National investment fraud lawyers KlaymanToskes announces the firm’s continued pursuit of financial recoveries for pro-athletes that suffered investment losses and/or fraud in response to the increase in fraudulent schemes and other financial crimes committed against professional athletes throughout the United States.
The firm recently announced the filing of FINRA arbitration case no. 23-00709 on the behalf of a former NFL player’s ex-wife, who is seeking up to $1 million in recovery for investment losses suffered at the hands of Morgan Stanley and barred broker Darryl M. Cohen.
The filing comes after Cohen’s arrest on Thursday, March 23rd, 2023, for his role in a $13 million scheme to defraud professional athletes. Cohen allegedly defrauded four professional basketball players along with his co-defendants, Brian Gilder, Charles Briscoe, and Calvin Darden, Jr.
Cohen was previously barred from acting as a broker by the Financial Industry Regulatory Authority in February 2022 after he allegedly failed to cooperate with the regulator’s investigation into his misconduct. KlaymanToskes has continued their investigation of Cohen since he left the industry and has been contacted by multiple Darryl Cohen customers alleging investment losses.
If you suffered investment losses or fraud at the hands of your trusted financial advisor, contact our firm for a free, confidential consultation at 888-997-9956 or lklayman@klaymantoskes.com.
According to the findings of a 2021 study conducted by Ernst & Young LLP, from 2004 to 2018, professional athletes alleged nearly $600 million in fraud-related losses. However, legal proceedings filed between 2016 and 2018 accounted for approximately $189 million, or 32 percent of all identified losses from 2004 to 2018.
According to attorney Lawrence L. Klayman, “$600 million is an incredible sum of money for pro-athletes to allegedly lose. It indicates pro-athletes are a target and should have their accounts scrutinized by a third party, such as our firm.”
This data may indicate that during the relevant time period, more than half of the fraud-related losses suffered by professional athletes have not been recovered. The report includes data collected from publicly available criminal, civil and bankruptcy pleadings, along with secondary research.
According to the findings of the 2021 Ernst & Young study, the rising trend of fraudulent schemes and financial crimes on pro-athletes is largely due to their high net worth, high-profile status, and financial inexperience. However, there are certain risk factors that inherently increase the risk that athletes will be targets of fraud, including shortage of time to manage their own finances, reliance on qualified and experienced advisors with unchecked access, and exploitation by family and friends.
The most common types of financial schemes against professional athletes are listed below:
Unauthorized Investments: A professional athlete’s broker/financial advisor may take advantage of their access to make unauthorized and overly risky investments on the athletes’ behalf, while generating high commissions and fees for themselves. Examples of unauthorized trading include taking stakes in various startup companies, real estate ventures, or other “opportunities” in which the representative already had a financial interest. In the event of unauthorized transactions, the representative may be liable for failing to disclose a conflict of interest.
Unauthorized Use of Cash by Brokers/Advisors: A professional athlete’s broker/financial advisor may take advantage of their access to the athletes’ bank and brokerage accounts to make unauthorized cash withdrawals to enrich themselves. In this situation, the financial representative often uses the funds for personal expenses rather than stated investments. This is considered fraud, theft, misrepresentation, and the employing firm may be held liable for failure to supervise the wrongful conduct of the financial advisor.
Misappropriated Earnings and Securities Concentrations: A professional athlete’s broker/financial advisor may misappropriate the cash inflows they control/manage. Misappropriation of funds may constitute a claim for misrepresentation, fraud, theft or failure to supervise by the brokerage firm. In other cases, a financial advisor may concentrate or fail to diversify an athlete’s investments. Investment losses as a result of a securities concentration may be the basis for a suitability claim.
Misleading/False Advice: A professional athlete’s broker/financial advisor may take advantage of their role to mislead athletes with false or misleading financial information, such as inaccurate historical investment returns, misclassified risk profiles, fake investment suggestions and/or recommendations involving Ponzi schemes. This misconduct by a financial professional may constitute a claim for misrepresentations and omissions of material facts.
FINRA (“Financial Industry Regulatory Authority”) is the self-regulatory body responsible for regulating all registered U.S. brokers and brokerage firms doing business with investors in the United States and throughout the world. Investors can file an arbitration claim through FINRA when they have a dispute involving the business activities, negligence, misconduct, and/or securities violations of a brokerage firm or one of its brokers/advisors.
KlaymanToskes believes a FINRA (“Financial Industry Regulatory Authority”) arbitration claim is the best possible solution for investors who have suffered realized or unrealized losses as a result of misconduct and/or securities violations by a FINRA-regulated brokerage firm or financial advisor. FINRA arbitration may be the best use of investors’ time and resources, often occurring with increased speed and efficiency over court proceedings.
With over a century of combined experience, KlaymanToskes has assisted thousands of investors in the recovery of more than $600 million. Our firm has been advocating for investors’ rights for decades, and has represented clients throughout the world that maintain accounts with U.S. brokerage firms, including individual, high net-worth, and ultra-high-net-worth investors.
KlaymanToskes is dedicated to restoring the financial lifestyles of professional athletes who have been victims of financial crimes and fraud. If you suffered investment losses due to the misconduct and/or securities violations of your brokerage firm or broker/advisor, contact Lawrence L. Klayman, Esq. at (888) 997-9956 or lklayman@klaymantoskes.com for a free and confidential consultation to discuss your potential case today.
We offer legal services on a contingency fee basis, meaning we do not collect attorney’s fees unless we are able to obtain a financial recovery for you.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered over $250 million in FINRA arbitrations and over $350 million in other securities litigation matters. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956