GunnAllen Financial :: Stock Broker Fraud Blog

GunnAllen Financial Inc. has settled Financial Industry Regulatory Authority charges that it was allegedly involved in a trade allocation scheme, in addition to several reporting, anti-money laundering, supervisory, and recordkeeping deficiencies. The trade allocation scheme was allegedly conducted by Alexis J. Rivera, the former head trader at GunnAllen.

FINRA says that in 2002 and 2003 and acting through Rivera, GunnAllen participated in a “cherry picking” scam. Rivera took profitable stock trades and put them into his wife’s personal account instead of GunnAllen customer accounts. Rivera allegedly made over $270,000 in illegal profits.

The ex-trader has been barred from FINRA. The trade allocation scheme violated FINRA rules and the federal securities laws’ anti-fraud provisions. Rivera’s supervisor, Kelley McMahon, has agreed to a six-month suspension from taking part in a principal role with any FINRA-registered company. She has also agreed to a $25,000 fine.

Also according to the SRO, GunnAllen "never put any stock of a company on a restricted or watch list” before 2005 nor did the investment firm notify its own compliance department of its investment banking activities. GunnAllen also reportedly did not tell its parent company that it was involved in a consulting contract with someone that had been banned from FINRA in the past.

FINRA also sanctioned GunnAllen for a number of other failures, including complaint reporting and supervisory deficiencies, failure to keep a record of instant messages and e-mails, and neglecting to put in place a proper AML compliance program.

By settling, GunnAllen and McMahon are not admitting to or denying FINRA’s allegations.

If you are the victim of broker misconduct, contact Shepherd Smith and Edwards for a free consultation to discuss your case.

Related Web Resources:

GunnAllen Resolves Past FINRA Regulatory Issues; Looks Confidently Toward the Future, PR Newswire, May 8, 2008

GunnAllen Financial Pays $750,000 to Settle Charges Involving Former Head Trader's Trade Allocation Scheme, AML and Supervisory Deficiencies, Additional Charges, FINRA, May 8, 2008

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A former broker and branch manager of a Michigan office of GunnAllen Financial, Inc. is accused of selling fraudulent investments. His clients, many of whom are retirees, recently learned that the partnership investments may have been part of a Ponzi scheme. According to reports, a mastermind of the scheme stated in a sworn statement that the investments were fraudulent and that he had acted on advice of the GunnAllen broker/manager.

Frank Bluestein, who has been in the investment business for a over decade, joined GunnAllen Financial in 2004. There, he was not only a registered stockbroker but also as one of the firms’ branch office managers. According to reports, Bluestein, his son and another broker worked in a Detroit area office fo GunnAllen.

Along with other investments, Bluestein's clients were persuaded to invest millions of dollars into partnerships which ceased paying earlier this year. Those who invested recently learned about investigationa, a court action seeking to freeze partnership assets and that their total investment in the partnerships could be in peril

Bluestein sometimes operated through a firm he formed called "Maximum Financial," yet he was a licensed representative and manager through GunnAllen, where he maintained client accounts. Securities industry regulations require firms to have in place and enforce compliance procedures to supervise brokers and managers. It was recently reported that Bluestein has retired from both GunnAllen and the securities industry, while there is an additional report that he is in the process of joining another securities firm.

When most investors seek recovery, based on documents they signed, any claims filed against a brokerage firm andor its representatives must be filed in securities arbitration and can not be filed in court.

Shepherd Smith and Edwards represents investors nationwide in claims against securities firms. We have represented investors in more than 1,000 securities cases, including several against GunnAllen Securities. To learn whether we might assist you with a claim contact us to arrange a free consultation with one of our attorneys.

Additional Information:

Michigan Rep Probed By Regulators, Investment News, by Bruce Kelley, October 11, 2007

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Posted In: GunnAllen Financial

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Stock Broker Fraud Blog

Published by Houston Securities Fraud Lawyers Shepherd Smith & Edwards

GunnAllen Financial Settles FINRA Charges Over the Firm's Alleged Involvement in Trade Allocations

Former GunnAllen Financial Branch Manager Allegedly Involved in Partnership Ponzi Scheme

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