South Florida Arbitration & Litigation Lawyer Blog
Boca Raton, Florida Securities Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
In addition to providing information relative to the results of certain publically available enforcement awards, we have recently added a new feature to our site, which we are incorporating herein. We are now providing iFINRA generated nformation relative to FINRA complaints issued in the months reference below. Please keep in mind that the issuance of a disciplinary complaint represents FINRA’s initiation of a formal proceeding in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint. Because these complaints are unadjudicated, you may wish to contact the respondents before drawing any conclusions regarding the allegations in the complaint. However, if you feel that you have suffered damage as a result of this same activity, immediately call the law office of Russell L. Forkey for your free initial consultation.
Complaint Filed By FINRA in Janurary of 2011
Raymond Thomas Blunk (CRD #2011245, Registered Representative, Carmel, Indiana) was named as a respondent in a FINRA complaint alleging that he recommended that customers participate in a Stock to Cash program under which customers pledged stock to obtain loans to purchase other products; Blunk’s customers obtained loans totaling approximately $1.7 million. The complaint alleges that the pledged stock would be transferred to the loaning entity’s securities account maintained at a clearing firm; which were typically a short period of time, were for up to 90 percent of the value of the stock with no payments required during the term of the loan; however, customers were required to pay the full principal and interest due at the end of the loan term. The complaint also alleges that documentation the loaning entity used made it appear it was retaining the securities pledged and might use them to enter into hedging transactions, but in reality, the customers conveyed full ownership to the entity, which routinely sold the securities upon receipt and moved the money into its own bank account. The complaint further alleges that the entity became unable to make complete payments to customers with profitable portfolios and used the proceeds from the sale of securities new customers pledged to pay off its obligations to existing customers, and money was also diverted to pay for expenses not related to its operation. In addition, the complaint alleges that Blunk failed to find out what happened to stock conveyed to the lender and assumed the lender was a broker/dealer holding the stock for his customers in custodial accounts. Moreover, the complaint alleges that when Blunk tried to find out more information, intermediaries refused to provide more information but Blunk still entrusted his clients’ securities to the lender. Furthermore, the complaint alleges that as a result of this failure to conduct due diligence, Blunk violated the requirement of having a reasonable basis for recommending the Stock to Cash program to customers and potential customers. (FINRA Case #2007008935009)