After a long, checkered career, Clay Hoffman has been barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). According to FINRA, Mr. Hoffman was first suspended and then barred from the securities industry for first failing to pay a fine he agreed to as part of a settlement, then for failing to cooperate with FINRA’s investigation into his alleged “unsuitable transactions, unauthorized transactions, excessive trading and fraud.”
Imagine that you have woken up every day for eight years enjoying your secure retirement. Then, one day, you learn that the retirement portfolio you thought you owned, the foundation for your financial security, has vanished. This is exactly what happened to some unlucky Verizon retirees who trusted Richard Cody and his wife with their retirement portfolios, according to the U.S. Securities & Exchange Commission.
According to settlement papers signed with the Financial Industry Regulatory Authority (FINRA), Mr. Gorelik, a financial advisor with a long career, has been misrepresenting his educational background.
Mr. Matthew J. Gorelik told his brokerage firm, Merrill Lynch, and others that he graduated from a university in Massachusetts. While the settlement papers do not state which university, we all know that the most prestigious university in Massachusetts is Harvard.
The truth is that Mr. Gorelik has never graduated from any university, much less Harvard.
Tammy Charlene Petersen, a financial advisor from Carrollton, Virginia, has been barred from the securities industry for stealing $107,378 from firm customers. She wired money from four different customer accounts into her own account to use for her personal benefit. Petersen did this without any of the customers’ knowledge or consent.
FINRA prohibits any financial advisor from making improper use of a customer’s securities or funds. Investors trust and rely on financial advisors when they hire them to manage their money and give them financial advice. Not only is it unethical for a financial advisor to convert an investor’s money for their own use, it is against the law.
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.