by Brian Mahany
Zombie horror is quite the rage these days in the entertainment industry. Movies, TV shows… even my local Barnes & Noble retailer has an entire section of books devoted to the living dead. While the zombies in the entertainment industry are imaginary, debarred stockbrokers and investment advisers really do come back from the dead.
The Financial Industry Regulatory Authority (FINRA) regulates stockbrokers. Other agencies such as the SEC and CFTC regulate investment advisers and commodities brokers. All have the power to revoke licenses. Usually, the system works to keep most financial professionals in line but can do little to control those who have already been banned from the industry. According to a feature article from Investment News, debarred stockbrokers simply choose to come back as self styled “teachers” or “wealth coaches.”
Whatever they call themselves, by simply creating a new title, these folks are free to pray on other victims and escape all regulatory scrutiny.
According to the Investment News article, stockbroker Frank Bluestein sold a Ponzi scheme to unsuspecting investors. That scheme netted about a quarter of a billion dollars. Bluestein was tossed from the brokerage industry and can no longer work as a stockbroker. End of story, right?
Unfortunately no. According to published reports, Bluestein operates a trading website that charges members $1250 for a 6 month membership. Is he selling securities? Not quite. But he is charging a fee to “teach” investors how to make better decisions on futures and options. What his website fails to disclose, however, is that Bluestein has a staggering 137 customer and regulatory complaints against him.
By reading FINRA’s broker check report, one would get the sense that the only way Bluestein should be teaching is in a prison to other inmates.
We often see debarred stockbrokers reappear as insurance agents. In many states, insurance agents are not highly regulated. State regulatory boards are made up of part time people that sometimes only meet once a month. We routinely see insurance agents selling securities, abusive tax shelters such as 419 plans and even Tenant in Common (TIC) investments.Unfortunately, these same agents shouldn’t be selling those products without proper licenses and training. They frequently also have no clue what they are doing.
If contacted by someone offering to sell you an investment, always check with them to see what licenses they hold. Most states can verify license information on line at no charge. Some even let you know if there is any disciplinary history. FINRA and the SEC offer the gold standard of information, and again the information is both free and on-line. Even assuming your new “teacher” or “wealth coach” is licensed, see if they are affiliated with a larger organization or company. Mom and pop operations frequently have no errors and omissions insurance.
Journalist Bruce Kelly wrote in Investment News that, “The industry must do everything in its power to keep these bad players out of the business once they get barred. Banned brokers who claim that they are teachers or coaches are demonstrating anew the absurd lengths to which they will go to stay in the game.” We agree.
If you have been ripped off by a stockbroker, investment adviser or other financial professional, give us a call. The stockbroker fraud lawyers at Mahany & Ertl have helped many victims of bad brokers, Ponzi schemes and other frauds to get back their hard earned money. We generally take cases in which the losses exceed $100,000.
Many 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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