In a recent FINRA News Release, the Financial Industry Regulatory Agency announced that Pinnacle Partners Financial, Corp. has been expelled. Pinnacle Partners is a broker-dealer based in San Antonio, Texas. It’s President, Brian Alfara, has also been barred for fraudulent sales of oil and gas private placements and unregistered securities.

From the FINRA News Release:

In addition, Brian Alfaro was found to have used customer funds for personal and business expenses. As restitution, Pinnacle and Alfaro are ordered to offer rescission to investors who were sold fraudulent offerings and refund all sales commissions to those customers who do not request rescission.

On the day Alfaro and Pinnacle Partners were to appear before the hearing panel, Alfaro decided not to attend the hearing. As a result, the hearing officer issued a default decision.

The hearing officer found that from August 2008 to March 2011, Alfaro and Pinnacle operated a boiler room in which approximately 10 brokers placed thousands of cold calls on a weekly basis to solicit investments in oil and gas drilling joint ventures Alfaro owned or controlled. Alfaro and Pinnacle raised over $10 million from more than 100 investors, and that Alfaro diverted some of the customer funds for unrelated business and personal expenses.

The hearing officer also found that Pinnacle and Alfaro included numerous misrepresentations and omissions in the investment summaries for 11 private placement offerings, including grossly inflated natural gas prices, projected natural gas reserves, estimated gross returns and estimated monthly cash flows. Pinnacle and Alfaro deliberately attempted to mislead investors by deleting material, unfavorable information from well operator reports and providing investors with maps that omitted numerous dry, plugged and abandoned wells near their projected drilling sites. In addition, Pinnacle and Alfaro distributed an offering document claiming that a previous venture had distributed more than $14 million to its investors when the actual distribution was less than $1.5 million.

The hearing officer decision also notes that from January 2009 to March 2011, Alfaro misused customer funds entrusted to him with the belief that the funds would be used for drilling and production in the wells in which their ventures invested. The funds were used for Alfaro’s personal expenditures and for business purposes that were not related to the purposes of the customers’ investments. When projects failed or were failing, Alfaro concealed his misuse of customers’ funds by persuading them to transfer their investment to his other oil and gas ventures. In one instance, Alfaro collected more than $500,000 in subscription costs for a well that was never drilled, and used those funds for unrelated personal and business expenses.

In April 2011, FINRA had suspended indefinitely Pinnacle and Alfaro for failure to comply with a FINRA Temporary Cease and Desist Order prohibiting their fraudulent misrepresentations. The suspension resulted from FINRA’s Notice of Suspension, which alleged that Pinnacle and Alfaro had continued to make fraudulent oral and written misrepresentations and omissions in connection with their offer and sale of certain oil and gas joint interests, and had otherwise failed to comply with the terms of the Temporary Order FINRA issued on January 21, 2011.

FINRA was represented at the hearing by Mark Dauer, Enforcement Deputy Chief Litigation Counsel, and Robert Long, Enforcement Senior Regional Counsel.

With a default decision, unless the hearing officer’s decision is appealed to FINRA’s National Adjudicatory Council (NAC) or is called for review by the NAC, the hearing officer’s decision becomes final after 25 days.

Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2011, members of the public used this service to conduct 14.2 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999 . Investors may find copies of this disciplinary action as well as other disciplinary documents in FINRA’s Disciplinary Actions Online database.

FINRA, the Financial Industry Regulatory Authority, is the largest independent regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business – from registering and educating all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, informing and educating the investing public, providing trade reporting and other industry utilities, and administering the largest dispute resolution forum for investors and firms.

For more information, please visit http:// www.finra.org.

The SEC has filed suit against Life Partners Holding, Inc., Life Partners, Inc., R. Scott Peden (General Counsel and President), Brian Pardo (Chairman and CEO), and David Martin (CFO) in federal court in Waco, Texas, for allegedly misrepresenting the value of life insurance policies purchased on behalf of Life Partners’ customers. (See SEC v. Life Partners Holdings, Inc., Brian D. Pardo, R. Scott Peden and David M. Martin, Case No. 6:12-cv-00002 in the United States District Court for the Western District of Texas). The SEC alleges that Life Partners systematically and materially underestimated life expectancies in order to boost revenues and profit margins. Click here for the full SEC Litigation Release.

In addition, the Texas State Securities Board (TSSB) issued a Press Release outlining Life Partners’ alleged failure to answer several subpoenas of the TSSB. (See Texas State Securities Board v. Life partners Holding, Inc., Cause No. D-1-GN-11-002286, in the District Court of Travis County, Texas, 126th Judicial District). The TSSB has been conducting an ongoing investigation into Life Partners for suspected violations of the Texas Securities Act, including, but not limited to:

Fraudulent practices in connection with the offer for sale and sale of investments in life settlement contracts; the sale of unregistered investments; the sale of investments in life settlement contracts by people who are not registered dealers, agents, or investment advisers; and the fraudulent offer and sale of shares of its common stock.

Due to Life Partners’ alleged failure to cooperate, the TSSB was forced to file an Application to Enforce Subpoenas in the District Court of Travis County. In the Application, TSSB seeks a court order compelling Life Partners to disclose its records related to the marketing and sale of life settlement contracts. Named in the filing are Life Partners Holding, Inc., Life Partners, Inc., R. Scott Peden (General Counsel and President) and Brian Pardo (Chairman and CEO).

About Moulton & Arney, LLP

Moulton & Arney is a Houston, Texas, based boutique litigation and FINRA arbitration law firm representing investors nationwide in claims to recover investment losses. The investment fraud attorneys at Moulton & Arney, LLP have extensive experience representing individual investors in securities litigation and arbitration. Moulton & Arney have successfully represented thousands of individual investors in securities fraud lawsuits and arbitrations, with combined claims of hundreds of millions of dollars. Cindy Moulton has represented more than 1,000 investors in litigation arising from the sale of viatical investments.

Attorney Cynthia R. Levin Moulton, the firm’s founder, has a proven track record in investment fraud claims involving complex investment vehicles. She has been named a Texas Super Lawyer, is rated 5 out of 5 by Martindale.com, and is rated a 10.0 by AVVO.com.

To contact Moulton & Arney, LLP, visit securitiesfraudcounsel.com or, call (866) 378-4465, or (713) 353-6699.

A FINRA arbitration panel has awarded former Lincoln Financial Advisor (Lincoln), Jeffrey Concepcion, more than $2 million.  Lincoln Financial Advisors employed Concepcion for more than 20 years.  In the weeks leading up to his termination, Concepcion was in negotiations for business development opportunities with outside financial advisors.  Before the opportunity came to fruition, Concepcion was abruptly terminated in August 2008.

According to Concepcion, Lincoln refused to offer him a severance package unless he agreed to a non-competition agreement.  Conception refused to enter into the agreement.  Concepcion then asserts Lincoln circulated false and misleading information, specifically, that the he was leaving the financial industry completely and that his termination was “for cause.”  Conception subsequently filed suit, claiming nearly $5 million in damages.  In his statement of claim, Concepcion alleged unfair competition, tortious interference with business relationship and prospective business relationship, defamation and breach of contract (at the arbitration hearing Conceptions withdrew his breach of contract claim).

The FINRA arbitration panel found Lincoln liable and ordered it to pay Concepcion $2,037,232.

Moulton & Arney is a boutique litigation firm handling complex commercial litigation, contract disputes, securities litigation, FINRA and commercial arbitrations.

Galleon Group LLC co-founder, Raj Rajaratnam must pay a $92.8 million penalty, a record, in a case brought on by the SEC, according to a judge. The 54 year old was sentenced to 11 years in prison, the longest for insider trading in U.S. history.

Rajaratnam believes he should be free of additional civil penalties in the case, claiming that he has already experienced enough suffering after the order from U.S. District Judge Richard Holwell to pay a $10 million fine and forfeit close to $54 million in addition to his prison term.

U.S. District Judge Jed Rakoff sided with the SEC Monday in New York, issuing an order for a judgement without trial. Rakoff said he reviewed the pre-sentencing report prior to his decision, at the request of Rajaratnam’s lawyer. According to Rakoff, Rajaratnam has a net worth that “considerably exceeds the financial penalties imposed in the criminal case.”

“When to this is added the huge and brazen nature of Rajaratnam’s insider trading scheme, which, even by his own estimate, netted tens of millions of dollars and continued for years, this case cries out for the kind of civil penalty that will deprive this defendant of a material part of his fortune,” Rakoff said in his order.

An SEC lawyer stated yesterday that the agency hopes to question “one or both” of Rajaratnam’s brothers under oath for the lawsuit against Rajat Gupta. Gupta is the former Goldman Sachs Group, Inc. director who was accused of tipping off Rajaratnam.