South Florida Arbitration & Litigation Lawyer Blog
Stock Broker Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
January, 2012:
Stephen Elliot Hill (CRD #2202940, Registered Representative, Upper Saddle River, New Jersey) 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, Hill consented to the described sanction and to the entry of findings that he improperly used $1,800,000 in funds that belonged to a customer. The findings stated that Hill and his relative formed a company to serve as an investment vehicle for investments in a manufacturer and distributor of a dental prosthesis that snaps over a patient’s natural teeth. Hill solicited a customer to invest in his company; the customer agreed to the investment and Hill caused the transfer of $103,000 from the customer’s account at his member firm to an affiliate of the manufacturer. Within hours of this transfer, Hill caused the transfer of an additional $220,000 from the customer’s firm account to the affiliate, and later that day, he caused the transfer of an additional $1,477,000 from the customer’s account to the affiliate. The findings also stated that following these transactions, and unbeknownst to the customer, Hill’s company and the affiliate executed a secured promissory note. Hill’s company financed the note using $1,800,000 of the customer’s funds plus $200,000 Hill and a third party contributed, for a total of $2 million. Pursuant to the note, the affiliate agreed to pay Hill’s company, not the customer, interest at a rate per annum equal to 20 percent on the aggregate unpaid principal balance. FINRA found that Hill did not inform his firm in writing of these transactions and investments. (FINRA Case #2010022653601).