The Law Offices of Robert Wayne Pearce, P.A. is representing two Co-Trustees of a family trust in a FINRA arbitration case against United Planners’ Financial Services of America and AG Financial advisor Aaron Graham for fraud, breach of fiduciary duty, professional negligence, negligence, and negligent supervision and fraudulent concealment of Graham’s misconduct.
Aaron Graham Of United Planners’ Financial Services Of America A Limited Partner And AG Financial Has 4 Customer Complaints For Alleged Broker Misconduct.
The Law Offices of Robert Wayne Pearce, P.A. is currently representing two Co-Trustees of a family trust who have filed an arbitration claim against his employer, United Planners’ Financial Services Of America, and Aaron Graham himself.
IMPORTANT: We are providing information about our clients’ allegations and seeking information from other investors who did business with Aaron Graham and had similar investments, a similar investment strategy, and a similar bad experience to help us win our clients’ case. Please contact us online via our contact form or by giving us a ring at (800) 732-2889.
Aaron Graham Customer Complaints
Aaron Graham has been the subject of 4 customer complaints that we know about. Two of Aaron Graham’s customer complaints were settled in favor of investors. One of Aaron Graham’s customers’ complaints was denied, and, to date, the customer has not taken any further action. We represent another customer whose arbitration claim was recently filed and is pending.
Current Allegations Against Aaron Graham
A sample of the allegations made in the previously FINRA reported arbitration claim settlements and/or complaints for investment losses were as follows:
- Claimant alleged claims of forgery, unauthorized trading and unsuitability by Aaron Graham in connection with claimant’s investments in Manulife annuity and with her children’s investments in variable annuities.
- Client made complaints concerning Aaron Graham’s unsuitable investment recommendations and relating to the management in his account.
We currently represent two Co-Trustees of a family trust who have filed an arbitration claim against his employer, United Planners’ Financial Services Of America and Aaron Graham himself.
A summary of the allegations made in the FINRA arbitration filed for investment losses realized by the family’s trust were as follows:
Beginning in the late summer 2017, Graham, who had written discretionary authority to manage Claimants’ account in a reasonable manner, deployed a highly speculative strategy involving speculative investments and an excessive amount of leverage, which were inconsistent with Claimants instructions, needs, financial condition, and agreements related to their brokerage and investment advisory relationships. Graham mismanaged Claimants’ TDA account and made other investments for Claimants in violation of securities law, state and securities industry rules and regulations, and brokerage and/or advisory agreements.
Respondent Graham is a registered representative and agent of and employed by United Planners Financial Services of America (“UP”) and was held out as a stockbroker, investment advisor, investment manager, financial advisor, and financial planner with special skills and expertise in the management of securities portfolios and financial, estate, retirement, and tax planning matters. Graham was a Certified Trust Financial Advisor (CTFA), a designation he held since 1999 for expertise in trust and other fiduciary matters. As a registered principal with UP, Graham held FINRA Series 7, 9, 24, 63 and 65 and various insurance licenses.
This arbitration was filed by Claimants as Co-Trustees of their family’s trust against Respondent UP and its registered representative Graham for his breach of brokerage and advisory agreements, statutory and common law fraud, breach of fiduciary duties, negligence, failures to act in Claimants’ “best interest,” unsuitable recommendations, misrepresentations, omissions, misleading statements, and other acts and omissions, which were fraudulently concealed from Claimants.
2. The Relevant Facts
Claimants are 68 and 63 years, respectively. Neither one has had any education beyond high school. They both went to work immediately thereafter. They have been married since 1980 and have children. The husband went to work in the oil fields with his father, and the wife became a dental assistant.
In 1999, the Claimants formed a company that drilled the initial conductors, mouseholes, and ratholes for oil producers before they constructed the drilling rigs that drilled for the oil. This was the family business that the husband learned from his father. After his father retired, the husband set out on his own and became very successful in a short period.
By 2008, the Claimants had accumulated several million dollars and were introduced to Graham through their friends in the oil business. Neither one of the Co-Trustees had any education or experience investing in the stock or bond markets prior to meeting him. Graham would travel from his Salt Lake City office to meet with his clients. On those occasions, he would stop by the Claimants’ office to visit and solicit their business. Eventually, Graham was successful in persuading the Claimants to open a TDA account, which Graham managed for a management fee on a discretionary basis.
In 2010, the Co-Trustees sold their company and deposited all the sales proceeds along with their other savings previously deposited into the TDA account managed by Graham. By the end of 2010, Respondent UP’s agent Graham controlled $12.5 million of the Claimants’ life savings held in trust for them. Graham managed the TDA account exclusively; he did not consult with Claimants with respect to any transaction therein.
In or about 2011 Graham began to distribute $15,000 per month to Claimants. The next year he increased the distribution to $25,000 per month to Claimants. From inception of the relationship, Graham continuously assured Claimants they would have more than enough funds for a lifetime of distributions at a rate of $25,000/month. Indeed, this might have been true if Graham had only continued to manage the account as he was instructed and agreed.
Initially, Claimants received monthly account statements from TDA at Claimants’ business office PO Box address. Graham also supplied Claimants with written reports supposedly summarizing the account activity and performance of the account. However, after the sale of the business, Claimants only received Graham’s summary reports and annuity statements at their home. Graham never notified TDA that the Claimants sold their business, moved, and no longer received TDA statements that may have been delivered to their former business office. When Claimants asked Graham about the whereabouts of the TDA statements, he told them he was receiving them and all they needed were his summary reports with the account balances. However, the summary reports Graham prepared and sent to Claimants continuously omitted material information making the statements made misleading.
Unknown to Claimants, Graham’s management of the assets in their TDA account drifted over the years, from a conservative to moderate risk management style. By late 2017, Graham crossed the line to a highly aggressive/speculative management style. At this point, he began to excessively trade and grossly speculate in not only highly leveraged exchange traded products in the oil and gas and cannabis sectors, but he did so utilizing a speculative margin trading strategy. Beginning in 2017 and through 2022, Graham excessively traded and speculated in exchange traded products, including, but not limited to, Credit Suisse Velocity Shares 3X (Natural Gas), Direxion Shares Trust Daily Natural Gas ETF, United States Oil Fund LP ETF, United States Natural Gas Fund ETF, Proshares Trust II Ultrashort Bloomberg Gas ETF, and ETFMG Alternative Harvest ETF.
For example, Graham executed hundreds of Credit Suisse Velocity Shares 3X (Natural Gas) purchase and sale transactions in the Claimants’ TDA account. These securities were leveraged ETFs; the leverage within the fund was 3:1. They were highly complex securities that were typically designed to achieve their stated objectives daily. Because of compounding, their performance over longer periods of time would differ significantly from their stated daily objective. FINRA warned their broker-dealer members like UP and associate members like Graham of the nature, mechanics, and risks of these ETFs. Yet Graham proceeded to trade the leveraged Credit Suisse Velocity Shares 3X (Natural Gas) for a trust account with preservation of capital, growth, and income objectives and a conservative to moderate risk tolerance, on margin, which further compounded the risk of the investments made in the TDA account. Not only did he trade these securities, but he did so contrary to the stated short term trading objectives of the funds themselves. The transactions in the leveraged ETFs were not suitable for any investor if held more than one trading session. Graham only sold 7 purchases within a day; he held 98% of the shares of Credit Suisse Velocity Shares 3X (Natural Gas) he purchased in Claimants’ TDA account more than a day in violation of FINRA Rules 2010, 2111, and 3110(a) and realized almost $2.5 million in losses.
As previously stated, Graham compounded the risk of trading these already triple leveraged ETFs by trading them in a margin account he opened for Claimants. In 2017 and 2018, as Graham ratched up the trading activity in these speculative ETFs, he steadily increased the margin debit balance of Claimants’ trust account. By the end 2018, the margin debit balance peaked at over $ 4.5 million. The risk to account equity measured by volatility of daily returns became as high as 6.8 times that of the S&P 500 Index. On information and belief, the TDA account Graham managed was experienced or nearly experienced margin calls in late December 2018/early January 2019. Notwithstanding, Graham continued to trade these 3:1 leveraged ETFs on margin as high as 3:1 and suffered further margin calls and capital losses in 2020 and thereafter.
The Claimants never asked Graham to engage in short term trading, and they never asked him to trade on margin. In fact, it was not until 2022 that Claimants even learned what a margin account was and that they had a margin account at TDA in which Graham had borrowed millions of dollars. The Claimants were simple retired folks and all they wanted and thought Graham was doing was making investments that would preserve their life savings, grow modestly, and generate income for their support in retirement. The degree of risk Graham was taking with the securities purchased and trading activity on margin in 2017 and thereafter could not be characterized by anyone as less than high risk or speculative, which was not suitable or in the Claimants’ “best interest.”
The speculative transactions and trading on margin in Claimants’ TDA account and other investment recommendations violated not only the statutes, rules, regulations, and common law but also Claimants’ brokerage and investment advisory agreements with Respondents. The Claimants were blind to the changes in the portfolio due to the lack of information, unsophistication, trust, and confidence in Graham. At that point, they were no longer receiving any written communications or statement from the custodian of their funds. It is estimated that the Respondent Graham’s speculative trading activity itself caused over $3.3 million in capital losses.
3. The Wrongful Conduct
The acts and omissions of Respondent UP through its employees, including, Graham, constituted violations of the Utah Securities Act (Sections 61-1-1, 61-1-2, and 61-1-22), fraud, breach of fiduciary duty, professional negligence, negligence, and negligent supervision and fraudulent concealment of Graham’s misconduct. In addition, there were numerous violations of the FINRA Code of Conduct (the “FINRA Code”), directly and indirectly, in breach of the investment advisory agreement and brokerage agreements to follow the FINRA Code.
Respondents Breached Their Fiduciary Duties To Claimants
At the outset, it is important to understand that UP and Graham served Claimants not only in their broker-dealer capacities but in their capacities as registered investment advisers. This is how Respondent UP and Graham held themselves out to the public and to Claimants from the inception of the relationship. The Claimants contracted with Respondent UP and Graham to act as stockbrokers and investment advisers and pay periodic fees to recommend the appropriate account relationship and to continuously provide investment advice and to continuously monitor and manage their accounts in a manner that would always be in their best interest and protect them from unreasonable risk of loss.
The fact that Respondent UP, Graham, and others on his team were investment advisers is an important distinction in this case because an investment adviser is unequivocally a “fiduciary” who has a special relationship with the client and held to a higher standard of care. An adviser’s fiduciary duty is imposed in recognition of the nature of the relationship between an adviser and its client—a relationship of trust and confidence. SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 194 n. 2 (1963) (“SEC v. Capital Gains”). There are no “ifs” or “buts” in this case about whether Respondent UP and its employees owed Claimants any fiduciary duties, including, but not limited to, a duty of care and a duty of loyalty. These fiduciary duties are based on equitable common law principles and fundamental to any investment advisers’ relationship with their clients under the Investment Advisers Act of 1940 (“Advisers Act”) and at common law.
This combination of care and loyalty obligations has been characterized as requiring the investment adviser to always act in the “best interest” of its client. See SEC v. Tambone, 550 F.3d 106, 146 (1st Cir. 2008) (“SEC v. Tambone”); SEC v. Moran, 944 F. Supp. 286, 297 (S.D.N.Y 1996) (“SEC v. Moran”) (“Investment advisers are entrusted with the responsibility and duty to act in the best interest of their clients.”). The fiduciary duty to always act in the best interest of the client requires an adviser “to adopt the principal’s goals, objectives, or ends.” Arthur B. Laby, The Fiduciary Obligations as the Adoption of Ends, 56 Buffalo Law Review 99 (2008); see also Restatement (Third) of Agency, § 2.02 Scope of Actual Authority (2006) (describing a fiduciary’s authority in terms of the fiduciary’s reasonable understanding of the principal’s manifestations and objectives). This means the adviser must always serve the best interest of its client and not subordinate its client’s interest to its own. The investment adviser’s obligation to act in the “best interest” of its client is an overarching principle that encompasses both the duty of care and the duty of loyalty.
The foregoing discussion about “fiduciary duties” is important to this case because Respondent UP and Graham directly and/or indirectly breached their “fiduciary duties” to Claimants by, among other things: (1) executing highly speculative transactions in Claimants’ trust account contrary to not only the Claimants’ investment objectives and risk tolerance but contrary to the investment parameters of the leveraged ETFs themselves; (2) additionally leveraging the triple leveraged ETFs and other investments in Claimants’ account contrary to the Claimants’ investment objectives and risk tolerance; (3) failing to act prudently and engaging in gross speculation;,(4) not employing modern portfolio techniques, such as asset allocation and diversification to protect Claimants’ assets from unreasonable risk of loss; (5) failing to safeguard and protect Claimants’ assets from an unreasonable risk of loss; (6) failing to sell securities and reduce the debt promptly and in a manner to serve the best interest of Claimants; (7) misleading Claimants about the nature, mechanics, and risks of the investment strategy employed in Claimants’ TDA account in late 2017 and thereafter; (8) continuing to “hold” an unsuitable, undiversified, and/or over-leveraged investment strategy in Claimants’ managed accounts when market conditions dictated otherwise; (9) failing to refrain from self-dealing and conflicts of interest relating to the switches of annuities and other investment strategy recommendations; (10) failing to adequately disclose conflicts of interest relating to Graham’s compensation and investment recommendations provided to Claimants, etc.
Graham’s acts and omissions as a “fiduciary” were evidently contra to what a “prudent” portfolio manager would have done when managing Claimants’ accounts. His false statements and omissions required to be disclosed made the statements misleading and constituted violations of the Utah Securities Act (Sections 61-1-1, 61-1-2, and 61-1-22) and common law fraud. Graham failed to exercise reasonable care and caution and failed to make reasonable business decisions by continuing to trade aggressively on margin, “hold” short term ETFs more than a day, and “hold” an undiversified and over-leveraged portfolio of securities in the energy sector when market conditions dictated otherwise. Rather than protecting Claimants’ assets, Graham exercised discretion and executed an extraordinarily speculative investment strategy in the portfolio, and he continued to do so when he should have diversified the portfolio and/or liquidated enough securities in order to protect Claimants’ accounts from unreasonable risk of loss. Instead, Graham took unreasonable and conflicting risks between July 2017 and September 2022 that were not in Claimants’ “best interest” and caused them to lose millions of dollars in retirement savings.
Aaron Graham Red Flags & Your Rights As An Investor
Of course, Aaron Graham did not admit to any of the allegations. But regardless of whether an arbitration award was entered, a settlement occurred, or the customer complaint is still pending, the allegations made by customers are red flags which should put all current and former customers of Aaron Graham at United Planners’ Financial Services Of America A Limited Partner and AG Financial on alert to review carefully the activity and performance of their accounts and question whether Aaron Graham has engaged in any stockbroker misconduct that may have caused them investment losses. The large number of customer complaints at United Planners’ Financial Services Of America A Limited Partner and AG Financial also raises questions about the brokerage firms’ supervisory practices. If these red flags raise questions, call us and we will inform you of your rights as an investor.
File A Claim To Recover Your Investment Losses At United Planners’ Financial Services Of America A Limited Partner Due To Aaron Graham
If you have questions about United Planners’ Financial Services Of America A Limited Partner, AG Financial, and/or Aaron Graham and the management or performance of your accounts, please contact Attorney Pearce for a free initial consultation via email or Toll Free at 1-800-732-2889.