On May 6, 2019, the Law Offices of Jonathan W. Evans & Associates filed a Statement of Claim and Demand for Arbitration against Western International Securities, Inc. and its former broker Dennis Albert Mehringer, Jr. on behalf of a retired client in the greater Los Angeles area. The filing of the claim continues the investigation into representative Dennis Mehringer, whom FINRA previously barred from the securities industry following an extensive regulatory hearing. Mehringer is currently appealing the FINRA bar.
The claim alleges negligence, suitability, misrepresentation and fraud, unauthorized trading, failure to supervise, breach of fiduciary duty, violation of California Securities Laws, violation of FINRA Rules, and breach of contract. The allegations center on the disastrous self-serving financial planning and investment advice Mehringer provided to his suddenly unemployed 61-year old client. Mehringer's advice started with his recommendations to his client to roll over annuity, pension, and 401k accounts and desposit a modest inheritance into Western International accounts.
The claim alleges that following his client's unexpected job loss, Mehringer promised he could and would replicate the lost employment income by investing the client's retirement savings without risk. Once he had control over the unsophisticated client's money, he concentrated it in a cluster of high-yield junk bonds and other risky securities. The income generated by the investments initially made his plan appear to work, however, for his unsophisticated client, it also masked the outsized risks Mehringer was taking to generate the returns.
Three of the bonds he purchased for his client's account were issued by financially stressed companies, Sandridge, Verso Paper, and Exco Resources. Each of these companies subsequently declared bankruptcy. Adding insult to injury, Mehringer also purchased a concentrated position in an illiquid Real Estate Investment Trust, Northstar Realty, which paid him an outsized commission but caused 75% principal losses to his client. The losses from the three bonds and REIT destroyed half the client's total portfolio.
Critically, Claimant alleged Western International Securities' failed to reasonably supervise its broker which created the environment for the disaster. By example, the new account documents for each of the client's accounts presented inconsistent investment objectives, risk tolerances, investment experience and financial wherewithal. Had any supervisor taken a moment to compare the investor profile data between the accounts, it would have raised red flags and required the firm to act to protect its unsophisticated client.
The claim seeks market-adjusted damages, disgorgement of commissions and fees, punitive damages, attorneys' fees, interest, and costs.
If you have invested with Western International Securities, its former stockbroker Dennis Albert Mehringer, or with any broker or financial adviser whose recommendations or actions have proven harmful to your investments or interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.