Stockbrokers In The News - Law Offices of Robert Wayne Pearce

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.

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.

Feb 19, 2016

Winter Park, Florida Representative Suspended & Fined for Alleged Fraud

Anthony Grey of Winter Park, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly charging excessive mark-ups to his clients and engaging in other fraudulent activity. Mr. Grey entered the securities industry in the early 1980s and later became associated with Gardnyr Michael Capital, Inc. (GMCI) in 1994. During a routine FINRA member conduct examination in 2009, a FINRA examiner discovered a pattern of trades that revealed Mr. Grey artificially inflated prices of bonds for his retail customers. FINRA found that on ten occasions, Mr. Grey charged his customers unfair mark-ups ranging from 5.36% to 19.12%. In seven of the occasions FINRA further alleged that Mr. Grey charged fraudulently excessive mark-ups that he failed to disclose.

Feb 17, 2016

Former UBS Financial Representative Suspended and Fined

Christian Harkness of La Crosse, Wisconsin submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly violating his broker-dealer conduct rules. Mr. Harkness entered the securities industry in 1998 as a General Securities Representative (GSR). Mr. Harkness became associated with UBS Financial Services Inc. (UBS) in 2007 and later in 2009 to Stifel, Nicolaus & Co. (Stifel) as a GSR. FINRA found that Mr. Harkness violated NASD Rule 2370 and FINRA Rules 3240 and 2010 by borrowing money from a firm client on two occasions as well as failing to disclose outside business activities. FINRA alleged that Mr. Harkness did not receive written permission from his broker-dealer to participate in either of the activities and thereby violated FINRA conduct rules.

Feb 8, 2016

Halcyon Cabot Partners Broker Barred by FINRA for False and Misleading Offering Documents

Jason Lee Reid, a former broker at the New York-based Halcyon Cabot Partners, LTD (Halcyon Cabot), submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he created and solicited private securities offering documents which contained materially false and misleading information. FINRA found that Jason Lee Reid, of New York, NY, knew or should have known that the private offering documents he created and used to solicit investors contained false and misleading information and failed to discuss material facts. According to FINRA, the offering documents failed to note the material risks posed by investing in the company and contained false and misleading statements regarding the company’s future business prospects.

Feb 5, 2016

Commonwealth Financial Network Broker Suspended by FINRA for Securities Investment Misrepresentations

James Johnson, a former broker at the Waltham Massachusetts-based Commonwealth Financial Network, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made negligent misrepresentations and omissions regarding a securities investment. FINRA found that James Michael Johnson, of Richmond Virginia, discussed with his member firm customers a purchase of a 10% interest in West Virginia Farm Properties, LLC, a company formed to develop rural land into a residential neighborhood in West Virginia. Mr. Johnson misrepresented to the customers that all development costs had been covered; that the infrastructure for building the homes was already in place; that the houses were ready to be built on the property; and that the customers’ investment would allow the company to begin building homes immediately.

Jan 18, 2016

New York du Pasquier & Co. Representative Suspended for Misrepresenting Material Fact

Conrad Huss of Airmont, New York submitted an Offer of Settlement to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly misrepresenting material facts in the sale of promissory notes. Mr. Huss first became associated with FINRA through a member firm in November 1989. From January 15, 2005 through October 31, 2006, Mr. Huss was a registered representative with du Pasquier & Co., Inc. (DPC). While associated with DPC, FINRA found that Mr. Huss made misrepresentations in the solicitation and sale of $1.4 million worth of promissory notes in a private offering to 14 DPC customers. According to FINRA, the notes were issued by Economic Development Finance Corporation (EDFC), a Massachusetts real estate development company. After the offering (between March 2006 and August 2006) EDFC defaulted under the EDFC Notes and failed to pay DPC’s customers the principal due. This resulted in significant losses for many of the DPC customers.

Jan 15, 2016

Raymond James Representative Barred For Alleged Forgery and Misappropriation

Paul Steffany of Stamford, Connecticut submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly falsifying documents and converting funds for his own personal use. Mr. Steffany entered the securities industry in October 1982. In 2007 Mr. Steffany became associated with FINRA through broker-dealer Raymond James & Associates, Inc. (Raymond James) as a general securities representative (GSR). In May 2014 Mr. Steffany was terminated from Raymond James after violating company policy. While associated with Raymond James, Mr. Steffany served as the trustee of a testamentary trust established by an estate customer. As the trustee, Mr. Steffany was responsible for paying legal bills, signing tax returns and distributing funds to the beneficiaries of the trust. Mr. Steffany estimated that he spent no more than 43 hours annually dealing with trust related matters.