Articles Posted in Unauthorized Trading

Recently, the Financial Industry Regulatory Authority (FINRA) announced a settled enforcement action against Alan Scot Feigenbaum (CRD #3132230, Boca Raton, Florida).  In this action, an AWC was issued in which Feigenbaum was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for five months. Without admitting or denying the findings, Feigenbaum consented to the sanctions and to the entry of findings that he exercised discretion without written authority in customer accounts. The findings stated that Feigenbaum entered orders on a discretionary basis for trades in customer accounts, including those of senior customers. Although the customers permitted Feigenbaum to exercise discretion and had not complained, none of them had given him written authorization to do so and neither of his member firms had approved the accounts as discretionary. Feigenbaum exercised discretion without written authorization despite having previously received a written letter of caution from one of his supervisors for similar misconduct. In addition, Feigenbaum inaccurately stated that he had not exercised discretion in any customer account on compliance questionnaires. The findings also stated that Feigenbaum caused one of his firms to create and maintain inaccurate books and records through his use of an unauthorized email account and by mismarking orders as unsolicited. Feigenbaum had an approved outside business through which he provided accounting and tax services to clients. Feigenbaum communicated with certain of his brokerage customers, including seniors, regarding securities-related matters over the email account he used for his tax preparation business. The content of the communications included investment recommendations. Because the firm was unaware of and had not authorized use of the email account, it was unable to supervise, preserve, or retain the securities-related emails. Furthermore, Feigenbaum inaccurately stated on compliance questionnaires that he had conducted all business-related communication over his firm email account. Feigenbaum also marked trades in a particular exchange-traded product in customer accounts as unsolicited, when in fact he had solicited the transactions.  The suspension is in effect from December 6, 2021, through May 5, 2022. (FINRA Case #2019062006601)

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.

Kelly Marvin Barnett (CRD #4127608, Sarasota, Florida):

Recently, the Financial Industry Regulatory Authority announced that Kelly Marvin Barnett executed and Acceptance, Waiver and Consent in which Barnett was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for six months. Without admitting or denying the findings, Barnett consented to the sanctions and to the entry of findings that he used discretion in five customers’ accounts without written authorization or acceptance of the accounts as discretionary. The findings stated that a customer of Barnett’s died of a heart attack. Barnett was unaware of his customer’s death and two days after his customer’s death, Barnett placed three trades in the customer’s account for the sale of two ETFs and for the purchase of an ETF. Four days after his customer’s death, Barnett placed two additional trades in his customer’s account for the purchase of a UIT and for the sale of an ETF. Barnett’s customer had orally granted him discretion to place trades in the account but had never given him a written grant of authorization to use discretion. Further, Barnett’s member firm had never accepted the account as a discretionary account. The findings also stated that Barnett exercised discretion in four additional customer accounts without a written grant of authorization and without having the accounts accepted as discretionary. The customers had orally agreed to a trading strategy. When Barnett could not reach the customers, he executed the planned strategy without speaking to the customers first. In total, Barnett executed 25 discretionary trades in the four customers’ accounts. The findings also included that Barnett maintained handwritten notes of customer contact in the firm’s customer files in order to document conversations with clients regarding orders and recommendations.

With regards to the trades in Barnett’s deceased customer’s account, after his customer’s death, Barnett created two handwritten documents falsely stating that he had spoken to the customer on the dates of the trades and that the customer had approved the transactions. Barnett maintained the falsified handwritten notes in the firm’s customer file to substantiate his contact with his customer on the dates of the trades. FINRA found that Barnett maintained blank, signed switch disclosure forms in the firm’s customer files. The forms contained important disclosures regarding UIT exchanges. On 19 occasions, Barnett used the blank signed forms to effect UIT exchanges without having each client sign a completed switch disclosure form. Each form detailed the UIT that was being sold, the UIT that was being purchased, provided the reasons for the switch, and detailed the charges associated with the switch. As a result, the switch forms were an instruction given or received in connection with the purchase or sale of a security and was a record that the firm was required to maintain. By completing the blank, signed forms to falsely evidence acknowledgement of disclosures, Barnett falsified the exchange forms and caused the firm’s books and records to be inaccurate. The suspension is in effect from June 4, 2018, through December 3, 2018. (FINRA Case #2015048320901).

Brian John Hussey Jr. (CRD #4640067, Zephyrhills, Florida)

Recently, Brian John Hussey, Jr. entered into an Acceptance, Waiver and Consent with the Financial Industry Regulatory Authority, in which Hussey was suspended from association with any FINRA member in all capacities for seven months. Apparnelty, in light of Hussey’s financial status, no monetary sanction was imposed. Hussey, without admitting or denying the findings consented to the sanction and to the entry of findings that he made unsuitable recommendations to  a customer that she sell 100 percent of the mutual fund positions in her individual retirement account (IRA) and invest the proceeds in penny stocks focused on the marijuana business. The findings stated that the thinly-traded penny stocks recommendation was inconsistent with the client’s investment objectives and financial situation. In addition, the transactions were solicited in violation of Hussey’s member firm’s policies prohibiting the solicitation of penny stocks. In order to effect the transactions, Hussey mismarked solicited trades as unsolicited in the customer’s accounts to avoid the firm’s policy preventing its representatives from soliciting the purchase of penny stocks. Moreover, the SEC issued an Order suspending all trading in one of the penny stocks.  Hussey had already heavily invested the customer’s accounts in that penny stock. Three days after trading resumed in the penny stock, Hussey purchased an additional $22,679.50 in the account. Hussey eventually had 100 percent of the customer’s portfolio concentrated in the two penny stocks. After the firm made inquiries regarding the trading activity in the customer’s IRAs, and to avoid future compliance issues, Hussey’s recommended that the customer move her account to another FINRA member firm, where Hussey, with the customer’s permission, engaged in discretionary trading of her account using her login credentials. Hussey did not disclose his exercise of discretion or his discretionary authority in this third party account to his firm or to the executing member firm. The customer complained to Hussey’s firm, asserting $58,572 of market losses in her accounts with the firm and the third party firm account, in addition to damages from the lost opportunity to participate in market gains. Hussey’s firm settled for $67,019.24, which he is obligated to pay back to the firm. The findings also stated that as stated above, Hussey mismarked order tickets for trades as unsolicited when, in fact, he solicited the trades and therefore caused his firm to maintain false and inaccurate books and records.  The suspension is in effect from June 18, 2018, through January 17, 2019. (FINRA Case #2017053342601).

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

Fort Lauderdale, Boca Raton, Delray Beach, Lantana, Lake Worth and West Palm Beach, Florida Elder Financial Abuse and Exploitation Litigation and FINRA Arbitration Attorney:

SEC Charges Virginia-Based Broker With Stealing Funds From Elderly Customers

The Securities and Exchange Commission recently charged a broker based in Roanoke, Va., with defrauding elderly customers, including some who are legally blind, by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.

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:

June 2014 Disciplinary and Other FINRA Actions

Special Orders and Trading Instructions – South Florida Broker/Dealer, Investment Advisor and Account Executive Breach of Fiduciary Duty, Breach of Contract, Mismanagement, Negligence and Negligent Supervision FINRA Arbitration and Litigation Attorney:

Special Orders and Trading Instructions:

In addition to market and limit orders, brokerage firms may allow investors to use special orders and trading instructions to buy and sell stocks. One common special order and trading instruction is the “stop-limit order.”

Special Orders and Trading Instructions – South Florida Broker/Dealer, Investment Advisor and Account Executive Breach of Fiduciary Duty, Breach of Contract, Mismanagement, Negligence and Negligent Supervision FINRA Arbitration and Litigation Attorney:

Special Orders and Trading Instructions:

In addition to market and limit orders, brokerage firms may allow investors to use special orders and trading instructions to buy and sell stocks. One of the most common special orders and trading instructions is the “stop order.”

Corporate and Corporate High Yield Bond Breach of Fiduciary, Unsuitability, Churining and Unauthorized Purchase and Sale FINRA Arbitration, Litigation and Probate Attorney:

If you are considering or if your account executive or investment advisor is soliciting you to purchase, hold or sell a corporate bond, you may wish to read this post to refresh your understanding of corporate bonds or, if you are an unsophisticated invesotr, arm youself with questions to ask your investment professional.

What Are Corporate Bonds?

South Florida Broker/Dealer and/or Account Executive Negligent Supervision, Selling Away and Unapproved Outside Business Activity FINRA Arbitration, Litigation and Probate Estate 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:

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