Frank Bluestein, one of the nation’s top-producing independent brokers, is under investigation by Michigan securities regulators for allegedly placing clients in partnerships that stopped paying dividends.
Industry sources place Bluestein’s annual fees and commissions at close to $7 million. In the summer of 2007, he was ranked the fourth-largest independent-contractor registered representative, with $1 billion in client assets, by Registered Rep.
According to an attorney familiar with the investigation, 1,500 people invested in a series of private partnerships that paid monthly dividends that stopped about six months ago. Many of them invested through Bluestein over a period of three to ten years with investments ranging from $10,000 to $1 million. The partnerships have been described as investments in real estate and telephone and Internet leases to hotels.
Bluestein’s attorney said his client denies culpability and that the partnerships were offered by a colleague, Ed May. May has no comment. The attorney also claims Bluestein lost “substantial amounts” of his own money through bad investments.
Bluestein’s own practice, Maximum Financial Group, is based in Michigan and over the last decade, he has been affiliated with Gunn- Allen Financial Inc. in Florida, Questar Capital Corp. of Minnesota, and AXA Advisors LLC of New York. Last month, Bluestein resigned from GunnAllen and GunnAllen clarifies that they “did not authorize, endorse, sponsor, approve, sanction, participate or benefit in any way from this activity” and believes the activity was hidden from them. Meanwhile, Questar Capital said they have not received any from Michigan regulators and AXA Advisors has declined to comment on the investigation.
The Michigan Office of Financial and Insurance Services is investigating Bluestein but has not reveals further details or charged Mr. Bluestein in any lawsuits or complaints.