Erez Law Files Claim Against Cetera Advisors and Broker George Merhoff for Energy and Mining Sector Losses

Posted on Wednesday, June 26th, 2019 at 3:34 pm    

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Erez Law recently filed a FINRA arbitration against Cetera Advisors LLC for energy and mining sector losses.

Their customers allege that George Merhoff (CRD# 2918171), who was a registered representative of Cetera Advisors LLC in Klamath Falls, Oregon from 2012 to April 2019, when he was terminated regarding, “Discharged due to violating firms policies and procedures by making undisclosed payments to a customer of the firm.”

The Erez Law client alleges the following in the newly filed FINRA claim:

According to the claim, the Erez Law clients were inexperienced and unsophisticated investors. They were not interested in investing their retirement savings in high risk or speculative investments or strategies. Regrettably, Merhoff recklessly concentrated the clients’ retirement savings in high-risk energy and mining stocks and did so without authorization. Brokers such as Merhoff are required to obtain their customer’s required authorization prior to every transaction. Merhoff did not obtain the clients’ required authorization and as such the trades are deemed unauthorized. Merhoff also allegedly failed to recommend an adequately diversified and suitable portfolio for the clients.

It is alleged that Merhoff further increased the risks of the underlying securities he purchased without authorization by excessively concentrating the equity allocation of clients’ account in the energy and mining sectors. Merhoff purchased high-risk stocks mostly in the risky energy and mining sectors including but not limited to:

Although these two sectors make up a small fraction of the S&P500 and the economy, Erez Law alleges that Merhoff concentrated the vast majority of the equities in the clients’ account in these two sectors. This over-concentration only further served to increase the risks to which the client was unknowingly exposed.

Over the past few years, oil prices have significantly declined. A supply glut in 2014 and 2015 led to some of the lowest prices the market has seen in recent years. In turn, securities values also dropped, including the values of Linn Energy. The volatile energy sector experienced significant turmoil, and many energy companies were negatively impacted when global crude oil prices fell below $40 per barrel at the end of 2015. This was the lowest level since early 2009, as supply was in excess of global demand. Oil and gas companies experienced a spike in bankruptcies, which have left many investors reeling.

In June 2019, FINRA barred Merhoff after he consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its review of his issuance of consolidated account reports to customers and his making of undisclosed payments to customers.

In August 2017, the Oregon Department of Consumer and Business Services, Division of Financial Regulation (DFR), alleged “violation of the suitability rule and failure to supervise. Cetera Advisors, LLC and Mr. Merhoff neither admitted nor denied the allegations.” Merhoff was sanctioned to $70,000 in civil and administrative penalties and fines.

Merhoff has been the subject of 38 additional customer complaints, between 2015 and 2020, according to his CRD report:

January 2020. “Breach of fiduciary duty, unsuitable recommendations, violation of FINRA rules, negligence, breach of contract, well managed theory of damages.” The customer is seeking $35,000 in damages in this pending complaint.

January 2020. “Breach of fiduciary duty, negligence, fraud, and breach of contract.” The customer is seeking $500,000 in damages in this pending complaint.

December 2019. “Violation of Oregon and FINRA regulations, breach of fiduciary duty, unsuitable recommendations, negligence, and breach of contract.” The customer is seeking $460,000 in damages in this pending complaint.

October 2019. “Violation of Oregon Securities Law, Breach of Fiduciary Duty, unsuitable Investments, Violation of FINRA Rules, Negligence, and Breach of Contract.” The customer is seeking $325,000 in damages in this pending complaint.

September 2019. “Violation of Oregon Securities Law, violation of California Corporation Code, and Negligence.” The customer is seeking $610,970 in damages in this pending complaint.

September 2019. “Negligence, Breach of Fiduciary Duty, and Violation of Oregon Securities Law.” The customer is seeking $100,000 in damages in this pending complaint.

July 2019. “Incurred investment losses due to over-concentration.” The case is currently pending.

July 2019. “Incurred investment losses due to over-concentration.” The case is currently pending.

June 2019. “Negligence, breach of fiduciary duty, violations of Oregon and FINRA rules, unsuitable investments, breach of contract, common law fraud, and poor performance.” The customer is seeking $350,000 in damages in this pending complaint.

June 2019. “Negligence, Breach of Fiduciary Duty, and Violation of Oregon Securities Law.” The customer is seeking $300,000 in damages in this pending complaint.

June 2019. “Negligence, Breach of Fiduciary Duty, and Violation of Oregon Securities Law.” The customer is seeking $250,000 in damages in this pending complaint.

June 2019. “Breach of Fiduciary Duty, fraud, material omissions of fact, breach of contract, professional negligence, violation of Oregon and SEC securities laws.” The case is currently pending.

April 2019. “Negligence and Breach of Fiduciary Duty.” The customer is seeking $150,000 in damages in this pending customer complaint.

April 2019. “Negligence and Breach of Fiduciary Duty.” The customer is seeking $100,000 in damages in this pending customer complaint.

April 2019. “Negligence and Breach of Fiduciary Duty.” The customer is seeking $100,000 in damages in this pending customer complaint.

February 2019. “Violations of Oregon Securities Laws and FINRA rules, Breach of Fiduciary Duty, Unsuitable Investments, Negligence, Breach of Contract.” The customer is seeking $450,000 in damages in this pending customer complaint.

October 2018. “Negligence, Breach of Fiduciary Duty and Contract, and Violation of Oregon Securities Law.” The customer is seeking $500,000 in damages in this pending customer complaint.

October 2018. “Violation of Oregon Securities Law, Breach of Fiduciary Duty, Unsuitable Investment Recommendations, Violation of NASD and FINRA Rules, Negligence, and Breach of Contract.” The customer is seeking $306,635 in damages in this pending customer complaint.

September 2018. “Unsuitable investment by lack of diversity.” The customer sought $76,795 in damages and the case was settled for $65,000.

August 2018. “Negligence, Breach of Fiduciary Duty, and Breach of Contract.” The customer is seeking $100,000 in damages in this pending customer complaint.

June 2018. “Violation of Oregon and FINRA Securities Rules, Breach of Fiduciary Duty, Unsuitable Investment Recommendations, Negligence, and Breach of Contract.” The customer sought $35,562 in damages and the case was settled for $14,500.

September 2017. “Negligence, Breach of Fiduciary Duty, Breach of Contract. and Violation of Oregon Securities Law.” The customer sought $50,000 in damages and the case was settled for $4,200.

July 2017. “Violations of Oregon Securities Law, Breach of Fiduciary Duty, Violation of FINRA rules, and Breach of Contract.” The customer sought $175,000 in damages and the case was settled for $75,000.

June 2017. “Negligence, breach of fiduciary duty, breach of contract, violation of Oregon Securities law,” The customer sought $500,000 in damages and the case was settled for $155,000.

May 2017. “Unsuitable recommendations, violations of common law fraud, breach of fiduciary duty, and negligence.” The case was settled for $15,000.

April 2017. “Negligence, Breach of Fiduciary Duty, Negligent Supervision, and Breach of Contract.” The customer sought $100,000 in damages and the case was settled for $10,000.

April 2017. “Negligence, breach of fiduciary duty, and breach of contract.” The customer sought $200,000 in damages and the case was settled for $50,000.

March 2017. “Breach of fiduciary duty, negligence, and Oregon securities law violations.” The customer sought $140,000 in damages and the case was settled for $135,000.

July 2016. “Unsuitability, common law fraud, breach of contract and fiduciary duty, and violations of Oregon securities law.” The customer sought $100,000 in damages and the case was settled for $15,000.

July 2016. “Unsuitability, common law fraud, breach of contract and fiduciary duty, and violations of Oregon securities law.” The case was settled for $20,000.

June 2016. “Negligence, breach of fiduciary duty, and breach of contract.” The client sought $60,000 in damages and the case was settled for $10,000.

May 2016. “The clients allege negligence, breach of fiduciary duty, and breach of contract.” The client sought $150,000 in damages and the case was settled for $65,000.

April 2016. “Negligence, Breach of Fiduciary Duty, and Breach of Contract.” The customer sought $50,000 in damages and the case was settled for $10,000.

March 2016. “Breach of Fiduciary Duty, Negligence, and Oregon Securities Law Violations.” The customer sought $4,656,000 in damages and the case was settled for $2.9 million.

March 2016. “Unsuitable investments which resulted in portfolio decline.” The case was settled for undisclosed amounts.

February 2016. “Unsuitable investment.” The case was settled for an undisclosed amount.

February 2016. “Unsuitable investments and poor performance.” The customer sought $900,000 in damages and the case was settled for $290,000.

February 2016. “Unsuitable investments and issues with the money market fund.” The case was settled for $10,000.

December 2015. “Unsuitable investments.” The case was settled for an undisclosed amount.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.

Disclaimer: Clients are responsible for costs. Contingency fee is calculated before deducting costs incurred in the case.