Legal Matters

The Frankowski Firm is investigating potential claims against Financial Industry Regulatory Authority (“FINRA”)-expelled broker Daniel Todd Levine, of Greenwood Village, Colorado, following Mr. Levine’s permanent bar from the securities industry based on Mr. Levine’s failure to cooperate and provide information connected to FINRA’s investigation into alleged undisclosed outside business activities and unauthorized trading. According to FINRA’s Acceptance, Waiver, and Consent findings against Mr. Levine, FINRA sent a request for documents and information to Mr. Levine on August 13, 2018 as a part of its investigation. The investigation involved allegations that Mr. Levine engaged in undisclosed outside business activities, solicited a senior customer to borrow funds for an outside business activity, and executed unauthorized trades. On December 3, 2018, Mr. Levine’s counsel emailed to inform FINRA that Mr. Levine would not produce the requested information. In addition to the regulatory action and permanent bar, Levine’s FINRA BrokerCheck Report reveals an additional customer complaint and two employment separations after allegations of misconduct. [...]

An arbitration panel for the Financial Industry Regulatory Authority (“FINRA”) has made findings against Great Falls, Montana-based D.A. Davidson & Co. and entered an award against the firm for over $1 million. The award follows D.A. Davidson customer complaints of fraud, negligence, breach of contract, breach of fiduciary duty, and violations of the Nebraska Securities Act. The causes of action brought by three D.A. Davidson customers related to investments in Cliffs Natural Resources; Puerto Rico Public Finance Corporation; and Puerto Rico Electric Power Authority. The Claimants claimed that D.A. Davidson improperly placed them in unsuitable investments, made fraudulent misrepresentations as part of the sales transactions, concealed material facts, negligently supervised the Claimants’ broker, and breached fiduciary duties it owed the Claimants. The arbitration panel entered an award of $783,286.94 in compensatory damages, with interest of nearly $100,000, plus $120,000 in attorneys’ fees, and $47,465 in case expenses: a total award exceeding $1 million. The panel also sanctioned D.A. Davidson during [...]

The Securities and Exchange Commission brought charges last month against thirteen individuals and ten companies for unlawfully selling securities of Woodbridge Group of Companies, LLC to retail investors. The thirteen individual defendants were among Woodbridge’s top revenue producers, selling more than $350 million of unregistered securities to more than 4,400 investors. Making matters worse, the defendants marketed the security as a “safe” and “secure” investment, according to the SEC allegations. In fact, the Woodbridge Group collapsed into bankruptcy in December 2017 and the SEC had previously charged the company, its owner, and others with operating a $1.2 billion Ponzi scheme, and charged five of its top Florida-based sales agents for securities and broker-dealer registration violations. Our firm has previously blogged about the Woodbridge Group charges in this space. The individual parties and companies named in the SEC’s most recent allegations are: Robert S. “Lute” Davis, Jr., Donald Anthony Mackenzie, Jordan E. Goodman, Aaron R. Andrew, Jeffrey L. Wendel, Alan H. [...]

The Financial Industry Regulatory Authority (“FINRA”) has sanctioned Merrill Lynch $6 million for selling shares in initial public offerings  (IPOs) to industry insiders, including employees’ immediate family members and customers who were brokers at other brokerage firms. FINRA found that from 2010 through March 2018, Merrill Lynch made at least 1,462 prohibited sales of IPO shares in 325 different offerings to 149 customer accounts. The shares offered included IPOs in highly sought after stocks such as Facebook, LinkedIn, Twitter, and GM. At least 120 different financial advisors in 79 Merrill Lynch branch offices effected the sales. FINRA rules prohibit who may purchase IPOs to ensure that FINRA members do not provide favorable treatment to industry insiders at the expense of the investing public. FINRA Rule 5130 restricts member firms, like Merrill Lynch, from selling IPO shares to immediate family members and customers who are associated with other broker-dealers. FINRA also found that Merrill Lynch’s violations occurred because of compliance and [...]