Vernon Litigation Group and the law firm of Kristian Kraszewski are currently pursuing FINRA arbitration claims against Oppenheimer on behalf of multiple investors from multiple states, including Georgia and South Carolina. As a result, we are widening and expanding our investigation beyond Oppenheimer’s sales of Miller Energy, to include supervision and regulatory reporting practices, work environment, and treatment of employees in comparison to it’s the treatment of high producing financial advisors, as well as activities related to its bond desk operations. If you have any information related to our broadening investigation, please call us to discuss how you can assist with our investigation. A flavor for the history of Oppenheimer’s regulatory problems as well as some of the details of our ongoing investigation are set out below.
DESPITE RECORD RETURNS OPPENHEIMER INVOLVED IN MULTIPLE REGULATORY INQUIRIES
Despite record returns in domestic and global markets since the financial crisis, Oppenheimer has been involved in multiple regulatory inquiries, fines, and sanctions. For example, in 2015, two SEC Commissioners noted that from 2005-2015, there were “at least 30 separate regulatory actions against Oppenheimer for numerous violations of securities laws and rules.” This statement was part of dissent in regulatory action against Oppenheimer by regulators. These two SEC Commissioners went on to conclude in 2015 that “Oppenheimer has a failed compliance culture, from top to bottom.”
As a result of the 2015 regulatory actions, Oppenheimer was fined $20 million for improperly selling penny stocks on behalf of its investors in unregistered offerings. The article can be found here. Also in 2015, Oppenheimer was fined again for $3.75 million for supervisory failures. In that instance, FINRA found that Oppenheimer failed to supervise broker Mark Hotton (who was accused of stealing money from clients and overtrading these accounts while at Oppenheimer). FINRA further found that Oppenheimer failed to timely report disclosure events for at least 300 of its registered representatives.
According to Oppenheimer’s FINRA Brokercheck report, Oppenheimer and its affiliates have had at least 182 arbitrations and 91 regulatory disclosures from the following regulatory bodies, securities exchanges, and state securities regulators: SEC, FINRA, NASD , NYSE , CBOE , NASDAQ, International Securities Exchange, Department of the Treasury Financial Crimes Division, Florida, Michigan, South Carolina, Massachusetts, New Hampshire, New Mexico, Delaware, Georgia, Kansas, Missouri, Iowa. The sanctions, censures and fines cover issues such as Non-Traditional ETFs, bonds, mutual funds, short stock positions, options, penny stocks, auction-rate securities, anti-money laundering and bank secrecy violations. Possibly most troubling about this history is that 9 of these regulatory events occurred after the regulatory fines of 2015 described above. Some examples of recent regulatory issues are below:
In 2016, Oppenheimer was fined $3.4 million for reporting failures, omitting key documents through discovery in arbitrations relating to an alleged rogue broker, and for failing to provide mutual sales charge waivers due to insufficient supervision.
Also in 2016, Oppenheimer was fined $2.9 million for failures relating to NASD Notice to Members (NTM) 09-31. NTM 09-31 was issued to remind broker-dealers such as Oppenheimer regarding its duties when recommending the sale of inverse and leveraged ETF investments. Generally speaking, inverse and leveraged ETFs are unsuitable for retail investors if the investments are held for longer than a single trading day. Despite these warnings from NASD/FINRA and separately by the SEC, Oppenheimer was found to solicited 96 trades in non-traditional ETF’s from a conservative investor that was 89 years old. FINRA also found that Oppenheimer had made 56 similar solicitations from a conservative 91-year-old investor. Oppenheimer also violated its own internal policies regarding unsolicited investments in inverse and leveraged ETF’s by permitting purchases from its clients with liquid investments below $500,000.
Vernon Litigation Cases Against Oppenheimer
Beyond Oppenheimer’s regulatory issues, its supervisory failures have led to a growing number of FINRA arbitration filings. Our firm is currently involved in multiple claims involving a former registered representative of Oppenheimer named Abraham Heimann. Mr. Heimann worked in one of the firm’s Atlanta offices from 2002 through July 2013. Mr. Heimann moved his business to Cetera Advisors until February 2016 when he left the business. Mr. Heimann has been the subject of at least 7 customer claims. The bulk of these claims involved over-concentrations in energy investments, especially Miller Energy.
We believe that Mr. Heimann was one of the largest retail sellers of Miller Energy in the country. Clients were told that Mr. Heimann owned the stock personally. We assert that Mr. Heimann continued recommending the investment even as the stock price plummeted. We are also aware of the fact that Oppenheimer and Heimann were sued by an Oppenheimer employee for sexual harassment in 2013. Mr. Heimann’s conduct in the office was apparently the catalyst for his transition away from Oppenheimer. Curiously, Mr. Heimann’s CRD does not reflect termination of him by Oppenheimer.
We are also investigating Oppenheimer’s supervision over Charles Laverty and Mark Hotton. Combined with Abe Heimann, these three brokers collectively have over 50 reportable events on their regulatory records and all were former Oppenheimer Advisors.
About Vernon Litigation Group
Vernon Litigation Group is a team of financial litigators that represent clients in courtroom litigation, arbitration, and negotiations throughout the United States. Our lawyers have collectively represented hundreds of investors in FINRA and other securities arbitration and litigation claims nationwide and recovered millions of dollars from financial institutions. For more information, visit our website at vernonlitigation.com or contact Vernon Litigation Group by phone at (239) 319-4434 or by e-mail at info@vernonlitigation.com.