Stockbrokers In The News - Law Offices of Robert Wayne Pearce

Dec 9, 2015

WFG Investments Broker Named in FINRA Complaint About Fraudulent Private Placement Offering

Stuart G. Dickinson, a former registered representative with the Highland Park, Texas branch of WFG Investments, Inc. was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he failed to perform adequate due diligence in connection with a private placement securities offering that turned out to be a fraudulent investment. The complaint alleges that Mr. Dickinson, of Highland Park, Texas sold limited partnership interests in ATMA, LP (ATMA), a private placement securities offering involving the acquisition and operation of automated teller machines (ATMs) to seven customers of WFG Investments for $1,024,000. According to FINRA’s complaint, Mr. Dickinson failed to conduct adequate due diligence with respect to the securities investment, because the underlying business scheme of the offering was a fraud and most of the ATMs were fictional. FINRA’s complaint alleges that had Mr. Dickinson conducted proper due diligence of the offering, he would have found numerous red flags, such as stale and overstated performance history. As a result of the foregoing alleged events, Mr. Dickinson’s seven customers suffered a total loss of more than a million dollars.

Dec 7, 2015

Vandham Securities Broker Barred by FINRA for Fraudulent Bond Trading Scheme

Matthew P. Schulman, a former broker employed with the Woodcliff Lake, New Jersey branch of Vandham Securities Corporation (Vandham), has been barred by the Financial Industry Regulatory Authority (FINRA) based on findings that he engaged in a fraudulent bond trading scheme in which he effected bond trades between his personal brokerage account and his firm’s proprietary trading account at prices that significantly favored him, resulting in illicit profits of approximately $30,000. Matthew Schulman, of Edgewater, New Jersey, was a bond trader for Vandham and had a duty to act for the firm’s benefit. However, FINRA found that Mr. Schulman effected approximately 23 bond transactions between his personal brokerage account and the firm’s proprietary account in which he caused the firm to sell bonds to his personal account and then, promptly thereafter, had the firm repurchase the same bonds at a higher price. For example, FINRA found that in some instances Mr. Schulman paid approximately 50% less to purchase a bond from the firm’s proprietary account, and in some instances Mr. Schulman charged the firm 500% or more to buy a bond from his personal account.

Dec 3, 2015

Ameriprise Financial Broker Suspended for Failing to Supervise Private Securities Transactions

John Joseph Kilinofsky Jr., a broker with the Plano, Texas branch of Ameriprise Financial Services, Inc. (Ameriprise), 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 failed to reasonably supervise a registered representative’s outside business activities. According to FINRA, John Kolinofsky, the branch manager and supervisory principal of the Plano, Texas Ameriprise office, failed to supervise a broker’s participation in private securities transactions and outside business activities in compliance with his firm’s written supervisory policies and procedures. FINRA found that a registered representative, whom Mr. Kolinofsky had a duty to supervise, was allegedly involved in the sale of nearly $1.72 million of preferred shares issued by the biopharmaceutical company BioChemics Inc. FINRA further found that Mr. Kolinofsky knew that the registered representative was engaging in outside business activity with BioChemics and approved the disclosure forms which failed to note the unauthorized securities activity as required by FINRA Rule 2010. Moreover, FINRA found that Mr. Kolinofsky personally invested $10,000 in BioChemics without giving the required written notice to Ameriprise.

Dec 1, 2015

Cabot Lodge Securities Registered Principal Suspended for Failure to Supervise

Paul Reid Richardson, of Temple Terrace, Florida, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in which he was suspended for 60 days for failing to supervise wire-transfer activity in customer accounts. Paul Richardson, a former registered principal with the Tampa, Florida branch of Cabot Lodge Securities LLC (Cabot), consented to, without admitting or denying, the sanctions and FINRA’s findings that he approved third-party wire transfers totaling nearly $89,000 from two customer accounts, which were later found to have been made by an imposter. By authorizing the wire-transfers, Mr. Richardson allegedly failed to properly review the distribution requests for funds. According to FINRA, Mr. Richardson relied on the representations of a firm broker as opposed to verbally confirming the wire instructions with the customers.

Nov 23, 2015

Royal Securities Broker Barred by FINRA for Unsuitable ETF Recommendations

Allen Michael Green, a former registered representative with the Ypsilanti, Michigan branch of Royal Securities Company (Royal Securities) 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 made unsuitable non-traditional exchange traded funds (ETF) recommendations to a disabled customer who had limited financial resources, causing the customer massive investment losses. According to FINRA, Allen Green believed that the world economy was on the brink of collapsing and recommended almost exclusively to invest in securities with precious metals, natural resources, commodities, and energy. Mr. Green allegedly recommended that his customer liquidate her existing variable annuity, which included a surrender charge of $59,583. As a result of following Mr. Green’s unsuitable recommendations, his client lost at least $193,165 which does not include the variable annuity surrender charge.

Nov 18, 2015

Merrill Lynch Broker Permanently Barred by FINRA for Unauthorized Trades and Unsuitable Recommendations

Thomas Joseph Buck, a former registered representative with the Carmel, Indiana branch of Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch), 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 made unsuitable account recommendations and exercised discretion in clients’ accounts. Thomas Buck, of Carmel, Indiana, allegedly conducted business under the designation “The Buck Group” with more than 3,000 accounts and $1.3 billion under management. According to FINRA, Mr. Buck neglected to adequately assess the suitability of the fee structure for certain clients – using commission-based accounts when it would have been less expensive for the clients to maintain fee-based accounts. FINRA found that in some instances, Mr. Buck’s clients paid substantially more in commissions than they would have if they were in fee-based accounts. Further, Mr. Buck allegedly misled clients about the potential advantages of fee-based accounts so that the clients remained in the higher-cost commission-based accounts. Mr. Buck also made unauthorized trades in certain customer accounts, allegedly neglecting to get the customers or Merrill Lynch’s prior written authorization as required by FINRA Rule 2010. Consequently, Mr. Buck was permanently barred from association with any FINRA member in any capacity.

Nov 13, 2015

LPL Financial Representative Suspended for Unauthorized Securities Transactions

Walter Rae Chao, a former broker with the San Mateo, California branch of LPL Financial, LLC (LPL Financial), 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 participated in private securities transactions totaling $1.27 million without the required approval from LPL Financial. FINRA found that Walter Chao, of Redwood City, California, introduced at least 13 clients to purchase interest in special purpose vehicles (SPV), which were created by another firm, in order to purchase pre-initial public offering (IPO) shares of Facebook, Inc. Nine of the 13 clients invested a total of $1.27 million in the Facebook SPVs. FINRA stated that although Mr. Chao did not receive direct compensation from the other firm for the transactions, approximately $8,000 in fees associated with Mr. Chao’s mother’s purchase of the Facebook SPV were waived.

Nov 11, 2015

J.P. Turner Broker Named in FINRA Complaint For Fraudulent and Unsuitable Mutual Fund Switching

Leonard Allen Goldberg, of Rancho Mirage California, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he caused over $123,600 in losses to five customers while making over $77,900 for himself and his employing firms, J.P. Turner & Company, LLP and Newport Coast Securities, Inc. According to FINRA’s complaint, Mr. Goldberg allegedly used discretion without the required written authorization to effect 300 mutual fund and exchange traded fund (ETF) transactions to the detriment of his customers. Additionally, the complaint alleges that Mr. Goldberg used that discretion to effect fraudulent and unsuitable short-term switches of Class A mutual funds in the same 5 customers’ accounts in order to generate commissions for himself. These mutual fund switches and short-term trading resulted in repeated fees and charges to his customers.

Nov 6, 2015

Fox Financial Representative Barred Amid Allegations of Unsuitable Life Settlement Recommendation

James Edward Rooney Jr., a former registered representative with Carrollton, Texas-based Fox Financial Management Corp. (Fox Financial) 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) sanctions in which he was permanently barred for refusing to provide documents and information requested in connection with an investigation regarding the suitability of his life settlement recommendation to a customer. FINRA’s investigation arose from a customer complaint regarding a life settlement investment recommendation. According to FINRA, Mr. Rooney allegedly made the life settlement recommendation without conducting the proper due diligence and expecting to receive a commission. The findings also state that Mr. Rooney allegedly misrepresented the investment and provided the customer with misleading sales materials which were oversimplified and incomplete.

Nov 4, 2015

Cambridge Investment Representative Barred Amid Allegations of Converting Client Funds

Glenn Allen Moffitt, a former registered representative with the Henderson Nevada branch of Cambridge Investment Research, Inc. (Cambridge) 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) sanctions and findings that he failed to appear for on-the-record testimony which was requested amid allegations that he converted approximately $370,000 from an elderly customer. FINRA Rule 8210 requires registered representatives to appear as requested for on-the-record testimony at any time. According to FINRA, Mr. Moffitt acknowledged that he received FINRA’s request for his testimony in conjunction with the conversion allegations investigation, but Mr. Moffitt refused to appear. Consequently, Glenn Moffitt, of Henderson Nevada, was barred from association with any FINRA member in any capacity.