Michigan rep probed by regulators

One of the nation's top producing independent registered reps is under investigation by Michigan securities regulators. Mr. Bluestein was ranked this summer as the fourth largest independent-contractor rep by a trade publication, with $1 billion in client assets. His practice, Maximum Financial Group of Waterford, Mich. was described by Registered Rep magazine as an “Investment advisory firm” that solves problems using cash flow strategies and growth. The broker’s attorney says that Frank Bluestein has lost “substantial amounts” of his own money through bad investments. Mr. Bluestein allegedly put 1,500 clients into a series of private partnerships that paid monthly dividends that stopped about six months ago, according to an attorney familiar with the matter. The clients’ investments ranged from $10,000 to $1 million, said Bill Shepherd of Shepherd Smith and Edwards LLP of Houston. The law firm has interviewed about 100 clients who invested in the partnerships. Attorneys with knowledge of the case said that the investors bought the partnerships between three and 10-years ago. Attorneys also characterized the partnerships as investments in either real estate or in leasing telephone and Internet leases to hotels. Over the last decade, Mr. Bluestein has been affiliated with GunnAllen Financial Inc. of Tampa, Questar Capital Corp. of Minneapolis, AXA Advisors LLC of New York. He resigned last month from GunnAllen, company officials said. Mr. Bluestein “denies culpability,” said his attorney, Matthew Leitman of Miller Canfield Paddock Stone PLC. “Frank and his family invested substantial amounts and lost substantial amounts.” The Michigan Office of Financial & Insurance Services is “investigating Mr. Bluestein,” said a spokeswoman, Kathy Fagan, who added it was policy not to reveal further details of a case during an investigation. Regulators have not charged Mr. Bluestein in any lawsuits or complaints, with Mr. Shepherd noting that the investigation is “brand new.” For the full report, see the upcoming Oct. 15 issue of InvestmentNews.