Broker Misconduct - Law Offices of Robert Wayne Pearce

Mar 13, 2017

Network 1 Financial Broker Fined for Failure to Disclose Outside Securities Accounts

Keith Testaverde, a registered representative with Network 1 Financial Securities, Inc. has been fined $25,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for six months for allegedly failing to disclose the existence of outside securities accounts which he owned or controlled at another firm. Without admitting or denying FINRA’s findings, Keith Testaverde consented to the findings that he neglected to disclose to his member firm, Network 1 Financial Securities (Network 1 Financial), that he maintained control over and executed trades in a securities accounts which were held at another member firm. According to FINRA, Mr. Testaverde made approximately 121 trades in one of the accounts, many of which were on Network 1 Financial’s “watch list,” meaning that they required preapproval. FINRA found that 12 of the trades made by Mr. Testaverde were prohibited outright. Further, Mr. Testaverde falsely represented on his firm’s annual compliance questionnaire that he did not have any undisclosed outside securities accounts. Due to the foregoing misconduct, FINRA assessed a fine of $25,000 and suspended Mr. Testaverde for six months. The suspension is in effect from January 17, 2017 through July 16, 2017.

Mar 10, 2017

Former NYLife Securities Broker Barred for Converting Client Funds

Marc Bushey, of Plympton, Massachusetts, has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. Mr. Bushey 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 allegedly converted a client’s trust funds for his personal use. According to FINRA, Marc Donald Bushey, a broker formerly employed with NYLife Securities LLC, assisted his customer with creating a trust in 2007 to benefit the customer’s children. The customer and a third party were appointed as co-trustees. Mr. Bushey then assisted the customer’s trust in opening an account with NYLife Securities, where he served as the registered representative on the account. FINRA found that between November 2015 and September 2016, Mr. Bushey wrote at least seven checks from the trust’s account, made them out to “cash,” and deposited them into his personal account. Mr. Bushey then used the funds for his personal use, according to FINRA. He never had authorization from the trustees for his actions.

Mar 3, 2017

K.C. Ward Financial Broker Barred for Unsuitable and Unauthorized Trading

Craig David Dima, a stockbroker formerly employed with K.C. Ward Financial, submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was barred from association with any FINRA member. Without admitting or denying FINRA’s allegations, Craig Dima consented to the entry of findings that he made unauthorized and unsuitable trades in the IRA account of an elderly retiree. According to FINRA, Mr. Dima sold nearly all of his 73-year old customer’s Colgate-Palmolive stock, which she had accumulated during her 28 years of employment with the company. FINRA alleged that on 11 occasions, Mr. Dima sold the customer’s shares without permission and even after the customer told him not to sell the stock. When Mr. Dima’s elderly customer confronted him about the sales, he misrepresented to her that the transactions were caused by a computer glitch. As a result of Mr. Dima’s unauthorized sales, the customer was charged more than $375,000 in mark-ups, mark-downs, and fees. Further, the customer was deprived of substantial dividends she would have received had she held the Colgate shares as she had intended. FINRA found that the unauthorized, unsuitable trades executed by Mr. Dima totaled approximately $15 million in his customer’s retirement account. In the Order Accepting Offer of Settlement, Mr. Dima was barred from association with any FINRA member in any capacity.

Mar 1, 2017

Popular Securities Broker Fined and Suspended for Unauthorized Discretionary Trades

Manuel Mejia-Gomez, a former registered representative with Popular Securities, LLC, 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 executed three unauthorized transactions in a customer’s accounts; failed to follow a customer’s instructions to liquidate a particular security; and engaged in discretionary trading without written authorization in the accounts of three customers. According to FINRA, Manuel Mejia-Gomez, of San Juan, Puerto Rico, executed three unauthorized transactions in a customer’s account which caused the customer to complain to Popular Securities, who then cancelled the transactions. FINRA alleges further that instead of following his customer’s instructions to liquidate a specific bond, Mr. Mejia-Gomez allegedly consulted with his customer’s employee who had no authority to make trading decisions. Mr. Mejia-Gomez used the instructions of this unauthorized employee to liquidate a different bond than was instructed by his customer.

Feb 27, 2017

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

Thomas Leone, 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 and falsified a payment authorization form without the customer’s authorization. Thomas John Leone, of West Simsbury, Connecticut, was found by FINRA to have forged his customer’s signature on a life insurance application by electronically affixing a signature copy onto multiple documents. Further, Mr. Leone arranged for payment of the insurance premiums by completing a payment authorization form that the customer’s husband had previously pre-signed on an unrelated policy application and submitted this form without customer authorization, causing payments to be debited from his bank account. For violating FINRA Rule 2010, which requires FINRA members to observe high standards of commercial honor, FINRA fined Mr. Leone $5,000 and suspended him for 12 months.

Feb 23, 2017

LPL Financial Broker Suspended for Unsuitable Recommendations to Elderly Widow

Scott Goldman, a stockbroker formerly registered with LPL Financial Corporation (LPL Financial), submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $10,000 and suspended for 20 days for allegedly making unsuitable recommendations of a leveraged, overconcentrated precious metals investment to an elderly widow. According to FINRA, Mr. Goldman used several different investment strategies (referred to as “Champion Models” by Mr. Goldman) in which he invested his customers’ accounts in mutual funds with a mutual fund family or through subaccounts of a variable annuity. FINRA found that one of Mr. Goldman’s Champion models was the “Champion Precious Metals Model,” which was identified as the most risky due to the fact that it was concentrated in the volatile precious metals sector. Further, the Champion Precious Metals Model used leveraged mutual funds, furthering the risk to investors.

Feb 20, 2017

MML Investors Services Broker Named in FINRA Complaint for Misrepresentations to 90 Year Old Customers

Stanley Niekras, a previously registered broker with MML Investors Services, LLC (MML), was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he misrepresented to his customers, a 90 and 91 year old married couple, that he was entitled to over $70,000 for purported estate and financial planning services when he had no financial planning or advisory agreement with the elderly couple. According to the FINRA complaint, Stanley Clayton Niekras, of Watertown, New York, allegedly presented the elderly couple, who were declining both physically and mentally, with bills claiming he had spent more than 264 hours working on their estate and was entitled to retroactive compensation at a rate of $250 an hour. The bill, which Mr. Niekras allegedly presented to the couple on MML letterhead, was for $72,636.18 and was “due upon receipt.”

Feb 17, 2017

Caldwell International Securities Broker Suspended for Unsuitable and Excessive Trading

John Kakonikos, former registered representative with Caldwell International Securities Corp., submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was suspended for 18 months, assessed a deferred fine of $10,000, and ordered to pay restitution of $72,524.53, plus interest, to his customer. John Billy Kakonikos, of Flushing, New York, was found by FINRA to have engaged in excessive and unsuitable trading in his customer’s account, causing realized trading losses of $72,524.53, while generating $41,617.56 in fees and commissions. According to FINRA, Mr. Kakonikos was the registered representative for a customer with a high-school education, annual income of approximately $25,000 per year, and no experience actively trading securities. Further, FINRA alleged that Mr. Kakonikos had de facto control over this customer’s account. FINRA found that Mr. Kakonikos recommended and executed 117 securities transactions in this account, nearly half of which were placed without the customer’s authorization. In light of the customer’s financial situation, lack of investment experience and financial needs, FINRA found Mr. Kakonikos’ trading to be unsuitable and excessive. Mr. Kakonikos was assessed a deferred fine of $10,000 and suspended by FINRA for 18 months. The suspension is in effect from November 21, 2016 through May 20, 2018.

Feb 13, 2017

FINRA Suspends Former Dougherty & Co. Broker for Unsuitable Recommendations to the Elderly

Jeffrey A. Hill, a stockbroker formerly registered with Dougherty & Co. LLC, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $5,000, suspended for 15 months, and ordered to pay $45,000 in disgorgement of the commissions he received. Without admitting or denying FINRA’s findings, Jeffrey Alan Hill, of Bemidji, Minnesota, consented to the entry of findings that he recommended unsuitable bond investments and exercised discretion in the accounts of two elderly customers. Between January 2010 and June 2014, Mr. Hill allegedly initiated hundreds of trades for two elderly customers without their explicit permission. FINRA found that Mr. Hill contacted the customers only half of the time, and recommended dozens of transactions that were unsuitable, such as short-term trading of corporate and municipal bonds. According to FINRA, Mr. Hill recommended his elderly customers sell bonds shortly after buying them, or initiated the transactions for them. Those transactions were unsuitable for any customer, particularly in light of the commissions the customers ended up paying. Further, the trades were inconsistent with the customers’ financial situations, needs, and objectives. Mr. Hill was suspended by FINRA for 15 months and assessed a fine of $5,000, and required to pay $45,000 in disgorgement of commissions received. The suspension is in effect from December 19, 2016 through March 18, 2018.

Feb 10, 2017

BancWest Broker Barred by FINRA for Unapproved REIT Transactions

John Hudnall, a former broker with BancWest Investment Services, Inc. (BancWest), submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was barred from the securities industry amid findings that he recommended and sold a REIT investment to an 80 year old customer, which he split into two transactions in order to circumvent his firm’s supervisory review. FINRA found that John Stuart Hudnall, of Pacifica, California, sold a $400,000 Wells Core Office Income REIT investment to an 80 year old customer. He then split it into two transactions, one of 40,000 and the other of $360,000, to avoid supervisory review of such a large transaction. Mr. Hudnall only submitted the $40,000 portion to his firm, and submitted the $360,000 portion directly to the REIT sponsor. Mr. Hudnall allegedly received a gross commission of $25,200 in connection with the $360,000 part of the REIT investment.