Broker Misconduct - Law Offices of Robert Wayne Pearce

Mar 29, 2016

FINRA Fines and Suspends Edward Jones Broker for Discretionary Trade Violations

James P. Hilty Jr., an Ocala, Florida based broker formerly employed with Edward D. Jones & Co., L.P. (Edward Jones) 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 entered discretionary trades customers’ accounts without the necessary prior written customer authorization. FINRA found that while employed as a General Securities Representative with Edward Jones, James Hilty exercised discretion in three customer accounts with the execution of 14 trades. In violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010, Mr. Hilty neglected to obtain the necessary prior written authorization for discretionary trading from the customers or his member firm. FINRA stated that none of the customers were aware of the trades executed by Mr. Hilty at the time they were made. Mr. Hilty had instead previously spoken with the customers about a trading strategy, but he failed to discuss the subject trades prior to their execution or on the day of the trades.

Mar 24, 2016

Oppenheimer Broker Fined and Suspended by FINRA for Falsifying Letters of Authorization

Stephen Oberman, a registered representative formerly employed with the Chicago, Illinois based Oppenheimer & Co., Inc. (Oppenheimer), submitted a Letter of Acceptance, Waiver, and Consent in which he consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he falsified signatures on at least 51 letters of authorization (LOAs) requesting fund disbursements from and address changes to a customer’s account. FINRA’s findings stated that while serving as a General Securities Representative at Oppenheimer, Stephen Mark Oberman, of Naperville, Illinois, was assigned to the account of a customer that had a trust with three trustees. Mr. Oberman falsified the trustees’ signatures by photocopying their signatures from other firm documents and cutting and pasting them onto the LOAs. Even after two of the trustees had died, Mr. Oberman continued to falsify their signatures, only disclosing this to Oppenheimer after learning that two of the three trustees were deceased.

Mar 23, 2016

American Portfolios Representative Fined and Suspended for Unsuitable Mutual Fund Switches

Jeffrey Davidson, a registered representative employed by the Stuart, Florida branch of American Portfolios Financial Services, Inc. (American Portfolios), submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made unsuitable mutual fund switch recommendations which cost his customers approximately $46,000 in unnecessary sales charges. According to FINRA, Jeffrey Lee Davidson, of Stuart, Florida, recommended a series of mutual fund switches in 12 customer accounts which were unsuitable for those customers. Mr. Davidson recommended that the customers, one of whom was 97 years old and 5 others were 65 or older, purchase Class A mutual funds, for which they paid commissions and sales charges. He then recommended that they sell the mutual funds within less than one year of the purchase. Mr. Davidson used the funds from the sales of the mutual funds to purchase other mutual funds, for which the customers paid additional commissions and fees.

Mar 15, 2016

NEXT Financial Broker Fined by FINRA for Unsuitable Bond Recommendations

Betsy Bratton Marcom, a former Registered Representative with the Georgetown, Texas branch of NEXT Financial Group, Inc. (NEXT Financial), submitted a letter of Acceptance, Waiver, and Consent in which she consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanction and findings that she made unsuitable investment recommendations to her customer which resulted in approximately $135,000 in realized losses. FINRA’s findings state that Betsy Marcom, of Georgetown, Texas, recommended that her client, a non-profit parish church, invest almost its entire portfolio in non-investment grade corporate bonds. Her recommendation was inconsistent with her client’s investment objectives and risk tolerance. According to FINRA, Betsy Marcom was a member of her client’s Finance Council and recommended that the council begin investing in non-investment grade bonds in order to generate a larger return in their account. Relying on the expertise of Ms. Marcom, the church’s account became increasingly concentrated in the bonds, reaching as much as 99% of the account’s assets. As a result of Ms. Marcom’s unsuitable recommendations, her client had invested over $700,000, approximately 45% of its liquid assets, in non-investment grade bonds in the NEXT Financial account, with realized losses of approximately $135,000.

Mar 9, 2016

American Portfolios Financial Services Fined By FINRA for Unsuitable Mutual Fund Switches

American Portfolios Financial Services, Inc. (American Portfolios) submitted a letter of Acceptance, Waiver, and Consent (AWC) in which it was censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise the unsuitable mutual fund switches by two of its registered representatives. According to FINRA, American Portfolios, based out of Holbrook New York, engaged in unsuitable mutual fund switching through two of its registered representatives which resulted in its customers incurring nearly $91,000 in unnecessary sales charges. During the relevant time period, FINRA found that the two American Portfolios representatives recommended 78 unsuitable mutual fund switch transactions in 15 customer accounts.

Mar 7, 2016

Garden State Securities Broker Fined and Suspended by FINRA for Unsuitable Recommendations

Adam R. Tau, a former broker with the New York branch of Garden State Securities, Inc., 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 recommendations to a customer which resulted in substantial losses in the customer’s account. FINRA found that Adam Tau made recommendations to his customer that were unsuitable given his customer’s conservative investment objectives, risk tolerance, and limited assets and income. Mr. Tau recommended five purchases of common stock totaling approximately $204,000. During the relevant time period, the stock experienced several price declines which resulted in a loss of approximately $30,000. Additionally, FINRA found that Mr. Tau exercised discretion in his customer’s account by effecting ten trades without obtaining the necessary written authorization from his customer and neglecting to obtain the written acceptance of the account as discretionary by Garden State Securities.

Mar 4, 2016

WFG Investments Broker Suspended by FINRA for Unsuitable Trading

Larry Michael Crabtree, a former Edmond, Oklahoma based registered representative with WFG Investments, Inc. consented to, but did not admit to or deny, the sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he exercised discretion in a customer’s account to make unsuitable securities purchases which resulted in substantial losses to his customer. FINRA found that Larry Crabtree, of Edmond Oklahoma, exercised discretion in the IRA account of an elderly retiree with known health problems, limited income and limited liquid assets. Mr. Crabtree made purchases of securities on his customer’s behalf, one of which was a highly leveraged oil and gas exploration company, which resulted in an almost complete loss when that oil and gas company declared bankruptcy. Mr. Crabtree also exercised discretionary trades in certain customer accounts, neglecting to get the customers’ or WFG Investment’s prior written authorization as required by FINRA Rule 2010. Consequently, Mr. Crabtree was suspended from association with any FINRA member in any capacity for six months. Due to his financial status, no monetary sanctions were imposed.

Mar 1, 2016

Finance 500 Fined for Supervisory Failures

Finance 500, Inc. of Irvine, California, and Robert Lansing Hicks, of Orange, California, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly failing to establish and implement an anti-money laundering (AML) program and numerous supervisory failures. FINRA found that between 2005 and 2014, Robert Hicks, who was Finance 500’s owner President, Chief Executive Officer, Chief Compliance Officer and designated Anti-Money Laundering Compliance Officer, and Finance 500 failed to implement and enforce adequate supervisory policies in order to oversee the market making activities of low-priced stocks, sales of unregistered low-priced securities, the review and retention of emails, and the implementation and delegation of supervisory responsibilities.

Feb 24, 2016

FINRA Complaint Filed Against Former LPL Financial Representative

The Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) filed a complaint against George Zedan, of Whittier California, for allegedly converting a client’s funds for his own personal use. Mr. Zedan entered the securities in 1998 and later in April 2004, when he became associated with FINRA member firm LPL Financial, LLC (LPL). Mr. Zedan remained associated with LPL until March 2013 when he resigned from the firm while under police investigation. FINRA alleges that Mr. Zedan, while associated with LPL, took advantage of an elderly client by using their funds for his own personal use. FINRA also alleges that Mr. Zedan proposed a false and inappropriate real estate investment strategy for an 87 year old client. According to the complaint, Mr. Zedan in 2012, started to discuss a $300,000 investment in a real estate venture with the client, none of which was put down on paper. After agreeing to the proposition, the client allegedly, under the direction of Mr. Zedan, wrote a personal check for $300,000 and with the memo line reading “real estate” and handed it to Mr. Zedan. A week later, September 4, 2012, Mr. Zedan deposited the check into his personal banking account and started using the funds for his own personal expenses.

Feb 22, 2016

Huntington Investment Company Broker Named in FINRA Complaint Alleging Unsuitable UIT Recommendations

David Michael Miller, a former registered representative with Huntington Investment Company (Huntington) was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging unsuitable Unit Investment Trust (UIT) recommendations. The complaint alleges that Mr. Miller, of Columbus, Ohio, had no reasonable basis to recommend UIT purchases which totaled approximately $5.4 million in 129 customer accounts. Further, the complaint alleges that Mr. Miller failed to exercise the necessary due diligence with respect to the UIT recommendations. Specifically, the complaint states that Mr. Miller allegedly did not read the prospectuses, did not know that the underlying closed-end funds were leveraged, and did not know that certain of the closed-end funds invested in junk bonds and that the UIT prospectuses advised that investing in such bonds should be viewed as speculative and subject to numerous risks, including higher interest rates, economic recession, possible downgrades, and defaults of interest and/or principal. The complaint further alleges that Mr. Miller negligently misrepresented and omitted material facts to customers in connection with their UIT purchases totaling $964,000. Also, Mr. Miller allegedly misrepresented to this particular customer that the UIT investment was “safe,” and that if the customer hold the investment until termination of the trust, he would receive his entire principal investment plus the 5% interest payment received during the term of the trust.