Library - Law Offices of Robert Wayne Pearce

Hornor, Townsend & Kent Stockbroker Suspended for Unauthorized Transactions

Clay Gavin Erickson of Ogden, Utah submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly engaging in unauthorized transactions in violation of FINRA Rule 2010. In January 2011, Clay Gavin Erickson joined Hornor, Townsend & Kent as an Investment Company and Variable Contracts Products Representative. While associated with his firm, Clay Erickson effected 494 unauthorized transactions, totaling $5,317,233.32, in his customers’ variable annuity accounts. According to FINRA, Erickson anticipated an imminent market downturn, so he transferred funds held by 57 customers to a money market sub-account in an effort to protect the customers’ account value. The findings stated that Erickson did not obtain authorization from the customers therefore violating FINRA Rule 2010. In addition, Clay Erickson was terminated shortly after his firm received a complaint from one of the customers regarding the transactions.

Feb 5, 2020

Morgan Stanley Stockbroker Suspended for Engaging in Private Transactions

Ken Kavanagh of Hawley, Pennsylvania submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which he was fined and suspended by the Financial Industry Regulatory Authority (FINRA), for allegedly engaging in private transactions and falsely answering compliance questionnaires in violation of NASD Rules 3030 and 2110 and FINRA Rules 3270 and 2010. In April 2006, Ken Kavanagh was registered as a General Securities Representative with Morgan Stanley. According to FINRA, from October 2007 through March 2018 Kavanagh engaged in outside business activities without providing prior written notice to Morgan Stanley. The findings stated that Kavanagh managed the personal affairs of professional athletes, 40 of whom were clients of both Kavanagh and Morgan Stanley. The findings also stated that Kavanagh formed two entities to facilitate his activities and had separate bank accounts for the personal services he provided, generating $5 million. In addition, Kavanagh concealed his relationship with his two entities by naming a relative the sole owner and falsely attested on compliance questionnaires that he was not involved in any outside activities.

Feb 3, 2020

Former NYLife Representative Barred for Unauthorized Transactions

Cristina Sabengsy, a former registered representative with NYLife Securities LLC, submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) and has been barred for allegedly forging signatures in order to facilitate unauthorized transactions, violating FINRA Rule 2010. In February 2016, Cristina Sabengsy registered as an Investment Company and Variable Contracts Products Representative with NYLife Securities LLC. According to FINRA, from April 2016 through October 2017, Sabengsy forged the signatures of two of her insurance customers on fourteen insurance and variable annuity policy documents without permission. The findings stated that neither customers were made aware or consented to the transactions related to purchasing a variable annuity for one customer and converting the other customer’s term life insurance policy to a whole life insurance policy. The findings also stated that Sabengsy forged signatures on at least 10 other documents in order to receive commission. Although these were authorized transactions, the customers did not authorize the signing of their names. On March 7, 2018, the Firm filed a Uniform Termination Notice for Securities Industry Registration (“Form U5”) terminating Sabengsy.

Jan 29, 2020

Former Morgan Stanley and Ameriprise Stockbroker Suspended for Misconduct

Steven Tarasius Yellen of El Paso, Texas submitted a Letter of Acceptance Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly exercising discretion and engaging in unauthorized trading in violation of NASD Rule 2510(b) and FINRA Rules 4511 and 2010. From August 1984 until February 2016, Steven Tarasius Yellen was registered with Morgan Stanley as a General Securities Representative. According to FINRA, during his time with Morgan Stanley, Steven Yellen exercised discretion in a customer’s account without written authorization or acceptance of the account as discretionary and engaged in unauthorized trading. The findings stated that he opened a second account for the same customer without knowledge and transferred $30,000 from the original account to execute two unauthorized transactions. The firm did settle with the customer and filed a Uniform Termination Notice for Securities Industry Registration (“Form U5”) terminating Yellen.

Jan 27, 2020

Wells Fargo Stockbroker Suspended for Engaging in Private Securities Transactions

Robert David Meyers of Kiawah Island, South Carolina submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which Meyers was fined and suspended by the Financial Industry Regulatory Authority (FINRA) , for allegedly engaging in private securities transactions in violation of FINRA Rules 3280 and 2010. In July 2007, Meyers registered with Wells Fargo as a General Securities Representative (GS). According to FINRA, between February 2016 and October 2017, Meyers participated in private securities transactions by soliciting, facilitating and recommending private equity investments. The findings stated that the securities were offered by three private equity funds to 26 Wells Fargo customers who made investments totaling $1.9 million without written notice or consent from his firm. On November 2, 2017, Wells Fargo filed a Uniform Termination Notice for Securities Industry Registration (Form U5) stating that Meyers was discharged due to the recommendations not offered through the firm. Meyers did not receive any compensation from the private equity funds as a result of his participation.

Jan 23, 2020

Maxim Group Stockbroker Suspended for Unauthorized Trading

Murry Meir Shapero of Aventura, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for violating NASD Rule 2510(b) and FINRA Rule 2010. NASD Rule 2510(b) prohibits registered representatives from exercising discretion in a customer’s account unless the customer gives prior written authorization to the registered representative and the registered representative’s member firm provides written acceptance of the account as discretionary.’ FINRA Rule 2010 requires that member firms and registered representatives “observe high standards of commercial honor and just and equitable principles of trade.” A violation of NASD Rule 2510(b) is also a violation of FINRA Rule 2010.

Nov 27, 2019

Raymond James Broker Permanently Barred by FINRA for False Testimony Regarding Unauthorized Trades

Stefan Pastor, a former registered representative with Raymond James Financial Services, Inc. (Raymond James) has been permanently barred by the Financial Industry Regulatory Authority (FINRA) based upon its findings that he gave false information to FINRA during on-the-record (OTR) testimony regarding allegations that he engaged in unauthorized trading. According to FINRA, Stefan Anton Pastor, of Fort Lauderdale, Florida, provided false information in his OTR testimony to FINRA during an investigation into a customer complaint alleging unauthorized trading. Mr. Pastor falsely claimed that the customer had authorized the trades, and to support his claim, he allegedly provided the customer with sale confirmations, which the firm determined were not authentic. FINRA found that the customer never authorized the trades and that Mr. Pastor did, in fact, provide false trade confirmations to try to prove that he had reversed the unauthorized trades.

Nov 25, 2019

Former PHX Financial Broker Named in FINRA Complaint Alleging Excessive Trading

Halil Kozi, a former registered representative with PHX Financial, Inc., was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly engaging in excessive trading, known as churning, in his customer’s account, causing his customer to suffer losses of nearly $72,000. FINRA’s complaint alleges that Halil Kozi, of Middletown, New Jersey, allegedly exercised complete control over the trading in his customer’s account. Mr. Halil engaged in trading of equities and options, of which he is alleged to have known his customer lacked experience and knowledge. The complaint alleges that Mr. Halil used high-pressure sales tactics on his customer, and the customer routinely followed his recommendations. FINRA further alleges that the recommendations were unsuitable for his customer in light of the customer’s moderate risk tolerance and balanced growth investment objective.

Nov 22, 2019

FINRA Suspends Wells Fargo Broker for Private Securities Transactions

David Manor, a currently unregistered representative formerly employed with Wells Fargo Clearing Services, LLC (Wells Fargo), has agreed to an Offer of Settlement by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in which he consented to, but did not admit to or deny, the findings that he engaged in outside business activities without his firm’s approval, made unsuitable recommendations to his customer and caused that customer approximately $224,000 in losses in less than three months. FINRA’s findings state that while employed by Wells Fargo, David Manor, of Brookline, Massachusetts, engaged in unapproved outside business activity in which he assisted a customer, a 75 year old retiree with limited income, in selling mineral rights on a property he owned. In return for his help, the customer paid Mr. Manor $107,000 that Manor then used to open a brokerage account away from his member firm and traded from the account on behalf of his customer. FINRA stated that Mr. Manor effected risky, unsuitable options trades from the account, and caused his customer to lose approximately $224,000 in less than three months.

Sep 30, 2019

The Law Offices of Robert Wayne Pearce, P.A. Wins $6 Million Plus Award Against UBS and UBS Puerto Rico

In an arbitration proceeding against UBS Financial Services, Inc. and UBS Financial Services, Inc. of Puerto Rico, the Law Offices of Robert Wayne Pearce, P.A. won $4.25 million in compensatory damages plus interest at 6.25% from February 28, 2014 and costs of $170,000 for one of the firm’s clients last month. This arbitration arose out of a series of unsuitable recommendations by a UBS-PR and UBS financial advisor that our clients purchase and then hold an excessive concentration of Puerto Rico Bonds and UBS-PR Closed-End Funds. As a result, our clients’ investment portfolios were not diversified from not only an asset allocation standpoint but also overly concentrated in securities from a single geographic area – Puerto Rico. The excessive concentration in Puerto Rico securities and leverage strategy implemented made the accounts highly speculative, which was inconsistent with not only our clients’ investment objectives but also the UBS-PR and UBS financial advisor’s representations. UBS and UBS-PR, through their representatives, disseminated false and misleading information to our clients about the nature, mechanics and risks of owning leveraged and concentrated positions in Puerto Rico Bonds and UBS-PR Closed-End Funds and the investment strategy employed in their accounts.

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