FINRA Announces August 2013 Disciplinary Actions

The Financial Industry Regulatory Authority (FINRA) issues a report on disciplinary and other actions involving registered brokers, investment advisers and brokerage firms every month.

If you have questions about losses in your brokerage account call us at 561 391 1900 to discuss your legal rights or visit our website for more information.

Here are some of the most significant  actions for August  2013. Follow this link to the FINRA website for all of the August  2013 disciplinary actions as well as those for prior periods.

FIRMS FINED

Collins Stewart LLC nka Canaccord Genuity Securities LLC (CRD #24790, New York, New York)  was
censured and fined $20,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it issued research reports on three companies, but failed to disclose in those reports that it earned investment banking compensation from two of those companies, was a manager of the initial public offering (IPO) within the preceding 12 months for all three companies, and was a market maker for two of the companies. (FINRA Case #2011025812401)

Crown Capital Securities, L.P. (CRD #6312, Orange, California)  was censured and fined $15,000.
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to transmit almost all of its ROEs to OATS on
numerous business days. The findings stated that the firm failed to provide documentary evidence that it performed the supervisory reviews set worth in its WSPs concerning OATS.
(FINRA Case #2012032296601)

Edward D. Jones & Co., L.P. dba Edward Jones (CRD #250, St. Louis, Missouri)   was censured and fined $160,000. No restitution payment was provided for in the AWC in light of the fact that the firm previously provided restitution to its customers, which it commenced paying as early as December 31, 2008. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it purchased municipal securities for its own account from customers and/or sold municipal securities for its own account to customers at an aggregate price (including any markdown or markup) that was not fair and reasonable, taking into consideration all relevant facts, including the best judgment of the broker, dealer or municipal securities dealer as to the fair market value of the securities at
the time of the transaction and of any securities exchanged or traded in connection with the transaction, the expense involved in effecting the transaction, the fact that the broker, dealer, or municipal securities dealer is entitled to a profit, and the total dollar amount of the transaction. (FINRA Case #2009018103101)

First Clearing, LLC (CRD #17344, St. Louis, Missouri)   was censured and fined $95,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it had fail-to-deliver positions at a registered clearing agency in equity securities that resulted from sales of securities that the seller was deemed to own pursuant to 17 C.F.R. § 242.200 and intended to deliver once all restrictions had been removed, and did not close the fail-to-deliver positions by purchasing or borrowing securities of like kind and quantity within the time firm prescribed. The findings stated that the firm had fail-to-deliver positions at a registered clearing agency in equity securities that resulted from long sale transactions, and did not close out the fail-to-deliver positions by purchasing or borrowing securities of like kind and quantity within the time frame prescribed. The findings also stated that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning close-out requirements for short sales. (FINRA Case #2009018947901)

First Southwest Company (CRD #316, Dallas, Texas) was censured and fined $27,500. Without admitti
ng or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to report a Large Options Position Report (LOPR) position with the correct effective date, failed to submit reportable positions to the LOPR on numerous days, and failed to accurately report accounts to LOPR under common control or acting in-concert that should have been linked for purposes of in-concert reporting, impacting numerous positions held in those accounts. The findings stated that the firm failed to establish and maintain a supervisory system, including WSPs and a separate system of follow-up and review, reasonably designed to achieve compliance with rules governing the reporting of large options positions, in that the firm failed to conduct reasonable supervisory reviews to ensure the accuracy of its LOPR submissions. The firm also failed to transmit numerous
ROEs to OATS that it was required to transmit to OATS. (FINRA Case #2010022732701)

Getco Execution Services LLC (CRD #145021, Chicago, Illinois)   was censured and fined $12,500. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that for a calendar quarter, it made publicly available a report on its routing of non-directed orders in covered securities during that quarter. The report included incomplete information as to the percentage of total non-directed orders that the firm routed to each of the significant venues identified in the report. (FINRA Case #2012031647101)

Hunter Scott Financial, LLC (CRD #45559, Delray Beach, Florida)  was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it charged its customers a fee for handling, in addition to a commission, on securities transactions. The findings stated that the handling fee was fixed at $50 per transaction and a substantial portion was not attributable to any specific cost or expense incurred by the firm in executing the trade, or determined by any formula applicable to all customers. The handling fee was determined by the firm, not by the individual representative executing the order. Although reflected on customer trade
confirmations as a charge for handling, a substantial portion of the fee actually served as a source of additional transaction-based remuneration or revenue to the firm, in the same manner as a commission, and was not directly related to any specific handling services the firm performed, or handling-related expenses the firm incurred, in processing the transaction. The firm’s characterization of the charge as being for handling was therefore improper. The finding also stated that by designating the charge as a handling fee on customer trade confirmations, the firm understated the amount of the total the firm commissions charged and misstated the purpose of the handling fee. (FINRA Case #2012034690901)

KCCI, Ltd. (CRD #34528, Jersey City, New Jersey)   was censured and fined $13,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it conducted a securities business while net capital deficient, and incorrectly calculated its month-end net capital computations and month-end assets and liabilities. The findings stated that the firm filed a FOCUS report that contained an inaccurate net capital computation. The findings also stated that the firm failed to have adequate WSPs for the preparation and review of its month-end net capital and assets and liabilities computations. The firm failed to clearly memorialize the systems, processes, and supervisory controls utilized to ensure its books and records were accurate and complete. (FINRA Case #2012034326101)

Madison Avenue Securities, Inc. (CRD #23224, San Diego, California)  was censured and fined $12,500. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that its registered representative participated in private securities transactions through the offer and sale of private placement offerings. The findings stated that at the time the representative became registered with the firm, he provided written notification to the firm that he was the owner and manager of an entity, which was engaged in a private offering of securities that he participated in selling, and that he intended to form another entity and commence a related private offering. The representative further informed the firm that he acted as the portfolio manager with respect to funds raised in the offerings and had an opportunity to profit from the portfolio transactions at the conclusion of the investment period. In connection with the private securities transactions, he signed the private placement memorandum and the subscription documents as manager on behalf of each issuer. The offerings raised approximately $10,704,805 from several retail investors, and $3,486,087 from an institutional investor. The findings also stated that the firm acknowledged the
representative’s association with the issuers of the private placement offerings as an outside business activity, but failed to record the transactions on its books and records and failed to supervise his conduct with respect to these private securities transactions. (FINRA Case #2011028857601)

Maxim Group LLC (CRD #120708, New York, New York)   was censured, fined $95,000, required to pay $10,123.33, plus interest, in restitution to investors and revise its WSPs. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to execute orders fully and promptly. In transactions for or with customers, the firm failed to use reasonable diligence to ascertain the best inter-dealer market and buy or sell in such market so that the resultant price to its customers was as favorable as possible under prevailing market conditions. The findings stated that the firm failed, within 90 seconds after execution, to transmit to the FINRA/NASDAQ Trade Reporting Facility (FNTRF) last sale reports of transactions in designated securities, and failed to designate through the FNTRF some of the reports as late. The firm failed to report the correct execution time to the FNTRF in some last sale reports of transactions in designated securities. The findings also included that the firm reported to the FNTRF last sale reports of transactions in designated securities it was not required to report, incorrectly reported principal transactions as agent to the FNTRF, reported some principal transactions as agent to the Over-the-Counter (OTC) Trade Reporting Facility® (OTCRF), and inaccurately reported a few riskless principal transactions as principal to the FNTRF. FINRA found that the firm failed to report to the FNTRF and the OTCRF the correct symbol indicating whether transactions were a buy, sell or cross in short sale transactions. FINRA also found that the firm failed to show the terms and conditions on brokerage order memoranda, failed to show the correct execution time on some broker order memoranda, and failed to document two transactions on its trading ledger.

In addition, FINRA determined that the firm failed to report the correct contra-party’s identifier for transactions in TRACE-eligible securities to TRACE, and failed to report transactions were executed at an average price, and failed to provide written notification disclosing to its customers the correct capacity and correct compensation type in transactions. Moreover, FINRA found that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning trade reporting, short sale reporting, trading during a trading halt, and books and records. Furthermore, FINRA found that the firm sold corporate bonds to customers and failed to sell such bonds at a price that was fair, taking into consideration all relevant circumstances, including market conditions with respect to each bond at the time of the transaction, the expense involved and that the firm was entitled to a profit. For a month, the firm made available a report on the covered orders in national market system (NMS) securities it received for execution from any person which included incorrect information regarding the number of cancelled shares, the average realized spread, the average effective spread, price-improved average time, the number of at-the-quote shares, the at-the-quote average time, the number of outside-the-quote shares, the outside-the-quote average amount and the outside-the-quote average time.

The findings also stated that the firm failed to establish, maintain and enforce written policies and procedures reasonably designed to prevent trade-throughs of protected quotations in NMS stocks that do not fall within any applicable exception, and if relying on an exception, are reasonably designed to assure compliance with the terms of the exception. The firm’s supervisory system did not provide for supervision reasonably design to achieve compliance with Securities and Exchange Commission (SEC) Rule 611(c)
of Regulation NMS; did not include WSPs providing for the specific steps required to comply with the self-help exemption of SEC Rule 611; and did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules addressing minimum requirements for adequate WSPs in short sale reporting, order handling and OATS reporting. (FINRA Case #2009017655401)

Robert W. Baird & Co. Incorporated (CRD #8158, Milwaukee, Wisconsin)   was censured and fined $45,000. The firm has already made restitution to the customers affected in the transactions. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it purchased municipal securities for its own account from customers and/or sold municipal securities for its own account to customers at an aggregate price (including any markdown or markup) that was not fair and reasonable, taking into consideration all relevant factors, including the best judgment of the broker dealer or municipal securities dealer as to the fair market value of the securities at the time of the transaction and of any securities exchanged or traded in connection with the transaction, the expense involved in effecting the transaction, the fact that the broker, dealer, or municipal securities dealer is entitled to a profit, and the total dollar amount of the transactions. (FINRA Case #2010022621201)

Wedbush Securities Inc. (CRD #877, Los Angeles, California)   was censured, fined $72,500 and required to revise its WSPs. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to provide written notification disclosing to its customers its correct capacity in transactions and the reported price. The firm made available reports on the covered orders in NMS securities it received for execution from any person that included incorrect information as to order type and size categories. The findings stated that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and/or FINRA rules addressing adequate WSPs in order handling, trade reporting, sales transactions and other rules (books and records). The findings also stated that the firm failed to provide evidence of supervisory review for trade reporting and other rules (books and records). The findings also included that the firm failed to provide written notification disclosing to its customers its correct capacity in transactions and the correct price and the average price details. FINRA found that the firm failed to properly mark sell orders as short and, as a result, failed to report transactions in reportable securities to the Trade Reporting Facility (TRF®) with a short sale indicator. The firm failed to show the correct order entry time and the correct long/short sale indicators in its proprietary trading
ledger. (FINRA Case #2009017002603)

Wells Fargo Securities, LLC (CRD #126292, Charlotte, North Carolina) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $20,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to report transactions in reportable securities to the FNTRF as short. (FINRA Case #2010021604501)

Individuals Barred or Suspended

Manny Aizen aka Manuel Aizen (CRD #1676247, Registered Principal, Dallas, Texas), Edward Michael Milkie (CRD #871257, Registered Principal, Dallas, Texas) and Daniel Edward Levin (CRD #707280, Registered Representative, Dallas, Texas) submitted Offers of Settlement in which they were each fined $30,000. Aizen and Milkie were each suspended from association with any FINRA member in any principal capacity for six months. Levin was suspended from association with any FINRA member in any capacity for five months.

The fines must be paid either immediately upon their reassociation with a FINRA member firm following their suspensions, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the allegations, Aizen, Milkie and Levin consented to the described sanctions and to the entry of findings that Levin made unwarranted and misleading statements and claims concerning investment products on radio shows, and made unbalanced statements on their member firm’s website regarding life settlements. The findings stated that Levin discussed private placement securities offerings and promoted them as attractive alternative investments to his listeners during his radio shows. These offerings were unregistered securities offered pursuant to the exemptions offered by Rule 506 of Regulation D, and could not be sold through general solicitations and still maintain their exempt status. Levin’s statements about the offerings constituted solicitations, and others he made during his radio show were designed to procure orders for the offerings. Although the statements did not name the investments specifically, they were part of an overall scheme designed to awaken an interest in the offerings and were the first step in a campaign to sell these securities.

Levin’s statements were not made to customers with whom his firm (or the issuer) had a pre-existing and substantive relationship, but rather broadcast indiscriminately to the general public. After making the statements on the radio show, Levin sold the offerings to customers. Because the securities had lost their exemption from registration under Regulation D as a result of the general solicitation, the sales were impermissible sales of unregistered securities, in contravention of the Securities Act of 1933.

The findings also stated that Aizen was the firm’s principal responsible for the supervision of Levin and another individual associated with the firm, for approval of their use of radio shows to promote firm products, as well as for their use of a firm website. The findings also included that Aizen approved the publication and contents of the website on life settlements in a certain year. Aizen was the principal primarily responsible for reviewing the contents of the radio shows, but did not regularly review the shows, even after FINRA raised concerns regarding the contents. Aizen’s review and supervision of the radio shows and the website was inadequate to prevent both the violative advertising made on the shows, as well as the general solicitation to the public that resulted in the firm’s sale of unregistered securities. FINRA found that Milkie failed to adequately supervise the sale of private placements because he failed to conduct adequate due diligence and respond to “red flags” on an issuer’s private placements that their firm offered to customers. FINRA also found that Milkie, as the firm’s president, was responsible for conducting due diligence on the firm’s behalf, and had supervisory authority over due diligence on the issuer’s offerings, and was responsible for the overall supervision of the firm. The firm, acting through Milkie, failed to conduct an adequate investigation as a basis for its recommendation that customers purchase the offerings, did not adequately verify the issuer’s representations in the offering documents, and did not review other relevant documents of the issuer. Milkie failed to review third-party due diligence reports that were available for the issuer’s offerings.

The reports raised numerous concerns and red flags for the offerings. In addition, FINRA determined that the firm engaged in both private placement offerings (Regulation D offerings) and contingent offerings when its WSPs in place did not address the suitability of recommendations for investments in private placements and the sale of contingency offerings. Milkie, as the firm’s president, was responsible for the firm’s overall supervision. Aizen’s suspension is in effect from June 17, 2013, through December 16, 2013. Milkie’s suspension is in effect from June 17, 2013, through December 16, 2013. Levin’s suspension is in effect from June 17, 2013, through November 16, 2013.

FINRA records indicate that Aizen is currently employed by Berthel, Fisher & Company Financial Services. Milkie and Levin were previously registered with Berthel Fisher & Company until 09/2012 and neither is  currently registered.

(FINRA Case #2009016271801)

Richard Allen Barnett (CRD #2347495, Registered Representative, Grand Blanc, Michigan- currently not registered, formerly registered with Professional Asset Mangement) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $15,000 and suspended from association with any FINRA member in any capacity for one year and three months. The fine must be paid either immediately upon Barnett’s reassociation 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. Without admitting or denying the findings, Barnett consented to the described sanctions and to the entry of findings that he participated in private securities transactions through the sale of approximately $712,000 in membership interests in limited liability companies, to members of the public, some of whom were his firm’s securities customers. The findings stated that Barnett failed to give the firm written notice of his intention to engage in the sales of membership interests in the entities, and failed to receive the firm’s written approval, prior to engaging in these private securities transactions, for compensation.

The findings also stated that Barnett completed and signed a firm audit questionnaire, and failed to disclose his sales of membership interests in the entities and failed to disclose on the audit questionnaire that he was acting as an operating manager of some of these entities. The findings also included that Barnett was required to be registered as a general securities representative (Series 7) in order to participate in the sales of the membership interests in the entities; however, he was only registered as an investment
company/variable contracts products representative (Series 6) at the time. FINRA found that it received a written complaint from an individual who, based upon Barnett’s recommendation, had invested $30,000 in one of his entities. Through her complaint, the individual was requesting a refund of her investment. Barnett and the individual entered into a purchase agreement, wherein Barnett purchased her membership interests in the entity for $30,000. Barnett then had her execute a release agreement that contained an
improper confidentiality provision that obligated her not to file any complaints relating to her purchase of the membership interest with FINRA, the SEC and other institutions. She declined to cooperate with FINRA’s investigation after the execution of the release
agreement.

The suspension is in effect from June 17, 2013, through September 16, 2014. (FINRA Case #2009019241101)

Joseph Fon Beagnyam (CRD #1262605, Registered Representative, Dickinson, Texas-currently registered with International Assets Advisory, LLC) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 10 business days. Without admitting or denying the findings, Beagnyam consented to the described sanctions and to the entry of findings that he executed discretionary transactions in the brokerage accounts of member firm customers without their prior written authorization and without the firm’s acceptance of the accounts as discretionary. The findings stated that the firm did not receive complaints from these customers. The customers provided oral consent to Beagnyam to place orders to buy and sell securities in their accounts, but had not given him written authorization to exercise discretion. The findings also stated that Beagnyam did not hold his firm’s Strategic Portfolio Services (SPS) Advisor designation and was therefore not permitted by the firm to exercise discretion in customer accounts. The findings also included that Beagnyam completed firm compliance attestations in which he acknowledged, among other things, his awareness of the firm’s policies and procedures, which included policies addressing discretionary trading.

The suspension was in effect from July 1, 2013, through July 15, 2013. (FINRA Case #2011027995301)

Milton Joseph Beile III (CRD #4265262, Registered Representative, Chesterfield, Missouri-currently registered with Oakbridge Financial Services, until 05/2013 registered with Merrill Lynch) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 30 business days.

FINRA considered Beile’s efforts to obtain reimbursement on the customer’s behalf in determining the sanctions. Without admitting or denying the findings, Beile consented to the described sanctions and to the entry of findings that he participated in a private
securities transaction through the sale of a $100,000 promissory note to a customer of his member firm. The findings stated that the investment opportunity was not offered through Beile’s firm. Beile met with the customer and obtained a $100,000 check written against her firm account for the purchase of the promissory note issued by a real estate development entity. Beile forwarded the customer’s check directly to the entity and also negotiated additional terms to the promissory note that the customer had purchased. The findings also stated that Beile failed to give written notice of his intention to participate in the private securities transaction to his firm, and failed to receive the firm’s written approval, prior to engaging in the transaction. Thereafter, the customer decided that she wanted to obtain a reimbursement of her $100,000 investment. Beile’s efforts to obtain reimbursement on the customer’s behalf resulted in the customer being paid $120,000 by the entity.

The suspension is in effect from July 15, 2013, through August 23, 2013. (FINRA Case #2011028156401)

Martin Firestone Bowers (CRD #1018570, Registered Supervisor, Berwyn, Pennsylvania-currently registered with Janney Montgomery Scott) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for five business days.

Without admitting or denying the findings, Bowers consented to the described sanctions and to the entry of findings that he exercised discretion in customers’ accounts without obtaining each customer’s written authorization and his member firm’s acceptance of the accounts as discretionary.

The suspension was in effect from July 1, 2013, through July 8, 2013. (FINRA Case #2011030316201)
Christian Joel Brand (CRD #2434521, Registered Representative, Highwood, Illinois-currently registered with Merrimac Corporate Securities, Inc. ) submitted an Offer of Settlement in which he was suspended from association with any FINRA member in any capacity for four months. In light of Brand’s financial status, no monetary sanctions were imposed. Without admitting or denying the allegations, Brand consented to the described sanction and to the entry of findings that he approached an elderly customer who was suffering from dementia about investing in a development
project. The customer, who was Brand’s grandmother, issued checks totaling $510,000 for the project, payable to entities for which Brand was the majority owner and principal. Brand assisted the customer to prepare some of the checks. Other relatives and a friend also invested in the project. The findings stated that Brand prepared offering documents that evidenced the elderly customer’s investments in the project. The findings also stated that the initial loan for the project was not funded and failed. The customer did not receive any of her investment funds back, nor has she earned any interest from her investment.

The findings also included that Brand failed to notify his member firm about the proposed transactions and his role in the transactions. Brand’s participation was not within the course or scope of his employment with his firm.

The suspension is in effect from July 1, 2013, through October 31, 2013. (FINRA Case #2009020906701)

Anthony David Brentin (CRD #5550765, Registered Principal, Longview, Washington-not currently registered, formerly with PFS Investments, Inc. ) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Brentin consented to the described sanction and to the entry of findings that Brentin falsely led an individual to believe that she was giving him $5,000 as a contribution to support his city council campaign and to cover expenses such as the cost of campaign
signs. At the time, there was a pending court judgment finding Brentin and his wife liable for approximately $4,800 in unpaid rent and utilities for their former residence that they owed to their landlord. Brentin used the $5,000 that the individual had given him to satisfy the judgment and paid his back rent and utility bills. In obtaining $5,000 from the individual, Brentin took advantage of the individual, who was susceptible to being manipulated based on her age and medical condition. The findings stated that Brentin was
charged with felony theft in his state based on his obtaining $5,000 from the individual by deceiving and taking advantage of the individual, who was deemed a vulnerable person under state law. Brentin was convicted of that charge after a jury trial and sentenced to six months incarceration. (FINRA Case #2012031369201)

Elmer Wayne Bullis (CRD #1718482, Registered Representative, Richmond, Virginia-registered with Next Financial until 09/2012-not currently registered) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $15,000 and suspended from association with any FINRA member in any capacity for three months. The fine must be paid either immediately upon Bullis’ reassociation 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. Without admitting or denying the findings, Bullis consented to the described sanctions and to the entry of findings that he recommended that his customers, a husband and wife, combine their existing annuities into new deferred variable annuities. The findings stated that the customers met with Bullis to complete the applications for these transactions and sign several documents; some of the documents completed and signed that day were incomplete or inaccurate.

The findings also stated that Bullis provided the customers with documents that purported to contain an overview of the transactions and that contained analyses and explanations
for the different transfers and benefits, and costs of the new annuities. These documents also contained incomplete and inaccurate information, were confusing and misleading, and did not disclose the name of the member firm. The findings also included that one of the customers emailed Bullis and made several complaints, including that transaction information was creative accounting, that Bullis had churned the customers’ accounts, that certain annuities had never been discussed as part of the consolidation, and that the transactions had resulted in losses to the customers of $156,000. The customer closed the email asking Bullis how they would be compensated for these losses and instructing him not to initiate or perform any new action with their funds unless they specifically instructed him to do so. FINRA found that Bullis failed to report this complaint to his firm and willfully failed to update his Uniform Application for Securities Industry Registration or Transfer (Form U4) within 30 days of its receipt.

The suspension is in effect from July 1, 2013, through September 30, 2013. (FINRA Case #2011028898803)

Joseph Anthony Carpenter Jr. (CRD #4998111, Registered Representative, Palm Harbor,Florida-currently unregistered, last registered with Wells Fargo Advisors, LLC) submitted a Letter of Acceptance, Waiver and Consent in which he was barred fromassociation with any FINRA member in any capacity. Without admitting or denying thefindings, Carpenter consented to the described sanction and to the entry of findings thata customer gave Carpenter $5,000 to open and fund a Roth Individual Retirement Account (IRA) at his member firm. The findings stated that Carpenter opened the account but failedto fund it. Carpenter improperly kept the funds, converting some for his own purposes,until after the customer complained.

The findings also stated that Carpenter reimbursedhis member firm, which earlier reimbursed the customer. (FINRA Case #2011029984102)

Richard Walter Chocko (CRD #2807414, Registered Representative, West Islip, New York-currently unregistered, last registered with Rockwell Global Capital, LLC, prior to that International Assets Advisory, LLC and J.P. Turner & Company, LLC) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 15 business days. The fine must be paid either immediately upon Chocko’s reassociation 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. Without admitting or denying the findings, Chocko consented to the described sanctions and to the entry of findings that he used discretion in a customer’s account, without obtaining the customer’s written authorization; and his firm did not approve the account as a discretionary account since it does not allow discretionary accounts. The findings stated that Chocko
recommended that the customer purchase the common stock of a corporation. The customer authorized the stock’s purchase, but indicated that Chocko should make the decision when to place the order. Chocko purchased shares of the stock in the customer’s account for a total amount of $95,894.99, and then sold the shares for $84,235.09, generating a loss of $11,659.90. The commission charged to the customer for the purchase and sale of the shares position was $2,100 in aggregate. The findings also stated that Chocko used discretion in the customer’s account, in that he did not purchase the shares position on the same day that he received the customer’s authorization.

The suspension was in effect from July 1, 2013, through July 22, 2013. (FINRA Case #2011028193201)

Giancarlo Ciocca (CRD #4252148, Registered Representative, Coral Gables, Florida-currently not registered, previously registered with Interbolsa Securities, LLC and prior to that Merrill Lynch) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Ciocca consented to the described sanction and to the entry of findings that he impersonated one of his customers at his member firm during a telephone call with a firm call center employee. The findings stated that Ciocca did so in order to obtain online access to the customer’s account. The customer was not on the call; instead Ciocca, impersonating the customer, was on the call with his sales assistant. After Ciocca obtained online access to the account, he used that access to change account preferences so his firm would no longer send hard-copy statements to the customer and to change the email address associated with the account to one Ciocca controlled. The findings also stated that the customer had sustained market losses in his account and Ciocca undertook these activities to prevent the customer from learning of those losses. Ciocca created and sent the customer inaccurate account performance reports, which listed transactions that had not occurred and did not reflect the actual losses that had been incurred in the account. Ciocca misrepresented to his firm that he was in compliance with firm policies prohibiting the creation of performance reports. The customer complained to Ciocca, who then attempted to settle the customer’s complaint. This firm did not authorize the settlement offer, which was made without the firm’s knowledge. The findings also included that Ciocca failed to respond to a request for information and documents. FINRA also issued a request to Ciocca for an on-the-record interview. After being warned that a failure to appear would be a violation of FINRA Rule 8210, Ciocca’s counsel informed FINRA that Ciocca would not appear for the interview as requested or at any other time.
(FINRA Case #2011027886902)

Sean Collins (CRD #5470363, Registered Representative, Wayne, Pennsylvania-not currently registered, previously with State Farm VP Management Corp.) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for six months. In light of Collins’ financial status, no monetary sanction has been imposed. Without admitting or denying the findings, Collins consented to the described sanction and to the entry of findings that he willfully failed to timely amend his Form U4 to disclose a felony charge, plea and conviction.

The findings stated that Collins filed Form U4 amendments in which he improperly answered “no” to the question that asked him whether he had ever been charged with a felony. That answer was not accurate at the time of those filings. The findings also stated that Collins knew or should have known of his obligation to keep his Form U4 accurate in that, among other things, he completed annual compliance certifications for his member firm in which he acknowledged to the firm his obligation to keep his Form U4 current and accurate with respect to criminal activity.

The suspension is in effect from July 1, 2013, through December 31, 2013.
(FINRA Case #2011029338301)

Charles Eugene Crotts (CRD #5354524, Registered Representative, Lexington, North Carolina-not currently registered, previously with Royal Alliance Associates, Inc. and prior to that American Portfolios Financial Services, Inc.) submitted a Letter of Acceptance, Waiver and Consent in which he was barredfrom association with any FINRA member in any capacity. Without admitting or denying
the findings, Crotts consented to the described sanction and to the entry of findings that he failed to appear and provide on-the-record testimony, as FINRA requested. The findings stated that the request was regarding allegations that Crotts improperly borrowed money from a customer of his member firm, made unsuitable investment recommendations to a customer, and engaged in undisclosed outside business activities.

The findings also stated that Crotts borrowed $30,000 from a firm customer without providing notice to, or receiving permission from, his firm to borrow from the customer. (FINRA Case #2012032962301)

LinnaJo Dombroski (CRD #5395894, Registered Representative, Chula Vista, California-not currently registered with FINRA, previoiusly with Princor Financial Services Corporation) submitted an Offer of Settlement in which she was suspended from association with any FINRA member in any capacity for seven months. Without admitting or denying the allegations, Dombroski consented to the described sanction and to the entry of findings that she failed to timely respond to FINRA requests for information and documents relating to her alleged outside business activities away from her prior member firm, and failed to timely respond to a FINRA-issued complaint.

The suspension is in effect from June 17, 2013, through January 16, 2014. (FINRA Case #2009019874403)

Neil McCarthy Egleston (CRD #2921577, Registered Representative, Port Washington, New York-currently registered with Northeast Securities, Inc. ) submitted an Offer of Settlement
in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 30 business days. Without admitting or denying the allegations, Egleston consented to the described sanctions and to the entry of findings that he failed to provide prompt written notice to his member firm of his participation in outside business activities. The findings stated that Egleston purchased securities issued by the outside business activities, invested in the companies and reported income and losses on his tax returns. The findings also stated that Egleston made false statements in annual firm compliance questionnaires, representing that he would receive the firm’s approval prior to engaging in any outside business activity or prior to making any material changes in the practice of his outside business activity, and that he was not engaged in any outside business activities that had not been reported to, and authorized in writing by, the firm’s compliance department.

The suspension was in effect from July 1, 2013, through August 12, 2013. (FINRA Case #2009019335901)

Peter Timothy Frawley (CRD #4827671, Registered Representative, Royal Oak, Michigan-currently registered with Corecap Investments, Inc., prior to that with Leonard & Company) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $2,500 and suspended from association with any FINRA member in any capacity for 10 business days.

Without admitting or denying the findings, Frawley consented to the described sanctions and to the entry of findings that he executed several transactions in customers’ accounts without prior written authorization of these customers and without his member firm’s written acceptance of the accounts as discretionary, contrary to the firm’s policies and procedures.

The suspension was in effect from July 1, 2013, through July 15, 2013. (FINRA Case #2011026737501)

Darrell Glynn Frazier (CRD #1663429, Registered Representative, Dublin, Ohio-not currently registered, formerly with MML Investors Services, LLC, prior to that Park Avenue Securities, LLC. ) submitteda Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Frazier consented to the described sanction and to the entry of findings that he made false representations in connection with the sale of variable annuities. The findings stated that as a result of this conduct, Frazier willfully violated Section 10(b) of the Securities Exchange Act of 1934, FINRA Rules 2010 and 2020, and NASD Rules 2110 and 2120. Frazier told customers that they would earn a return of 7 percent or more by purchasing variable annuity products and that the principal amount they invested through the variable annuity would be guaranteed against loss. Frazier assured one customer that he would not be charged annual fees on his variable annuities, and advised another customer that he, Frazier, would only make money from the annuity purchase if the customer made money.

All of these representations and assurances were false. The findings also stated that some of the customers separately contacted Frazier to question why a particular annuity was not performing as expected. The customers questioned why they were not seeing the guaranteed 7 percent return reflected in account documents, and why the values of their annuities appeared to be decreasing. Frazier assured them that they were receiving the 7 percent return and that their principal was safe. The findings also included that Frazier separately told customers that the 7 percent return had not yet been added to their annuity but soon would be, that an annuity was making money but that the 7 percent return would only be reflected on annual, not quarterly, statements, that for various reasons, he had not been able to obtain documents reflecting the 7 percent return; and in response to why the value of his annuity seemed to be declining, Frazier promised to look into the matter, but never did.

FINRA found that Frazier made unsuitable allocation recommendations to his variable annuity customers. The customers had not completed college and had little investment
experience. All were at or near retirement age, were of moderate means and expressed concerns about losing their principal. Nevertheless, at various times during the terms of their variable annuity contracts, Frazier recommended that the customers allocate most or all of their annuity assets to a single investment portfolio, and often the portfolio he recommended involved high-risk investments. Frazier’s recommendations to over concentrate assets in high-risk investments were unsuitable for customers who were at or near retirement, had only moderate means, and were concerned about preservation of principal. FINRA also found that Frazier recommended that customers take out home mortgages from their paid-off homes and invest the proceeds into variable annuities.

Some customers followed this advice. Frazier convinced customers to use profits from their annuities to purchase duplicative or excessive insurance policies, and arranged for systematic withdrawals from the variable annuities to pay the insurance premiums.

The withdrawals to pay the insurance premiums resulted in several customers incurring additional tax liability and surrender charges. Frazier also recommended that a customer, whose variable annuity was beyond the surrender period and was no longer subject to deferred sales charges, sell the annuity and invest the proceeds in a new variable annuity, exposing her to a new period of deferred sales charges. These strategies produced additional compensation for Frazier but were unsuitable for the customers. In addition, FINRA determined that Frazier often completed or partially completed forms that the customers were required to fill out when applying for a variable annuity contract. Several of the forms Frazier completed were inaccurate. Frazier overstated the net worth and income of customers and inaccurately characterized their risk tolerances. Frazier regularly had customers sign undated, blank brokerage forms. Such signed, but otherwise blank forms were located among his files, along with correspondence specifically instructing customers to sign but not date blank forms. (FINRA Case #2010023442901)

Roger Allan Fuller (CRD #1722316, Registered Representative, McGregor, Texas-not currently registered, formerly with Chase Investment Services, Corp. ) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Fuller consented to the described sanction and to the entry of findings that he forged customers’ names and/or initials on forms, which required the customers’ authorization and submitted the forms to his member firm. The findings stated that during Fuller’s entire tenure with his firm, he failed to notify the firm that he had existing ownership interests in securities accounts at an executing member firm. The findings also stated that Fuller failed to respond to FINRA requests for information concerning, among other things, the forgery allegations and the security accounts held at the executing firm. (FINRA Case #2012031369801)

Michael Anthony Gigante (CRD #1808104, Registered Representative, Staten Island, NewYork-not currently registered, formerly with MML Investors Services, LLC and Metlife Securities, Inc.) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $15,000 and suspended from association with any FINRA member in any capacity for 60 days.

Without admitting or denying the findings, Gigante consented to the described sanctions and to the entry of findings that he engaged in an undisclosed business activity by referring member firm customers to a mortgage broker associated with an entity that offered mortgage brokerage services and investment opportunities. The findings stated that Gigante’s firm’s written policies and procedures prohibited registered representatives from in any new or previously undisclosed outside business activity with or without compensation, until the firm had formally approved the activity.

Gigante did not receive any monetary compensation from referring customers to the mortgage broker. Gigante made the referrals hoping that the mortgage broker would reciprocate by referring clients to Gigante at his firm. Gigante did not report to his firm that he was referring potential investors to the mortgage broker, nor did he seek the firm’s permission to make these referrals.

The findings also stated that on firm compliance questionnaires, for two years, Gigante failed to disclose that he was referring customers to the mortgage broker and represented that he was not engaging in any outside business activities. Unbeknownst to Gigante, the mortgage broker’s operation was a Ponzi scheme that eventually unraveled, causing the participants to lose all of their investments without seeing any return. The findings also included that after the firm conducted an internal investigation, it became aware of Gigante’s unapproved outside business activity and terminated his employment.

The suspension is in effect from July 1, 2013, through August 29, 2013. (FINRA Case #2011028873001)

Audra Anne Gilbert (CRD #5629528, Registered Representative, Hewitt, Texas-not currently registered-formerly with Raymond James Financial Services, Inc.) submitted a Letter of Acceptance, Waiver and Consent in which she was suspended from association with any FINRA member in any capacity for four months. In light of Gilbert’s financial status, no monetary sanction has been imposed. Without admitting or denying the findings, Gilbert consented to the described sanction and to the entry of findings that she
engaged in check-kiting practices. The findings stated that Gilbert wrote checks totaling approximately $1,500 from her member firm account while having insufficient funds in that account. Gilbert then deposited the checks into her checking account at a different institution, thus drawing on insufficient funds. The findings also stated that Gilbert was charged approximately $243 in fees in her firm account for having non-sufficient funds. These fees were then charged off onto the blotter of Gilbert’s supervisor, and Gilbert never paid them.

The suspension is in effect from June 17, 2013, through October 16, 2013. (FINRA Case #2012032984401)

Robert Gist (CRD #716088, Registered Representative, Atlanta, Georgia-not currently registered with FINRA, previously registered with Resource Horizons Group, LLC) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Gist consented to the described sanction and to the entry of findings that he misappropriated several million dollars from his customers. The findings stated that in order to carry out the scheme, Gist misrepresented to these customers that he would invest their money in securities positions. Instead, Gist invested the customers’ funds in a company he cofounded. In furtherance of the scheme, Gist created and sent account statements with wholly fictitious securities positions to his customers every six months. The findings also stated that Gist perpetuated the scheme by selling units of the company he owned, or used other investors’ funds, in order to make periodic payments to his customers. By virtue of his conduct, Gist willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, FINRA Rules 2010, 2020 and 2150(a), and NASD Rules 2110, 2120 and 3110(a). (FINRA Case #2013036772901)

Steven Bruce Grunwerg (CRD #2670062, Registered Representative, East Windsor, New Jersey-not currently registered, formerly with Wells Fargo Advisors, LLC) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Grunwerg consented to the described sanction and to the entry of findings that he executed a promissory note with a member firm customer, in the amount of $30,000.

The findings stated that the note acknowledged a pre-existing debt of $80,000 and further stated that $50,000 had already been repaid. After Grunwerg’s firm learned of the promissory note, it permitted him to resign. On the same day, Grunwerg told a customer of his firm’s bank affiliate that over the past three months, he had removed $65,000 from her safe deposit box without authorization and for his own personal use. (FINRA Case #2012032630801)

Diego Fernando Hernandez (CRD #3054186, Registered Representative, Lonetree, Colorado-not currently registered, formerly with AXA Advisors) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Hernandez consented to the described sanction and to the entry of findings that he failed to timely and completely respond to numerous FINRA requests for information and documents in connection with its investigation into the possibility that, among other things, Hernandez may have misappropriated funds from customers of his member firm.

The findings stated that Hernandez engaged in outside business activities but did not disclose to his firm, or receive the firm’s prior approval, to engage in such activities. (FINRA
Case #2013035802001)

Jared Clayton Jenkins (CRD #5818549, Registered Representative, Apple Valley, Minnesota-not currently registered, until 07/2013, Jenkins was registered with Ameriprise Financial Services, Inc. ) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $2,500 and suspended from association with any FINRA member in any capacity for 10 business days.

Without admitting or denying the findings, Jenkins consented to the described sanctions and to the entry of findings that he exercised discretionary trading authority in some customers’ accounts, without the customer’s prior written authorization. The findings stated that Jenkins accepted instructions from third parties for the accounts of some customers without obtaining written authorization from the customers or written approval from his member firm to accept third-party orders for the accounts.

The suspension was in effect from July 15, 2013, through July 26, 2013. (FINRA Case #2011029509401)

Anthony Mediate III (CRD #2449614, Registered Representative, Red Bank, New Jersey-Registered with National Securities Corporation, until 11/2012, Mediate worked for Newbridge Securities Corporation) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for 60 days. In light of Mediate’s financial status, no monetary sanctions have been imposed. Without admitting or denying the findings, Mediate consented to the described sanction and to the entry of findings that he engaged in excessive trading and exercised discretion without written authorization in his handling of a customer account. The findings stated that during the 15 months that the customer maintained the IRA account with Mediate at his member firms, the customer incurred a net out-of-pocket loss of approximately $55,000. The customer paid a total of $37,464.45 in commissions. The turnover ratio for the account was 5.35 and the commission-to-equity ratio was 30 percent. This level of activity was inconsistent with the
customer’s stated objectives and financial situation. The findings also stated that Mediate failed to timely disclose an unsatisfied judgment on his Form U4 until two days after he was confronted with the judgment at a FINRA on-the-record interview.

The suspension is in effect from July 15, 2013, through September 12, 2013. (FINRA Case #2009018517201)

Craig Robert Morrison (CRD #4490109, Registered Representative, Gainesville, Florida-not currently registered, CFD Investments, Inc. 11/2012-12/2012, ING Financial Partners, Inc. 12/2010, ING Financial Advisors 03/1006-12/2010) submitted a Letter of Acceptance, Waiver and Consent in which he 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 Morrison’s reassociation 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. Without admitting or denying the findings, Morrison consented to the described sanctions and to the entry of findings that he falsified customers’ documents by recycling the customers’ signatures from previously signed documents and pasting their signatures onto new asset allocation change/ fund transfer forms, beneficiary designation forms and a Roth 403(b) salary reduction agreement. The findings stated that Morrison pasted the signatures without authorization, for transactions the customers otherwise had approved.

The suspension is in effect from July 1, 2013, through September 30, 2013. (FINRA Case #2012034371401)

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

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