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SEC Bars Advisor in $6.9 Million Free Riding Scheme

On June 12, 2024, the Securities and Exchange Commission (SEC) filed a cease-and-desist order against former investment advisor Kerry Lee Broderick. The order bars Broderick from any association with broker-dealers, investment advisers, and from participating in any offering of penny stocks. This severe sanction is the result of her involvement in a "free riding" scheme, primarily orchestrated by her then-employer, Andrew Komarow, starting in October 2022. What is Free Riding? Free riding is an illegal practice where securities are purchased or traded in a brokerage account and sold before the initial purchase is fully processed. This Free riding scheme exploits the "immediate access" credit some brokerage firms provide to customers, allowing them to start trading as soon as the transfer is initiated. Details of the Free Riding Scheme The SEC's initial complaint against Komarow revealed that from October 13, 2022, to January 30, 2023, Andrew Komarow made 23 Automated Clearing House (ACH) transfers totaling $6.9 million to several personal accounts [...]

By |August 1st, 2024|Blog|
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Triad Advisors Faces $30 Million FINRA Complaint Over Alleged Supervisory Failures

A significant legal battle is unfolding as more than 70 investors have filed a FINRA complaint against Triad Advisors, alleging that the firm failed to supervise two former brokers who led them into unsuitable investments, resulting in over $30 million in losses. This case brings to light critical issues of accountability and oversight within the financial advisory industry, especially concerning vulnerable populations like retirees. At the heart of this complaint are James Walesa and Kenneth Luccioni, two brokers previously employed by Triad Advisors in Park Ridge, Illinois. The allegations against them include making unsuitable investment recommendations and engaging in practices that amount to common law fraud and gross negligence. BrokerCheck records reveal that Walesa’s settlements have totaled nearly $7 million, with five additional cases pending, while Luccioni’s settlements amount to $1.175 million. The magnitude of these settlements underscores the severe financial impact on the investors involved. One of the most striking aspects of this case is the demographic of the [...]

By |August 1st, 2024|Blog|
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Financial Advisor Raul Benitez Faces Multiple Allegations of Unsuitable Investment Recommendations

The recent allegations against financial advisor Raul Benitez have raised significant concerns within the securities industry. Benitez, formerly employed by Wells Fargo Clearing Services, LLC, is under scrutiny following at least six customer complaints and one termination for cause. The complaints, documented by The Financial Industry Regulatory Authority (FINRA), allege unsuitable investment recommendations and various other infractions, including common law fraud and gross negligence. One of the most pressing cases involves a complaint filed in January 2024, in which a customer accused Benitez of violating securities laws by making unsuitable investment recommendations and misrepresentations in September 2014 and March 2015. This claim, seeking $500,000 in damages, is currently pending. Another significant complaint from November 2023 also alleges unsuitable investment recommendations by Benitez, again seeking $500,000 in damages and currently pending resolution. These cases are not isolated incidents. In July 2021, a customer claimed that Benitez made an unsuitable investment recommendation in NorthStar, resulting in a settlement of $175,000, although the [...]

By |August 1st, 2024|Blog|
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SEC Charges 16 Firms with $81 Million Penalty for Recordkeeping Failures

On Feb. 9, 2024, in a significant enforcement action, the Securities and Exchange Commission (SEC) announced charges against five broker-dealers, seven dually registered broker-dealers and investment advisers, and four affiliated investment advisers for widespread and longstanding failures to maintain and preserve electronic communications. These firms have collectively agreed to pay more than $81 million in civil penalties. The Violations and Penalties The SEC's investigation revealed that employees at these firms were using unapproved communication methods, known as off-channel communications, to discuss business matters. These methods included personal text messages, which the firms failed to maintain or preserve as required by federal securities laws. This lack of compliance deprived the SEC of critical information necessary for monitoring and enforcement. The penalties are substantial, as outlined below: Northwestern Mutual (NMIS, NMIM, and Mason Street): $16.5 million Guggenheim Securities (Guggenheim Securities and GPIM): $15 million Oppenheimer & Co. Inc.: $12 million Cambridge Investment Research (CIR and CIRA): $10 million Key Investment Services (KIS [...]

By |July 8th, 2024|Blog|
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Disclaimer: Mr. Frankowski is licensed in Alabama,Florida and Texas. He is not licensed in any other state including Nevada and California. Mr. Frankowski has represented investors from all over the country in securities cases including: Alabama, California, Colorado, Florida, Georgia, Illinois, Kentucky, Louisiana, Mississippi, Nevada, New Mexico New York, North Carolina, Tennessee, Texas.