Investor Alert: Iorio Altamirano LLP Investigates Former Oppenheimer Broker Frederick Levine and Oppenheimer Over Unit Investment Trust (UIT) Early Rollover Practices

Iorio Altamirano LLP is investigating claims on behalf of Oppenheimer customers who invested in Unit Investment Trusts (UITs) at the firm through former Oppenheimer broker Frederick Levine and other financial advisors. If you have lost money with Oppenheimer or former Oppenheimer broker Frederick Levine contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Financial Advisor Frederick Levine (CRD#: 1765119)

FINRA has suspended financial advisor Frederick Levine from the securities industry for the 3-month period ending on December 20, 2020. He was also fined $5,000.

Frederick Levine was registered with Oppenheimer from January 2002 until November 2014. Oppenheimer filed a Uniform Termination Notice for Securities Industry Registration (Form U5″), disclosing that Levine had voluntarily resigned from the Firm. After departing Oppenheimer, he joined RBC. Mr. Levine is currently not registered.

Frederick Levine entered the securities industry in 1992 and was previously registered with the following firms:

RBC Capital Markets, LLC, Florham Park, NJ (November 2014 – September 2020);
Oppenheimer & Co. Inc., Florham Park, NJ (January 2002 – November 2014);
Josephthal & Co., Inc., New York, NY (February 2001 – January 2002);
Robb Peck McCooey Clearing Corporation, New York, NY (November 1996 – February 2001); and
D.H. Blair & Co., Inc., New York, NY (June 1992 – October 1996).

If you have lost money with Frederick Levine or Oppenheimer, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010.

Frederick Levine AWC

Frederick Levine and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on August 3, 2020, over allegations that from July 1, 2011 through November 17, 2014, Levine engaged in an unsuitable pattern of short-term trading of UITs in customer accounts.

The AWC indicates that Mr. Levine recommended that customers roll over UITs over 100 days prior to maturity on nearly 950 occasions. On average, Mr. Levine recommended that his customers sell their UIT positions after holding them for about 260 days and use proceeds to buy a new UIT.

Over 600 of the early rollovers that Mr. Levine recommended were “series-to-series” rollovers (i.e., purchasing a subsequent series of the same UIT).

Levine’s recommendations were unsuitable in light of the frequency and cost of the transactions and caused customers to incur unnecessary sales charges.

What is a UIT?

Unit Investment Trusts (UITs) sell investors shares or “units” in a fixed portfolio of securities through a one-time public offering. UITs are considered long-term investments that mature on a specific date; generally, after 15 or 24 months. Once the UIT matures, the underlying securities are sold, and the proceeds are paid to investors.

A UIT’s portfolio is passively managed between the trust’s inception and its maturity date. UIT sponsors often offer UIT product lines in successive “series.” These new series coincide with the maturity date of the prior series. Successive series of UITs tend to have the same or similar investment objectives and investment strategies as the prior series, despite a change in the underlying securities that make up the fixed portfolio.

Investors can expect to pay various upfront sales charges and fees, including an initial sales charge, a deferred sales charge, a creation and development fee (C&D fee), and a fee for annual operating expenses.

A broker recommending the sale of a customer’s UIT before its maturity date and who then uses the sale proceeds to purchase a new UIT would cause their customer to incur greater sales charges than if the customer held the UIT to maturity. As a result of their long-term nature, structure, and costs, short-term trading of UITs may be unsuitable.

Oppenheimer & Co. Inc. AWC

Iorio Altamirano LLP is also investigating claims on behalf of Oppenheimer customers who invested in UITs. If you have lost money with Oppenheimer, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Oppenheimer and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on December 30, 2019, over allegations that it failed to properly supervise $6.4 billion worth of UIT sales between January 2011 and December 2015. Specifically, that it:

Failed to establish and maintain a supervisory system, and failed to establish, maintain, and enforce written supervisory procedures (“WSPs”) that were reasonably designed to supervise the suitability of representatives’ recommendations to customers as they pertain to early rollovers of UITs.

As part of the AWC, Oppenheimer was censured and agreed to a fine of $800,000 million. Oppenheimer also agreed to pay over $3.87 million in restitution to customers.

Oppenheimer is a full-service broker-dealer, with approximately 1,955 registered representatives and 127 branch offices. The firm is headquartered in New York, New York, and has been a FINRA member since 1945.

A FINRA restitution order does not preclude investors from pursuing their own claims to seek restitution or other available remedies. Investors harmed by Oppenheimer’s failures may have a claim against the firm.

If you have lost money with Oppenheimer, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.com or toll-free at (855) 430-4010.

Oppenheimer Failed To Reasonably Supervise Patterns of Short-Term Trading of UITs

Oppenheimer executed over $6.4 billion in UIT transactions generating approximately $68.6 million in sales charges.

$753.9 million represented transactions in which UITs were sold before their maturity dates, and customers used part or the entire proceeds for early rollover purchases into new UITs.
$237.1 million represented transactions in which UITs were sold before their maturity dates, and customers used some or the entire proceeds for series-to-series early rollovers (i.e., purchasing a subsequent series of the same UIT).

Further, Oppenheimer did not use automated reports, alerts, or other systems to supervise for potentially unsuitable patterns of early UIT rollovers. The firm relied on a manual review by branch managers of the firm’s UIT trade report. Because the report did not effectively flag early rollovers, the review was not reasonably designed to supervise the suitability of representatives’ recommendations to customers as they related to early rollovers of UITs. As a result, Oppenheimer’s review of the UIT trade report failed to identify that firm representatives recommended potentially unsuitable early rollovers, including series-to-series early rollovers. These rollovers caused customers to incur over $3.87 million in sales charges that would not have been incurred had customers held the UITs until their maturity dates.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.