South Florida Arbitration & Litigation Lawyer Blog
Theft and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
September, 2011:
Larry Richard Gregory (CRD #2308559, Registered Representative, Norfolk, Virginia) 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, Gregory consented to the described sanction and to the entry of findings that he served as vice president and board member of a purported charitable foundation he managed with other non-registered principals, and unbeknownst to his member firm, he effected the transfer of approximately $400,000 from member firm customers (most of whom are now deceased) to the foundation as supposed donations; Gregory transferred nearly $184,000 of that amount to the foundation from the sole known surviving donor customer’s brokerage account. The findings stated that for almost seven years, Gregory, in conjunction with the other non-registered principals, collectively converted for their personal use a total of $79,444.70 from the foundation account they controlled, which was maintained at Gregory’s member firm. The findings also stated that the money generally was used to fund the educations of the principals’ relatives; Gregory personally converted a total of $26,619.45 of that amount for his own personal use. The findings also included that for more than a decade while associated with both the foundation and his member firm, Gregory failed to disclose to his firm his officer and director positions and role in a business activity outside the scope of his relationship with his firm; Gregory did not disclose his association with the foundations until after the firm undertook an internal review of his activities related to the foundation. FINRA found that Gregory assisted an elderly customer in causing a bank to issue him a $40,061.48 check as a gift from the customer, contrary to his firm’s WSPs that required associated persons, including Gregory, to notify the firm of, and receive approval for any non-de minimis gifts received from customers; the procedures also placed an annual $100 cap on customer gifts. FINRA also found that Gregory failed to disclose, and receive written approval for, the $40,061.48 gift, violating his firm’s WSPs. In addition, FINRA determined that as a result of his violations of the firm’s procedures, Gregory impeded his firm’s ability to effectively supervise over subjects of regulatory importance, including, but not limited to, issues relevant to customer protection. (FINRA Case #2011026406001).