Stock-Picking Strategy Led to Massive Losses
Published On: January 3, 2024

Stoltmann Law Offices Alleges SA Stone Wealth Management Financial Advisor Lawrence Waller Used a Stock-Picking Strategy That Resulted in Huge Losses to Their Client

Stoltmann Law Offices, P.C. is a Chicago-based securities, investor protection, and consumer rights law firm that offers victims of fraud, negligence, and breach of fiduciary duty representation on a contingency fee basis nationwide.  We have represented thousands of investors who have been victims of negligent or fraudulent investment advice. We have aggressively prosecuted countless investor related claims since 2005.  Since its passage in June 2020, we have also pursued investor claims under Regulation Best Interest, which materially changed the regulatory landscape in which all financial advisors operate.

In November 2023, Stoltmann Law Offices filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) against SA Stone Wealth Management in connection with an investment strategy employed by one of the company’s registered representatives, Lawrence (Larry) Waller.

The FINRA Statement of Claim alleges that Mr. Waller, who works through his own office in Atlanta, Georgia called “HLM Financial Services”, recommended that an investor entrust several hundreds of thousands of dollars to his care, based on various representations.  Those included:

  • NOTHING IS COOKIE CUTTER
  • We create personalized financial plans and equity portfolios for our clients.
  • We practice a hands-on approach to wealth management. Our approach to building and transferring wealth is unique and different.
  • Our greatest priority is that our clients lead the process and understand all aspects of their financial picture.
  • We are committed to working together. We are committed to financial education and transparency. We are committed to putting you first.
  • We are different. HLM has a unique strategy to building and preserving multi-generational wealth.
  • We believe in the fundamentals – both with creating our portfolios and educating our clients. Together we decide how the portfolio evolves over time.
  • We Educate. Explaining our strategy for each portfolio is one of our greatest priorities.
  • We are independent money-managers. All of our custom portfolios are made in-house and are designed and managed by us. This active management style gives us full control to position the portfolios for growth in almost any economic environment.
  • Our philosophy is to look at the total financial health of our clients, not just disjoined segments. We review the entire picture then educate and advise our clients about the entire picture.
  • The team works to maximize investment gains, minimize taxes, and most importantly, communicate clearly and consistently with each other and the clients throughout the process.
  • Larry often refers to himself as a “unicorn” in the industry, as his passion lies with the nitty-gritty market research that has made him a successful old-school money-manager, creating custom portfolios for each client.

The FINRA statement of claim alleges that the investor relied on these representations made by Waller and HLM and entered into a discretionary asset management program agreement with SA Stone and Waller.

The Claim Alleges That Because the Investor’s Account Was Not Diversified or Asset Allocated like a Professional Financial Advisor Is Obligated to Do, The Investor Lost Almost 50% in Two Years

Stock-Picking Strategy Losses

According to the FINRA Statement of Claim, from October 2021 through June 2023, Mr. Waller invested the Investor’s money in ten stocks, utilizing a “buy and hold” strategy, and lost almost half of the investor’s money. Mr. Waller invested the Investor’s money in the following stocks:

  • Albermarle Corp. (ALB)
  • Crowdstrike (CRWD)
  • Etsy, Inc. (ETSY)
  • GXO Logistics (GXO)
  • Livient Corp. (LTHM)
  • Nvidia (NVDA)
  • Sea LTD (SE)
  • Shopify (SHOP)
  • Square, Inc./Block, Inc. (SQ)
  • Upstart Holdings (UPST)

This “plan” was a stock-picking plan and not a reasonable investment plan customarily provided by a fiduciary investment advisor like Mr. Waller.  Typically, and as disclosed in SA Stone’s Form ADV Part 2, if an investor selects a stock-investing plan, that plan would have between 40 and 50 individual stocks, not just ten. According to the FINRA Statement of Claim, Mr. Waller, allegedly, invested the Investor’s account in these ten stocks, set-it-and-forget-it, and generated 2.5% in advisory fees for basically performing no advisory services.

SA Stone and Mr. Waller Were Fiduciaries to their Investor Clients

As a licensed registered investment advisory firm, SA Stone IA owed Mr. Brown fiduciary duties as a matter of law under the Investment Advisors Act of 1940, 15 U.S.C. § 80b, et. seq.; See also, SEC v. Capital Gaines Research Bureau, Inc., 375 U.S. 180 (1963). The fiduciary duties identified by the Supreme Court include the duty of utmost good faith and full and fair disclosure of all material facts.

This fiduciary duty has been interpreted and expounded upon by the Securities and Exchange Commission – SA Stone IA’s primary regulator – to include the fiduciary duty “to adopt the principal’s goals, objectives, or ends. This means the advisor must, always, serve the best interest of its clients and not subordinate its clients’ interests to its own.” See Investment Advisers Act Release 3060.

The “duty of care” owed by a Registered Investment Adviser is focused primarily on the concept that the Adviser owes the fiduciary duty to provide advice that is in the client’s best interest. In providing investment advice to a client, a fiduciary Investment Adviser must consider the client’s financial situation, level of sophistication, investment experience, and investment objectives, and has a duty to provide personalized advice that is suitable for and in the best interest of the client based on the client’s investment profile. See Securities and Exchange Act Release No. IA-4889, File No. S7-09-18, 17 CFR Part 275, Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers, April 18, 2018. It is also material to the fiduciary duty that Registered Investment Advisers owe their clients that all advice they provide not contradict the duty of loyalty, which the SEC has interpreted to mean that a registered investment adviser cannot put his interests ahead of his client’s.

What Should Victims of SA Stone, HLM and Waller Do Next?

If you invested money with SA Stone and Mr. Waller and have lost $100,000 or more as a result of stock-picking strategies, you may have a claim to pursue in FINRA Arbitration. To be clear, merely suffering investment losses does not mean you have any legal claims.  However, if you suffered those investment losses because your advisor failed to adequately diversify and asset allocate your account, or breached other duties or invested your money unsuitably based on your instructions and financial profile and resources, you should consider bringing FINRA arbitration claims against SA Stone. 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 received Larry Waller’s investment advice, and lost money as a result, you should call 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.

Disclaimer

The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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