The self-assessment required firms that sold front-end load mutual funds to review their compliance in providing breakpoint discounts to customers during 2001 and 2002 and report those results to FINRA. Breakpoint discounts are volume discounts applicable to front-end sales charges (front-end loads) on Class A mutual fund shares. The self-assessment followed findings by NASD, the NYSE and the Securities and Exchange Commission that nearly one in three mutual fund transactions that appeared eligible for a breakpoint discount did not receive one.

The findings made in the settlements resulted from FINRA’s review of firms’ compliance with the self-assessment requirements. The violations include failing to accurately report information; failing to send timely notices and responses to customers concerning the availability of breakpoint discounts; failing to provide timely refunds for missed breakpoints to customers; and failing to correctly calculate such refunds.

In addition, FINRA found that three firms — Fox & Company Investments, Inc., First Midwest Securities, Inc. and Chase Investment Services, Corp. — failed to deliver breakpoint discounts during a later review period and continued to fail to have reasonable written supervisory procedures in place to assure that appropriate breakpoint discounts would be delivered to their customers during that later period.

In its review, FINRA found that 14 firms — J.J.B. Hilliard, W.L. Lyons Inc., New England Securities, SunAmerica Securities, Inc., Multi-Financial Securities Corporation, H. Beck, Inc., Leonard & Company, Fox & Company Investments, Inc., Investors Capital Corp., vFinance Investments, Inc., FSC Securities Corporation, National Securities Corporation, Advantage Capital Corporation, Steven L. Falk & Associates, Inc. and Securities America, Inc. — failed to accurately and/or fully complete their self-assessments.

FINRA further found that six of the firms — Multi-Financial Securities Corporation, Intersecurities Inc., SWS Financial Services, Spelman & Co. Inc., Securities America, Inc., and SIGMA Financial Corporation — failed to accurately complete a comprehensive trade-by-trade review of transactions. The trade-by-trade review was a required part of their customer remediation process following the self-assessment.

Six firms — ProEquities, Inc., FSC Securities Corporation, Lincoln Investment Planning, Inc., New England Securities, Gary Goldberg & Co., Inc., and Leonard & Company — failed to provide timely refunds of breakpoint discounts to their customers. In addition, five firms — Leonard & Company, Gary Goldberg & Co., Inc., Financial West Group, GunnAllen Financial, Inc. and ProEquities, Inc. — failed to notify their customers on a timely basis — or failed to notify them at all — of the potential for reimbursement for missed breakpoint discounts. In addition, GunnAllen and ProEquities did not timely respond to customer inquiries about breakpoint discounts.

The names of the firms charged and fines assessed are:

The fines for two firms — New England Securities and H. Beck, Inc. — include other charges in addition to breakpoint self-assessment failures. The additional findings against H. Beck relate to fee-based brokerage violations. Additional findings against New England Securities involve anti-money laundering violations, customer complaint and other reporting violations and supervisory deficiencies.

All 25 firms settled these matters without admitting or denying the findings, but consented to the entry of FINRA’s findings.

If you have questions about investments you made with these firms, The White Law Group may be able to help.  For a free consultation, call the firm at 312-238-9650.

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. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.

For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.

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.

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.

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.