by Brian Mahany
From the outside, John Thomas Financial appears to be a pretty respectable place. It’s main office is located at 14 Wall Street, a high rent building across the street from the New York Stock Exchange. It’s president, Anastasios “Tommy” Belesis, has been seen with former New York Mayor (and U.S. Attorney) Rudolph Guiliani. There is a darker side, however; one that involves the New York City Police Department, the Financial Industry Regulatory Authority (FINRA) and perhaps even the FBI, although company lawyers deny the latter.
So what’s going on?
The company says it runs a clean shop and that any pending investigations were simply ginned up by disgruntled former employees. Maybe. But regulators are apparently taking the complaints seriously.
According to InvestmentNews, FINRA began an investigation in January against the firm’s president for allegedly inflating the price of a stock. The New York Post reports that the FBI is speaking with former employees. And Bloomberg Businessweek reports many former stockbrokers complain that John Thomas Financial is nothing more than a boiler-room operation.
A boiler-room is often synonymous with “pump and dump” schemes. In the typical boiler room operation, stockbrokers cold call potential investors and engage in high pressure sales tactics. Potential investors are often told that they may miss out on a great opportunity unless they act quickly. Frequently the claims made by the brokers are exaggerated if not outright false.
A pump and dump operation is one in which stockbrokers artificially inflate the price of a stock through hype and misleading statements. Usually, they don’t tell investors that they (the brokers) have a position in the stock. In other words, by creating the hype, they are able to “pump” the value of their own stock and then “dump” it on unsuspecting investors. For obvious reasons, pump and dump schemes are illegal.
John Thomas Financial was sanctioned two years ago in 2011 and ordered to pay $275,000 after allegations surfaced that the firm was artificially inflating commissions and hiding them as “fees.” The company paid the fine but admitted no wrongdoing.
We have found that many elderly investors succumb to high pressure sales tactics, although anyone at any age can become a victim of stockbroker fraud. If a stockbroker recommended a bad investment, failed to understand your needs or churned your account by making multiple trades simply to generate commissions, you may have a claim. Obviously, no one can guarantee what will happen with the market but broker dealers must disclose their fees, recommend suitable investments (suitability rules) and are even required to get to know you before making recommendations.
If you think you have a claim, give us a call. We generally take cases in which the losses exceed $100,000.
Most cases are resolved through arbitration and can be handled on a contingent fee basis meaning no legal fees unless we make a recovery for you. For more information, contact attorney Brian Mahany. Brian can be reached at or by telephone at (414) 704-6731 (direct). All calls are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Fraud recovery available in many jurisdictions.
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