Library - Law Offices of Robert Wayne Pearce

Brian Brunhaver Named in FINRA Complaint Alleging a Number of Industry Violations

Brian Harris Brunhaver, a former Snohomish, Washington-based registered principal employed by Boston, Massachusetts-based LPL Financial LLC, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he used an unauthorized email account to communicate with customers and his assistant regarding his securities business. The complaint alleges that LPL Financial issued an adviser alert informing its registered representatives that they would be required to use either a firm-provided email address or an address approved by its compliance officers hosted with a firm-approved email host vendor. However, Mr. Brunhaver allegedly used both his firm-provided email address and a personal email account following the adviser alert for business communications without obtaining his firm’s permission. Mr. Brunhaver also allegedly allowed his assistant to use her personal email account for business communications.

Apr 1, 2014

FINRA Permanently Bars Stockbroker Ariel Hernandez

Until recently, Ariel Luis Fernandez was a registered stockbroker with Liberty Partners Financial Services, LLC (Liberty Partners) and a registered Investment Advisor with Liberty Partners Capital Management, LLC in Pembroke Pines, Florida. Rather than face the music, it appears that Mr. Hernandez entered into an agreement with the Financial Industry Regulatory Authority (FINRA) to be barred from any future registration in the securities industry for noncompliance with an industry rule. The FINRA Rule he agreed that he violated was Rule 8210. It requires that registered persons cooperate with ongoing investigations by producing documents and giving testimony. By agreeing not to cooperate, Mr. Hernandez closed down the investigation and avoided severe sanctions.

Mar 31, 2014

Merrill Lynch Brokers Andres Rojas and Giancarlo Ciocca Barred for Impersonation of Customers

The Financial Industry Regulatory Authority (FINRA) has permanently barred Andres Enrique Rojas (Rojas) and Giancarlo Ciocca (Ciocca), former Merrill Lynch Pierce Fenner and Smith, Inc. (Merrill Lynch) stockbrokers, for impersonation of a customer to obtain online access to the customer’s account to prevent the customer from detecting substantial losses. According to the recent decision of a FINRA Hearing Officer, Mr. Rojas was terminated by Merrill Lynch for “conduct including diverting a client’s account statements.” Mr. Rojas did not answer or otherwise defend the complaint. FINRA previously barred Mr. Ciocca for the same misconduct

Mar 28, 2014

Stuart Siegel Named in FINRA Complaint Alleging Conversion of Funds

Stuart James Siegel, a former Bradenton, Florida-based registered representative employed by Morgan Stanley, was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging conversion of funds. Mr. Siegel was appointed president of a foundation established after the death of one of his customers and opened a brokerage account at his firm to fund its activities. FINRA’s complaint alleges that Mr. Siegel obtained his firm’s permission to serve as president, but firm policies prohibited him from receiving any compensation and from serving as the registered representative for the foundation’s brokerage account. In addition to Mr. Siegel’s duty to review grants, donations, and placing trades, he had access to the foundation’s checking account, could withdraw funds, and had authority to use its debit card. Mr. Siegel allegedly converted more than $76,000 of the foundation’s funds to repay personal loans, pay his children’s school tuition, and pay personal life insurance policy premiums without informing or seeking permission from foundation officers or board members. After Morgan Stanley discovered the alleged conversion, Mr. Siegel reimbursed the foundation for the expenditures.

Mar 27, 2014

FINRA Complains That Reginald Berthiaume Jr. Failed to Disclose Outside Business Activities

Reginald Maurice Berthiaume Jr., a former Orlando, Florida-based registered representative formerly employed by Boston, Massachusetts-based Moors & Cabot, Inc. and later at Ft. Lauderdale, Florida-based Kovack Securities, Inc., was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he failed to timely disclose to each of his member firms his involvement in outside businesses. The complaint alleges that Mr. Berthiaume failed to timely respond to FINRA requests for documents and information concerning known associates of one of the businesses and business-related electronic communications and correspondence relating to two businesses. The complaint also alleges that Mr. Berthiaume made an incomplete response to one request for information and documents by only providing some printed emails and copies of checks. FINRA received additional, but incomplete, production of documents after Mr. Berthiaume received a Wells notice – a letter that a regulator sends to people or firms when it is planning to bring an enforcement action against them. The complaint further alleges that Mr. Berthiaume failed to appear for on-the-record testimony.

Mar 25, 2014

FINRA Accuses Karen Lee Chafe of Altering Variable Annuity Documents

The Financial Industry Regulatory Authority (FINRA) has filed a complaint against Karen Lee Chafe, a Berthel, Fisher & Co. Financial Services, Inc. (Berthel Fisher) representative in its Melbourne Beach, Florida offices of altering at least 61 variable annuity withdrawal forms and IRA distribution/withdrawal request forms for over 14 customers. According to FINRA, Ms. Chafe obscured information, added new information to the forms, and then submitted the forms as new forms being filed for customers at her brokerage firm. The recycled distribution/withdrawal request forms were altered in various ways and were not re-signed by any of the customers. Ms. Chafe allegedly admitted to FINRA staff members her misconduct. FINRA claims the altered forms caused Berthel Fisher and the annuity company to maintain inaccurate books and records. Ms. Chafe has been charged with multiple violations of NASD Conduct Rule 2110 and FINRA Rule 2010.

Mar 24, 2014

Violeta Godoy Barred by FINRA for Misappropriating Customer’s Funds

Violeta Maria Godoy Zuniga, a former Doral, Florida-based registered representative employed by New York, New York-based J.P. Morgan Securities, LLC, 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) findings that she misappropriated $7,000 from a bank customer for personal use. FINRA’s findings stated that after Ms. Godoy assisted a bank customer in opening a new savings account, the customer instructed Ms. Godoy to withdraw $8,000 from an existing account and deposit the funds in the newly opened account. Further, Ms. Godoy deposited $1,000 and kept the remaining $7,000 for personal use. During the customer’s next visit to the bank, Ms. Godoy allegedly approached and informed him that she had taken the funds from his account but would return the funds to him. Ms. Godoy then supposedly asked the customer not to report the misappropriation to management. J.P. Morgan Securities terminated Ms. Godoy after the customer filed a police report, and the customer was reimbursed. Ms. Godoy was barred from association with any FINRA member in any capacity.

Mar 20, 2014

Phillip Gainey Fined and Suspended by FINRA for Selling Away Equity-Indexed Annuities

An annuity is a form of insurance that offers a series of payments for a period of time. The traditional annuities are either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.

Mar 20, 2014

FINRA Suspends Carlo Corzine for Inadequate Due Diligence of Tactical Air Defense Services Stock

Carlo Wayne Corzine, a Boca Raton, Florida-based registered principal formerly employed by Shrewsbury, New Jersey-based Buckman, Buckman & Reid, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he participated in the sale of more than 152 million unregistered shares of Tactical Air Defense Services, Inc. (“TADF”) on behalf of his customers, including the president and CEO of TADF and other accounts he controlled. The findings stated that Mr. Corzine’s customers opened accounts at Buckman, Buckman & Reid through which they deposited and sold large amounts of the stock, then immediately wired the sale proceeds out of the accounts. These sales resulted in proceeds of approximately $570,000 to the customers. FINRA’s findings also stated that Mr. Corzine failed to perform adequate due diligence prior to the stock sales despite various red flags indicating suspicious activities and potential violations of the registration requirements of the Securities Act of 1933. Because the stock was unregistered, it could not be sold absent an applicable exemption from registration. No exemption was available under the circumstances. The findings also included that Mr. Corzine neither adequately investigated the truth of the representations contained in a letter from the company’s president and CEO pertaining to TADF that accompanied many of the company’s deposits, nor did he independently verify certain relevant and material information the customer provided pertaining to the stock.

Mar 19, 2014

Peter Bruno Fined and Suspended by FINRA for Unsuitable and Unauthorized Transactions

NASD Rule 2310 known as the “Suitability Rule” provides that a stockbroker who recommends the purchase or sale of a security to have “reasonable grounds” for believing that the recommendation is suitable for the customer based on the facts disclosed by the customer relating to his investment objectives and financial situation and needs. Apparently, Mr. Bruno recommended an unsuitable closed-end bond fund for a customer who listed his investment objective as “preservation of capital” and his risk tolerance as “conservative.” The customer was retired and needed the monies deposited into his account within the next year and a half. By recommending the investment in a closed-end bond fund which was subject to volatility based on interest rates, the customer was exposed to unnecessary losses if he needed to liquidate the funds at a time when they had declined in value. This recommendation was inconsistent with the customer’s conservative risk tolerance and objective to preserve capital that he needed the next year.

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