FINRA Enforcement Actions 2015 - Russell L. Forkey

James D. Belenis – Unapproved Private Securities and Outside Business Activity – Boca Raton, Florida FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Sat, 28 Nov 2015 20:26:20 GMT

James D. Belenis – Unapproved Private Securities and Outside Business Activity – Boca Raton, Florida FINRA Arbitration and Litigation Attorney:

The Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory authority assigned the responsibility, by the Securities and Exchange Commission, to license, regulate and discipline securities broker/dealers and their employees, including account executives. In the event that FINRA elects to institute an enforcement action, firms and licensed individuals have the responsibility to reflect such action on their U-4 and/or U-5 filings, which can be viewed on the FINRA website under the broker-check section of the site or by viewing the monthly disciplinary information also provided on the FINRA site.

The monthly disciplinary information is referenced on the FINRA site generally in alphabetical order. This post relates to the following company or individuals. If the reader would like to review the entire FINRA release or the broker-check information concerning this matter, you can follow these highlighted links:

November 2015 Disciplinary and Other FINRA Actions:

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck//

James D. Belenis (CRD #2441443, Davis, California) submitted an AWC in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 20 business days. Without admitting or denying the findings, Belenis consented to the sanctions and to the entry of findings that he engaged in a private securities transaction by investing in a limited liability company that held a gold mining operation, without prior written notice to his member firm. The findings stated that Belenis assisted in raising capital for the limited liability company, yet inaccurately answered “no” on a firm questionnaire asking whether he had assisted in raising capital. The suspension was in effect from October 5, 2015, through October 30, 2015. (FINRA Case #2013036196701)

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With extensive courtroom, arbitration and mediation experience and an in-depth understanding of elder abuse, exploitation and securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.

At the Boca Raton Law Office of Russell L. Forkey, we represent clients throughout South and Central Florida, including Fort Lauderdale, West Palm Beach, Boca Raton, Sunrise, Plantation, Coral Springs, Deerfield Beach, Pompano Beach, Delray, Boynton Beach, Hollywood, Lake Worth, Royal Palm Beach, Manalapan, Jupiter, Gulf Stream, Wellington, Fort Pierce, Stuart, Palm City, Jupiter, Miami, Orlando, Maitland, Winter Park, Altamonte Springs, Lake Mary, Heathrow, Melbourne, Palm Bay, Cocoa Beach, Vero Beach, Daytona Beach, Deland, New Smyrna Beach, Ormand Beach, Broward County, Palm Beach County, Dade County, Orange County, Seminole County, Martin County, Brevard County, Indian River County, Volusia County and Monroe County, Florida. The law office of Russell L. Forkey also represents South American, Canadian and other foreign residents that do business with U.S. financial institutions, investment advisors, brokerage and precious metal firms.

Unlawful Reimbursement of Customer Losses – Boca Raton, Florida FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Sat, 28 Nov 2015 20:11:24 GMT

Unlawful Reimbursement of Customer Losses – Boca Raton, Florida FINRA Arbitration and Litigation Attorney:

November 2015 Disciplinary and Other FINRA Actions:

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck//

Rushton Leigh Ardrey III (CRD #1598393, Newbury, Massachusetts) submitted an AWC in which he was suspended from association with any FINRA member in any capacity for 10 business days. In light of Ardrey’s financial status, no monetary sanction has been imposed. Without admitting or denying the findings, Ardrey consented to the sanction and to the entry of findings that without his member firm’s prior written authorization, he caused a wire of $33,000 to be sent from his personal bank account to that of a customer in order to reimburse the customer for losses sustained in her account.

The suspension was in effect from September 21, 2015, through October 2, 2015.(FINRA Case #2013039039501).

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Exchange-Traded Notes (ETN), Leveraged and Inverseleveraged ETFs – Unsuitable Investment Recommendations, FINRA Arbitration Attorney

Russell L. Forkey — Mon, 24 Aug 2015 00:01:40 GMT

Exchange-Traded Notes (ETN), Leveraged and Inverseleveraged ETFs – Unsuitable Investment Recommendations, FINRA Arbitration Attorney:

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck//

Jeffrey David Daggett (CRD #843023, Temecula, California) submitted an AWC in which he was assessed a deferred fine of $20,000 and suspended from association with any FINRA member in any capacity for four months. Without admitting or denying the findings, Daggett consented to the sanctions and to the entry of findings that he recommended unsuitable transactions in an exchange-traded note (ETN), and leveraged and inverseleveraged ETFs (non-traditional ETFs) in the accounts of his customer. The findings stated that Daggett recommended the ETN and non-traditional ETFs without having reasonable grounds for believing that the securities were suitable for the customer in view of the customer’s financial situation, investment objectives and needs. The customer’s realized and unrealized losses from investing in the ETN and non-traditional leveraged ETFs were approximately $88,099.75. The suspension is in effect from July 6, 2015, through November 5, 2015. (FINRA Case#2012035383801).

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Ronald Seth Cohen – Unapproved Outside Business Activity Fort Lauderdale, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 23:42:43 GMT

Ronald Seth Cohen – Unapproved Outside Business Activity Fort Lauderdale, Florida FINRA Arbitration Attorney:

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Ronald Seth Cohen (CRD #2419431, Boca Raton, Florida) submitted an AWC in which he was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in any capacity for four months. Without admitting or denying the findings, Cohen consented to the sanctions and to the entry of findings that he engaged in three outside business activities without providing prior written notice to his member firm. The findings stated that Cohen actively managed three businesses and received approximately $466,200 in compensation from the businesses’ owner, a firm customer. The findings also stated that Cohen made misrepresentations to his firm regarding his participation in the outside business activities by falsely stating that he disclosed all outside business activities on two annual compliance questionnaires. These representations were false, as Cohen had not disclosed his participation in the three outside business activities.

The suspension is in effect from July 6, 2015, through November 5, 2015. (FINRA Case #2014042790701).

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John Cherry III – Conversion of Client Funds, Fraud and Misrepresentation Boca Raton, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 23:26:26 GMT

John Cherry III – Conversion of Client Funds, Fraud and Misrepresentation Boca Raton, Florida FINRA Arbitration Attorney:

August 2015 Disciplinary and Other FINRA Actions:

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

John Cherry III (CRD #1891720, New York, New York) was barred from association with any FINRA member in any capacity and ordered to pay $138,235.38 in restitution and $300,000 in disgorgement, along with prejudgment interest on both amounts. The NAC imposed these sanctions following an appeal of an OHO decision. Cherry appealed this matter to the SEC but later withdrew his application. The sanctions are based on findings that Cherry converted $474,000 in customers’ funds to purchase a house without the customers’ knowledge or authorization. At Cherry’s direction, the customers transferred their funds to a company Cherry owned and controlled for the purpose of investing in securities. Rather than investing the funds in securities as the customers had directed, Cherry used the funds to purchase the house in which he and his wife were living. To review the release, please follow the above link.

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Mark Andrew Bullivant – Conversion of Client Funds, Boca Raton, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 23:13:08 GMT

Mark Andrew Bullivant – Conversion of Client Funds, Boca Raton, Florida FINRA Arbitration Attorney:

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck//

Mark Andrew Bullivant (CRD #4444874, Fort Myers, Florida) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Bullivant consented to the sanction and to the entry of findings that he refused to appear for FINRA-requested on-the-record testimony involving an investigation into whether he had converted customer funds. (FINRA Case #2013039617201).

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Leveraged – Inverse Mutual Funds – Risk vs. Rewards – Boca Raton, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 22:56:55 GMT

Leveraged – Inverse Mutual Funds – Risk vs. Rewards – Boca Raton, Florida FINRA Arbitration Attorney:

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/ /

Gregory Howard Bray (CRD #2673259, St. Louis, Missouri) submitted an AWC in which he was fined $7,500 and suspended from association with any FINRA member in any principal capacity for six weeks. Without admitting or denying the findings, Bray consented to the sanctions and to the entry of findings that he failed to adequately supervise a registered principal, who was the member firm’s CEO and CCO, in connection with the principal’s sales of certain complex products and recommendations of Class A mutual fund shares. The findings stated that Bray failed to ensure that the principal understood the complex products he sold to customers. Bray himself was not familiar with the risks associated with some of the complex products and did not have any basis for concluding that the principal understood them or that the principal’s recommendations were suitable. Bray’s supervision also was inadequate with respect to the principal’s unsuitable recommendations of Class A shares of leveraged/inverse mutual funds, and he failed to detect the principal’s short-term trading of the Class A shares.

The suspension was in effect from July 6, 2015, through August 16, 2015. (FINRA Case #2013035045901).

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Garyn Ian Angel – Boca Raton, Florida FINRA Prohibited Private Securities Transaction

Russell L. Forkey — Sun, 23 Aug 2015 22:33:26 GMT

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Garyn Ian Angel (CRD #3172630, Port Richey, Florida) submitted an AWC in which he was assessed a deferred fine of $7,500 and suspended from association with any FINRA member in any capacity for four months. Without admitting or denying the findings, Angel consented to the sanctions and to the entry of findings that he participated in two private securities transactions without providing prior written notice to his member firms. The findings stated that Angel settled a customer’s complaint regarding a customer’s investment without notifying his present or his former firms.

The suspension is in effect from June 15, 2015, through October 14, 2015. (FINRA Case #2014040036901).

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Tribal Capital Markets, LLC. a/k/a Blue Capital Securities, Inc. – CMO Risk Disclosure – Boca Raton, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 22:18:29 GMT

August 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Tribal Capital Markets, LLC aka Blue Capital Securities, Inc. (CRD #38901, New York, New York) submitted an AWC in which the firm was censured and fined $50,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that in connection with selling collateralized mortgage obligations (CMOs), it provided marketing materials for a proposed CMO transaction to customers that failed to adequately disclose and present a balanced discussion of certain risks involved in the transaction. The findings stated that the firm failed to provide required CMO educational materials prior to its sales of CMOs to retail customers. The findings also stated that the firm violated books and records rules in connection with its mortgage-backed securities (MBS) and CMO business, in that its order memoranda transactions were incomplete or contained inaccuracies. Order tickets failed to identify the registered representative who entered the order, contained inaccurate order execution times, and were marked as unsolicited when that was not the case. The findings also included that the firm violated FINRA’s TRACE rules in connection with its MBS and CMO business. The firm failed to report transactions, failed to report transactions within 15 minutes of the execution time, and failed to accurately report times of order receipt, order entry and order execution for transactions in TRACE-eligible securitized products to TRACE. To review the complete release, please follow the above link.

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Boca Raton, Florida – Elder Financial Abuse FINRA Arbitration and Litigation Attorney

Russell L. Forkey — Sun, 23 Aug 2015 14:42:37 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Daryl Richard Lemon (CRD #2473133, Los Angeles, California) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Lemon consented to the sanction and to the entry of findings that he executed 1,236 transactions in an elderly customer’s discount brokerage account maintained at another broker-dealer without providing prior written notice, or any notice at all, to his member firm. The findings stated that Lemon periodically charged the customer amounts that he characterized as “advisory fees.” (FINRA Case #2013036632201).

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Unauthorized Trading and Unauthorized Discretion Boca Raton, Florida, FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 14:19:17 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Philip Taylor Lang (CRD #3006186, Jackson, Mississippi) submitted an AWC in which he was assessed a deferred fine of $20,000 and suspended from association with any FINRA member in any capacity for nine months. Without admitting or denying the findings, Lang consented to the sanctions and to the entry of findings that he executed discretionary trades in five accounts belonging to his family member without obtaining the family member’s prior written authorization and without having his member firm’s acceptance of the accounts as discretionary accounts. The findings stated that Lang failed to complete or submit any discretionary account disclosure forms for his family member’s accounts, as required by his firm’s WSPs. Lang completed and submitted annual employee certification forms with inaccurate answers regarding whether he handled any customer accounts on a discretionary basis that had not been previously reported to the firm. The findings also stated that Lang made unsuitable investment recommendations in four of the accounts. Unbeknownst to his family member, Lang changed the investment objective for each account and began speculative trading in the accounts on a discretionary basis. Lang’s speculative trading activity was inconsistent with the family member’s investment objectives, financial situation and needs. Lang, by misstating the investment objectives, caused his firm to maintain inaccurate books and records.

The suspension is in effect from January 5, 2015, through October 4, 2015. (FINRA Case#2012033887601).

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South Florida Selling Away FINRA Arbitration and Securities Litigation Attorney

Russell L. Forkey — Sun, 23 Aug 2015 14:05:03 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Chris Fulco (CRD #4093586, Staten Island, New York) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Fulco consented to the sanction and to the entry of findings that he participated, either directly or indirectly, in the sales of a non-public company’s shares away from his member firms without providing written notice to or receiving approval from his firms. The findings stated that Fulco concealed his involvement in the transactions, from one of his firms, by lying on the firm’s compliance questionnaire. The findings also stated that Fulco misrepresented his involvement in the transactions during his FINRA testimony. Fulco falsely testified that wire transfers he received were not payments relating to the transactions and that he did not use his personal email account to communicate with the company. The findings also included that Fulco encouraged another individual not to appear for his scheduled on-the-record interview with FINRA or, if he did, to provide false testimony. FINRA found that Fulco willfully failed to timely disclose a federal tax lien and civil judgment on his Form U4. (FINRA Case #2011030015301).

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Unauthorized and/or Prohibited Loan Activity Between Client and Brokerage Firm Account Executive – Boca Raton, Florida FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 13:35:31 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Gloria Gonzalez Andrus (CRD #1178786, Austin, Texas) submitted an AWC in which she was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for two months. Without admitting or denying the findings, Andrus consented to the sanctions and to the entry of findings that without prior notice to or approval from her member firm, she borrowed $390,000 from a brokerage customer to purchase a condominium. The findings stated that Andrus issued a promissory note to the customer promising to repay the loan within a specific period of time. Andrus has repaid $300,000 to the customer. The findings also stated that Andrus falsely certified on an annual compliance questionnaire that she had not received any loans from her brokerage customers.

The suspension was in effect from January 5, 2015, through March 4, 2015. (FINRA Case #2013037263701).

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WFG Investments, Inc. – Fort Lauderdale, Florida Unsuitable, Unauthorized Discretion and Outside Business Activity FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 13:16:12 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

WFG Investments, Inc. (CRD #22704, Dallas, Texas) submitted an AWC in which the firm was censured and fined $700,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to conduct appropriate due diligence and supervision with respect to a private placement offering that a registered representative sold away from the firm as an approved private securities transaction. All of the private placement investors, who were also firm customers, lost 100 percent of their investments resulting from a related entity’s fraudulent business practices. The firm failed to detect and follow up on red flags that the related entity was engaged in fraudulentbusiness practices. (FINRA Case #2013035346501). To review the entire release, please follow the above link.

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Popular Securities, Inc. n/k/a Popular Securities, LLC – Boca Raton, Florida Puerto Rico Bond and Closed-End-Fund Over Concentration and Unsuitability FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 12:55:22 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Popular Securities, Inc. nka Popular Securities, LLC (CRD #8096, San Juan, Puerto Rico) submitted an AWC in which the firm was censured and fined $125,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish, maintain, and enforce a supervisory system and procedures reasonably designed to identify and review concentrated securities purchases, including PR municipal bonds and PR closed-end funds. The findings stated that when the PR general obligation bond rating was downgraded, the firm’s customers continued purchasing concentrated positions of PR securities. The firm’s WSPs did not outline the steps that the firm should have taken to review its customers’ securities purchases for concentration, and apart from a procedure that required quarterly reviews of “elderly” customer accounts for concentration of one product in the client’s account, the firm did not establish, maintain, or enforce any systems or procedures that required supervisors to review for concentrated purchases (i.e., concentration in a single security, substantially similar securities, or securities of a single geographic region), including PR securities, or document their reviews.(FINRA Case #2013035309401).

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Oriental Financial Services Corp. – South Florida Unsuitable Puerto Rico Bond Investment FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 01:20:44 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Oriental Financial Services Corp. (CRD #29753, San Juan, Puerto Rico)submitted an AWC in which the firm was censured, fined $245,000 and undertakes to submit to FINRA a proposed methodology of how it will identify, review and remediate unsuitably concentrated Puerto Rico (PR) securities purchases. At a minimum, the methodology must include the firm’s review of customers’ concentrated PR securities purchases effected between December 14, 2012, and June 30, 2013, and a provision explaining how restitution, if any, will be calculated. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that the firm reported to FINRA on Form 4530 that it had not disclosed on customer confirmations the markups and markdowns for riskless principal transactions in PR closed-end funds (PR CEFs).

The findings stated that between 2000 and August 5, 2013, the firm effected approximately 2,800 riskless principal transactions involving PR closed-end funds (CEFs) in approximately 1,000 accounts and failed to disclose approximately $2.9 million in markups and markdowns on customer trade confirmations. The findings also stated that the firm failed to establish and maintain a supervisory system reasonably designed to achieve compliance with Securities Exchange Act of 1934 Rule 10b-10. The firm’s staff did not appropriately classify PR CEFs as equity securities and its supervisory staff were therefore unaware that the disclosure requirement for riskless principal transactions in equity securities applied to PR CEFs throughout the 13-year time period. The firm failed to have a system in place to ensure that it disclosed markups and markdowns on riskless principal transactions in PR CEFs because it failed to appropriately classify those products as equities that required disclosures. The findings also included that the firm failed to establish, maintain, and enforce a supervisory system and procedures reasonably designed to identify and review concentrated securities purchases, including PR municipal bonds and PR CEFs. The firm’s registered representatives continued soliciting concentrated purchases of PR securities even after a municipal bond rating downgrade of the general obligation rating of the Commonwealth of Puerto Rico. While the firm’s WSPs required that its registered representatives have reasonable grounds to believe that any purchase or sale recommendation was suitable for a particular customer, the WSPs did not outline the steps that the firm should have taken to review the transactions for concentration. Despite having implemented guidelines, the firm did not require that supervisors review for concentrated purchases (i.e., concentration in a single security, substantially similar securities, or securities of a single geographic region), including PR securities, or document their reviews. The firm engaged a consultant to perform a self-review through which it identified six potentially unsuitable purchases of PR securities. (FINRA Case#2013035308801).

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Newbridge Securities Corporation – Boca Raton, Florida Corporate and Municipal Bond Abuse FINRA Arbitration Attorney

Russell L. Forkey — Sun, 23 Aug 2015 01:03:19 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Newbridge Securities Corporation (CRD #104065, Ft. Lauderdale, Florida)submitted an AWC in which the firm was censured, fined $138,000 and required to revise its WSPs. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it sold (bought) corporate bonds to (from) customers, and failed to sell (buy) 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. The findings stated that in transactions for or with a customer, the firm failed to use reasonable diligence to ascertain the best inter-dealer market, and failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions. The firm failed to execute orders fully and promptly.

The findings also stated that the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with respect to the applicable securities laws and regulations, and FINRA rules. The firm’s supervisory system did not include WSPs providing for any of the four minimum requirements for adequate WSPs regarding corporate bond best execution, sales transactions, OATS, trade reporting, other trading rules (related to clearly erroneous trades), and other rules. The firm failed to provide documentary evidence that on the trade dates reviewed it performed the supervisory reviews set forth in its WSPs concerning order handling, best execution, anti-intimidation/coordination, trade reporting, other rules, automated order handling under SEC Rules611(a) and (c) of Regulation NMS, sales transactions, other trading rules, other trading rules(related to clearly erroneous trades) and OATS. (FINRA Case #2009019877901). To review the complete release, please follow the above link.

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Citigroup Global Markets Inc. – South Florida Broker/Dealer and Account Executive Breach of Fiduciary Duty FINRA Arbitration Attorney

Russell L. Forkey — Sat, 22 Aug 2015 23:34:29 GMT

February 2015 Disciplinary and Other FINRA Actions

Broker Check: http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/

Citigroup Global Markets Inc. (CRD #7059, New York, New York) submitted an AWC in which the firm was censured and fined $3,000,000, to be paid jointly to FINRA and the New York Stock Exchange (NYSE). Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to deliver prospectuses in connection with sales of certain ETFs to customers. The findings stated that the firm failed to deliver prospectuses for approximately 255,000 customer purchases of approximately 160 ETFs during a three-month period for which the firm self-reported the ETF prospectus delivery failure. Consequently, from 2009 through April 2011, it is estimated that the firm may have failed to deliver prospectuses for over 1.5 million purchases of ETFs by its customers. The findings also stated that the firm failed to design and implement an adequate supervisory system to achieve compliance with the securities laws and regulations governing ETF prospectus delivery. The firm’s decentralized supervisory system was not reasonably designed to ensure compliance with its prospectus-delivery requirements, which contributed to the firm’s failure to identify deficiencies in its process, to timely identify the scope of the problem after the firm detected certain failures in 2009, and to timely remedy the inadequacies in its manual process. The firm did not appropriately respond to “red flags” indicating that it had experienced failures to deliver. Although the firm notes isolated ETF prospectus delivery failures in 2009, it did not determine the extent of the issue or fully recognize deficiencies in its supervision in these areas until 2010. (FINRA Case #2011026502901).

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Ameriprise Financial Services, Inc. and David Bradley Tysk – Boca Raton, Florida FINRA Investment Suitability and Breach of Fiduciary Duty Arbitration and Litigation Attorney

Russell L. Forkey — Sun, 15 Mar 2015 00:21:03 GMT

Ameriprise Financial Services, Inc. and David Bradley Tysk – Boca Raton, Florida FINRA Investment Suitability and Breach of Fiduciary Duty Arbitration and Litigation Attorney:

Ameriprise Financial Services, Inc. (CRD® #6363, Minneapolis, Minnesota) and David Bradley Tysk (CRD #1782289, Eden Prairie, Minnesota). The firm was censured and fined $100,000. Tysk was fined $50,000 and suspended from association with any FINRA® member in any capacity for three months. The sanctions were based on findings that Tysk altered computer notes of customer contacts after the customer complained about the suitability of a recommendation. The findings stated that Tysk knew or should have known the importance of customer-related notes in the event of complaints. Tysk’s concealed alterations of his notes did not comply with the clear import of the document-retention policies in the firm›s code of conduct. Tysk failed to inform the firm of the alterations when he provided a copy of the notes to be produced in discovery during an arbitration proceeding. The customer became suspicious of the notes and requested further discovery to determine whether the notes had been altered after he lodged his complaint with the firm. The firm and Tysk opposed the requests. In a meeting to prepare for the arbitration hearing, Tysk finally disclosed to the firm that he had altered the notes. Despite knowing that Tysk had altered the notes, the firm failed to inform the customer that a copy of computer notes of customer contacts produced during discovery had been altered. The firm asked Tysk to search his computer for evidence of the edits, but did not take any additional steps to locate previous versions of the notes. The firm also failed to produce an exception report during discovery as required. Just before the hearing, the firm found an exception report relevant to the customer’s claim, which it should have provided months earlier. As soon as it could, the firm turned it over to the customer. At the conclusion of the arbitration hearing, the firm and Tysk were sanctioned for violating arbitration discovery rules. Tysk has appealed this matter to the National Adjudicatory Council (NAC) and the sanctions imposed against him are not in effect pending review. The decision, as it relates to Ameriprise Financial Services, is final. (FINRA Case #2010022977801).

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Brookville Capital Partners, LLC. and Anthony Lodati – Boca Raton, Florida Private Placement and Regulation D Fraud and Misrepresentation Attorney

Russell L. Forkey — Sat, 14 Mar 2015 23:47:47 GMT

Boca Raton, Florida Private Placement and Regulation D Fraud and Misrepresentation Litigation and Arbitration Attorney:

The Financial Industry Regulatory Authority (FINRA) recently announced that it has ordered Brookville Capital Partners LLC, based in Uniondale, NY, to pay full restitution of more than $1 million to the victims and fined the firm $500,000 for fraud in connection with sales of a private placement offering. FINRA also barred Brookville President Anthony Lodati from the securities industry.

FINRA found in its settlement and alleged in a May 2014 complaint that Brookville and Lodati defrauded Brookville customers in connection with the sale of a private placement offering called Wilshire Capital Partners Group LLC, through which investors would purportedly have an indirect interest in pre-initial public offering shares of Fisker Automotive. The conduct took place from January 2011 to October 2011.

During the time Brookville solicited customers to invest in the offering, Lodati learned that John Mattera, an individual with a significant criminal and regulatory background, had effected transactions on behalf of Wilshire as Wilshire’s CEO and Managing Director. Instead of disclosing that, among other things, Mattera had been sanctioned by the Securities and Exchange Commission (SEC) in 2010 for securities fraud and convicted of a felony in Florida in 2003, Lodati and Brookville purposely withheld this information and information about Mattera’s involvement with Wilshire, and continued to solicit its customers to invest. In total, Brookville sold over $1 million worth of interests in Wilshire to 29 customers. Brookville received more than $104,000 in commissions for the sales.

In November 2011, the SEC sued Mattera and others in connection with a scheme that included Wilshire, through which they defrauded investors of $13 million. These individuals were also criminally prosecuted and convicted, and Mattera has been sentenced to prison. The SEC obtained a court order freezing all of Wilshire’s assets, including the interests owned by Brookville’s customers. The Brookville customers who invested in Wilshire lost their entire investment.

In settling this matter, Brookville and Lodati neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

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