Legal Matters

The Securities and Exchange Commission (“SEC”) has charged Atlanta, Georgia based investment advisor Joseph A. Meyer, Jr. and his company, Statim Holdings, with investment fraud of a private fund they manage. According to the SEC allegations, between August 2009 and at least June 2018, Statim Holdings, Inc. and Meyer defrauded Arjun, L.P., a private fund they managed, by telling investors that in return for giving up substantial portions of their profits, one class of investors would be protected from any loss of principal and two other classes of investors would receive guaranteed rates of return on their investments. Meyer had allegedly promised these investors that their profits would be transferred to Statim’s capital account and used to ensure guaranteed returns during periods when the Fund incurred losses or lacked sufficient profits to pay the required returns. Instead, Meyer is alleged to have withdrawn from the Fund substantially all of the investors’ profits as they were generated and used them to [...]

The Financial Industry Regulatory Authority (“FINRA”) has made findings against Quest Capital Strategies, Inc. of Lake Forest, California and censured and fined the firm for supervisory failures and lapses in compliance with regulations governing the encryption of customer information sent electronically. FINRA found that from at least April 12, 2012 to March 20, 2014, Quest failed to establish adequate supervisory systems to supervise mutual fund sales practices. Specifically, FINRA’s findings state that Quest failed to have written supervisory procedures setting forth mutual fund share class comparison processes such as who would conduct the comparisons, how the comparisons would be documented, and how the comparisons would be supervised. FINRA likewise found that Quest failed to establish adequate supervisory systems concerning mutual fund transactions; lacking an adequate suitability review for certain mutual fund transactions where the registered representatives at Quest lacked updated forms detailing the customers’ mutual fund experience and risk tolerance. Quest was similarly found to lack adequate written procedures for [...]

An arbitration panel for the Financial Industry Regulatory Authority (“FINRA”) has made findings against Morgan Stanley Smith Barney and entered an award against the firm exceeding $4.2 million in favor of  Morgan Stanley customers including former NFL star Asante Samuel. The award followed customers’ complaints of breaches of fiduciary duty, negligence and gross negligence, violations of FINRA regulatory rules, and negligent supervision surrounding the claimants’ investments in the South Beach Club and the 7020 Club. The FINRA arbitrators found Morgan Stanley liable for negligence, negligent supervision, and violations of FINRA’s supervisory rules. The award included combined compensatory damages of $3,242,700, interest of $968,300, and costs of $750. If you or someone you know lost money as a client of Morgan Stanley Smith Barney due to unsuitable, misrepresented, or unauthorized transactions, please call the Frankowski Firm at 888.741.7503 or fill out this contact form.

An arbitration panel for the Financial Industry Regulatory Authority (“FINRA”) has made findings against Crystal Bay Securities, Inc. of Delray Beach, Florida and entered an award against the firm for $192,598.90: over $50,000 more than the total requested by the Claimant. The award followed a customer’s complaint involving allegations of breach of fiduciary duty, exploitation of a vulnerable adult, violation of Florida’s Securities and Investor Protection Act, negligence, and failure to supervise. The customer complaint involved purchases of Real Estate Investment Trusts (“REITs”) in the customer’s account. Crystal Bay Securities and its broker, Rafael Golan, were found in violation of the Florida Securities and Investor Protection Act based on the sales of alternative investment product REITs including ARC Global Trust (a/k/a Global Net Lease), BSP – Business Development Corp. of America, ARC Realty Finance Trust, and PE – Grocery Center REIT I, Inc. The arbitrators order recission of the customer’s purchases of these REITs, $136,201.82 in compensatory damages, plus interest, [...]