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Craig Scott Capital Subject Of FINRA Complaint

FINRA recently filed an amended complaint against Craig Scott Capital, LLC and its co-founders, Craig Scott Taddonio and Brent Morgan Porges, alleging, among other things, excessive trading, churning, failure to supervise. Churning and Excessive Trading According to the complaint, Respondents churned and excessively traded Craig Scott Capital customer accounts. They encouraged their sales team to recommend active trading in customer accounts to maximize commissions to the detriment of their customers. FINRA claims that for nearly three years Craig Scott Capital fostered a culture of aggressive, excessive trading of customer accounts. By encouraging the firm's representatives to recommend hundreds of short-term trades in customer accounts, the firm earned over $5 million in commissions while customers lost over $9 million dollars in losses in accounts where the annualized turnover rates were as high as over 200 and the annualized cost-to-equity ratios were as high as 800%. Failure to Supervise FINRA also alleged that Respondents failed to establish and enforce a reasonable supervisory [...]

By |February 12th, 2016|FINRA, Press Releases & News|
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FINRA Bars Two Advisers Following Broker Fraud

FINRA has barred two Buffalo, New York advisers, Timothy S. Dembskyi and Walter F. Grenda, from the securities industry for broker fraud in relation to the sale of a hedge fund, the Prestige Wealth Management Fund, LP. Dembski and Grenda's misconduct occurred while they were employed with Mid Atlantic Capital Corporation. FINRA discovered that Dembski and Grenda made material misrepresentations and omissions to make investors think that the fund was a "growth" fund that would be centered around a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund. However, in actuality, the fund was a highly speculative investment, the fund's Chief Investment Officer had complete control over investments made, and it was not obligated to follow the computer algorithm. In its last month that it was traded, the fund lost more than eighty percent of its value. Brad Bennett, FINRA's Executive Vice President and Chief of Enforcement, said, "In 2015, FINRA barred nearly 500 [...]

By |February 11th, 2016|FINRA, Fraud, Press Releases & News|
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FINRA Issues Investor Alert About High-Yield CD Offers

FINRA issued a new investor alert warning that advertisements touting higher-than-average Certificate of Deposit yields might actually be a lure to trick investors into buying costly investments. "In light of today's low interest rates, these ads attract attention. Some may be legitimate marketing, but calls into our Securities Helpline for Seniors indicate that many such ads are ploys in which the CD is used as bait to try to sell you a high-commission product, such as a fixed or equity-indexed annuity, a complex insurance investment that is not FDIC-insured and not subject to federal securities laws," said Gerri Walsh, FINRA's Senior Vice President of Investor Education. "The reality with these CD come-ons is that you may end up walking out with a costly financial product that is not a CD, and not risk-free." FINRA warns investors to be wary if you respond to one of these promotions for a certificate of deposit. Most require that you show up at an [...]

By |February 10th, 2016|FINRA, Press Releases & News|
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Broker Lies About Charging $11M In Commissions For Nontraded REITs and BDCs

FINRA charged a broker for lying to a Native American tribe about the $11 million in commissions he charged when he sold the tribe $190 million in nontraded real estate investment trusts and business development companies. Between June 2011 and January 2015, broker Gopi Krishna Vungarala “regularly lied to his customer, a Native American tribe, regarding investments he recommended,” according to the FINRA complaint. Vungarala served as the unnamed tribe's registered representative as well as its treasury investment manager, according to the complaint. He “fraudulently induced the tribe to invest hundreds of millions of dollars in nontraded REITs and BDCs, without revealing he and his firm received commissions for the sales (usually 7%) or the availability of certain volume discounts.” Also according to the complaint, the tribe bought $190.4 million of illiquid REITs and BDCs and were charged $11.4 million in commissions, which went to his broker-dealer Purshe Kaplan Sterling Investments. Mr. Vungarala was paid $9.6 million – or 84.3% - of those [...]

By |February 9th, 2016|FINRA, Fraud|
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