Blog

Recent Posts

Apr 9, 2025

John Michael Babiarz Fined and Suspended by FINRA for Violating Industry and Firm Rules

The Financial Industry Regulatory Authority (FINRA) has rendered a default decision against John Michael Babiarz, a former broker with Worcester, Massachusetts based Jesup & Lamont Securities Corp., for settling customer complaints without Jesup & Lamont Securities knowledge or approval. FINRA’s findings stated that Mr. Babiarz deceived Jesup & Lamont Securities by concealing the customer complaints, which kept Jesup & Lamont Securities from participating in or approving the settlements. Mr. Babiarz’s actions delayed the regulatory filings requiring the disclosure of complaints and settlements. FINRA also stated that Mr. Babiarz caused solicited trading orders to be miscoded as unsolicited and miscoded order tickets in customer accounts. As a result, the Jesup & Lamont Securities’ trade confirmations sent to customers, generated from the order entry information, falsely identified solicited orders as unsolicited. Due to Mr. Babiarz’s misconduct, the Jesup & Lamont Securities’ books and records, including the orders and trade confirmations, were inaccurate and contained false information. FINRA further stated that Mr. Babiarz exercised discretion in customer accounts without written authorization. The customers gave Mr. Babiarz verbal grants of discretion, but none of them provided Mr. Babiarz with written authorization to exercise discretion, and Jesup & Lamont Securities never accepted the accounts as discretionary. During the time Mr. Babiarz was employed by Jesup & Lamont Securities, it prohibited its registered representatives from exercising discretion in customer accounts. Still, Mr. Babiarz was able to conceal the discretionary nature of his trading from Jesup & Lamont Securities for almost four years. Mr. Babiarz, of Peabody, Massachusetts, was fined a total of $20,000 and suspended from association with any FINRA member in any capacity for a total of 90 business days. The fines are due and payable when and if Mr. Babiarz seeks to re-enter the securities industry, and the suspensions are in effect from February 19, 2013 through June 26, 2013.

Continue Reading

Apr 9, 2025

Arthur Apostol Fined and Suspended by FINRA for Affixing Customer Signatures onto Account Documents

Arthur Apostol, a broker with Charlotte, North Carolina based LPL Financial LLC and East Hartford, Connecticut based First Niagara Securities, submitted a Letter of Acceptance, Waiver and Consent in which Mr. Apostol consented to the Financial Industry Regulatory Authority’s (FINRA) findings that while he was in the process of transferring his customers’ accounts from his former member firm, New Haven, Connecticut based Newalliance Investments, Inc., to LPL Financial, he affixed customers’ signatures onto new account forms by cutting and pasting their signatures from documents they had executed earlier. Mr. Apostol then submitted those forms to LPL Financial. FINRA’s findings stated that the customers had authorized the opening of the accounts, but Mr. Apostol did not have their authorization or consent to affix their signatures to the forms. The findings also stated that on previous occasions, Mr. Apostol asked customers to sign blank forms for future use. Mr. Apostol, of Ashford, Connecticut, was fined $5,000 and suspended from association with any FINRA member in any capacity for three months. The fine must be paid either immediately upon Mr. Apostol’s re-association with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Mr. Apostol’s suspension is in effect from February 19, 2013, through May 18, 2013.

Continue Reading

Apr 9, 2025

Leonard and Company Censured and Fined for Making Unsuitable Recommendations Involving Inverse Floater Collateralized Mortgage Obligations to Clients

Troy, Michigan based Leonard & Company submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $250,000, and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that for more than two years, by and through its brokers, it affected numerous Inverse Floater Collateralized Mortgage Obligation (CMO) transactions to retail customers without having reasonable grounds for believing that the recommendations were suitable. According to FINRA, Leonard & Company provided little, if any, formal training regarding Inverse Floater CMOs to its brokers. Specifically, Leonard & Company’s brief training program did not provide brokers with information about making a suitability determination for each customer and distinguishing between the Inverse Floater CMOs. FINRA’s findings also included that Leonard & Company failed to provide adequate “point-of-sale” information to its brokers to enable them to make informed and appropriate recommendations to their customers and failed to ensure that its brokers understood the unique features and specific risks associated with each Inverse Floater CMO they recommended to their retail customers – neither Leonard & Company nor its brokers conducted an adequate investigation of each individual Inverse Floater CMO to ensure it was suitable for each individual retail customer. As a result, retail customers who lacked sophistication and/or did not have any prior experience investing in Inverse Floater CMOs were exposed to the risk of losing a significant portion of their investment without having a sufficient understanding of the risks they were undertaking.

Continue Reading

Apr 9, 2025

Hartford Investment Financial Services and Hartford Life Distributors Censured and Fined for Distributing Mutual Fund Prospectuses Containing Unwarranted and Misleading Statements

Radnor, Pennsylvania based Hartford Investment Financial Services, LLC and Berwyn, Pennsylvania based Hartford Life Distributors, LLC now known as Forethought Distributors, LLC submitted a Letter of Acceptance, Waiver and Consent in which the firms were censured, fined $100,000 jointly and severally, and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that Hartford Life prepared and distributed numerous copies of a brochure called Staying Ahead of the Curve that discussed features of the Hartford Floating Rate Fund (HFRF) mutual fund, which were unwarranted and misleading in light of changing conditions in the bank loan market. The brochure was provided to selling broker-dealers for use in the marketing and sale of HFRF to their customers. The brochure was approved by Hartford Investment, the Chief Investment Advisor to HFRF.

Continue Reading

Apr 9, 2025

Haley Securities, Inc. Censured and Fined for Prohibited Private Placement and Limited Partnership Sales through Haley Associated Limited Partnership

Omaha, Nebraska based Haley Securities submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $20,000, and consented to the entry of the Financial Industry Regulatory Authority’s findings that it was solely engaged in the sale of private offerings of securities designed to raise equity for an affiliate, Haley Associated Limited Partnership (HALP). While selling the private placements and limited partnerships, HALP relied on the Rule 506 exemption from registration under Regulation D. FINRA stated that the firm sold some interests in HALP’s offerings by soliciting potential investors at the suggestion of existing customers or at meetings convened by third parties.

Continue Reading

Apr 9, 2025

Grand Financial, Inc. Censured and Fined for Prohibited Conduct in Oil and Gas Private Placement Sales

Addison, Texas based Grand Financial, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm was fined $25,000 and consented to the entry of Financial Industry Regulatory Authority (FINRA) findings that it offered for sale oil and gas private placements (PPMs), which were unregistered pursuant to the exemption provided within Rule 506 of Regulation D within a few days of an initial telephone call to potential investors. FINRA stated that this conduct by Grand Financial constituted “general” solicitation in violation of Section 5 of the Securities Act of 1933. FINRA’s findings also included that the firm sent advertising materials that omitted material facts to individuals rather than sending the individuals the PPM memorandum for an offering, which contained full disclosure of the risks involved in the offering. Grand Financial opted to send an executive summary that did not contain full disclosure of the risks associated with the offering.

Continue Reading

Apr 9, 2025

Sammons Securities Company LLC – CIP Leveraged Fund Advisors, LLC – Investor Alert!

Many investors have purchased CIP Leveraged Fund Advisors, LLC (“CLFA”) through an independent broker-dealer, Sammons Securities Company LLC (“Sammons Securities”). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Sammons Securities is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Sammons Securities is headquartered in Ann Arbor, Michigan and reportedly has registered representatives across the United States operating in one or two person offices.

Continue Reading

Apr 9, 2025

Royal Securities Company- CIP Leveraged Fund Advisors, LLC – Investor Alert!

Many investors have purchased CIP Leveraged Fund Advisors, LLC (“CLFA”) through an independent broker-dealer, Royal Securities Company (“Royal Securities”). CLFA was supposed to be a manager of Real Estate Investment Trusts (REITs), but failed miserably. Royal Securities is an independent broker-dealer in the United States who offered and sold CLFA to its best clients. Royal Securities is headquartered in Grandville, Michigan and reportedly has registered representatives across the United States operating in one or two person offices.

Continue Reading

Apr 9, 2025

Theresa I. Reyes Barred from the Securities Industry by FINRA for Converting Customer’s Funds

Theresa I. Reyes, a former registered representative with Chicago, Illinois based Chase Investment Services Corp. (JPMorgan Chase Bank NA), submitted an Offer of Settlement in which she consented to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that she repeatedly used her capacity as a personal banker at JPMorgan Chase Bank to engage in activity in a customer’s business credit card account without the customer’s knowledge or authorization. FINRA said that Ms. Reyes’ unauthorized actions included adding her husband as an authorized user, requesting that a credit card be issued on the account in her husband’s name, and increasing the customer’s credit limit. Ms. Reyes also set up an online credit card account profile for the customer, enrolled the customer in the bank’s online payment service, and made a payment to the credit card account. After JPMorgan Chase Bank removed Ms. Reyes’ husband from the credit card account at the customer’s request, Ms. Reyes arranged for her husband to be added back as an authorized user and also requested that another card be issued in her husband’s name and sent to her branch bank location. FINRA also said that over a period of more than two months, Ms. Reyes and her husband converted approximately $15,277.35 of the customer’s funds by charging several unauthorized personal expenses to the customer’s credit card account. FINRA further included that Ms. Reyes failed to appear for testimony FINRA requested. Ms. Reyes, of San Diego, California, was barred from association with any FINRA member in any capacity.

Continue Reading

Apr 9, 2025

Azim Nakhooda Fined and Suspended for False and Misleading Statements in Connection with Private Placement Offerings

Azim Nakhooda, a former broker with La Vista, Nebraska based Securities America, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he sent emails to Securities America customers in connection with their purchases of units in the IMH Secured Loan Fund (IMH) and Medical Provider Funding Corporation V (Med Cap V) promissory notes that contained false and misleading statements, including material misrepresentations regarding the liquidity and safety of IMH and the safety of Med Cap V notes. FINRA said that Mr. Nakhooda’s statements to customers relating to the IMH’s liquidity directly contradicted the disclosures in IMH’s private placement memorandum (PPM) about the illiquidity of IMH and the significant limitations on redemptions. Mr. Nakhooda’s statements regarding the safety of IMH also directly contradicted the disclosures of significant risks in IMH’s PPM. Mr. Nakhooda, of Chagrin Falls, Ohio, was fined $50,000 and suspended from association with any FINRA member in any capacity for nine months – the suspension is in effect from March 18, 2013 through December 17, 2013.

Continue Reading