There are a number of instances where investment losses are recoverable. These cases fall broadly under three categories: excessive trading, unsuitable investments and misrepresentations. These are discussed more fully under the topic “What Types of Investment Losses are Recoverable.

Most people are unaware that investment losses can be recovered; they write off losses as imprudent decisions, or feel helpless and foolish for having had their trust betrayed. While not all losses are recoverable, the important thing is to speak to an experienced securities attorney as soon as you suspect wrongdoing. A careful analysis, including determining when the statutes of limitations are triggered is essential to evaluating any claim.

Where to Begin

Aaron Parthemer a former registered representative with Morgan Stanley and Wells Fargo was barred from the securities industry on March 6, 2015. In their complaint, which Aaron Parthemer neither admitted nor denied, FINRA found that Parthemer engaged in private securities transactions without obtaining written approval from his broker dealer, and then made misrepresentations to FINRA in the course of FINRA’s investigation into Aaron Parthemer’s outside business activities.

Aaron Parthemer’s licensing and disciplinary history with FINRA

Aaron Parthemer is not currently licensed as of October, 2015, but was licensed with the following FINRA firms

There were a total of 4,727 cases filed in 2011 which was down from 5,680 in 2010.

In publishing Regulatory Notice 12-03 FINRA called on broker dealers to increase supervision and compliance when dealing with complex products.”  These investments include any security or strategy with “novel, complicated or intricate derivative like features.”  Examples are asset backed securities, unlisted REITs, structured notes, leveraged and inverse ETFs.

The law contains a number of provisions aimed at encouraging job growth by making it easier and less costly for startups to raise capital and eventually go public. There are three major components to the law. One section establishes a new category of companies called “emerging growth companies” that have less than $1 billion in annual revenues at the time they register with the SEC. These companies would face fewer regulatory barriers when raising funds.  Another section of the law increases the number of shareholders before triggering when companies have to start public reporting. The third component is the most controversial, and deals with a capital-raising strategy known as “crowd funding” that would let investors take small stakes in private start-ups sold over the Internet.
 

Montana Commissioner of Securities and Insurance, Monica J. Lindeen, and KMS Financial Services, Inc., a Seattle-based securities firm, have entered into a settlement agreement that provides restitution to the victims identified in the Commissioner’s action against Arthur Heffelfinger, a former KMS stock broker.† In an effort to be responsive to the victims affected by Heffelfinger’s illegal activities and to the communities in which KMS Financial Services does business, the firm has agreed to pay the victims just over $975,000 in restitution.† The firm was also agreed to pay a total of $50,000 in fines and investigative costs to the State of Montana.

“Nationally, it is very unusual for victims of a Ponzi scheme to ever be given their money back from the scam,” said Lindeen. “This settlement allows the victims of this Ponzi scheme to recover the money they lost.”

“Ponzi schemes work on the ‘rob Peter to pay Paul’ principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses,” said Lindeen. “Because in the end there is generally no money, the later investors become the victims and typically get nothing back. If KMS Financial Services hadn’t agreed to pay restitution, these victims would likely have no chance of recovering their losses.”

FINRA Orders SunTrust Investment Services to Pay $1.44 Million for Unsuitable UIT, Closed-End Fund and Mutual Fund Transactions
Sanction Includes $540,000 in Restitution to Disadvantaged Customers; Broker Barred in Separate Action, Former Branch Manager Suspended

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has ordered SunTrust Investment Services, Inc. of Atlanta, GA, to pay $1.44 million to resolve charges related to unsuitable unit investment trust (UIT), closed-end fund (CEF) and mutual fund transactions. Of that amount, $900,000 is a fine that includes nearly $224,000 in disgorgement of commissions earned on the unsuitable trades. The remaining $540,000 represents restitution to 17 customers who incurred losses.

As part of this settlement, SunTrust must also review all UIT purchases and provide remediation to all eligible customers who did not receive the maximum sales charge discount.

Oklahoma City///// On June 24, 2010, Oklahoma County District Court Judge Vicki Robertson issued a temporary restraining order against Firstar Financial Group of Central Oklahoma, LLC, John Joseph Hamilton, and Robin L. Peck. The judge’s action was based on an emergency request by the Oklahoma Department of Securities. The Department of Securities filed a civil action against the defendants alleging the fraudulent sale of unregistered investment interests and the sale of capital appreciation bonds.

 The Court has ordered the defendants to stop all offers and sales of the securities.

The Department initiated its investigation based on newspaper advertisements run by Firstar Financial Group of Central Oklahoma, LLC. The advertisements promote certificates of deposit issued by FDIC-insured banks that purportedly offer the highest certificate of deposit rates in the country. To achieve the yield advertised, Firstar Financial must contribute additional cash on behalf of the investor.

Arthur Heffelfinger Pleads Guilty to Operating a $1.7 million Ponzi Scheme and Theft

Monica J. Lindeen, Commissioner of Securities and Insurance (CSI), announced today that Arthur Leroy Heffelfinger has pled guilty in Lewis & Clark County District Court to Operating a Pyramid Promotional Scheme (Ponzi Scheme), a felony, and Theft (Common Scheme), also a felony. Heffelfinger was charged in January 2010 with three felonies – operating a ponzi scheme, theft, and exploitation of an older person. His trial for the charge of exploiting an older person will be set for sometime this Fall.

After an extensive investigation beginning in September 2009, Heffelfinger, a former stockbroker for KMS Financial Services, a firm located in Seattle, was charged with operating a ponzi scheme for a period of at least 8 years, for theft, and for exploiting an older person. The charging documents alleged that Heffelfinger diverted funds from at least twenty KMS clients from February 2001 through September 2009, using approximately $739,724 for his own personal use, approximately $917,777 for the purpose of conducting the ponzi scheme, and approximately $364,044 when exploiting the older person, for a collective total of $2,021,546. Heffelfinger sold the victims bogus real estate investment trusts.

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