Library - Law Offices of Robert Wayne Pearce

Wells Fargo Broker Suspended by FINRA for Falsified Forms

Sandra McCabe, a former registered representative employed with Wells Fargo Clearing Services, LLC, (Wells Fargo), 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 falsified documents by photocopying and re-using previously signed customer forms. FINRA’s findings state that on approximately 36 occasions, Sandra Jayne McCabe, of Holbrook, New York, photocopied and reused signed and partially completed customer forms rather than having them execute new forms. The forms included ACH authorization agreements which authorize transfers of funds. FINRA found that Ms. McCabe submitted the forms with non-original signatures and, in two cases, altered information on the forms as well. Although the customers authorized the underlying transactions, they did not authorize her to falsify the forms.

Oct 23, 2017

Trident Partners Fined by FINRA for Failure to Supervise Steepener Sales

Trident Partners Ltd. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales and suitability of steepeners, a complex, structured product. Trident Partners, headquartered in Woodbury, New York, was found by FINRA to have failed to establish, maintain, and enforce a supervisory system to ensure that recommendations for its sale of steepeners were suitable. Steepeners are complex, structured products that are typically longer-term notes and certificates of deposit with maturities spanning from 10-30 years. They are typically callable by the issuers after a short, pre-specified time. They pay higher interest rates, but if the steepener is not called after a year, the rates can drop to as low as zero, earning no returns for the remainder of the term. FINRA found that during the relevant period, steepeners were a significant part of Trident Partners’ business, with approximately 1,600 transactions and accounting for at least 10% of commissions generated.

Oct 20, 2017

Key Investment Services Broker Suspended by FINRA for Altering Variable Annuity Form

Robert Hurley, a formerly registered broker with Key Investment Services LLC, 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 altered a customer’s variable annuity form without the customer’s consent. FINRA’s findings state that Robert Francis Hurley, of Agawam, Massachusetts, altered and initialed the variable annuity distribution form after the client had signed it. According to FINRA, Mr. Hurley changed the payment frequency and modified how payments would be calculated, allegedly placing the customer’s initials next to both alterations. Mr. Hurley’s alterations caused his customer to receive a much larger annuity distribution payment than expected.

Oct 18, 2017

RBC Capital Representative Barred Amid Allegations of Unsuitable Recommendations

Paul Blum, a former registered representative with RBC Capital Markets, LLC (RBC Capital), submitted a Letter of Acceptance, Waiver and Consent in which he was barred by the Financial Industry Regulatory Authority (FINRA) for failing to appear for on-the-record testimony which was requested amid an investigation into customer complaints and arbitration claims alleging unsuitable recommendations and excessive trading. FINRA Rule 8210 requires registered representatives to appear for on-the-record testimony at any time. According to FINRA, Mr. Blum acknowledged that he received FINRA’s request for his testimony in conjunction with the investigation into customer complaints and arbitration claims, but he refused to appear. Mr. Blum’s BrokerCheck report notes that there are nine pending customer disputes and 11 settled disputes involving allegations of, among other things, unsuitable recommendations and excessive trading. Consequently, Paul Vincent Blum, of Jupiter, Florida, was barred from association with any FINRA member in any capacity.

Oct 17, 2017

G.F. Investment Services Representative Suspended for Failing to Supervise Unsuitable ETF Recommendations

Daniel Hushek, a Registered Principal with G.F. Investment Services, LLC, submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the unsuitable exchange traded fund (ETF) recommendations and transactions of a registered representative under his supervision. As a result, the representative’s recommendations and trades caused losses of more than $2.4 million in customers’ accounts. According to FINRA, Daniel Joseph Hushek III, of Bradenton, Florida, failed to adequately supervise or respond to red flags in connection with a registered representative of his member firm who recommended and engaged in unsuitable trading in 44 customer accounts (belonging to 41 customers). FINRA found that from March 2011 through July 2015, the registered representative under Mr. Hushek’s supervision recommended his customers invest almost exclusively in and hold for lengthy time periods non-traditional ETFs, despite the “enormous risks” associated with holding these complex products. FINRA stated that as a result of this employee’s misconduct, customers incurred realized and unrealized losses of over $2.4 million.

Oct 13, 2017

Oppenheimer Broker Suspended by FINRA for Borrowing Money from Customers

Jason Likens, a former registered representative associated with Oppenheimer & Co., Inc. (Oppenheimer), submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he consented to, without admitting or denying, the findings that he borrowed money from his customers and did not begin to repay the loans until repeated requests were made. Jason Hunter Likens, of Asheville, North Carolina, allegedly approached an elderly customer with significant health issues to borrow $5,000 on two separate occasions in a month’s time. The customer provided the loans to Mr. Likens in both instances. Mr. Likens failed to repay the loans on schedule and did not do so until the customer and his family made repeated requests. FINRA found further that Mr. Likens approached another customer to borrow $13,500 and that customer, too, provided the loan. Once again, FINRA found that Mr. Likens failed to repay the loan until the customer made repeated requests.

Oct 11, 2017

Ausdal Financial Broker Suspended by FINRA for Private Securities Transactions

David Gott, a representative formerly employed with Ausdal Financial Partners, Inc. (Ausdal 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 engaged in outside business activities without his firm’s approval. FINRA’s findings state that while employed by Ausdal Financial, David Glenn Gott, of Tipton, Iowa, sold at least $546,000 in private equity and debt investments to four individuals. Ausdal’s policies and procedures regarding private securities transactions prohibited registered representatives from engaging in such transactions. FINRA found that Mr. Gott neglected to provide the necessary written notice to his member firm prior to the private sales. According to FINRA, although Mr. Gott did not personally receive compensation for the sales, his company benefited from them. Mr. Gott was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for six months. The suspension was in effect from July 17, 2017 through January 16, 2018.

Oct 9, 2017

Pruco Securities Broker Suspended by FINRA for Forging Customer’s Signature

Jeffrey Delaney, a broker formerly registered with Pruco Securities, LLC, 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 forged a customer’s signature on life insurance applications without the customer’s knowledge or consent. According to FINRA, Jeffrey Allen Delaney Jr, of Peachtree City, Georgia, forged his customer’s electronic signature on seven forms related to the exchange of an existing life insurance policy for a new one. Mr. Delaney then submitted the forms for processing. FINRA found that Mr. Delaney never had the customer’s knowledge or consent to forge the signature. FINRA also found that Mr. Delaney willfully reported a false address on his Form U4. Mr. Delaney listed his incorrectly as South Carolina, allegedly to avoid Georgia’s insurance licensing requirements.

Oct 6, 2017

Ameritas Broker Fined and Suspended by FINRA for Borrowing Money from Elderly Customer

Thomas Lawrence, a former registered representative associated with Ameritas Investment Corp. (Ameritas), submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he consented to, without admitting or denying, the findings that he borrowed money from a 96 year old customer and has not repaid the loan. Thomas H. Lawrence III, of Chapel Hill, Tennessee, allegedly borrowed more than $39,000 from one of his customers, a 96 year old retiree. The elderly customer allegedly agreed to provide the loan and Mr. Lawrence drafted and signed a promissory note stating the terms of repayment. According to FINRA, Mr. Lawrence did not repay any portion of the loan, nor did he have any discussion with the customer about repaying the loan. Further, FINRA found that Mr. Lawrence hasn’t even spoken to the elderly customer since early 2014. Mr. Lawrence never notified his member firm before obtaining the loan, as it was prohibited except for immediate family members. Due to the afore-mentioned misconduct, Thomas Lawrence was suspended from association with any FINRA member for two years, fined $5,000, and ordered to pay restitution of $41,332.65, plus interest to the affected customer.

Oct 4, 2017

LPL Broker Permanently Barred for Failing to Respond to FINRA Investigation into Alleged Fraud and Unsuitability Claims

Roger Zullo, a former registered representative with LPL Financial LLC, has been barred by the Financial Industry Regulatory Authority (FINRA) for refusing to produce information and documents requested by FINRA in connection with an investigation into allegations of fraud, falsifying client suitability profiles and unsuitable variable annuity sales. FINRA’s investigation arose from a complaint, and subsequent Consent Order, by the Massachusetts Securities Division against Mr. Zullo and LPL Financial. FINRA began an investigation in January 2017 following allegations made in the complaint filed by the Massachusetts Securities Division. That complaint alleged that Mr. Zullo, of Boston, Massachusetts, “fabricated the financial suitability profiles of numerous LPL clients, selling them scores of large, illiquid, unsuitable, high-commission variable annuities, at substantial upfront profits to himself and LPL.” Further, the complaint alleged that Mr. Zullo prematurely switched out his clients’ existing annuities (which were also sold by Mr. Zullo), caused unnecessary surrender charges, and disregarded his clients’ investment profiles at an enormous profit to himself and LPL. The complaint states, “Over the course of three years, Zullo and LPL received more than $1,825,000 in variable annuity commissions alone; of this amount, more than $1,791,000, or 98%, represented commissions from the sale of the same annuity product, the Polaris Platinum III (B Shares) variable annuity.”

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