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Filings claim law firm’s conflict of interest and negligence caused irreparable damage and SEC action

TRENTON, NJ (April 2, 2024) – Bell Rock Capital, LLC and its CEO Cassandra Toroian recently filed a multi-count lawsuit against New Jersey law firm Stark & Stark, accusing it of legal malpractice, negligence, and intentional interference with prospective business relationships. Bell Rock Capital is a Delaware corporation and was an SEC-registered investment adviser until August of 2023. The lawsuit, filed in the United States District Court for the District of New Jersey (Case 3:24-cv-00252-RK-JBD), states that the law firm’s incompetent representation led to irreparable damage and SEC action. Bell Rock Capital is represented by Gallucci & Profy LLC.

At the heart of the dispute is the claim that Stark & Stark’s alleged professional lapses have cost Bell Rock Capital and Toroian dearly, to the tune of almost $1.3 million in disgorgement, prejudgment interest, and penalties. This financial hit was the culmination of a four-year ordeal, sparked by a civil action from the SEC, which, according to the plaintiffs, could have been avoided or mitigated had Stark & Stark not failed in its duties.

Beyond the immediate financial repercussions, the lawsuit outlines additional damages suffered by the plaintiffs, including significant legal fees paid to Stark & Stark ahead of the SEC action, a marked decrease in Bell Rock Capital’s value, and a detrimental impact on Toroian’s future earning capacity.

Stark & Stark, which on its website promotes its expertise to Registered Investment Advisors (RIAs) on regulatory and compliance issues, was retained by Bell Rock Capital to provide general advice and assistance with securities law compliance, annual regulatory filings, and specifically, issues related to block trade account allocations.

However, the lawsuit alleges that Stark & Stark failed to provide adequate warnings, advice, or reviews of Bell Rock Capital’s policies and procedures. This lack of professional guidance is said to have left Bell Rock Capital and Toroian exposed to enforcement actions by the SEC.

Adding to the controversy is the allegation that Stark & Stark simultaneously represented brokerage firm Schwab & Co. Inc. during its tenure with Bell Rock Capital, including periods when Schwab was under SEC investigation. Stark & Stark’s failure to disclose this dual representation or to reassess Bell Rock Capital’s compliance policies in light of this relationship is cited as a glaring omission by the plaintiffs.

The lawsuit states that from 2011 to 2019, Stark & Stark’s alleged neglect of its professional responsibilities and its failure to protect and advise the plaintiffs on regulatory compliance led directly to government investigations and the consequential SEC action.

The lawsuit states that Bell Rock Capital’s primary reason for retaining Stark & Stark was to avoid such “costly damaging investigations by the government,” a safeguard the firm failed to provide, according to the plaintiffs. Following the public disclosure of the consent order, Stark & Stark also reportedly failed to update Bell Rock Capital on necessary language changes to its compliance manual or on policies regarding block trades.

The plaintiffs faced almost $2 million in defense costs and attorney’s fees due to the SEC action, a situation they contend could have been prevented but for Stark & Stark’s alleged malpractice and negligence.

The lawsuit states that “Stark & Stark’s incompetent representation of plaintiffs exposed and failed to protect them. In particular Stark & Stark failed to provide full, complete, competent, and timely advice needed for Toroian and Bell Rock Capital to protect themselves and comply with SEC laws, rules, and regulations. Instead, because it did not wish to offend its client Schwab—a much larger and more financially important client than the plaintiffs—it failed to properly advise and protect them.”

The plaintiffs argue that the law firm’s actions not only resulted in significant monetary losses and damage to their reputation but also lost business opportunities. The lawsuit further states: “But for Stark & Stark’s wrongdoing, breach of duty, negligence, and conflict of interest, there would have been no basis for the SEC action.”

Bell Rock Capital and Cassandra Toroian are seeking damages for the losses incurred due to Stark & Stark’s purported failures. Download a copy of the legal filings here and at


Source: Bell Rock Capital, LLC

Contact:  John P. David