Oppenheimer & Co.: (CRD#:249/SEC#: 801-887,8-4077)

 
Oppenheimer & Co. Inc., was founded in 1881 by Harris Fahnestock, and is headquartered in New York, New York. The parent company is Viner Finances, Inc.

Other names this firm uses are:

• Carolan Division of Oppenheimer & Co. Inc.
• Fahnestock Asset Management Division of Oppenheimer & Co. Inc.
• Fahnestock Division of Oppenheimer & Co. Inc.
• First of Michigan Division
• Pearl Street Investment Management Division of Oppenheimer & Co. Inc.
• Reparian Partners Division of Oppenheimer & Co. Inc.

Oppenheimer & Co. trades on the NYSE as NYSE: OPY, Russell 2000 Component and has over 3,500 employees.

Oppenheimer & Co. Sanctioned By FINRA For Improper Sales Practices Relating To Unit Investment Trusts

On December 30, 2019, Oppenheimer & Co. became the latest brokerage firm sanctiuoned by FINRA for unlawful sales practices relating to Unit Investment Trusts (UITs”).  Oppenheimer was fined $800,000 and ordered to pay restitution to customers in the amount of $3.87 million.  The alleged misconduct related to short-term transactions in UITs, which are designed to be long-termn investment vehicles.  These transactions resulted in high commissions to customers. According to the FINRA Letter of Acceptance, Waiver and Consent (“AWC”), “During the Relevant Period, Oppenheimer executed more than $6.4 billion in UIT transactions that generated more than $68.6 million in sales charges. The $6.4 billion in UIT transactions included more than $753.9 million in proceeds from transactions in which UITs were sold more than 100 days before their maturity dates and some or all of the proceeds were used to purchase one or more new UITs (“early rollovers”). Approximately $237.1 million of the proceeds were for transactions in which customers sold UITs more than 100 days prior to their maturity dates and used some or all of the proceeds to purchase a subsequent series of the same UIT, which, as noted above, had, in many cases, the same or similar investment objectives and strategies as the prior series (“series-to-series early rollovers”).” A copy of the FINRA AWC can be access by clicking https://www.finra.org/sites/default/files/fda_documents/2016050948101%20Oppenheimer%20%26%20Co.%20Inc.%20CRD%20249%20AWC%20jlg.pdf A Unit Investment Trust is a closed-end investment company typically issues redeemable securities (or “units”), like a mutual fund, which means that the UIT will buy back an investor’s “units,” at the investor’s request, at their approximate net asset value (NAV).  A UIT typically will make a one-time “public offering” of only a specific, fixed number of units (like closed-end funds). Many UIT sponsors, however, will maintain a secondary market, which allows owners of UIT units to sell them back to the sponsors and allows other investors to buy UIT units from the sponsors. A UIT will have a termination date that is established when the UIT is created, although it may be in the distant future.  In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments. When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors. A UIT does not actively trade its investment portfolio. That is, a UIT buys a relatively fixed portfolio of securities (for example, five, ten, or twenty specific stocks or bonds), and holds them with little or no change for the life of the UIT. Because the investment portfolio of a UIT generally is fixed, investors know more or less what they are investing in for the duration of their investment. Investors will find the portfolio securities held by the UIT listed in its prospectus. Oppenheimer is one of several brokerage firms that was audited and ultimately sanctioned by FINRA regarding the sale of UITs.  Specifically, FINRA was focused on short-term trading of UITs that have produced excessive commissions for Financial Advisors and minimal gain for the clients.  UITs are known to produce commissions of 2%-3%, which is above-average for most securities products. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients.  To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses. The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities.  Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters.  We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.  

Horizon Private Equity Loss Recovery Lawyer | John J. Woods Ponzi Scheme

Update 6/10/2022: The SEC files enforcement actions against Michael Mooney, Britt Wright and Penny Flippen.

Lawsuits target Horizon Private Equity and John Woods Ponzi scheme.

The Wolper Law Firm, P.A. has filed several arbitration claims with the Financial Industry Regulatory Authority (“FINRA”) on behalf of victims of the alleged Ponzi scheme perpetrated by John Woods, a former Financial Adviser at Oppenheimer & Co., Inc. The claims seek damages for clients who were victimized through the Horizon Private Equity, III Fund. The allegedly fraudulent fund was created by Woods while employed by Oppenheimer and sold to Oppenheimer clients. The aggregate losses incurred by investors are believed to be more than $110 million. In August 2021, the Securities and Exchange Commission (SEC) brought the Ponzi scheme to an abrupt halt when it filed its enforcement action in the Northern District of Georgia. The SEC Complaint criticized both the misconduct and John Woods’ utilization of his platform at Oppenheimer to solicit clients. As the SEC action has moved forward, the recovery efforts by the court appointed receiver have been discouraging, signaling that the assets were depleted. While the receiver is working hard to recover assets, as the saying goes, she can not squeeze blood from a stone. Attorney Matthew Wolper is aggressively representing clients who lost their retirement savings when they were misled by Woods, who convinced them they would reap a significant return, with little risk, on their investment in the Horizon Fund.

Claims Against Oppenheimer

The claims filed by Wolper Law Firm, P.A. state that John Woods engaged in the unlawful practice of “selling away” for nearly ten years while employed and registered with Oppenheimer, in violation of FINRA Rules 3270 and 3280. “Selling away” means a broker solicits clients to purchase securities not officially offered or held by the executing brokerage firm and for which due diligence has not been completed. The arbitrations remain pending. While at Oppenheimer, Woods made virtually no effort to hide his misconduct from management and utilized myriad resources and personnel at Oppenheimer to facilitate the Ponzi scheme. Woods lured hundreds of clients (many of whom were account holders at Oppenheimer) to invest in a fraudulent fund he created in 2007 called the Horizon Private Equity, III, LLC. The Horizon Fund was neither approved nor vetted by Oppenheimer, but clients were told and/or led to believe that it was an Oppenheimer-sponsored product. They trusted the Oppenheimer brand. John Woods and other Oppenheimer registered cohorts—James Woods (John Woods’ brother), Michael Mooney (John Woods’ cousin), and others — helped solicit, pitch or administer the Horizon Fund while employed by Oppenheimer.

The Securities and Exchange Commission (SEC) Enforcement Action

As rumor of John Woods’ activity spread and the scheme threatened to unravel, the SEC launched an investigation and filed an enforcement action. The SEC complaint reads, in relevant part:

John Woods has been running a massive Ponzi scheme for over a decade. As of the end of July 2021, investors in the Ponzi scheme were owed over $110,000,000 in principal. There are more than 400 investors, residing in at least 20 different states, who currently hold investments in the Ponzi scheme, which goes by the name Horizon Private Equity III, LLC (“Horizon”). Many of the victims are elderly retirees…. *** Woods told the Institutional Investment Adviser [Oppenheimer] that Southport, through his brother [James Woods], had recommended that his customers invest in Horizon, and he disclaimed any financial or other interest in Horizon or Southport when asked. The Brother did, in fact solicit Southport clients to invest in Horizon, but during the early stages of the Ponzi scheme many investors were referred through the Institutional Investment Adviser [Oppenheimer]. *** In 2016, the Institutional Investment Adviser [Oppenheimer] became concerned that Woods was involved in an undisclosed outside business activity, as described in more detail below, and it ultimately asked Woods to resign.

What Is the Horizon Private Equity, III and Who Is John Woods?

John Woods has worked in the securities industry since 1989 and started his career at Lehman Brothers. In 1991, Woods began working for CIBC World Markets Corp. which, through acquisition, eventually became part of Oppenheimer & Co., Inc. From 2003 through December 2016, Woods was a dually registered Financial Advisor and Investment Advisor at Oppenheimer and worked out of their Atlanta branch office. The seeds for the Horizon Fund were planted in 2006 when, according to publicly available records in the State of Georgia, Woods formed Horizon Private Equity, III LLC and two other iterations of the fund while working at Oppenheimer. He did not initially disclose his involvement in the Horizon Fund to Oppenheimer and, hence, Horizon and the other two funds were “undisclosed” Outside Business Activities (and Outside Securities Activities) of Woods. A reasonable examination or audit by Oppenheimer would have uncovered Woods’ affiliation with these.

The Purchase of Southport Capital

In 2008, Woods surreptitiously purchased Southport Capital from a third party to grow the Horizon Fund – this while he was registered and maintaining his business at Oppenheimer. Woods did this as an Outside Business Activity or Outside Securities Activity, although the records of this purchase are publicly available. Again, a reasonable examination or audit by Oppenheimer would have uncovered Woods’ affiliation with Southport. Oppenheimer has a non-delegable duty to supervise the Outside Business Activities and Private Securities Transactions of its registered representatives, including the Oppenheimer Employed Horizon Fund Facilitators. In addition to FINRA Rule 3110 (supervision) and its progeny, Notice to Members 01-79 discusses the imposition by brokerages of “preventative compliance” to address selling away and ensure that registered representatives, like John Woods and the Oppenheimer Employed Horizon Fund Facilitators, are not wearing multiple hats and misleading investors into fraudulent securities. Between 2008-2016, John Woods and the Oppenheimer Employed Horizon Fund Facilitators solicited hundreds of clients to invest in the Horizon Fund, totaling between $110 million and $150 million in assets, and perhaps more. Many of the client meetings occurred at the opulent Oppenheimer branch office in Atlanta. This strategy was clearly designed to impress prospective clients.

Misleading Investors

Sometimes the initial contact was made by John Woods, and at other times it was made by James Woods or Mooney. Eventually, clients met with John Woods prior to investing in the Horizon Fund. At some point, John Woods established a small “satellite” office for the Horizon Fund in the same building as Oppenheimer’s Atlanta branch office. Oppenheimer management purportedly knew (or should have known) about the Horizon Fund branch office because John Woods regularly shuttled between the two offices during regular working hours. When presenting the Horizon Fund to prospective investors, John Woods and/or one of the Oppenheimer Employed Horizon Fund Facilitators described it as a “fixed income” investment that paid a dividend of 6%-7%. Clients were told it could be as high as 8%. John Woods compared the Horizon Fund to an “annuity,” with the distinction that investors could receive a return of their principal, within 30 or 90 days, without any surrender charge. John Woods and the Oppenheimer Employed Horizon Fund Facilitators assured investors that the Horizon Fund was “safe” and carried very little risk because of the high-quality collateral within the fund and further stated that there was no way investors could lose money. For retirees looking for a stable, fixed return, the Horizon Fund appeared to be an attractive investment opportunity.

Oppenheimer Didn’t Report Compliance Failures

By December 2016, the Horizon Fund had raised significant assets from Oppenheimer customers, Southport Capital customers and entities abroad — believed to be close to or more than $100 million. The Horizon Fund eventually became too large for Oppenheimer to ignore and the nexus to John Woods was clear and unmistakable. Instead of self-reporting its compliance failures and notifying the regulators and customers of John Woods’ misconduct, Oppenheimer allowed John Woods to “resign” instead of terminating him for cause, which saved both Oppenheimer and John Woods from having to report the sales practice misconduct on John Woods’ Form U-5. By failing to accurately report the reasons for this employment separation (which is a regulatory violation by Oppenheimer), it failed to put the investment public on notice of sales practice misconduct and potential fraud. Had it not been for Oppenheimer’s reporting misconduct, tens of millions of dollars in investor capital could have been preserved. John Woods simply packed his bags and transitioned to Southport Capital, which he already owned. The claimant, who was generally unaware of this change in employment, was told that it would have no impact on his investment relationship or the Horizon Fund. From 2016-2021, John Woods openly operated as the CEO of Southport and continued raising capital for the Horizon Fund.

See Oppenheimer & Co., Inc. Individual Broker Complaints by following the links below:

– Oppenheimer & Co. Financial Advisor, Demos Argyros, Has Five Customer Complaint Disclosures, Including One Pending Complaint

Wolper Law Firm, P.A. Helps Victims of the Woods’ Ponzi Scheme

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies, and securities. Prior to  , he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. The Wolper Law Firm, P.A. is continuing to investigate additional claims arising out of the $110 million Ponzi scheme orchestrated by John J. Woods and his investment advisory firm, Livingston Group Asset Management d/b/a Southport Capital (the fund known as Horizon Private Equity, III, LLC.)  If you or a loved one has lost your investment in the Horizon Fund or through any other suspected investment fraud, our law firm may be able to help.  Please reach out to us at (866) 814-4939 or by email at mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Matt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]