Broker Misconduct - Law Offices of Robert Wayne Pearce

Dec 29, 2016

FINRA Bars Former UBS Broker Amid Allegations of False Account Reports

Jeffrey Hamilton Howell, a registered representative formerly employed by UBS Financial Services, Inc. (UBS) submitted a Letter of Acceptance, Waiver and Consent in which he was barred by the Financial Industry Regulatory Authority (FINRA) amid findings that he failed to provide documents and information FINRA had requested and failed to appear and provide on-the-record testimony in relation to allegations that he sent his customer false weekly reports that overvalued the account by as much as $3 million. FINRA found that beginning in September 2008 and continuing through November 2014, Jeffrey Howell, of Wentzville, Missouri, created and sent his customer over 300 weekly reports that supposedly reflected the customer’s portfolio value. In actuality, the report misstated the account value in amounts ranging from $289,000 to approximately $3 million. In order to conceal his fraudulent misconduct, Mr. Howell allegedly altered three UBS account statements to match the information purported in his falsely created portfolio reports. When asked by FINRA to appear for testimony regarding the allegations, Mr. Howell acknowledged that he received the request and would not appear to provide testimony. By refusing to respond to FINRA’s request, Mr. Howell was in violation of FINRA Rules 8210 and 2010. Without admitting or denying the findings, Mr. Howell was permanently barred by FINRA.

Dec 27, 2016

Former LPL Financial Broker Suspended for Unsuitable UIT Recommendations

Mark Tauzin, a former registered representative with LPL Financial LLC submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $20,000 by the Financial Industry Regulatory Authority (FINRA) for engaging in unsuitable short-term trading of front-loaded Unit Investment Trusts (UITs) which resulted in sales charges to the customers of more than $316,000. According to FINRA, Mark Tauzin, of Lafayette, Louisiana, effected 215 UIT transactions in the accounts of 14 households that were sold within a 12 month time period. UITs are not designed to be used as trading investments, particularly not to be used for short-term trading, and typically carry significant upfront charges. As a result of Mr. Tauzin’s unsuitable UIT transactions, the customers incurred sales charges of $316,840.50 and Mr. Tauzin received $205,115.02 in commissions.

Dec 19, 2016

Wells Fargo Broker Suspended for Unsuitable Discretionary Trades

Robert Batchen, a broker formerly employed with the Skokie, Illinois branch of Wells Fargo Advisors, LLC (Wells Fargo), 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 made unsuitable discretionary trades in his customer’s accounts, causing losses in excess of $56,000. FINRA found that Robert James Batchen, of Wheeling, Illinois, exercised discretion in his customer’s accounts without the written authorization of the customer of his member firm, in violation of NASD Rule 2510(b). Mr. Batchen is alleged by FINRA to have effected more than 900 discretionary trades during the relevant time period.

Dec 16, 2016

Waddell & Reed Broker Barred For Forgery and Conversion

Gregory Russel Bauer, of Saxonburg, Pennsylvania, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly forging his customers’ signatures, intercepting checks in the mail, and converting more than $400,000 for his personal use. FINRA’s findings state that while associated with Waddell & Reed, Inc. of Pittsburgh, Pennsylvania, Mr. Bauer, allegedly forged the signatures of his customers, who were Mr. Bauer’s parents, on withdrawal request forms he submitted. These forged documents enabled securities to be sold from his parents’ accounts and for checks to be issued to his parents, which Mr. Bauer allegedly intercepted and deposited into his personal bank account. FINRA found that Mr. Bauer then allegedly used the ill-gotten funds, over $400,000, for his personal expenses. As a result of the aforementioned fraudulent misconduct, Gregory Bauer was barred from association with any FINRA member in any capacity.

Dec 14, 2016

Source Capital Group Broker Barred For Forgery

Joey Cless Broussard, of Princeton, Texas, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in a default decision made by FINRA’s Office of Hearing Officers for allegedly forging his customer’s signature on a false letter he created to cancel a request for rescission of a purchase of an investment in an oil and gas limited partnership. FINRA alleged that while associated with Source Capital Group, Inc. of Allen, Texas, Mr. Broussard sold an interest in Bayou City Exploration, Inc. (Bayou City) oil and gas limited partnership to an elderly customer. The investment gave investors a right of rescission if they requested it in writing within ten days of purchase. The customer sent a rescission letter to Bayou City to cancel her investment. Upon learning this, FINRA alleged that Mr. Broussard contacted the customer to get her to keep the investment, explaining that she needed to send a second letter to Bayou City to cancel her rescission request. The customer did not send the letter. Instead, FINRA alleged that Mr. Broussard handwrote a letter purportedly from the customer to cancel the rescission request, forged her signature, and faxed the letter to Bayou City. Joey Broussard did not have the customer’s permission to write the letter or forge her signature. As a result of the default decision, Mr. Broussard was barred from association with any FINRA member in any capacity.

Dec 13, 2016

Huntington Investment Company Broker Suspended for Unsuitable UIT Recommendations

Richard Graham, a former registered representative with Huntington Investment Company of Lafayette, Indiana, submitted a letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $10,000 by the Financial Industry Regulatory Authority (FINRA) for Unit Investment Trust (UIT) recommendations which were unsuitable for his customers given their investment objectives. According to FINRA, Richard Dale Graham, of Lebanon, Indiana, recommended that his customer, a 98-year old woman, invest in three UITs which made up approximately 42% of her net worth. Given the woman’s moderately conservative investment goals and age, the recommendations were found by FINRA to be unsuitable, and the UITs lost $29,493 in value.

Dec 9, 2016

JP Turner Broker Barred by the SEC for Fraudulent Investment Scheme

The Securities and Exchange Commission (SEC) announced that it has accepted an Offer of Settlement submitted by Levi Lindemann in which he is barred from the securities industry for allegedly operating a fraudulent scheme through his private company, Gershwin Financial, Inc. and his sole proprietorship, Alternative Wealth Solutions. The SEC alleged in its complaint that Levi Lindemann, of West Lakeland, Minnesota, raised approximately $976,000 from six investors, including elderly individuals, and told the investors that their money would be used to purchase various investments including notes and interests in a unit investment trust (UIT). The SEC complaint alleged that in reality, none of Mr. Lindemann’s purported investments were ever made. Mr. Lindemann is a former registered representative with J.P. Turner & Company, LLC (J.P. Turner). His BrokerCheck report shows that Mr. Lindemann is currently involved in four (4) pending customer disputes while he was employed by J.P. Turner for allegations including breach of fiduciary duty, misrepresentations, violation of Minnesota Uniform Securities Act, and negligence.

Dec 6, 2016

Cambridge Investment Research Broker Suspended For Unsuitable Mutual Fund Switches

Robert Lyons, of Augusta Georgia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly executing unsuitable mutual fund switches in the accounts of three customers. FINRA alleged that between January 2011 and December 2013, Robert Lyons recommended and effected fourteen unsuitable mutual fund switches in the accounts of three customers, resulting in unnecessary fees for his customers. Mutual fund “switching” is simply the process of transferring an investment from one mutual fund to another, sometimes for good reasons and other times to defraud clients. Some brokers attempt to effect numerous switches in client accounts in order to generate commissions. In the case of Mr. Lyons, FINRA found that the former Cambridge Investment Research representative caused unnecessary losses to his clients and additional commissions for himself as a result of the mutual fund “switches” he recommended. FINRA found that Mr. Lyons recommended his customers purchase Class A and Class T shares for the switches, which were only advantageous if the customers held them on a long-term basis, usually several years or more. In this case, the switches recommended and effected by Mr. Lyons were held for less than one year and all of the customers involved incurred added and unnecessary commission charges.

Nov 2, 2016

Woodbury Financial Broker Permanently Barred by FINRA for Elder Financial Abuse

Joseph R. Butler, a former Registered Representative with Woodbury Financial Services, Inc. (Woodbury Financial) was permanently barred by the Financial Industry Regulatory Authority (FINRA) for taking advantage of an elderly, dementia suffering customer’s bank accounts, converting her money for his own use, and naming himself as her annuity’s beneficiary, falsely representing that he was her son. In its investigation, FINRA states that Mr. Butler admitted that his 75 year old, widowed customer who suffered from dementia was dependent on him and trusted him to take care of her. Mr. Butler was added to the elderly customer’s accounts after observing that her mental faculties were declining. It was then that Mr. Butler began withdrawing money from her accounts. According to FINRA’s findings, between September 2009 and December 2010, Mr. Butler wrote nine checks from his customer’s accounts totaling $105,646.158. Eight of the nine checks were made payable to himself or cash, and the ninth check he used to pay his Federal income taxes. FINRA goes on to state that Mr. Butler arranged to have the customer’s account statements delivered to his home address rather than hers and, in the same month, wired $5,000 from her accounts to his own, claiming that it was a “test,” according to FINRA. Further, Mr. Butler sent a change request form for his customer’s $453,000 annuity in which he removed the granddaughters as beneficiaries and named himself, falsely representing on the form that his relationship to the customer was “son.”

Oct 31, 2016

Legend Securities Broker Named in FINRA Complaint for Allegations of Fraudulent and Excessive Trading

Hank M. Werner, a Northport, New York-based registered representative formerly employed with Legend Securities, Inc. and Liberty Partners Financial Services, LLC, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he fraudulently and excessively traded the accounts of his customer, a 77 year old blind and physically disabled widow. According to the FINRA complaint, while working at Liberty Partners Financial Services and then later at Legend Securities, Mr. Werner serviced and exercised control over all of his customer’s accounts. Due to his customer’s disabilities, she relied completely upon Mr. Werner for investment recommendations and information on account activity. However, FINRA’s complaint alleges that Mr. Werner churned and excessively traded the elderly widow’s accounts, allegedly placing over 700 trades and generating approximately $243,430.20 in commissions and fees and approximately $183,734.33 in net losses for his customer. Further, the complaint alleges that when Mr. Werner changed firms, he increased his markups and commissions on her trades to 3.75-4.25%, an increase of over 40%!