NFL-approved broker barred by Finra

He worked for firm accused of selling $18 million in phony notes

Nov 20, 2013 @ 12:18 pm

By Bruce Kelly

NFL star Vernon Davis was among the alleged victims
+ Zoom
NFL star Vernon Davis was among the alleged victims (Bloomberg)

A broker who worked for a firm alleged to have sold more than $18 million in fraudulent promissory notes to 58 investors, many of whom current and former NFL and NBA players, was barred last week by Finra.

The broker, Jinesh “Hodge” Brahmbhatt, was a broker with Success Trade Securities Inc. from 2009 until April, and got his start in the securities business in 1994 with the infamous boiler room Stratton Oakmont.

In Depth: The details on 7 athletes who sued their advisers

The letter of acceptance, waiver and consent from the Financial Industry Regulatory Authority Inc. does not specifically mention Mr. Brahmbhatt's work with Success Trade as the reason for his being barred; instead, it cites his failure to appear and testify in August at a disciplinary hearing regarding Success Trade and its chief executive, Fuad Ahmed.

In April, Finra filed a cease-and-desist order against Success Trade and Mr. Ahmed “to halt further fraudulent activities” as well as “the misuse of investors' funds and assets.” At the same time, Finra filed a complaint against Mr. Ahmed and Success Trade alleging “fraud in the sale of promissory notes issued by the firm's parent company, Success Trade Inc.”

(Don't miss a look at why athletes are so vulnerable to fraud)

According to a report on Yahoo Sports, Mr. Brahmbhatt was once registered in the financial advisers program established by the NFL Players Association. He dropped his Finra license in April, and told Yahoo Sports at the time that he had more than 30 clients who had bought about $12 million of the allegedly fraudulent promissory notes from Success Trade.

Professional athletes often become targets of fraudulent investment schemes. An August report in InvestmentNews highlighted this issue, noting that many athletes skilled enough to play professional sports are totally unprepared for their sudden wealth. They spend too much too quickly, invest poorly and often become victims of fraudsters.

A high proportion of them, in fact, don't achieve financial security but end up in financial ruin, often in worse condition after their playing days are over than when they started their athletic careers.

Finra over the past decade has warned broker-dealers and investors of the potential dangers in buying preferred shares and promissory notes of small, private broker-dealers such as Success Trade.

Reached on Wednesday morning, Mr. Ahmed said he had no comment about the Finra allegations at this stage. “We had our hearing in August, we defended ourselves and are waiting for the decision by Finra,” he said.

Mr. Brahmbhatt had previously testified with Finra, but being barred from the securities industry is a typical resolution for brokers who fail to show up at hearings, said Alan Futerfas, his attorney.

Employees of Mr. Brahmbhatt's advisory firm, Jade Private Wealth Management, family members and even Mr. Brahmbhatt invested in the promissory notes, Mr. Futerfas said.

“They met with the principals of Success Trade and presented with the same information that the athletes were told,” he said. “They were not involved in something they didn't put their money into.”

Calls on Wednesday to Mr. Brahmbhatt's registered investment adviser firm, Jade Private Wealth Management LLC, could not be be completed.

According to Yahoo Sports, athletes who bought the Success Trade notes include Detroit Pistons guard Brandon Knight, Cleveland Browns cornerback Joe Haden, San Francisco 49ers tight end Vernon Davis, former Washington Redskins running back Clinton Portis and Chicago Bears defensive end Adewale Ogunleye.

So far, at least one NFL player, Jared Odrick of the Miami Dolphins, has filed a Finra arbitration complaint against Mr. Brahmbhatt, Success Trade and Mr. Ahmed.

Mr. Odrick filed the arbitration complaint in April. According to the complaint, he invested $625,000 in Success Trade notes and one other series of promissory notes beginning in 2011, with promised returns of 10% to 12.5%. The Success Trade note “was part of a large Ponzi scheme orchestrated by Success Trade, Ahmed and Brahmbhatt,” according to the complaint.

More NFL and NBA players are considering filing arbitration complaints over the Success Trade notes, said Jeffrey Sonn, Mr. Odrick's attorney. “The bottom line is, this stuff wasn't properly registered as securities and never should have been sold,” said Mr. Sonn adding that in the last few weeks, he had been hired by one player from the NBA and another from the NFL who also bought the notes. “I think this is far from over.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Upcoming Event

Apr 30

Conference

Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video

INTV

AXA's Christine Nigro: How to handle being the only woman in the room

Women face unique challenges as they move into the C-suite, and they need to remember to always be themselves and let their professional strengths shine, according to Christine Nigro, vice chairman at AXA Advisors.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Brian Block's $4 million bonus was tied to a key metric at ARCP

Prosecution rests case in fraud trial against CFO of American Realty Capital Properties.

Edward Jones is winning the Google search war

Brokerage firm's digital marketing investment helps land it at the top of local and overall search engine results, report finds.

Voya's win in 401(k) fee suit involving Financial Engines bodes well for other record keepers

Fidelity, Aon Hewitt and Xerox HR Solutions are currently defending against similar fiduciary-breach claims.

Collective investment trusts getting more attention from 401(k) advisers

The funds are catching on due largely to lower costs and more product availability, but come with some inherent drawbacks.

Vanguard rides robo-advice wave to $65B in assets

Personal Advisor Services, four times the size of its closest competitor, combines digital and human touch.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print