Stoltmann Law Offices, P.C. is a Chicago-based securities, investor protection, and consumer rights law firm that offers victims representation on a contingency fee basis nationwide. We have represented thousands of investors who have been the victim of negligent or fraudulent investment advice, including veterans. We have aggressively prosecuted countless excessive trading, day-trading, and churning cases since 2005. Since its passage in June 2020, we have also pursued investor claims under Regulation Best Interest.
On July 7, 2023, the Securities and Exchange Commission filed a civil complaint against Caz L. Craffy alleging that he ripped off Gold Star families through an investment scheme. These allegations are heinous; Gold Star families should be the most cared for and cherished members of our American community and if the SEC’s allegations are true, Caz Craffy violated this trust.
SEC Allegations Against Caz Craffy Include Violations of Regulation Best Interest and Anti-Fraud Provisions
According to the SEC complaint, from November 2017 through January 2023, Caz Craffy, who was a registered financial advisor for Newbridge Securities and then Monmouth Capital Management, trading Gold Star family accounts on an unauthorized and excessive basis to drive commissions for himself. He is also alleged to have essentially stolen funds from an IRA set up for a thirteen year old client. Craffy has also been barred from the securities industry by FINRA and the New Jersey Bureau of Securities.
According to Craffy’s FINRA BrokerCheck Report, he disclosed several outside businesses to the brokerage firms with whom he was registered and maintained his securities and investment adviser licenses. These disclosures must be approved by the brokerage firm before they end up on the Form U-4, so any suggestion by a brokerage firm that “they didn’t know” what Craffy was up to lacks merit. Craffy disclosed his involvement with the Department of the Army as a Financial Counselor. He disclosed his role with Overwatch Global Strategies, which he described existed to “produce insights, analysis, and recommendation to improve client performance.” Craffy also disclosed he was a “company commander” for the US Army Reserves.
The core of the SEC’s allegations conclude that Craffy abused his position of trust with at least 29 Gold Star families, and at their most vulnerable moments, took their survivor and insurance payments, directed the money to brokerage accounts he controlled, and excessively traded the accounts on an unauthorized basis. The SEC describes the trading Craffy engaged in as extremely risky and designed to generate commissions, not investment returns. The SEC’s analysis concluded that Craffy’s unauthorized and excessive trading resulted in nearly $4million in investment losses and $1.64 million in commissions being paid. The SEC further concluded that Craffy executed over 1,000 unauthorized trades in 31 customer accounts.
Newbridge and Monmouth had Duties to Supervise Caz Craffy in Connection with All of His Investment-Related Activity
At all times relevant to his trading scheme, Caz Craffy was a fully licensed and compliant financial advisor through the Financial Industry Regulatory Authority – FINRA. He was registered with two brokerage firms at all times relevant: Newbridge Securities and Monmouth Capital Management. FINRA is a quasi-governmental agency which is responsible for creating and enforcing rules that all registered brokers and their dealers must follow and adhere to. Violating these rules can result in regulatory fines and penalties imposed by FINRA. Violating these rules can also form the basis for civil liability against the brokers and these firms.
Both of these brokerage firms were required to adequately supervise Caz Craffy while he was registered with them. There is no excuse for Craffy being allowed to run amok with the accounts of Gold Star families whose accounts were held with these brokerage firms. It is a gross failure of the compliance apparatus at these brokerage firms that Craffy was able to execute so many trades on an unsuitable and unauthorized basis. FINRA Rules mandated that these firms supervise Craffy, and the extent of his misconduct clearly suggests there was an epic compliance failure here.
These firms can also be liable for Craffy’s misconduct by virtue of his agency relationship with these firms. Craffy’s job was to act as a financial advisor and fiduciary to his clients. Newbridge and Monmouth could be held liable for Craffy’s abuses by virtue of this agency relationship. By law, the principal – here the firms Newbridge and Monmouth – are legally responsible for the conduct of their agent – Caz Craffy.
What Should Victims of Caz Craffy Do Next?
Victims of Caz Craffy’s trading scheme should consider bringing FINRA arbitration claims against Newbridge Securities or Monmouth Capital. Both of these brokerage firms were required to adequately supervise Caz Craffy while he was registered with them. There is no excuse for Craffy being allowed to run amok with the accounts of Gold Star families whose accounts were held with these brokerage firms. It is a gross failure of the compliance apparatus at these brokerage firms that Craffy was able to execute so many trades on an unsuitable and unauthorized basis. The attorneys at Stoltmann Law Offices have represented clients in multiple arbitration forums, have tried cases to conclusion in them, and have recovered approximately $100 million in lost investor funds since 2005.
If you were the victim of Caz Craffy’s unauthorized and excessive trading schemes, you should contact Stoltmann Law Offices, P.C. at 312-332-4200 for a no-obligation, initial consultation with an experienced securities arbitration attorney. We are a contingency fee law firm which means we do not get paid unless you do.