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 White Law Group may be able to help. To speak with a securities attorney please call our Chicago office at 312/238-9650 for a free consultation.
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 more information on the firm visit https://www.whitesecuritieslaw.com.