Douglas Jay Melzer (“Melzer”) in Mars, Pennsylvania has been barred from the securities industry for making biased recommendations to customers to invest in private securities. Melzer received large, unauthorized commissions for participating in the private securities transactions, and put his interests ahead of his clients’.
Perry Stephen Abbonizio of Worcester, Pennsylvania was fined and suspended for participating in outside business activities, and persuading his customers to invest, without providing notice to his employer.
From March 2008 through April 2011, Mr. Abbonizio, a stock broker with Wells Fargo Advisors, was engaged in an outside business venture and solicited approximately ten Wells Fargo customers to invest in the company without informing his employer. Mr. Abbonizio received compensation in the form of shares in the company for convincing people to invest, and the total value of his shares was approximately $100,000.
In Atlanta, Wells Fargo Advisors broker Timothy Landrum was recently barred from the securities industry for failure to respond to regulator inquiries about alleged theft of client funds. It appears that Mr. Landrum took money out of several customers’ Wells Fargo bank accounts.
If you’re reading this article, there is a good chance you invested in or through an entity that is now in receivership, and you probably have a lot of questions! The purpose of this article is to give you a general overview of how receiverships work so you know what to expect. Every receivership is different, but every receivership goes through four overlapping stages: 1) stabilization; 2) investigation; 3) litigation; and 4) distribution.
These four stages all support the overarching goal of every receivership—the orderly winding down of a business in a manner that maximizes value for investors.
We will come back to these four stages in a minute, but first it is important to understand the background context that gives rise to a receivership.
Some investor claims are easy to see, such as when money is simply missing from an account or a financial advisor has been arrested for securities fraud. In other cases, a financial advisor has been negligent. The financial advisor did not commit fraud, but he did make mistakes that caused investment losses. These cases are more difficult for an investor to spot. Here are the three things we see in most of the investor claims we file against financial advisors for malpractice or negligence.
Financial advisors love to sell variable annuities. The reason is simple—commissions of up to 8%. If a financial advisor can sell you a $200,000 variable annuity, that means commissions of up to $16,000. Not bad for a day’s work!
Unfortunately, commissions are just about the only thing that is simple about variable annuities.
The one reason why variable annuities are almost always a bad idea is that they are too complicated for ordinary investors (and normal people in general) to understand. Seriously, have you ever tried to read a variable annuity policy? Here is just one example from an actual policy. Try to stay awake through this, because there is a lot more you urgently need to know about variable annuities:
If your financial advisor has caused investment losses, you may want to sue your financial advisor. For better or for worse, you may instead be forced out of court and into a FINRA arbitration. This post explains why securities litigation frequently ends up in FINRA arbitration, and what you can expect from the FINRA arbitration process.