Stockbrokers In The News - Law Offices of Robert Wayne Pearce

Jul 13, 2016

New York Princor Investment Representative Fined and Suspended for Unsuitable Annuity Recommendations

Michael Taylor of Buffalo, New York was registered with FINRA as an Investment Company Products and Variable Contracts Limited Representative through Princor Financial Services Corporation (Princor) from 2010 until March 16, 2016. Mr. Taylor submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to identify and submit seven variable annuity purchases as annuity replacements even though each was funded by the sale of another annuity. According to FINRA, from December 2010 through May 2011, Mr. Taylor “circumvented Princor’s compliance procedures by failing to identify and submit seven variable annuity purchases as annuity replacements even though each was funded by the sale of another annuity. In addition, Taylor provided inaccurate information on the annuity transaction documents further concealing that they were replacements.” This alleged conduct would be in violation of NASD Conduct Rule 3110 and FINRA Rule 2010.

Jul 11, 2016

Florida Wells Fargo Representative under Investigation for Converting Client Funds

Jeffrey Krupnick of Sarasota, Florida was named as a respondent in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly converting a client’s funds for his own personal use. FINRA alleged that Mr. Krupnick, between January 2012 and November 2014, while registered with FINRA member firm Wells Fargo Advisors, LLC (Wells Fargo) converted approximately$143,000 from his half-brother, a Wells Fargo customer. FINRA alleged that due to over $50,000 in accumulated credit-card debt, Mr. Krupnick attempted to take advantage of his half-brother in a scheme to cover his losses. The FINRA investigators found that Mr. Krupnick opened several brokerage accounts for his half-brother for which he took control over and took funds from. FINRA alleged that Mr. Krupnick removed over $170,000 from 4 brokerage accounts he had created for his half-brother in October 2013. Furthermore, FINRA found that Mr. Krupnick named himself as the primary account holder on the joint accounts and assumed primary control over them even though he never contributed funds to the accounts and instead used the ill-gained funds to pay credit card bills, home payments, and other luxuries including a wedding in Hawaii.

Jun 8, 2016

Former Wells Fargo Broker Named in FINRA Complaint Alleging Unsuitable Private Securities Recommendations

Dennis Mark Adam Merritt, a registered representative formerly employed with the Palm Harbor, Florida branch of Wells Fargo Advisors, LLC was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he failed to perform adequate due diligence in connection with unsuitable private securities recommendations he made to several of his customers. The complaint alleges that Dennis Merritt, of Palm Harbor, Florida, recommended that four of his customers invest in a speculative investment, namely, a company called SavvyPhone, LLC, without having conducted proper due diligence to have made such recommendations. According to FINRA’s complaint, Mr. Merritt participated in three private securities transactions in which his customers invested a total of $115,000 in SavvyPhone based upon his unsuitable recommendations.

May 18, 2016

Watch Out Investors—FINRA May Not Be Protecting You from Unscrupulous Brokers

Investors often hire a financial advisor to manage their money professionally because they lack the knowledge themselves and trust that their advisor will act in their best interest and uphold the industry rules and regulations set forth by the Financial Industry Regulatory Authority (FINRA), lest they be disciplined or even barred from the financial industry. Unfortunately, as Senator Elizabeth Warren (D-Mass) writes in a letter she and Sen. Tom Cotton (R-Ark) sent to the chairman of FINRA, Richard G. Ketchum, “…FINRA is not doing nearly enough to fulfill its investor protection mission.” A recent study of data from FINRA’s BrokerCheck database, conducted by the National Bureau of Economic Research (NBER), concluded that financial advisor misconduct is “broader than a few heavily publicized scandals” and that “one in thirteen financial advisers have a misconduct-related disclosure on their record” (See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2739170). Financial advisor misconduct disclosures include such things as bribery, forgery, and fraud. The NBER study noted that only about half of the advisors who committed misconduct lost their job and 44% of those obtained a job at a different broker dealer within one year. One of the more disturbing findings of the NBER study is that approximately one-third of all financial advisors with misconduct records are repeat offenders.

May 6, 2016

Wunderlich Securities Broker Fined and Suspended for Unauthorized Discretionary Trades

Merid Amde, a former registered representative with the Birmingham, Michigan office of Wunderlich Securities, Inc. (Wunderlich), submitted an Offer of Settlement 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 in a customer’s account without the necessary prior written customer authorization and made false and exaggerated account valuations. According to FINRA, Merid Amde, of Bloomfield, Michigan, executed approximately 55 discretionary transactions in a customer’s accounts without the customer’s written authorization and without the accounts designated as discretionary by his member firm. Further, FINRA found that Mr. Amde mismarked 36 order tickets as unsolicited when they were actually solicited in order to purchase low-priced equities and various unit investment trusts (UITs).

May 4, 2016

Capitol Securities Management Broker Suspended for Unsuitable Reverse Convertible Note Recommendations

Robert Stein, a registered representative with the Boston, MA branch of Capitol Securities Management, Inc. (Capitol Securities), 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) sanction and findings that he made unsuitable reverse convertible note (RCN) recommendations and purchases in the accounts of eight customers. FINRA found that Robert Gerald Stein, of Sudbury, MA, recommended and effected 24 purchases of RCNs in 8 customer accounts. The customers were primarily over 60 years old and had conservative investment objectives. According to FINRA, Mr. Stein’s recommendations and purchases totaled approximately $4 million in the 8 customers’ accounts. Moreover, all of the accounts were heavily concentrated in RCNs, constituting a substantial portion of their net worth.

May 2, 2016

Alton Securities Group Representative Suspended for Failing to Supervise ETF and Mutual Fund Recommendations

Matthew Maberry, a Registered Principal with the Alton, Illinois branch of Alton Securities Group, Inc. (Alton Securities) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the exchange-traded fund (ETF) and mutual fund recommendations and sales by registered representatives under his supervision. Matthew Dale Maberry, of Bethalto, Illinois, was the Chief Executive Officer and Chief Compliance Officer with Alton Securities and was responsible for the design and implementation of the firm’s supervisory system. FINRA found that Mr. Maberry failed to ensure that this supervisory system was implemented to supervise the sales activity of its registered representatives. Specifically, FINRA stated that the supervisory system was not reasonably designed to ensure that employees made suitable recommendations of complex investment products such as non-traditional ETFs and non-traditional mutual funds.

Apr 29, 2016

Securities America Broker Fined and Suspended for Unsuitable CSMIF Preferred Notes Recommendations and Trades

Stuart Horowitz, a former registered representative with the Coral Springs, Florida branch of Securities America, 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) sanction and findings that he made unsuitable recommendations and trades in CSMIF preferred notes of an unregistered limited partnership investment fund despite numerous red flags that the fund was not a viable investment. FINRA found that Stuart Horowitz requested that his member firm, Securities America, quickly approve the CSMIF preferred notes fund so he could begin selling them. While awaiting a third-party due diligence report, the firm agreed to allow Mr. Horowitz to offer the CSMIF preferred notes for sale to existing fund investors. Mr. Horowitz emailed his customers with an interest in the fund and recommended they move forward with an investment conversion. FINRA noted that recommendations were made despite the fact that Mr. Horowitz was aware of numerous red flags, including that his previous member firm had decided not to allow the sale of the CSMIF preferred notes due to concerns about the fund’s ability to generate income for investors.

Apr 27, 2016

Morgan Stanley Broker Suspended by FINRA for Falsifying Customer Account Documents

Byron A. Echeverria, a General Securities Representative formerly employed with the Houston, Texas branch of Morgan Stanley, 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 customer account documents without the customers’ knowledge. FINRA’s findings state that Byron A. Echeverria, of Katy, Texas, falsified ten documents related to ten customer accounts. Some of the falsified documents included disclosure forms, transfer forms and IRA distribution forms. Mr. Echeverria allegedly re-used original customer signatures from previously executed documents, recycled customers’ signed signature pages from expired forms, affixed customer initials to handwritten changes, and altered tax withholding amounts in order to expedite transactions. None of the customers were aware of the altered forms or that their signatures had been affixed by Mr. Echeverria.

Apr 25, 2016

Wells Fargo Broker Permanently Barred by FINRA for Outside Business Activities

Valentino Infante, a former General Securities Registered Representative with the Miami, Florida office of Wells Fargo Advisors, LLC (Wells Fargo), has been permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public by the Financial Industry Regulatory Authority (FINRA) due to findings that he engaged in outside business activities without providing his member firm with prior written notice and for failing to appear at a FINRA on-the-record interview. According to FINRA, Valentino Infante, of Miami, Florida, established a limited liability company in Florida and, on two occasions, solicited a Wells Fargo customer to provide funding for the business. Mr. Infante neglected to obtain his member firm’s approval to engage in the outside business activities, as required by FINRA Rule 3270.