Unauthorized Customer Loans, Unapproved Outside Business Activities and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

November, 2011:

Donald Anthony Duarte Jr. (CRD #2879683, Registered Representative, La Puente, California) was barred from association with any FINRA member in any capacity and ordered to pay $25,000, plus interest, in restitution to a customer. The sanctions were based on findings that Duarte failed to timely respond to FINRA requests for information and testimony. The findings stated that Duarte borrowed $50,000 in the form of a promissory note from a customer to start a business buying up distressed properties, and in order to do this, he needed money to establish a credit line; he has not fully repaid the loan. The findings also stated that when Duarte received the loan, his member firm’s written procedures prohibited employees from accepting or soliciting loans from firm customers. The findings also included that Duarte engaged in an outside business activity without providing his firm with written notice of the activity; Duarte failed to disclose or obtain his firm’s written permission of his outside business activity of purchasing distressed properties. FINRA found that Duarte made misrepresentations to his firm in an annual compliance certification that he had not accepted any loans from customers and was not engaged in any outside business activities when, in fact, he had already obtained a loan from the customer and was engaged in an outside business activity. (FINRA Case #2009018133802).