On October 29, 2013, the Financial Industry Regulatory Authority (FINRA) brought a complaint against Wall Street Strategies, Incorporated (WSSI), Gary Savage, Sr. and Louis Karl Kittlaus. WSSI is a FINRA registered securities broker-dealer firm.
Savage has been FINRA-registered through WSSI since 1993. He entered the securities industry in 1983 and has been registered with numerous member firms in various roles. He is currently WSSI’s President, CEO, and CCO.
Kittlaus has been registered in the securities industry since 1965 and is a WSSI representative.
According to FINRA’s complaint, between January 2012 and November 2012, Savage sold through WSSI $2 million-plus of Renewable Secured Debentures via GWG Holdings, Inc. (GWG); he made approximately $95,000 in commissions from the sales.
The debentures are considered high risk, illiquid alternative investments and FINRA has alleged that “during the relevant time period, Savage made unsuitable recommendations to nine different customers in the course of 19 separate sales totaling more than $2 million of Debentures…Savage’s recommendations to his customers to invest in the Debentures were unsuitable based on the customers’ overall investment profiles.”
Savage also made “false, exaggerated, unwarranted and misleading statements in communications with the public.” When making sales, he utilized a GWG Debentures brochure that FINRA has alleged is false and misleading as it stated the debentures were secured by life insurance policies when instead they are pledged as collateral for an independent line of credit, according to the prospectus.
In addition, Savage, who oversaw 12 registered representatives across six locations, failed to establish and maintain a supervisory system that ensured his brokers are compliant with all applicable industry rules and regulations.
In particular, Savage’s supervisory lapses encompassed not establishing a system to review and hold his representatives’ written and electronic correspondence conducted with the public. This failed to achieve NASD and FINRA compliance as the system did not include a “reasonable review of the GWG sales literature, and failed to identify and follow-up on red flags related to Firm representatives’ unsuitable commendations and sales of the Debentures.”
As for Kittlaus, he also distributed the GWG brochure to prospective customers during the aforementioned period and according to FINRA, he additionally used “a false, exaggerated, and misleading letter promoting the Debentures.”
Customers of Savage, Kittlaus and/or WSSI are encouraged to contact the law firm of Blau & Malmfeldt at 312-443-1600 for a no-obligation consultation. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership, and shareholder rights disputes.