Securities Fraud Lawyer Blog
On January 6, 2016 the SEC charged Larry Werbel, a registered representative formerly with Summit Brokerage Services of Chagrin Falls, OH with violations of Section 10 of the Exchange Act and Rule 10(b)(5) and Section 206 of the Advisors Act.
The complaint against Larry Werbel arises from a claim the SEC brought against Edward Durante, who is accused of defrauding at least 50 unsophisticated investors of $11 million through the sale of securities of VGTel, Inc., a shell company he controlled.
According to the SEC’s complaint Edward Durante defrauded investors by selling approximately six million shares of VGTel stock to investors using a fictitious name to hide his criminal past and lying to investors regarding the use of stock sale proceeds. Durante also bribed investment advisers, who advised their clients to purchase VGTel stock without disclosing to their clients that they had been bribed. Durante also engaged in matched trading of VGTel stock with a stockbroker to artificially control the stock’s market price.
The complaint alleges that in approximately 2010, Larry Werbel entered into a consulting agreement with Durante’s company, New Market. Pursuant to this agreement, Durante caused an individual to pay Werbel $200,000 in exchange for Werbel inducing six of his clients to purchase approximately $2 million worth ofVGTel stock.
According to the allegations in the complaint, Werbel took no steps to learn anything about the assets or revenues of VGTel, did not review its balance sheet, never met with an officer or director of the company, and never performed any due diligence regarding VGTel other than talking to Durante. Nonetheless, in 2012 and 2013, Werbel recommended investments in VGTel to his clients, and failed to disclose the compensation he received from Durante.
The SEC’s complaint charges Larry Werbel with aiding and abetting Durante’s fraud. The SEC seeks permanent injunctions, disgorgement, civil money penalties, and other relief.
The above allegations contained in the SEC’s complaint have not been proven, and the issuance of a complaint represents the SEC’s initiation of a formal proceeding in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint.
Larry Werbel registration and disciplinary history
In order to lawfully sell investments to the public, one must either be registered or exempt from registration. Larry Werbel was registered with:
According to FINRA’s CRD disclosure report, Larry Werbel has been the subject of one customer complaint and one regulatory investigation.
The Law Office of David Liebrader practices exclusively in the field of investment loss recovery and our securities attorneys have successfully resolved over 1000 investment loss cases over the past 20 years. Recoveries for clients top $40 million. The types of claims we have successfully handled include those involving unsuitable investments (suitability claims), excessive trading or “churning”, misrepresentations and omissions, unauthorized trading, over-concentration of illiquid or overly risky investments, pump and dump scams involving “penny stocks”, direct participation programs (private placements) involving real estate investment trusts (REITS), oil and gas exploration programs, leasing equipment deals and receivable financing, promissory notes whether sold through a broker dealer or as part of the outside business activities of a registered representative, ponzi scheme losses, failure on the part of the broker dealer to perform due diligence, state securities law (blue sky) violations and failure to supervise.
Investment losses can be recovered through a process known as FINRA arbitration. FINRA regulates broker dealers that sell investments, and provides an arbitration forum to resolve investor disputes. Investors can pursue claims against their brokerage firms in the FINRA arbitration forum. Common claims in the forum are those for suitability, breach of fiduciary duty, misrepresentations and omissions, negligence, violation of FINRA rules, state and federal securities laws violations, elder abuse, breach of contract and failure to supervise. On average, the recovery process takes approximately a year, from start to finish.
FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).
If you have suffered investment losses please call The Law Office of David Liebrader at (702) 380-3131 for a free, confidential consultation