Broker Runs $6 million Hedge Fund

Wednesday, July 23rd, 2014

Have you suffered investment losses as a result of your dealings with former Sterne Agee Financial Services broker, Dean Mustaphalli? If so, The White Law Group may be able to help recovery some of your losses.

According to Investment News, Mustaphalli may be expelled from the industry for allegedly operating a $6 million hedge fund without informing his employer. The Financial Industry Regulatory Authority (FINRA) accused Mustaphalli of soliciting money for his fund, Mustaphalli Capital Partners, and receiving commissions over a six month period in 2011.

According to Investment News, Mustaphalli earned more than $41,000 in fees from the hedge fund, which has declined an estimated 90%. It’s unclear from the report whether Mustaphalli investors were Sterne Agee customers.

When a broker solicits investments that are not approved by his/her brokerage firm, the act can be considered “selling away.” If proven, the brokerage firm can still be liable for negligent supervision and responsible for investment losses.

If you are concerned about your dealings with Dean Mustaphalli, please contact the securities attorneys of The White Law Group at (312) 238-9690 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.

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New Jersey Broker Allegedly Diverts $900,000 to Personal Bank Account

Tuesday, July 22nd, 2014

Did you suffer investment losses as a result of your dealings with former New Jersey broker, John Montague? If so, The White Law Group may be able to help recoup some of your investment losses.

According to a press release from the U.S. Attorney’s Office, John Montague recently pled guilty to one count wire fraud, admitting he defrauded investors out of more than $900,000 by diverting checks to his personal bank account.

The charges against Montague stem from information involving an alleged scheme to solicit investors to purchase an investment product he was reportedly not authorized to sell. Montague allegedly “guaranteed investments” and promised investors a 6% return. Authorities allege that many investors made checks payable to Montague, which he then used for personal expenses. To maintain his scheme, Montague allegedly made “dividend” checks to clients.

According to BrokerCheck, during the relevant time, Montague was an employee of the brokerage firm Questar Capital Corporation, working there from 12/2006 – 07/2009. The report indicates he resigned from Questar in 2009 pending the FBI’s investigation into irregularities in his personal bank account.

Brokerage firms have a responsibility to effectively monitor the business activity of their employes. When brokers solicit investors to buy securities not authorized by the firm, the act can be considered “selling away.” If a broker is proven of “selling away,” the brokerage firm may still be liable for negligent supervision and responsible for investment losses.

If you were a client of John Montague and would like to discuss your potential to recover your losses, please call the securities attorney of The White Law Group at (312) 238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

To learn more about The White Law Group, visit www.WhiteSecuritesLaw.com.

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Berle Lorenzo Stocks barred from securities industry.

Tuesday, July 22nd, 2014

According to a FINRA disciplinary action announcement, Berle Lorenzo Stocks (CRD #1513263, Charlotte, North Carolina) recently submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity.

Without admitting or denying the findings, Stocks consented to the sanction and to the entry of findings that he placed securities transactions in a customer’s account without obtaining the customer’s authorization for the trades. The findings stated that while exercising control over the customer’s account, and while acting  with the requisite scienter, Stocks excessively and unsuitably traded and churned the customer’s account in a manner that was inconsistent with the customer’s investment objectives, financial situation and needs. Stocks’ improper trading activity resulted in losses of approximately $75,000 and generated total commissions of approximately $110,000. As a result of Stocks’ conduct, he willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

For the full findings, see FINRA Case #2012033141501.

According to his FINRA Broker Report, Stocks was registered with Genworth Financial Securities Corporation from August 2005 through June 2012.

The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For a free consultation with a securities attorney, call The White Law Group at 312/238-9650.  For more information on the firm, visit http://www.whitesecuritieslaw.com.

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Gabriel Nelson Smith barred from securities industry.

Tuesday, July 22nd, 2014

According to a FINRA disciplinary action announcement, Gabriel Nelson Smith (CRD #2950071, Nashville, Tennessee) recently was barred from association with any FINRA member in any capacity and ordered to pay $200,000, plus interest, in restitution to a customer.

The sanctions were based on findings that Smith solicited a customer of his member firm to invest in a short-term municipal bond that he indicated would guarantee a 15 percent return. The findings stated that based on Smith’s representations, the customer gave Smith personal checks totaling $200,000, payable to Smith, and Smith negotiated and endorsed all but one of the checks. Smith gave the customer a personal check for $282,273.51, with the notation “payment for return of money,” and drawn on an account that Smith purportedly held at a bank. When the customer presented Smith’s check for payment, the bank dishonored the check with the notation “return reason – closed account.” Smith never invested the customer’s funds and has not returned any portion of the customer’s $200,000. The findings also stated that Smith failed to respond to FINRA requests for documents, information and testimony regarding the circumstances surrounding his dismissal from the firm.

For the full findings, see FINRA Case #2012034568401.

According to his FINRA Broker Report, Smith was registered with Northwestern Mutual Investment Services from April 1998 through February 2010 and MML Investors Services from March 2010 through October 2012.

The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For a free consultation with a securities attorney, call The White Law Group at 312/238-9650.  For more information on the firm, visit http://www.whitesecuritieslaw.com.

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Gregg Matthews Kuchar barred from securities industry.

Tuesday, July 22nd, 2014

According to a FINRA disciplinary action announcement, Gregg Matthews Kuchar (CRD #1033768, Asheville, North Carolina) recently submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity.

Without admitting or denying the findings, Kuchar consented to the sanction and to the entry of findings that, in connection with a client’s wish to transfer an investment and then sell it to obtain the proceeds, he forged the client’s signature and initials on both the transfer and distribution forms. The findings stated that Kuchar submitted a forged transfer on death (TOD) form to a real estate company, on behalf of clients who had both passed away without any children or beneficiaries. The clients had accounts with the company holding approximately $210,000 in real estate investment trust shares. Shortly before submitting the TOD, Kuchar contacted the company about acquiring the form and then forged the clients’ signatures on the form, back-dated it, and submitted it to the company. The company noted concerns with the form, froze the account, and contacted Kuchar’s member firm. Subsequently, Kuchar admitted in a letter to his firm that he had forged the clients’ signatures. The findings also stated that Kuchar called the company and a life insurance company impersonating an elderly client, and attempted to obtain confidential information related to withdrawing the client’s required minimum distributions from an investment.

For the full findings, see FINRA Case #2013035724701.

According to his FINRA Broker Report, Kuchar was registered with Synergy Investment Group from January 2004 through December 2007, Southeast Investments, N.C. from January 2008 through April 2012 and Peak Brokerage Services from May 2012 through January 2013.

The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For a free consultation with a securities attorney, call The White Law Group at 312/238-9650.  For more information on the firm, visit http://www.whitesecuritieslaw.com.

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