Broker Misconduct - Law Offices of Robert Wayne Pearce

Jul 17, 2017

Legend Equities to Pay More Than $2.3 Million in Restitution for Mutual Fund Overcharges

Legend Equities Corporation has agreed to pay more than $2.3 million in restitution to customers who were overcharged in certain mutual fund purchases. According to the Financial Industry Regulatory Authority (FINRA), between July 1, 1009 and January 1, 2017, Legend Equities disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares of certain mutual funds without a front-end sales charge. The customers were instead sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses. According to the Letter of Acceptance, Waiver and Consent (AWC) submitted to FINRA, Legend Equities failed to reasonably supervise the application of the sales charge waivers to the eligible mutual fund sales, relying on its financial advisors to determine the applicability of sales charge waivers. Further, Legend Equities allegedly failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers. Without admitting or denying the findings, Legend Equities was censured and agreed to pay restitution to eligible customers who were overcharged of an estimated $2,300,188.00, the amount eligible customers were overcharged, inclusive of interest.

Jul 14, 2017

FSC Securities Fined by FINRA for Failure to Supervise Third-Party Check Requests

FSC Securities Corporation has been fined $200,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise third-party check requests in connection with an employee’s fraudulent investment fund memberships, which ultimately caused the investors to suffer significant losses. According to FINRA, FSC Securities failed to establish, maintain and enforce an appropriate supervisory system to review third-party check requests related to 15 customers’ accounts. These customers were sold memberships in an unapproved fund (the PFG Fund) by a registered representative of the firm who submitted 23 Letters of Authorization (LOAs), authorizing the issuance of approximately $1.6 million in third-party checks from FSC Securities accounts to a bank account controlled by the ill-fated fund. The PFG fund ultimately collapsed and lost millions of dollars due to speculative trading and other investments.

Jul 11, 2017

Former National Securities Broker Permanently Barred for Unauthorized Account Transactions

Former National Securities Corporation (National Securities) broker, Glenn McDowell, has been barred by the Financial Industry Regulatory Authority (FINRA) for executing 38 unauthorized transactions in his customer’s account in a three month time period without the authority to do so. Glenn McDowell, of Springfield Gardens, New York, caused his client to suffer losses of $64,740.08 as a result of the unauthorized trades. According to FINRA, Mr. McDowell entered 38 unauthorized transactions in his customer’s account in a three month time frame. FINRA deemed the number of unauthorized trades over the course of just three months to be quantitatively egregious misconduct. Further, FINRA found that Mr. McDowell sometimes bought and then sold, or sold and then bought, the same securities within a few days. By engaging in such misconduct, he generated $5,300 in commissions for himself while causing nearly $65,000 in losses to his customer.

Jul 7, 2017

Former Raymond James Broker Permanently Barred for Unauthorized and Unsuitable Account Transactions

Former Raymond James & Associates, Inc. (Raymond James) broker, Scott Sibley, has been barred by the Financial Industry Regulatory Authority (FINRA) for effecting precious metals purchases without his customers’ authorization, knowledge or consent. Scott Allen Sibley, of Fort Lauderdale, Florida, also allegedly made unsuitable recommendations to over-concentrate the accounts of at least 10 customers, all of whom were seniors with conservative investment objectives. According to FINRA, Scott Sibley effected over 900 securities purchases in a customer’s accounts without the customer’s knowledge or consent. Further, Mr. Sibley caused this customer to carry a margin debit balance without authorization or consent. FINRA also found that Mr. Sibley made unsuitable recommendations to over-concentrate customers’ accounts in precious metals to at least 10 customers, all of whom were seniors who relied on the money in their accounts to fund their retirements.

Jul 5, 2017

HD Vest Broker Suspended by FINRA for Altering Customer Documents

John Olinghouse, a formerly registered broker with the Sparks, Nevada branch of HD Vest Investment Services, Inc. (HD Vest), submitted a Letter of Acceptance, Waiver, and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he falsified customer documents and failed to notify his member firm of a customer complaint alleging improper financial advice. FINRA’s findings state that John Edward Olinghouse, of Sparks, Nevada, falsified numerous customer documents. According to FINRA, Mr. Olinghouse cut and pasted or taped customers’ signatures in some instances and, in other instances, used white-out to alter information on forms previously signed by customers. Further, FINRA found that Mr. Olinghouse privately settled a customer complaint which alleged improper financial advice without notifying his member firm of the complaint, which is required under FINRA Rule 2010.

Jul 3, 2017

Accelerated Capital Broker Suspended for Unauthorized Mutual Fund Exchanges

Jeffrey Scheibner, a stockbroker formerly employed by Accelerated Capital Group, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $5,000 and suspended for 3 months for allegedly making unauthorized mutual fund exchanges without the customers’ authorization or discretionary authority over their accounts. FINRA found that between August 24, 2015 and September 16, 2015, Jeffrey Lloyd Scheibner, of Ladera Ranch, California, exchanged 303 mutual fund positions into corresponding money market funds across 36 accounts. Mr. Scheibner allegedly did so without prior customer authorization and had no discretionary authority over the accounts. Without admitting or denying FINRA’s findings, Mr. Scheibner was suspended by FINRA for 3 months and assessed a fine of $5,000. The suspension is in effect from May 15, 2017 through August 14, 2017.

Jun 30, 2017

GF Investment Services Broker Barred by FINRA for Unsuitable ETF Hold Recommendations

Richard William Lunn Martin, a former registered representative with GF Investment Services, LLC, submitted an Offer of Settlement in which he was barred by the Financial Industry Regulatory Authority’s (FINRA) due to findings that he made unsuitable ETF hold recommendations which resulted in losses to his customers of approximately $2.4 million. Richard William Lunn Martin, of Johor, Malaysia, allegedly solicited, purchased and recommended his customers hold non-traditional ETFs in their accounts for years – an unsuitable recommendation for any customer. Non-traditional ETFs are typically designed to achieve their objectives over the course of one trading session, i.e., one day. In fact, FINRA Regulatory Notice 09-31 advises broker dealers and their registered representatives that non-traditional ETFs “are typically not suitable for retail investors who plan to hold them for more than one trading session, particularly in volatile markets.”

Jun 28, 2017

Legend Equities Broker Named in FINRA Complaint for Unsuitable Annuity Replacements

Walter Marino, a previously registered broker with Legend Equities Corporation, was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he recommended unsuitable variable annuity replacements (also known as exchanges) to two customers, allegedly causing one customer to incur a surrender charge of $85,523.23. According to the FINRA complaint, Walter Joseph Marino, of Dix Hills, New York, had no reasonable basis for his recommendation of replacements for his customers’ non-qualified variable annuities. The complaint alleges that both customers suffered substantial losses as a result of his recommendation. For instance, one customer incurred significant tax liabilities due to Mr. Marino’s failure to use the tax-free exchange available under the IRS Code. Further, as mentioned above, another customer is alleged to have suffered a surrender charge of more than $85,000. Mr. Marino, on the other hand, allegedly received commissions of approximately $60,000 for recommending the unsuitable transactions.

Jun 26, 2017

AXA Broker Suspended for Unsuitable Mutual Fund Trading

James Davis Trent, of Lexington, South Carolina, was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly recommending and executing unsuitable mutual fund trades in the accounts of elderly retirees, causing the customers to suffer substantial losses. FINRA alleged that while employed with AXA Advisors, LLC, James Trent engaged in a pattern of recommending unsuitable short-term trading of Class A mutual fund shares to four customers. In the 14 transactions at issue, Mr. Trent is alleged by FINRA to have recommended the sale of Class A mutual fund shares within less than a year, on average just six months. This unsuitable trading activity resulted in the customers incurring over $6,000 in unnecessary sales charges and a commission, for Mr. Trent, of nearly $3,000.

Jun 23, 2017

MML Investors Services Broker Suspended by FINRA for Forging Customer’s Signature

Eric Ott, a broker formerly registered with MML Investors Services, LLC, submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he forged a customer’s signature on life insurance applications without the customer’s knowledge or consent. According to FINRA, Eric Eugene Ott, of Union Kentucky, discussed the possibility of his customer applying for life insurance, but had not gotten her consent or approval to submit the applications. Mr. Ott, however, allegedly signed the customer’s name to the applications and paid the initial premiums without the customer’s knowledge. The customer became aware of the fraudulently obtained insurance policies only when she received correspondence from the issuing company, whereupon she called to complain.