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This blog is written by Robert H. Rex, Esq. who is a securities attorney and a passionate advocate for investors rights. With over 30 years of legal experience, 25 of which have dealt almost exclusively with the recovery of stockmarket and investment losses for mostly elderly clients, he and his... More
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Rex Securities Law
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Rex Investment Loss Recovery Blog
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  • Former NEXT Financial Broker Sued By FINRA

    by Robert H. Rex, Esq.

    The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA's chief role is to protect investors by maintaining the fairness of the U.S. capital markets.

    All stockbrokers and broker dealers (brokerage firms) are required to be licensed by and subject to the rules and regulations of FINRA. Each month FINRA publishes disciplinary actions against brokers and broker dealers. Discipline can range from monetary fines and suspensions, or in extreme cases, revocation of licensing and a bar from the securities industry.

    See the FINRA website for current and historical disciplinary actions.

    AUGUST 2013
    Eduardo Guillermo Diaz (CRD #1621873, Registered Principal, Ocean Springs, Mississippi) was named a respondent in a FINRA complaint alleging that in connection with the sale of a security, during telephone conversations and email communications, he intentionally or recklessly made untrue statements of material fact to a customer in willful violation of Section 10(b) of the Exchange Act and Rule 10b-5 regarding properties of a limited liability company he controlled and intentionally or recklessly omitted to state other relevant and related material facts to the customer. The complaint alleges that the customer's investments in the company and the loan to it, which totaled at least $365,000, were not paid directly from her account at Diaz's member firm. Rather, amounts withdrawn from her account were transferred to her checking account at a bank. At Diaz's request, she then wired the funds, comprising the investments and loan to the company, to a bank account, which was a personal bank account Diaz controlled. In reliance upon representations Diaz made, the funds the customer provided to Diaz were intended for use by the company for its general business operations. Diaz's bank account was comprised almost entirely of funds from the customer for her investments and the loan. Diaz improperly converted at
    least $126,000 of these funds in his bank account to his personal use for expenditures that did not benefit the company or the customer. The complaint also alleges that Diaz executed transactions in the customer's account, without her prior knowledge, authorization or consent. The unauthorized transactions in the customer's brokerage account at Diaz's firm resulted in more than $195,000 in cash that he sent to the customer, which she believed were distributions from the company. The complaint further alleges that Diaz, acting
    outside of his employment with his firm, participated in private securities transactions for compensation with the customer without providing prior written or oral notice to
    the firm of his proposed role in, or the selling compensation that he might receive from the transactions. The firm did not approve Diaz's private securities transactions with the customer. In addition, the complaint alleges that Diaz engaged in business activities with his company outside the scope of his relationship with the firm, without providing prior written notice to the firm or receiving its written approval. Diaz's participation in the company was not passive. Diaz was a member and manager of the company and received approximately $126,000 in compensation as a result of his business activity with it. Moreover, the complaint alleges that Diaz solicited loans from the customer in the total amount of $87,000. The loans were directed to Diaz and his company and deposited into his personal bank account. Diaz failed to notify his firm of the loans the customer made to him contrary to firm policy that prohibited Diaz from borrowing from customers in all circumstances. (FINRA Case #2012034594402)

    According to FINRA BrokerCheck Records Diaz is not currently registered. He was previously registered at the following brokerage firms:

    Kovack Securities, Inc.
    12/2012-1/2013

    Next Financial Group, Inc.
    12/2008-11/2012

    AIG Financial Advisors, Inc.
    10//2005-12/2008

    If you have questions about investment losses or the way your brokerage account has been handled, please contact us to discuss your legal rights.

    Free initial consultation.

    Nationwide representation.

    Rex Securities Law

    561 391 1900

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 09 4:08 PM | Link | Comment!
  • Ex-Lincoln Financial Advisor Broker Sued By FINRA-Million Dollar Theft

    The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA's chief role is to protect investors by maintaining the fairness of the U.S. capital markets.

    All stockbrokers and broker dealers (brokerage firms) are required to be licensed by and subject to the rules and regulations of FINRA. Each month FINRA publishes disciplinary actions against brokers and broker dealers. Discipline can range from monetary fines and suspensions, or in extreme cases, revocation of licensing and a bar from the securities industry.

    See the FINRA website for current and historical disciplinary actions.

    AUGUST 2013
    Hugh Robert Hunsinger Jr. (CRD #2179745, Registered Representative, Pinebrook, New Jersey) was named a respondent in a FINRA complaint alleging that he misappropriated and converted a total of $1,452,503.57 from the accounts of his elderly and unsophisticated parents. The complaint alleges that his parents never authorized the transfer of funds. To hide his misappropriation, Hunsinger told his parents that he was selling securities they owned to invest in new insurance or securities products. Instead, Hunsinger deposited the funds into bank accounts he controlled. The complaint also alleges that Hunsinger
    recommended that his parents invest in a deferred combination variable and fixed annuity to be issued by a company. Hunsinger provided his parents with documents that purported to be designed for one of them and that contained information, based on a historical illustration, concerning withdrawals, contract values, cash surrender, average annual
    returns and standard death benefit. The complaint further alleges that Hunsinger's parents agreed to his recommendation and believed that he was selling securities from their accounts to purchase the annuity. In addition, the complaint alleges that in subsequent meetings, Hunsinger reiterated to his parents, orally and in writing, that he had purchased the annuity, and later provided them with additional documents reflecting the purported initial premium for the annuity. Hunsinger caused securities to be sold in their accounts but never purchased the annuity. Moreover, the complaint alleges that Hunsinger willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, FINRA Rules 2010 and 2020, and NASD Rules 2110 and 2120. Hunsinger acted with scienter in falsely representing that he had purchased the annuity on behalf of his parents.
    Furthermore, the complaint alleges that Hunsinger failed to respond to FINRA requests for information and documents related to its investigation. (FINRA Case #2011030045101)

    According to FINRA BrokerCheck Records Hunsinger is not currently registered. He was most recently registered at the following brokerage firm:

    Lincoln Financial Advisors Corporation
    Paramus, NJ
    2/2002-11/2011

    If you have questions about investment losses or the way your brokerage account has been handled, please contact us to discuss your legal rights.

    Free initial consultation.

    Nationwide representation.

    Rex Securities Law

    561 391 1900

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 09 3:53 PM | Link | Comment!
  • Former SunTrust Investment Broker Christopher Vaughn Sued By FINRA-Theft From Elderly Client

    By Robert H. Rex, Esq.

    The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA's chief role is to protect investors by maintaining the fairness of the U.S. capital markets.

    All stockbrokers and broker dealers (brokerage firms) are required to be licensed by and subject to the rules and regulations of FINRA. Each month FINRA publishes disciplinary actions against brokers and broker dealers. Discipline can range from monetary fines and suspensions, or in extreme cases, revocation of licensing and a bar from the securities industry.

    See the FINRA website for current and historical disciplinary actions.

    AUGUST 2013
    Christopher Shawn Vaughn (CRD #4956822, Registered Representative, Leesburg, Florida) was named a respondent in a FINRA complaint alleging that he engaged in a scheme
    to convert securities an elderly customer owned. Without the customer's knowledge or consent, Vaughn made his wife the primary beneficiary of the customer's brokerage account. When the account was opened, Vaughn did not inform his immediate supervisor, or any other supervisor at his member firm, that his wife was the beneficiary. As part of his efforts to hide his misconduct, Vaughn provided a false mailing address for the customer on her application, which was for a post office box belonging to his wife's grandfather, preventing the firm from delivering monthly account statements and trading confirmations to the customer at her actual residential address. By doing so, Vaughn caused his firm's books and records to be inaccurate. The complaint alleges that after opening her account, Vaughn recommended and sold the customer a fixed annuity contract for $10,000. The customer informed Vaughn that she wanted her neighbor to be named as the annuity's beneficiary. In direct contravention of the customer's instructions, Vaughn falsely
    recorded in the firm's electronic system that his wife was the annuity's primary and sole beneficiary. The complaint also alleges that in connection with the annuity, Vaughn provided the same incorrect mailing address for the customer in the firm's system, thereby preventing the firm or the company that issued the annuity from delivering information
    concerning the customer's annuity to her actual residential address. After receiving an email communication from the company that issued the annuity inquiring about the
    accuracy of the customer's mailing address, Vaughn falsely represented to the company that the customer's address was correct, and that the customer had informed him that
    she had experienced delivery issues with the post office. In addition, the complaint alleges that the customer received a packet of documents concerning her annuity, from which
    she learned for the first time that Vaughn's wife was named as the beneficiary of the annuity. The customer did not know who Vaughn's wife was. After being contacted by the
    customer's neighbor questioning the inaccurate address and why his wife was named as the beneficiary, and indicating that the customer wanted her $10,000 investment returned,
    Vaughn told the customer and her neighbor that he had mistakenly identified his wife as the beneficiary of the annuity because a member of his wife's family purchased a $10,000 annuity at the same time and named his wife as the beneficiary. At her request, the customer's annuity contract was cancelled and the $10,000 was refunded to her.

    Moreover, the complaint alleges that after the customer's neighbor informed Vaughn of the customer's death, he informed the neighbor that the customer contacted him to
    remove the neighbor as the beneficiary. Vaughn promised to provide the neighbor with documentation to that effect, but he never did. Following the customer's death, Vaughn opened a brokerage account in his wife's name for the express purpose of receiving the assets from the customer's account. Vaughn's wife then presented to his firm a death certificate that Vaughn obtained from the neighbor, and successfully caused the assets
    held in the customer's account to be transferred to his wife's brokerage account. The customer's account held mutual funds worth a combined $22,417.58. Furthermore, the complaint alleges that after learning that the customer's assets had been transferred to Vaughn's wife's account, the neighbor and the customer's attorney asked the firm to conduct an investigation into Vaughn's conduct with respect to the customer's account.
    The firm did not find any documentation evidencing the customer requested Vaughn's wife to be named as a beneficiary on either the account or annuity. The firm terminated Vaughn's employment in connection with this matter. Vaughn and his wife executed a Mutual Release and Settlement Agreement with the firm, agreeing to transfer the assets held in the wife's account back to the customer's account or an account maintained in the name of the customer's estate. Vaughn's conduct resulted in the conversion of $22,417.58 in assets from the customer. (FINRA Case #2011028581201).

    According to FINRA BrokerCheck Records Vaughn is not currently registered. He was previously registered at the following brokerage firms:

    SunTrust Investment Services, Inc
    Deltona, FL
    8/2009-7/2011

    Wells Fargo Advisors, LLC
    The Villages, FL
    1/2008-8/2009

    A.G. Edwards & Sons, Inc.
    The Villages, FL
    6/2007-1/2008

    If you have questions about investment losses or the way your brokerage account has been handled, please contact us to discuss your legal rights.

    Free initial consultation.

    Nationwide representation.

    Rex Securities Law

    561 391 1900

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 09 3:40 PM | Link | Comment!
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