- June 22, 2018
- Breach of Fiduciary Duty
- Broker Discipline
- Failure to Supervise
- Selling Away
The Wolper Law Firm is currently investigating claims against Steven Pagartanis, a former Financial Advisor at Cadaret, Grant & Co. and Lombard Securities in Seatauket, KY. Steven Pagartanis has been in the securities industry since 1989 and has worked for several other brokerage firms, including Woodbury Financial Services, Invest Financial Corp. and Yankee Financial Group.
According to public records released by the Financial Industry Regulatory Authority (FINRA), on May 30, 2018, the Securities Exchange Commission (SEC) charged Steven Pagarantis with “defrauding long-standing brokerage customers in an $8 million investment scam.” The disclosure, which appears on Steven Pagarantis’ BrokerCheck, states the following:
Pagartanis, a former registered representative who was associated with various Commission-registered firms, defrauded at least nine retail investors of approximately $8 million by soliciting and selling them securities using false and misleading statements from 2013 to at least February 2018 (the “Relevant Period”). Contrary to his promises that he would make safe investments that would yield monthly return payments, Pagartanis never made any investments. Instead, Pagartanis deposited the investor funds into various bank accounts that he controlled and then used the funds, among other things, for his personal benefit and to make monthly return payments to investors in a Ponzi scheme-like manner. Despite complaints from investors and queries from regulators, Pagartanis has stopped making monthly payments and has not returned investors’ funds. Pagartanis told at least five of the investors that they were investing in the common stock of Genesis Land Development Co. (“GDC”), a Canadian land development and home building company whose stock is listed on the Toronto Stock Exchange. Pagartanis raised at least $6.7 million from these investors. Pagartanis told other investors that he was investing their money in a land development company. At Pagartanis’ direction, investors paid for their investments with checks made payable to “Genesis,” the name of the LLC for which Pagartanis is the sole owner and also the same name as GDC, the Canadian land development company. Pagartanis deposited the investors’ checks into Genesis I’s bank account, over which he had sole control. Pagartanis never invested any of the money he raised from the investors in the common stock of, or anything related to, GDC. Pagartanis knew, or recklessly disregarded, that his statements regarding how the investor funds would be invested and the safety of the investors’ funds were false.
FINRA rules strictly prohibit Financial Advisors from recommending securities that are neither authorized nor approved by their employing brokerage firm. Those who engage in private securities transactions are said to be “selling away.”
Brokerage firms are required by regulation to supervise the Financial Advisors they employ. The failure of a brokerage firm to properly supervise its Financial Advisors imposes liability on the brokerage firm for investment losses caused by the Financial Advisor’s misconduct.
As a consequence of Steven Pagartanis’ sales practice misconduct, which includes selling away, he has also been the subject of twelve (12) customer complaints, seven of which remain pending. Most of these complaints all relate to “selling away” in connection with the Genesis Land Development investment which is the subject of the SEC action. The aggregate damages of the Genesis Land Development customer complaints is more than $7 million.
Separately, in 2013 and 2017, Steven Pagartanis was the subject of two additional customer complaints relating to allegations of negligence, unsuitability and misrepresentation. Both matters were settled for $97,000 and $80,000, respectively.
If you or someone you know was a customer of Steven Pagartanis and you experienced investment losses, please contact the Wolper Law Firm at 800.931.8452 or by email at firstname.lastname@example.org to discuss your specific situation and the legal options available. The Wolper Law Firm represents investors nationwide in securities litigation and arbitration.