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Lawsuit alleges Montecito man sold stocks despite FINRA ban

By   /   Saturday, April 19th, 2014  /   Comments Off

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A Montecito man is facing allegations that he sold money-losing stock to clients and gave them flawed financial advice despite being banned from brokering securities by industry regulators.

A lawsuit filed in Santa Barbara County Superior Court on April 3 alleges that Elias Argyropoulos and his Coast Village Road company, Prima Capital Group, assured investor John van Wyk that the stocks he bought from the company would either make money or be transferred into other stocks that eventually would, guaranteeing no loss of their principal. Van Wyk alleged he lost money.  Argyropoulos denied the claims.

“We think it’s a frivolous lawsuit,” Argyropoulos told the Business Times when reached via phone at his Coast Village Road office. “We’re going to deny the allegations of the complaint, and we’ll deal with them in court.”

Raymond Chandler, Van Wyk’s attorney, said he couldn’t comment beyond his client’s complaint. “We believe the allegations are accurate and true,” Chandler said.

Van Wyk didn’t say how much money he lost. He alleges that in 2008, he met Argyropoulos to talk about investments in stocks sold through Prima.  For nearly a year, Van Wyk alleges he invested in stocks that Argyropoulos told him were about “to go public” and make money, according the lawsuit. If the stocks didn’t make money, the lawsuit alleges, Argyropoulos said he would shift the money into stocks that would. The suit alleges Argyropoulos didn’t tell Van Wyk that the stocks would go public only on minor exchanges and that, in any case, none of the stocks became publicly traded.

Van Wyk also alleged that Argyropoulos advised him to open online trading accounts with Charles Schwab and E-Trade to buy and sell publicly traded stocks. The case alleges that Argyropoulos asked for Van Wyk’s passwords and authority to trade on the accounts after making a similar promise — that even if the stocks lost money, he’d transfer into other stocks that would make up for it.

According to Business Times research, Prima Capital Group is a Delaware company. It is not registered with the U.S. Securities and Exchange Commission as an investment adviser. Several other unrelated firms with similar names are. Argyropoulos is also not registered as an investment adviser with securities regulators.

Prima Worldwide, also located in Santa Barbara, is a separate company that has no business relationship with Prima Consulting, Prima Worldwide owner Demetri Argryopolous told the Business Times.

Elias Argyropoulos has a history of disciplinary actions with the National Association of Securities Dealers, the predecessor to the Financial Industry Regulatory Authority, a self-regulatory body for the financial industry.

According to FINRA records, Argyropoulos was censured and fined $500 in 1983 for depositing his own personal money into the brokerage account of his son’s godfather to cover losses from trading on that account.

In 1988, Argyropoulos was again censured and fined $500 for loaning a distant relative $25,000 that was placed directly into a brokerage account. In 1994, financial industry regulators filed a complaint against him alleging six violations, which included: use of discretion without written authority, unauthorized transactions, unsuitable transactions, sharing in customer’s losses, guaranteeing customers against loss and manipulation and deceptive practices. It censured Argyropoulos and barred him from associating “in any capacity” with members of the financial industry group in the future.

The lawsuit alleges that Argyropoulos “consented to not sell securities in the future.” However, it’s unclear whether the agreement with financial industry regulators would extend to selling securities in companies in which Argyropoulos or Prima was a principal or owner. Such activity might be considered a private placement of stock rather than brokering.

“It may be that the issuer was making the sale instead of him — he wasn’t putting A and B together, he was A, selling to B,” said Mike Pfau, an attorney with Reicker, Pfau, Pyle & McRoy in Santa Barbara who is not involved with the case.

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