FINRA Enforcement Actions 2011

Xiomara Isabel Beach (CRD #5628107, Registered Representative, Long Beach, California)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Private Placement, Selling Away, Negligent Supervision, Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

December, 2011:

Xiomara Isabel Beach (CRD #5628107, Registered Representative, Long Beach, California) submitted a Letter of Acceptance, Waiver and Consent in which she was fined $7,500 and suspended from association with any FINRA member in any capacity for 20 business days. The fine must be paid either immediately upon Beach’s reassociation with a FINRA member firm following her 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, Beach consented to the described sanctions and entry of findings that she sold, or participated in the sale of, approximately $1.3 million in private placement offerings to customers without the required FINRA license because she did not pass the General Securities Representative (Series 7) licensing exam or any other FINRA licensing exam until a later date. The suspension was in effect from November 7, 2011, through December 5, 2011. (FINRA Case #2010022715604).

Amir Aqeel (CRD #5151040, Registered Representative, Tomrall, Texas)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Variable and Fixed Annuity Fraud Misrepresentation and Negligent Supervision Attorney, Russell L. Forkey, Esq.

December, 2011:

Amir Aqeel (CRD #5151040, Registered Representative, Tomrall, Texas) submitted an Offer of Settlement in which he was suspended from association with any FINRA member in any capacity for two years. Without admitting or denying the allegations, Aqeel consented to the described sanction and to the entry of findings that in completing life insurance policy applications, he placed fictitious electronic funds transfer account numbers on the accounts of customer applicants that he knew were incorrect and submitted the applications for further processing; the fictitious numbers were actually variations of Aqeel’s personal checking account number. The findings stated that based on the submission of the applications, Aqeel received credit towards his compensation; the policies subsequently lapsed due to invalid account numbers. The findings also stated that Aqeel created a credit guarantee document purporting to be a fully executed and authentic surety bond for $12,500,000 by including fictitious information, and used the document in an attempt to secure funding for the development, ownership and management of a hotel project by an entity, and Aqeel was paid approximately $155,000 as a finder’s fee. The findings also included that Aqeel failed to timely respond to FINRA requests to appear for on-the-record testimony. FINRA found that Aqeel forged two customers’ signatures on electronic signature authorization forms, bank authorization forms and/or acknowledgement forms, in completing their life insurance policy applications, without their knowledge or authorization. The suspension is in effect from November 7, 2011, through November 6, 2013. (FINRA Case #2008012703401

Wunderlich Securities, Inc. (CRD #2543, Memphis, Tennessee)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Securities Research Fraud and Deceit FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

December, 2011:

Wunderlich Securities, Inc. (CRD #2543, Memphis, Tennessee) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $50,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to supervise the personal trading of research analysts who maintained discretionary accounts at other firms. The findings stated that the firm’s WSPs mandated compliance department review of personal trading of research analysts but, as a matter of policy, the firm did not require compliance review of analyst accounts over which discretionary trading authority had been granted to a third-party manager or advisor. As a result of that policy, the firm did not review the personal trading of two research analysts who held discretionary accounts at other firms. The findings also stated that the firm issued equity research reports that failed to comply with NASD Rule 2711(h) disclosure requirements. In some research reports in which it disclosed that it had served as manager or co-manager of a public offering of securities for the subject company in the preceding 12 months, it failed to disclose also that it had received compensation from the company for investment-banking services in connection with the offering. One research report failed to disclose that the firm had served as manager or co-manager of a public offering for the company in the preceding 12 months. Research reports failed to disclose that the firm was a market maker in the subject company’s securities at the time the report was published. Some research reports were issued with indefinite disclosure regarding financial interests held in the securities of the subject company. Other research reports were issued with disclosures not prominently presented. The findings also included that, in connection with two public appearances by firm research department personnel, the firm failed to disclose its receipt of compensation from the subject company in the preceding 12 months. FINRA found that the firm maintained on its company website a list of all companies its research analysts covered, and for each company listed, the firm provided its current rating and price target for the company’s stock, but failed to include the disclosures mandated by NASD Rule 2210(d) and IM 2210-1(6)(a) with respect to potential conflicts of interest. (FINRA Case #2010020967601).

Wells Fargo Advisors, LLC fka Wachovia Securities, Inc. (CRD #19616, St. Louis, Missouri)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq., Relating to Matters Involving Fraud, Selling Away, Outside Business Activity Misrepresentation and Negligent Supervision.

December, 2011:

Wells Fargo Advisors, LLC fka Wachovia Securities, Inc. (CRD #19616, St. Louis, Missouri) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $350,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to establish, maintain and enforce adequate WSPs for its Escheatment Group (Escheatment) addressing the restoration of abandoned accounts. The findings stated that the firm considered an account to be abandoned upon receipt by the firm of three returned account statements by the postal service. The firm’s written procedures required that employees wishing to restore customer accounts from an abandoned status send a written request to Escheatment to restore the account. Upon receipt of the written request, and based solely upon the representations included in the request, Escheatment restored the account to an active status and notified only the requestor that the account had been restored to an active status. The findings also stated that the firm’s written procedures failed to identify the firm personnel who were authorized to submit requests to have abandoned accounts restored or released from abandoned status. Escheatment accepted requests to restore abandoned accounts from branch office personnel working in the branch office where the abandoned account was last serviced. The findings also included that the firm’s written procedures did not require that the requestor obtain supervisory approval before submitting requests to have abandoned accounts restored or released from abandoned status, did not require the requestor to submit proof that a customer had been located and did not require the requestor to submit proof of the customer’s new address. The firm’s procedures also did not require that Escheatment notify branch office managers when accounts were restored to active status.

Internet Securities (CRD #102800, Oakland, California) and Michael Wayne Beardsley

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Private Placement and Regulation D Fraud, Misrepresentation and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

December, 2011:

Internet Securities (CRD #102800, Oakland, California) and Michael Wayne Beardsley (CRD #2546470, Registered Principal, Oakland, California) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $12,500 and required to retain an outside consultant to review and prepare a report concerning the adequacy of the firm’s supervisory, and compliance policies and procedures, and supervisory controls; the report shall make specific recommendations addressing any inadequacies the consultant identifies, and the firm shall act on those recommendations. FINRA imposed a lower fine after it considered the firm’s size, including, among other things, the firm’s revenues and financial resources. Beardsley was suspended from association with any FINRA member in any principal capacity for one year. In light of Beardsley’s financial status, no monetary sanction has been imposed.

Institutional Capital Management, Inc. (CRD #41055, Houston, Texas) and Daniel Lee Ritz Jr.

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Selling Away and Unapproved Outside Business Activity Fraud, Negligence and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

December, 2011:

Institutional Capital Management, Inc. (CRD #41055, Houston, Texas) and Daniel Lee Ritz Jr. (CRD #1977521, Registered Principal, Katy, Texas) submitted a Letter of Acceptance, Waiver and Consent in which the firm was fined $65,000 and Ritz was suspended from association with any FINRA member in any principal capacity for four months. In light of Ritz’ financial status, no monetary sanction was imposed. Without admitting or denying the findings, the firm and Ritz consented to the described sanctions and to the entry of findings that the firm permitted registered persons assigned to a branch office to utilize outside email accounts to conduct firm business, even though the firm did not have a system or procedure in place to capture, preserve and monitor those emails; consequently, the firm failed to preserve all firm-related email communications of registered persons assigned to that branch as required. The findings stated that the firm failed to perform any supervisory review of email communications of registered persons assigned to that branch, and that Ritz permitted a firm registered representative to engage in investment advisory activity through the representative’s state-registered investment advisor (RIA) and failed to supervise that activity. Ritz was the principal responsible for supervising the representative, but failed to supervise any facet of his investment advisory business and was generally unaware of what it entailed. The findings also stated that as a result of Ritz’ lack of supervision, the representative was able to engage in extensive selling-away misconduct without the firm’s detection, raising more than $5 million from investors through sales of promissory notes without the firm’s knowledge. The findings also included that the firm failed to obtain all required information for some customers who purchased securities through the firm in private placement offerings.

Dawson James Securities, Inc. (CRD® #130645, Boca Raton, Florida), Albert James Polliak and Douglas Fulton Kaiser

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

South Florida Securities and Investment Fraud, Unsuitability, Misrepresentation and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

December, 2011:

Dawson James Securities, Inc. (CRD® #130645, Boca Raton, Florida), Albert James Poliak (CRD #1270681, Registered Principal, Parkland, Florida), and Douglas Fulton Kaiser (CRD #1674570, Registered Principal, Deerfield Beach, Florida) submitted Offers of Settlement in which the firm was censured and fined $90,000. Poliak, Dawson’s CEO, and Kaiser, who acted at times as both the firm’s head of trading and the Financial and Operations Principal (FINOP), were each fined $30,000 and suspended from association with any FINRA®- regulated broker-dealer in any capacity for one year. Without admitting or denying the allegations, Dawson, Poliak and Kaiser consented to these sanctions and to the entry of findings that the firm entered into a de facto commission recapture agreement with a firm customer without meeting the minimum required net capital of $250,000 and without filing an application for amendment of the firm’s FINRA membership agreement. The findings stated that the firm and a customer entered into a consulting agreement whereby the customer was to provide research and advisory services. However, the firm did not request, nor did the customer provide, research reports or advisory services or any of the other services set forth in the consulting agreement. Moreover, the firm paid the customer a total of $1,215,000, which exceeded by $885,000 the payments due to the customer per the contractual requirements under the consulting agreement. The payments exceeded the contractual requirements of the consulting agreement because the agreement was a de facto commission recapture arrangement through which the customer was paid larger amounts based upon the level of security transactions the customer was executing in its brokerage account at the firm.

FINRA Enforcement Actions – December, 2011

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Arbitration Attorney, Russell L. Forkey, Esq. is available for a free consultation if you have suffered investment losses relative to any of the matters set forth below:

Periodically, the Financial Industry Regulatory Authority, Inc. (FINRA) publically announces, on its website, enforcement actions that have either recently been settled by or commenced against broker/dealers and/or associated persons.

We review these settlements and filed actions each month and provide a brief description of those matters which we believe will be of interest to investors.

Michael Jefferson Harper (CRD #4650612, Registered Principal, Coral Springs, Florida)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Securities and Investment Fraud, Misrepresentation and Unsuitable FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.

November, 2011:

Michael Jefferson Harper (CRD #4650612, Registered Principal, Coral Springs, Florida) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Harper failed to respond in a timely manner to FINRA requests for information and failed to appear for testimony as FINRA requested. (FINRA Case #2009018908402).

Daniel Joseph Voccia II (CRD #2691802, Registered Principal, Calverton, New York)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Unauthorized Outside Business Activity and Selling Away Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

November, 2011:

Daniel Joseph Voccia II (CRD #2691802, Registered Principal, Calverton, New York) 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, Voccia consented to the described sanction and to the entry of findings that he was a brokerage partner with another registered representative, shared clients and commissions and collaborated on outside ventures, including a private company they formed. The findings stated that Voccia and his partner orally informed their member firm they were involved in an outside business activity relating to their company, and the firm gave oral approval with the understanding they would only solicit one firm customer; Voccia and his partner solicited other investors, including firm customers, without the firm’s knowledge and approval. The findings also stated that Voccia made misrepresentations and omissions of material fact when he told prospective investors that the company and its related companies had good chances of success and would be able to sustain themselves even though he had insufficient knowledge of the companies’ finances, and his representations were misleading because he focused on the potential benefits of investing in the company without providing adequate disclosure about the risks. The findings also included that Voccia engaged in capital raising for his company and his related companies; individuals invested approximately $6 million dollars during a five-year period. FINRA found that Voccia and his partner were able to sell investments without the firm’s knowledge because the investments were not held with their firm’s clearing firm but were held with firms that their firm allowed its brokers to use to maintain custody of illiquid investments such as their company. FINRA also found that Voccia did not provide the firm with written notice of any of the proposed offerings and did not inform the firm that he had received, or might receive, compensation for selling the offered securities. In addition, FINRA determined that the firm did not approve the private securities transactions, did not record them on its books and records and did not supervise Voccia’s participation in the transactions. Moreover, FINRA found that Voccia failed to disclose numerous outside business activities unrelated to his company without prompt written notice to his firm. Furthermore, FINRA found that Voccia failed to amend his Form U4 to disclose material information and failed to respond to FINRA requests for information, documents and to timely appear for testimony. (FINRA Case #2009017195203).