A New Jersey financial firm must pay $50,000 in Texas for allegedly not properly supervising one its brokers who loaded up too many energy stocks in his clients’ accounts. The Investment Center Inc. has been reprimanded by the Texas State Securities Board, which also imposed the fine.
It was an investor that brought the Texas securities case against the securities dealer and one of its ex-brokers. According to the state regulator’s consent order, between ’10 and ’14, some clients at The Investment Center held 95% of total investible assets in energy sector equities. The recommended securities were typically low-priced and publicly traded. There were purportedly periods when some clients’ accounts were invested in just one company instead of holding investments in different energy companies at the same time. Also, said the state regulator, with certain clients, their equity positions were 100% concentrated in the energy sector.
The Texas State Securities Board said that clients that could not sustain a lot of risk were among those affected by this broker’s investment choices.
Although the former financial representative’s actions in investing so much of his clients’ money in concentrated equity positions raised red flags when some of these accounts dropped in value, The Investment Center purportedly failed to act on the warning signs. The firm has since paid the investor who filed the Texas securities fraud complaint $98,000.
In other securities news, Stanley Jonathan Fortenberry, a Texas man, faces criminal charges. Fortenberry is charged with obstruction of justice and fraud. He is accused of bilking investors, causing them to sustain $900K in losses.
According to the indictment, from ’13 to ’14, Fortenberry raised money for oil and gas drilling projects in Colorado. At the time, he operated Wattenberg Energy Partners. He established the company under his son’s name, allegedly because state securities regulators in Pennsylvania and Texas had barred him from selling unregistered securities involving oil drilling projects.
The indictment said that Fortenberry had salespeople solicit individuals about the oil drilling project investments and then used investors’ money to pay for his own expenses and cover company costs. Fortenberry is accused of misleading investors into thinking that Wattenberg had a major role of control over the drilling projects when the company was just raising money and moving the funds to the companies that did have control.
The Texas man also allegedly ran a fraud scam involving the Premier Investment Fund. Investors thought they were getting involved in social media projects. Unfortunately, alleges the indictment, Fortenberry did not properly represent the company’s profitability or the manner in which he would be compensated. The Company did not make money and Fortenberry took about half of what he collected from investors for himself.
At Shepherd Smith Edwards and Kantas, LTD LLP, our Texas securities fraud lawyers have brought securities arbitration claims and lawsuits against financial firms, including The Investment Center, from investors seeking to recoup their investment losses. Contact us today.
Texas securities regulator fines N.J. firm $50,000 for broker’s misconduct, InvestmentNews, August 4, 2016
Texan charged with running fraudulent investment firms, MyPlainView, August 12, 2016