Earlier this year, in February 2023, Centaurus Financial also agreed to pay a $750,000 civil penalty after the SEC charged the firm in connection with the unsuitable recommendation of variable interest rate structured products to retail customers. The SEC’s order found that Centaurus failed to implement, and its branch manager failed to follow, Centaurus’ customer-specific suitability procedures and that Centaurus violated the broker-dealer books and records provisions of the federal securities laws. The SEC’s order found that Centaurus violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) and Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-4(e)(5), 17a-4(f)(2), and 17a-3(a)(17)(i)(B)(3) thereunder. The SEC concluded that Centaurus failed reasonably to supervise the firm’s brokers.

Financial institutions like Centaurus Financial, Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as recommendations to purchase alternative investments, such as GWG L Bonds, UITs, and REITS, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

Customers of Centaurus Financial or Donnie Ingram are encouraged to contact Iorio Altamirano LLP, a securities arbitration law firm that represents investors, for a free and confidential consultation and to review their legal rights.

Iorio Altamirano LLP has also been investigating Centaurus Financial, Inc. for its sales practices related to GWG L Bonds. For the latest on the law firm’s investigation, please visit the following blog posts:

What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

FINRA Disciplinary Proceeding No. 2018057298701

According to the complaint filed by FINRA’s Department of Enforcement, between September 2016 and September 2018, Donnie Ingram, a registered representative with Centaurus Financial and an investment advisor through his own SEC-registered investment advisory firm, Ingram Advisory Services, LLC (Ingram Advisory), made unsuitable recommendations to 81 customer accounts. Ingram’s recommendations caused his customers to incur unnecessary expenses of more than $300,000, providing no additional benefits to them while directly benefiting Centaurus and himself.

Ingram regularly recommended that his customers purchase “standard version” Unit Investment Trusts (UITs) instead of equivalent, lower-cost “fee-based” UITs. As a result, his customers incurred initial and deferred sales charges. These charges would have been waived if Ingram had recommended the fee-based UITs.

Other than causing the customer to incur the full transactional sales charges by purchasing the standard version UIT, there was no difference between the standard version UIT that Ingram recommended and purchased for his customers and the fee-based UIT.

According to the complaint, Ingram understood at the time he made these recommendations that he could have recommended and purchased the lower-cost fee-based UIT for his customers’ brokerage accounts. However, he recommended the higher-cost standard version UIT because it allowed him to receive as compensation a percentage of the transactional sales charge that the customer paid to the UIT sponsor, which the sponsor then paid to Centaurus as a dealer concession.

Additionally, Ingram recommended that his customers purchase Bluerock Residential Growth REIT Inc. (BRG) and MacKenzie Realty Capital, Inc. (MAC) through Centaurus instead of through Ingram Advisory, causing his customers to pay selling commissions that could have been avoided. Other than the selling commission that Ingram and Centaurus received, the underlying securities had the same features and benefits.

Ingram’s conduct violated the reasonable-basis suitability obligation in FINRA Rule 2111(a) and FINRA Rule 2010. Furthermore, Centaurus Financial failed to reasonably supervise Ingram’s recommendations of UITs, BRG, and MAC, violating FINRA Rules 3110(a), 3110(b), and 2010.

Centaurus Financial Inc.’s Supervisory System and Its Shortcomings

Centaurus Financial employed a multi-level supervisory system, which included assigned branch managers, trading principals, and Regional Compliance Supervisors (RCSs). The first level of supervision and oversight belonged to the branch manager, who was responsible for reviewing and processing orders and ensuring the suitability of recommended transactions.

During the relevant period between September 2016 and September 2018, the branch manager for Centaurus’ branch in Winter Park, Florida, was Ingram’s direct supervisor. In that capacity, the Centaurus branch manager was responsible for supervising Ingram and reviewing the suitability of his recommended transactions, including UITs, BRG, and MAC. However, the Centaurus branch manager failed to conduct a suitability review of Ingram’s investment recommendations, as he did not understand that it was his responsibility to do so. Furthermore, the Centaurus branch manager was allegedly aware of Ingram’s practice of recommending more expensive standard version UITs, BRG, and MAC through Centaurus due to the transactional sales charges and admitted that Ingram recommended the higher-cost UITs for “the compensation.”

In addition to the branch manager’s responsibilities, Centaurus’s Written Supervisory Procedures (WSPs) required a trading principal to carefully review UIT order forms for potential violations, unsuitable transactions, and other potential infractions. During the relevant period, no trading principal at Centaurus conducted any suitability review of Ingram’s UIT recommendations. The WSPs also mandated a Regional Compliance Supervisor (RCS) to review the suitability of Ingram’s investment recommendations of alternative investments or non-conventional investments (NCIs), such as BRG and MAC. The RCS responsible for Ingram’s recommendations, however, failed to consider the costs of his recommendations as part of the review.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in alternative investments such as GWG L Bonds, REITS, or UITs through Centaurus Financial, Inc., contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, you may reach the firm by phone toll-free at (646) 330-4624.

Mr. Bowman has been a stockbroker at SagePoint Financial, Inc. in Corona, CA, since February 2013.

Iorio Altamirano LLP has also been investigating SagePoint Financial, Inc. over Unit Investment Trusts (UIT) early rollover practices.

If you have suffered financial losses investing with Gary Bowman or SagePoint Financial, Inc., contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as SagePoint Financial, Inc.

FINRA Letter of Acceptance, Waiver, and Consent No. 2018056858102

Gary M. Bowman and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on July 1, 2021, after FINRA alleged that between February 2013 and December 2017, Mr. Bowman engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts in customer accounts. Specifically, FINRA alleged:

• Bowman recommended that his customers roll over UITs more than 100 days prior to maturity on approximately 4,200 occasions.
• Although his customers’ UITs typically had a 24-month maturity period, Mr. Bowman recommended that they sell their UITs after holding them for, on average, just over one year and use the proceeds to purchase a new UIT.
• Of the approximately 4,200 early rollovers recommended by Mr. Bowman, more than 600 were “series-to-series” rollovers.
• In other words, on more than 600 occasions, Mr. Bowman recommended that his customers roll over a UIT before its maturity date to purchase a subsequent series of the same UIT, which generally had the same or similar investment objectives and strategies as the prior series.
• As one example of a recommended “series-to-series” rollover, Mr. Bowman recommended that a customer purchase a UIT issued in the second quarter of 2016 that had an investment objective of an “above-average total return” and an investment strategy of “investing in dividend-paying companies in the technology sector” (the “2016 Q2 Series”).
• Although the 2016 Q2 Series UIT had a 24-month maturity period, Mr. Bowman recommended that his customer sell it after holding it for approximately 12 months and use the proceeds to purchase a later series of the same UIT issued in the second quarter of 2017 (the “2017 Q2 Series”).
• The 2017 Q2 Series had the same or a similar investment objective and strategy as the 2016 Q2 Series.
• Bowman’s recommendation that his customer sell the 2016 Q2 Series approximately 12 months prior to its maturity and use the proceeds to purchase the 2017 Q2 Series caused his customer to incur increased sales charges to purchase what was, essentially, the same investment.

As a result, Mr. Bowman violated FINRA Rules 2111 and 2010.

What is a Unit Investment Trust (UIT)?

Unit Investment Trusts (UITs) sell investors shares or “units” in a fixed portfolio of securities through a one-time public offering. UITs are considered long-term investments that mature on a specific date, generally after 15 or 24 months. Once the UIT matures, the underlying securities are sold, and the proceeds are paid to investors.

A UIT’s portfolio is passively managed between the trust’s inception and its maturity date. UIT sponsors often offer UIT product lines in successive “series.” These new series coincide with the maturity date of the prior series. Successive series of UITs tend to have the same or similar investment objectives and investment strategies as the prior series, despite a change in the underlying securities that make up the fixed portfolio.

Investors can expect to pay various upfront sales charges and fees, including an initial sales charge (generally 1% of the purchase price), a deferred sales charge (generally up to 2.5% of the offering price), creation and development fee (C&D fee, generally .5% of the offering price), and a fee for annual operating expenses.

A broker recommending the sale of a customer’s UIT before its maturity date and who then uses the sale proceeds to purchase a new UIT would cause their customer to incur greater sales charges than if the customer held the UIT to maturity. As a result of their long-term nature, structure, and costs, short-term trading of UITs may be unsuitable.

Financial Advisor Gary Max Bowman (CRD No. 2035699)

Gary Max Bowman has 31 years of experience in the securities industry and has been associated with ten firms, including two firms that have been expelled by FINRA.

SagePoint Financial, Inc. – Supervisory Duties

Brokerage firms like SagePoint Financial, Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.

How to Recover Financial Losses or Obtain a Free Consultation

If you have lost money with financial advisor Gary Bowman or SagePoint Financial, Inc., contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (646) 330-4624 for a free and confidential evaluation of your legal rights.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.

Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.

If you do not invest, you miss out on opportunities to increase your wealth. However, all investments carry risk, and when you invest, you have the potential to lose money.

There are many different types of investments. Some common types of investments include stocks, bonds, certificates of deposit, mutual funds, money market funds, exchange-traded funds, and annuities. There are also more complex investment vehicles, such as real estate investment trusts (REITs), unit investment trusts (UITs), hedge funds, commodities, and private placements.

Deciding how to invest your money or retirement savings can be challenging for busy Americans and even intimidating for investors who do not know where to put their hard-earned savings. Investors often turn to financial advisors for advice and recommendations.

Financial professionals must make suitable recommendations that are in the best interest of the investor. This obligation is mandated by the Securities and Exchange Commission (SEC). That is why financial advisors and brokerage firms ask investors about their risk tolerance, investment objective, investment experience, and more.

Iorio Altamirano LLP is a securities arbitration law firm based in New York City. We represent investors nationwide who have suffered investment losses as a result of wrongful conduct by financial advisors and brokerage firms.

Whether you invest by yourself or with a financial advisor, below are some New Year resolutions all investors should adopt:

1. If you do not understand an investment, do not invest in it.

Do not invest in securities or investment strategies unless you understand the investment and its risks. This is the best investment advice to protect your wealth while investing.

2. Research a broker’s background, credentials, and disciplinary history, before investing.

Details on a financial advisor’s background and qualifications are available for free on FINRA’s BrokerCheck website. For individual brokers, the report will show you the brokers’ current and past employment history, both in and outside the brokerage industry, the broker’s licenses, and qualification exams undertaken. The report also discloses any criminal felonies, investment-related crimes, industry disciplinary actions or investigations, investment-related civil actions, bankruptcy proceedings, judgments and liens, and terminations.

3. Avoid being the victim of investment fraud with these helpful suggestions.

All investors, including sophisticated and savvy investors, can suffer investment losses, or worse, be scammed. Here are some helpful suggestions to avoid being the victim of investment fraud:

• Ask questions before you invest and do your own independent research.
• Research before you invest. You can check out many investments by searching the SEC’s EDGAR filing system.
• Know the salesperson and check out the disciplinary history of brokers and advisors.
• Be wary of unsolicited offers. That is, be especially careful if you receive a sales pitch that you did not ask for or sought out.
• Be cautious if the investment sounds too good to be true, the salesperson “guarantees returns,” or you experience high-pressure sales tactics. Be mindful of the following warning signs:
  • High returns with little or no risk.
  • Overly consistent returns.
  • Unregistered investments.
  • Unlicensed sellers.
  • Secretive or complicated strategies.
  • Issues with paperwork.
  • Difficulty receiving payments.

4. Guard against excessive trading in your brokerage account.

Excessive trading occurs when a stockbroker ignores his obligations and makes a large number of trades in a customer’s account, not to benefit the customer but to generate commissions for the broker. Here are three ways to protect yourself against excessive trading:

• Review your account documents, including account opening documents. Make sure that your investment objectives and risk tolerance levels are accurately recorded.
• Regularly review your account statements and trade confirmations for unauthorized trades, high-volume trading activity, and excessive fees or commissions.
• If you do not understand your account statements or transactions in your accounts, ask questions. It is your money. If you identify any signs of excessive trading, ask questions, and speak to a branch manager. If you have suffered harm, you should also contact a securities arbitration attorney for a free case evaluation and confidential review of your account.

5. Contact a securities arbitration lawyer if you have been harmed.

If you have suffered investment losses or have otherwise been harmed by investment advice that was not in your best interest, contact a securities arbitration attorney.

Iorio Altamirano LLP is a securities arbitration law firm based in New York City. We are experienced securities arbitration attorneys, and we represent investors nationwide who have suffered investment losses due to wrongful conduct by financial advisors and brokerage firms. We offer a bold approach and aggressively pursue the recovery of investment losses on behalf of our clients. We are investor advocates.

Initiating a securities arbitration can be daunting for any investor, regardless of sophistication and net worth. Investors may also be deterred from filing a securities arbitration claim because of unfamiliarity with the forum or costs involved in pursuing a claim. Iorio Altamirano LLP is here to help.

If you believe that you may have been a victim of securities fraud or other wrongful conduct by your financial advisor or brokerage firm, contact our experienced securities arbitration attorneys for a free case evaluation.

FINRA alleged that between July 1, 2011, and December 31, 2015, Ivan Shore engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts in customer accounts.

If you have lost money with Ivan Shore, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential evaluation of your accounts.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Oppenheimer & Co. Inc.

FINRA’s Allegations – Shore Engaged in an Unsuitable Pattern of Early Rollovers of UITs

The specific allegations related to the elderly couple include the following:

• Between July 1, 2011, and December 31, 2015, Shore recommended his customers roll over Unit Investment Trusts (UITs) more than 100 days prior to maturity on approximately 900 occasions.
• Although Shore’s customers generally held UITs with a 24-month maturity period, Shore recommended that his customers sell their UITs after holding them for a short period and use the proceeds to purchase a new UIT.
• On average, Shore’s customers held UITs with a 24-month maturity for less than eight months (231 days).
• Of the approximately 900 early rollovers recommended by Shore, more than 240 were “series-to-series” rollovers. In other words, on more than 240 occasions, Shore recommended that his customers roll over a UIT before its maturity date to purchase a subsequent series of the same UIT.
• A subsequent series UIT generally has the same or similar investment objectives and strategies as the prior series.
• Shore’s recommendations caused his customers to incur unnecessary sales charges and were unsuitable because of the frequency and cost of the transactions.

FINRA’s Letter of Acceptance, Waiver, and Consent No. 2018057247001 also includes an example of Mr. Shore’s conduct. In the second quarter of 2013, Shore recommended that a customer purchase a UIT with an investment objective of “above-average capital appreciation” and an investment strategy of investing in a “diversified portfolio of common stocks.” The UIT had a 24-month maturity period. Notwithstanding, after holding the security only for 189 days, Shore recommended that his customer sell the UIT and use the proceeds to purchase a later series of the same UIT issued in the third quarter of 2013. The UIT purchased in the third quarter of 2013 had the same or a similar investment objective and strategy as the UIT purchased in the second quarter of 2013. Shore’s recommendation that his customer sell the first UIT approximately 17 months before its maturity and use the proceeds to buy a subsequent series of the same UIT is an example of “series to series” rollovers. These transactions caused his customer to incur increased sales charges to purchase what was, essentially, the same investment.

Unit Investment Trusts

A Unit Investment Trust (UIT) is a U.S. financial company that offers investors shares or “units” in a fixed portfolio of securities through a one-time public offering. A UIT matures on a specific date; often, after 15 or 24 months, at which point, the underlying securities are sold. The proceeds received from the sale of the underlying securities are paid to the investors. A UIT’s portfolio is not actively managed between the trust’s inception and its maturity date.

Unit Investment Trust sponsors often offer UIT product lines in successive “series.” Successive series of UITs often have the same or similar investment objectives and investment strategies as prior series.

Investors can expect to pay various sale charges and fees, including an initial sales charge, a deferred sales charge, creation and development fee, and a fee for annual operating expenses.

Oppenheimer & Co. Inc. – A Duty to Supervise

Financial institutions like Oppenheimer & Co. Inc. have a duty to supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as excessive trading, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to sufficiently supervise their financial advisors or the investment account activity, they may be liable for investment losses sustained by customers.

If you have lost money with financial advisor Ivan Shore or Oppenheimer & Co. Inc., contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (646) 330-4624 for a free and confidential evaluation of your account.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.