Scam

GMS Group – $1 Million in Lawsuits, Low-quality Bonds and More

GMS Group is a specialist in tax-free municipal bonds. And they use their knowledge to manipulate clients into buying low-rated bonds. That’s not all. They have done a lot more in the few decades they have existed. 

The following points will explore GMS Group reviews, GMS Group careers, and many other reasons why you should avoid this firm: 

About The GMS Group:

GMS Group is a financial advisory firm that specializes in offering tax-free municipal bonds. They claim to be specialists who help people invest in tax-exempt municipal bonds. The company caters to high-net-worth clients. 

The company has a very sketchy past. Many of their clients have sued them on different occasions. And they haven’t had an amicable relationship with FINRA. 

They claim to have been operating for 40 years but the company was established in 1997, according to their official documents. So, they are lying from the start. 

The main address of the GMS Group is 120 Eagle Rock Ave., Suite 300, East Hanover, NJ 07936, US. 

There are a total of 17 disclosures in their FINRA profile. Seven of these disclosures are regulatory events while 10 are arbitrations. 

The president and COO of the firm is Timothy Joseph Donohue. Being the GMS Group owner, Timothy is certainly living a luxurious life while his clients have to visit the court. 

You should be wary of financial services providers who have multiple disclosures in their FINRA profiles. In many cases, these service providers turn out to be more dangerous than expected. For example, Wendy Holmes, a UBS financial advisor, has many disclosures in her FINRA profile and is now facing a lawsuit for misrepresenting her clients. 

GMS Group Reviews & Complaints By Clients

As I shared earlier, GMS Group has a ton of disclosures in its FINRA profile. I’ll go through them to explain just how many times this company has paid fines and restitution for its horrible services. 

You can read about all of their violations and arbitration in the following document:

  1. The GMS Group had consented to the sanctions for charging unreasonable and unfair mark-ups and mark-downs in their transactions of below investment grade municipal securities. They had to pay $90,000 in fines to FINRA. This case is dated 2 May, 2021. 
  2. In 2016, this firm sold municipal bonds to its customers in amounts below the minimum denomination and didn’t disclose this fact to the customers. They sold the bonds that were restricted to Qualified Institutional Buyers to retail customers. They were fined $45,000. 
  3. In 2015, the GMS Group paid $75,000 in fines to the regulator. They failed to supervise the sales practices of their sales representatives who performed unsuitable trading. The representatives didn’t inform the customers of the generated commissions and the risks associated with the recommended investments. They had caused a 70-year-old investor to lose $90,000. 
  4. The company violated MSRB rules G-17, G-27, G-32 in 2011 and paid $50,000 in fines. 
  5. In 2008, this company had failed to report TRACE-eligible transactions to TRACE (Trade Reporting and Compliance Engine) and ended up paying a $5,000 fine. 

These are just a few of the many instances when this company violated securities law and regulations. 

This company has also paid hundreds of thousands in lawsuits and abrintrations. In 2002, they had to pay $50,000 to a client while in 2009, they had to pay $500,000 for misrepresentation and breach of contract. 

Below are all the arbitrations this case has faced:

GMS Group complaint

Investment Fraud Case Against GMS Group Stockbroker

William Ornstein is a GMS Group stockbroker who is facing complaints for negligence, breach of fiduciary duty, fraud, false representation, and several other crimes. He has been working at the GMS Group since 2001 and the complaints against him seek hundreds of thousands in damages. For example, a 2019 complaint seeks $100,000 in damages for negligence and violation of fiduciary duty. 

GMS Group scam 1

Another 2019 complaint alleges false representation, exploitation of the client, and deception. This complaint seeks $250,000 in damages. William Ornstein is a stellar example of how the GMS Group operates. 

The reason why these complaints are so scary is that very few people actually find out about such scams and negligence. Most of them are unaware that their stockbroker is duping them and is ruining their financial health for his personal gain. 

William Ornstein had settled a 2009 complaint with $675,000. That complaint was for engaging in unsuitable and unauthorized trading. 

Overworking & Mistreating Employees

Apart from misrepresenting and scamming its own clients, GMS Group is also abusing its staff through unprofessional behavior and poor leadership. 

There are a ton of GMS Group reviews detailing the terrible work conditions at this firm. I have shared some of those GMS Group reviews below to help you understand the situation: 

Systematic Unprofessional Behavior

Horrible Leads & Worse Salary

GMS Group review 2

No Training, Horrible Communication, Lack Of Mentorship 

GMS Group reviews

Drugs, Bullying, Terrible Pay & No Security

GMS Group review

GMS Group Specializations: Unfair Markups, Hiding Information and Unsuitable Transactions 

It seems like the New Jersey headquartered firm has a shortage of competent staff. Because the company’s so-called specialists have too many lawsuits against them.

Normally, a specialized firm doesn’t have so many complaints against its name. For example, the company had consented to violating MSRB Rules G-17 and G-30(a) in 2008. They were selling municipal securities at unfair pricing or markups.

It’s not like they learned from their mistake. Because in September 2015, Anthony Grey, a GMS Group broker had committed the same crimes by failing to disclose his unfair practices and charged his customers unfair markups. 

Public records alsos show that GMS failed to disclose statements related to purchase of municipal securities in 2015 and 2016. 

In October 2015, the firm had engaged in unsuitable trading in non-traditional ETFs. Moreover, they didn’t get written authorization from the customer accounts to do so. Carmine Capone, another GMS representative, had failed to supervise these transactions. 

The numerous complaints and cases we found here are proof of how this financial firm operates. They have no regard for rules or regulations. And they only care about maximizing their profits by manipulating their clients into paying unfair prices and conducting unsuitable transactions. 

GMS Group LLC Sued For Selling Risky Bonds To Customers

GMS Group scam

The tax-free municipal bond specialist is facing a lawsuit for negligence and misrepresentation. They concentrated their clients’ accounts in terrible Puerto Rico bonds when they were fully aware of the Puerto Rico debt crisis. In fact, the company was selling its own bonds to the customers to mitigate their risks and shift it to their customers. 

Public records show that GMS owned a significant position in Puerto Rico bonds. So, when they learned about the debt crisis of that place, they knew that the bonds would become worthless. Hence, they started selling those bonds to their clients. 

In 2017, the clients accounts that were concentrated in Puerto Rico bonds were decimated. And there’s a good chance that they will recover their losses. That’s because Puerto Rico filed for bankruptcy in 2017 and couldn’t pay back the bonds people had invested in. 

The only party who benefitted from these transactions was GMS. 

As you must have noticed by now, it isn’t the first time GMS has engaged in such selfish and negligent behavior. This just shows why GMS Group is a dangerous organization and why you should stay away from it. 

2.5Expert Score
GMS Group Review Conclusion

This New Jersey based firm lies about its history, has paid hundreds of thousands in arbitration awards, and has received numerous sanctions. 
All of this suggests that GMS Group is a negligent, selfish, and incompetent firm. You should stay miles away from such a company. 

Trust
2.5
Honesty
2
Ethics
2
Experience
3.5
Service
2.5
Pros
  • None
Cons
  • Has lost numerous arbitration awards
  • Sold low-quality bonds to shift the risk on customers
  • Takes no responsibility
  • Violated laws and regulations multiple times
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