South Florida Arbitration & Litigation Lawyer Blog
Broker/Dealer and Investment Advisor Negligent Supervision, Selling Away and Outside Business Activity FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
March, 2012:
Marsha Ann Hill (CRD #4197899, Registered Principal, Halstead, Kansas) submitted an Offer of Settlement in which she was fined $20,000 and suspended from association with any FINRA member in any capacity for one year. The fine must be paid either immediately upon Hill’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 allegations, Hill consented to the described sanctions and to the entry of findings that she made unsuitable recommendations to her customer to purchase a variable annuity in the amount of $110,418.97 and two private placement offerings in the amount of $10,000 each. The findings stated that the transactions were unsuitable because more than 90 percent of the customer’s liquid net worth was placed in the variable annuity, which had a seven-year surrender period and was illiquid; the private placement offerings were highly risky, unsuitable for the customer and did not meet her investment objectives. The findings also stated that after the customer had contacted her to confirm the status of her investments, Hill informed the customer that she had failed to forward the checks and requested that the customer re-date and re-initial the checks that had previously been provided with a different date. The checks received and forwarded blotter Hill completed contained entries for the transactions for which the dates indicated on the blotter were not accurate. The findings also included that by holding the checks, Hill misused the customer’s funds, in that she delayed the intended investments, caused her member firm to be in violation of SEC Rule 15c3-3, and caused the firm’s books and records to be inaccurate.
FINRA found that Hill sold a private placement offering to another customer. The information provided on the customer’s Account Information Form (AIF) indicated that she was not an accredited investor. After Hill sent the AIF to her OSJ manager, her supervisor noted that the financial information was not sufficient to invest in an accredited-only investment, and spoke to Hill about this fact. Hill then deleted certain information from the AIF using correction fluid and wrote in different annual income, net worth and liquid net worth information on the AIF without discussing the alterations with her customer or having her customer complete an updated form or re-execute the new AIF. Hill faxed the altered form to her supervisor.
The suspension is in effect from February 6, 2012, through February 5, 2013. (FINRA Case #2009018026801)