two largest funds seeing declines of 25.4% and 39%. Investment News reported in March that GPB Capital Holdings is under investigation by the FBI, the SEC, and the Financial Industry Regulatory Authority (“FINRA”). The firm has reportedly raised over $1.8 billion from wealthy investors through private placement funds, which invest in auto dealerships and the waste management industry. The firm reportedly paid over $100 million in commission incentives to over sixty brokers to sell GPB’s Regulation D offerings to their clients. In a lawsuit pending in Nassau County, New York, former GPB partner Patrick Dibre filed a counterclaim in which he alleges that GPB was operating a “very complicated and manipulative Ponzi scheme.” SEC investigators have reportedly been reviewing the accuracy of GPB’s disclosures to investors, fund [...]

Wedbush Securities Inc. will pay $8.1 million to settle SEC charges that it mishandled “pre-released” American Depository Receipts (ADRs), according to an SEC press release. ADRs are U.S. securities that represent shares of a foreign company and require a corresponding number of foreign shares to be held in custody at a depositary bank. Pre-release allows ADRs to be issued without the deposit of foreign shares, if the brokers receiving them have an agreement with a depositary bank and the broker or customer owns the number of foreign shares corresponding to the number of shares the ADRs represent. In this case, the SEC found that Wedbush improperly obtained pre-released ADRs when it should have known that neither it nor its customers owned the foreign shares corresponding to the ADRs. This practice inflated the number of a foreign issuer’s tradeable securities which resulted in abusive practices such as inappropriate short selling and dividend arbitrage. The SEC charged Wedbush with violating Section 17(a)(3) [...]