The Sonn Law Group is currently investigating The GMS Group, LLC (CRD #8000), a brokerage firm headquartered in Livingston New Jersey.
Over the course of the company’s history, The GMS Group has been involved in numerous customer disputes involving misconduct such as; charging fraudulently excessive markups; failing to enforce regulatory procedures; making unsuitable investments in non-traditional exchange traded funds (ETFs), and; failing to properly supervise the sales practices of its brokers.
Below we’ve provided summaries of several of the most notable cases of broker misconduct involving The GMS Group. If you’ve suffered significant investment losses, and you have questions about the conduct of your investment advisor or their firm, we invite you to contact the Sonn Law Group for a free legal consultation.
Unfair Pricing/Markups of Municipal Securities
January 1, 2008
“…the firm purchased municipal securities for its own account from, a customer and/or sold municipal securities for its own account to a customer at an aggregate price (including any mark-down or mark-up) that was not fair and reasonable, taking into consideration all relevant factors, including the best judgment of the broker, dealer or municipal securities dealer as to the fair market value of the securities at the time of the transaction and of any securities exchanged or traded in connection with the transaction, the expense involved in effecting the transaction, the fact that the broker, dealer, or municipal securities dealer is entitled to a profit, and the total dollar amount of the transaction. The conduct described in this paragraph constitutes separate and distinct violations of MSRB Rules G-17 and G-30(a).” Read the full text of the Acceptance, Waiver, and Consent letter.
September 3, 2015
“Anthony A. Grey, a registered General Securities Representative holding Series 3, 4, 5, 8, 24, 53, and 63 licenses, formerly associated with Gardnyr Michael Capital, Inc. (“GMCI” or the ‘Firm”), a FINRA member, appeals from FINRA disciplinary action based on his sales of municipal bonds to three retail customers between October 2008 and July 2009. FINRA found that, with respect to each of the ten transactions involved. Grey violated MSRB Rule G-17 by interpositioning and failing to disclose his deceptive and unfair practices and MSRB Rules G-17 and G-30 by charging customers unfair prices and excessive markups (ranging from 5.36% to 19.12%). In seven of those transactions, FINRA found that Grey also violated Section 10(b) of the Securities Exchange Act of 1934 and Rule lOb-5 thereunder by charging fraudulently excessive markups (ranging from 8.62% to 19.12%) that he willfully failed to disclose to customers.” Read the full text of the charges here.
Failure to Disclose Statements Related to Purchase of Municipal Securities
September 3, 2015
“GMS failed to deliver official statements by settlement date to numerous customers who purchased new issue municipal securities. As a result of the foregoing, GMS violated MSRB Rules G-17, G-27 and G-32.” Read the full text of the AWC letter here.
December 28, 2016
“In 23 transactions between January 2014 and March 2015 (the “Relevant Period”), GMS sold municipal bonds to retail customers in amounts below the minimum denomination. On three occasions, GMS failed to disclose to customers that their purchase was in an amount below the minimum denomination. In addition, during the Relevant Period, GMS sold bonds restricted to Qualified Institutional Buyers (“QlBs ‘) to customers who were not QIBs. Finally, GMS failed to adopt and enforce a supervisory system reasonably designed to achieve compliance with the MSRB’s rules regarding minimum denominations and the suitability of recommendations to customers. As a result of the foregoing conduct, GMS violated MSRB Rules G-15(f), G-17 (for transactions executed before July 5,2014), G-19, G-47(a) (for transactions executed on or after July 5,2014) and G-27(b).” Read the full text of the AWC letter here.
Unsuitable Transactions in Non-Traditional ETFs
October 21, 2015
“Between October 2011 and October 2013, Respondent recommended and engaged in unsuitable trading in nontraditional ETFs in four customer accounts, in violation of NASD Rule 2310 (before July 9, 2012) and FINRA Rules 2010 and 2111 (on and after July 9, 2012). Moreover. Respondent exercised discretion without having obtained prior written authorization in fourteen customer accounts, in violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010.” Read the full text of the AWC letter here.
October 21, 2015
“GMS, acting through [Carmine C.] Capone, failed to adequately supervise the sales practices of J.F., a registered representative who (i) recommended and engaged in unsuitable trading in nontraditional ETFs in four customer accounts, in violation of NASD Rule 2310 (before July 9, 2012) and FINRA Rules 2010 and 2111 (on and after July 9. 2012): and (ii) exercised discretion without having obtained prior written authorization in fourteen customer accounts, in violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010. As a result of the foregoing conduct, GMS and Capone violated NASD Rule 3010(a) and (b), and FINRA Rule 2010.” Read the full text of the AWC letter here.
If you’ve suffered significant investment losses as a result of broker negligence, misconduct, or fraud, contact the Sonn Law Group today. A qualified securities law attorney will review the facts of your case and give you qualified advise as to your best options for financial recovery.
COMMENT ISSUED BY GMS GROUP: “The article describes allegations made in respect of FINRA proceedings. GMS has denied the allegations made against it and no evidentiary findings were made in respect of this matter and there was no finding of wrongdoing by any tribunal, regulatory agency or Court. The agreement to pay damages was made to expedite the resolution of this matter rather then proceed through costly and time consuming litigation.”