Articles Posted in Arbitration

McLean, Virginia based law firm Greco & Greco, P.C. is currently investigating the activities of Ameriprise and its former financial advisor, James W. Dunn, who operated out of an office in Vienna, Virginia.

As more fully set out in his FINRA Brokercheck Report (www.brokercheck.finra.org), former Ameriprise financial advisor James W. Dunn resigned in October, 2021 while under review for “potential violation of company policy related to suitability, unauthorized trades and texting with clients.”  The Brokercheck report also reveals that Mr. Dunn was terminated by Wells Fargo in May 2019 regarding “concerns regarding mutual fund trades that were marked unsolicited.”

Mr. Dunn currently has 11 customer complaints listed on his Brokercheck report, totaling alleged losses of over three million dollars.  The complaints reference allegations of unauthorized trades in 2021 in stocks and foreign securities.

Greco & Greco is currently investigating and filing FINRA arbitration claims for investors harmed by UBS’s Yield Enhancement Strategy.  This strategy was marketed to UBS customers as a means to generate additional income on existing accounts with minimal risk.  UBS claimed that the options program, which allegedly used an “Iron Condor” strategy, would a) generate cash flow from lower yielding assets, b) mitigate downside exposure and provide downside protection, c) provide income when markets were flat or trending lower, d) limit exposure to significant downward market movements, e) manage risk, and f) provide portfolio diversification.

These representations proved to be untrue with investors losing large amounts of money from the use of the YES program, especially at times of high market volatility. 

As is often the case in the industry, the true reason brokers may have recommended the strategy comes back to fees.  The program allowed UBS and its brokers to earn additional fees on the same amount of assets by adding an additional “mandate” dollar amount upon which a percentage fee would be charged.  The program could allow UBS and the broker to earn an additional 1.75% on an additional dollar amount above the accounts’ value, although the net value of the customer accounts remained the same.

W. Scott Greco, working with local Puerto Rico co-counsel, represented multiple customers in FINRA arbitrations in 2019 against UBS of Puerto Rico that resulted in monetary awards to the customers.

The first, a case involving overconcentration in risky UBS Puerto Rico closed end funds, resulted in an award of $4,813,161.00 which were the principal losses from February, 2013 forward, despite UBS’s claims that the accounts had a net out of pocket profit.

The second FINRA arbitration in 2019 involved overconcentration in a few Puerto Rico bonds, and resulted in an arbitration award of $195,000 including attorney fees, again despite UBS claims of a net out of pocket profit.

FINRA recently entered a Letter of Acceptance Waiver and Consent regarding Capitol Securities Management Inc. regarding various alleged sales practice violations. The AWC can be found here:  http://disciplinaryactions.finra.org/Search/ViewDocument/63638 The issues addressed by the AWC involved supervision, its anti-money laundering program, and the alleged unsuitable sales of Reverse Convertible Notes. 

FINRA stated at page 3:  “CSM, acting through RS, recommended and effected 24 unsuitable purchases of customized RCNs totaling approximately $4 million for the accounts of eight customers. Most ofthe customers were over the age of 60 and had modest or conservative investment objectives and risk profiles. Furthermore, all of the customers’ accounts were heavily concentrated in RCNs, with the amounts ofthese investments constituting a substantial portion oftheir net worth. RS’s recommendations were unsuitable given the customers’ risk tolerance, investment objectives, ages and net worth.”