The White Law Group, LLC » Gunnallen Financial

GunnAllen Financial Securities Fraud Alert

CarterPA — Sat, 06 Feb 2010 19:22:46 +0000

On Sept. 28, 2009, the Securities and Exchange Commission (SEC) officially charged former GunnAllen Financial broker Frank Bluestein with fraud, alleging he helped run a $250 Ponzi scheme that entailed luring investors to refinance their home mortgages. The SEC did not name GunnAllen in its complaint. However, in April 2008, seven investors who said they lost their life savings at the hands of Bluestein sued GunnAllen, claiming the company “utterly failed to inquire into, monitor, and prevent” the multimillion-dollar scam for which Bluestein is now accused of allegedly committing.
GunnAllen Financial has been named in numerous other securities fraud claims brought by investors. In 2008, for example, former GunnAllen broker Jeffrey Southard was accused of selling $1.4 million of fraudulent bonds to senior citizens as part of a Ponzi scheme he allegedly conducted while working for GunnAllen. Before that, Southard worked for Ameriprise Financial, where he was accused of selling fraudulent, nonexistent, and unregistered securities and combining client funds with his own money.
In 2008, another GunnAllen broker, David Adler, was the subject of enforcement actions by the Oklahoma Department of Securities, which charged Adler of transacting business as an unregistered agent while employed at GunnAllen. Six years earlier, while working for Bear Stearns, a client accused Adler of churning, overconcentration, constructive fraud, and breach of fiduciary duty. On Sept. 19, 2003, a FINRA arbitration panel ruled in favor of the claimants, awarding them more than $30,000. The Panel also held Bear Steams liable for its failure to supervise Adler at the time.

Additionally, GunnAllen Financial’s CEO, John Sykes, recently resigned and there are questions as to whether the firm is currently maintaining the required net capital to operate as a registered broker-dealer. Reports Investment News:
“Inquiries into a firm’s net capital are among the most serious in the securities business. If the Financial Industry Regulatory Authority Inc. discovers that a broker-dealer is without sufficient net capital, it will shut down that firm almost immediately.”
According to Investment News, on Dec. 8, 2009 FINRA officials arrived at the Tampa headquarters of GunnAllen to determine the firm’s capital position. The story adds that while GunnAllen does not disclose its assets under management, based on the number of advisers, industry experts say regulators would want the firm to have a minimum of between $100,000 and $250,000 in net capital on reserve to stay open for business.
If you have questions about investments you made with GunnAllen Financial, or if you believe that you have been the victim of a securities fraud, the Law Offices of David A. Carter, P.A. may be able to help. David A. Carter is a securities lawyer based in Boca Raton, Florida. He reviews securities fraud cases throughout the country and Florida, including reviewing securities fraud cases in Tampa, St. Petersburg, Clearwater, Bradenton, Fort Myers, Naples, and Port Charlotte. For more information on the firm’s securities fraud practice, please visit http://www.carterpa.com. To contact the Law Offices of David A. Carter, P.A., please call 561-750-6999 or email us at contact@carterpa.com.

SEC charges Frank Bluestein, formerly of Gunnallen Financial, Inc. in Commerce, Michigan, with securities fraud.

CarterPA — Mon, 05 Oct 2009 02:22:49 +0000

The Securities and Exchange Commission recently announced that it had charged Detroit-area stock broker Frank Bluestein, formerly of Gunnallen Financial, Inc., with fraud, alleging that he lured elderly investors into refinancing the mortgages on their homes in order to fund their investments in a $250 million Ponzi scheme.

The SEC alleges that Bluestein acted as the single largest salesperson in the Ponzi scheme operated by Edward May and his company, E-M Management Company LLC (E-M). The SEC previously filed charges against May and E-M in connection with the fraudulent scheme.

The SEC alleges that Bluestein specifically targeted potential investors who were retired or elderly and conducted so-called “investment seminars” in Michigan and California to lure them into investing in E-M securities.

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of Michigan, alleges that Bluestein facilitated May’s fraudulent scheme by raising approximately $74 million from more than 800 investors through the sale of E-M securities over a five-year period. Bluestein, through his company Maximum Financial, conducted numerous investment seminars to find new E-M investors.

According to the SEC’s complaint, Bluestein was very methodical and careful not to discuss the E-M offerings openly during these “seminars” in a way that would alert attendees to the fact that they were actually forums to pitch the E-M offerings. Bluestein first gained the trust of potential investors in attendance by discussing generic financial planning topics and other investment products. But under the guise of informal conversations, Bluestein would generate talks among attendees who already had invested in E-M offerings. For instance, Bluestein would often ask if they had “received their Ed May checks?” or “How do you like those Ed Mays?” in order to drum up discussion of the investments and attract the interest of other potential investors attending the seminars.

The SEC’s complaint alleges that Bluestein misrepresented to investors that the investments were low-risk and that he had conducted adequate due diligence with respect to the investments when, in fact, he did little to investigate the legitimacy of the E-M offerings even when confronted with serious red flags about the existence of some transactions. Bluestein also misled investors about the compensation he was receiving from the offerings by failing to disclose that he received at least $2.4 million in commissions from May and E-M in addition to the $1.4 million in disclosed compensation he received from investor funds.

The SEC complaint alleges violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (Securities Act), Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 (Exchange Act), and Rule 10b-5 thereunder by Bluestein. As part of this action, the SEC seeks an order of permanent injunction against Bluestein as well as the payment of disgorgement of ill-gotten gains, prejudgment interest and financial penalties. [SEC v. Frank Bluestein, Civil Action No. 2:09-cv-13809 (E.D. Mich.) (Friedman, J.)] (LR-21223)

Prior to working at Gunnallen Financial, Frank Bluestein was a financial advisor with Questar Corporation and Fahnestock & Co., Inc.

If you have questions about investments you made with Frank Bluestein or Gunnallen Financial, or if you believe that you have been the victim of a securities fraud, the Law Offices of David A. Carter, P.A. may be able to help. The Law Offices of David A. Carter, P.A. is a South Florida securities fraud, securities arbitration, investor protection, and Chapter 7 bankruptcy law firm based in Boca Raton. David Carter is a securities attorney that reviews securities fraud cases throughout the country and Michigan, including reviewing securities fraud cases in Detroit, Livonia, Ann Harbor, Lansing, Flint, Grand Rapids, Traverse City, and Cadillac. To contact the Law Offices of David A. Carter, P.A., please call 561-750-6999, or email us at contact@carterpa.com. For more information about the Law Offices of David A. Carter, P.A., you can also visit our website at www.carterpa.com.

Richard Grant Cody, of Gunnallen Financial, Inc.’s Boston, Massachusetts office, investigated by FINRA.

CarterPA — Tue, 11 Aug 2009 13:07:04 +0000

According to a FINRA investigation, Richard Grant Cody violated Rules 2310 and 2110 by recommending transactions in customer accounts that were quantitatively and qualitatively unsuitable for the customers; violated Rule 2110 by sending customers misleading and unapproved account summaries; and also violated Rule 2110 by failing to update his Form U4 in a timely manner to disclose two settlements with customers. For the suitability violations, FINRA elected to suspend Richard Grant Cody in all capacities for three months and fine him $20,000. For the misleading and unapproved account summaries, Cody was fined $5,000; and for the Form U4 violation, Cody was fined $2,500.
This decision appears to have been appealed.
According to Richard Grant Cody’s FINRA Broker Report, he appears to have also been named in at least three customer disputes related to securities fraud, for among other things, unsuitability.
If you have questions about investments you made with Richard Grant Cody or Gunnallen Financial, or if you believe that you have been the victim of a securities fraud, the Law Offices of David A. Carter, P.A. may be able to help. The Law Offices of David A. Carter, P.A. is a South Florida securities fraud, securities arbitration, investor protection, and Chapter 7 bankruptcy law firm based in Boca Raton. David Carter is a securities attorney that reviews securities fraud cases throughout the country and Florida, including securities cases in Orlando, Jacksonville, Tampa, Tallahassee, Gainesville, and West Palm Beach. To contact the Law Offices of David A. Carter, P.A., please call 561-750-6999, or email us at contact@carterpa.com. For more information about the Law Offices of David A. Carter, P.A., you can also visit our website at www.carterpa.com.

Michael Ross Berkoff, formerly of Gunnallen Financial, Inc., suspended from FINRA.

CarterPA — Tue, 28 Jul 2009 01:28:40 +0000

In May 2009, FINRA Enforcement announced that Michael Ross Berkoff had been suspended from FINRA for a period of 30 business days and fined $10,000. Without admitting or denying FINRA’s findings, Berkoff consented to findings that he had failed to enter a stop-loss order on behalf of a client, and borrowed $8,000 from a customer in violation of Gunnallen’s firm rules, as well as FINRA Rules 2110 and 2370.

According to Berkoff’s FINRA Broker Report, he has also been named in three separate customer complaints involving unsuitable trading, use of margin, misrepresentation, and unauthorized trading.

Prior to working for Gunnallen Financial, Berkoff worked for Westminster Financial Services, Inc. in Vandalia, Ohio.

If you have questions about investments you made with Berkoff or one of the firms he worked for, or if you believe that you have been the victim of a securities fraud, the Law Offices of David A. Carter, P.A. may be able to help. The Law Offices of David A. Carter, P.A. is a South Florida securities fraud, securities arbitration, investor protection, and Chapter 7 bankruptcy law firm based in Boca Raton. David Carter is a securities attorney that reviews securities fraud cases throughout the country and Florida, including securities cases in Delray Beach, Boynton Beach, Stuart, Fort Myers, Naples, Deerfield Beach, Fort Lauderdale, and Fort Pierce. To contact the Law Offices of David A. Carter, P.A., please call 561-750-6999, or email us at contact@carterpa.com.