Gregg N. Nussbaum, a former Registered Representative with West Palm Beach, Florida-based First Integrity Capital Partners Corp. (First Integrity Capital), submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority's (FINRA) sanctions and findings that he intentionally exceeded his trading authority while a proprietary trader at First Integrity Capital. According to FINRA, Mr. Nussbaum, of Deerfield, Florida, had the firm's authority to engage in riskless principal trading, in which he could simultaneously open and close a U.S. Treasury position of less than $5 million par value. FINRA claims Mr. Nussbaum did not open and close positions simultaneously but instead left the positions open for extended periods throughout the day. Moreover, it alleged he exceeded his firm's $5 million par value limit. In order to accomplish this misconduct, FINRA found that Mr. Nussbaum intentionally submitted order tickets containing false execution times, in violation of FINRA Rule 2010 and NASD Conduct Rule 3110(a). Mr. Nussbaum's alleged fraudulent activity caused First Integrity Capital to conduct securities business while net-capital deficient, which is in violation of the required minimum net capital of $100,000. As a result of his unlawful conduct, Gregg Nussbaum was permanently barred from association with any FINRA member in any capacity.
Daniel Simon Pikula, a Registered Representative with Fort Lauderdale, Florida based Newbridge Securities Corporation, submitted a letter of acceptance, waiver, and consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority's (FINRA) findings that he executed discretion in a customer's account without the customer's written authorization or his member firm's written acceptance of the account as discretionary. FINRA's findings stated that Mr. Pikula, of Wellington, Florida was fined $5,000 and suspended from association with any FINRA member in any capacity for 15 business days. The suspension was is in effect from March 17, 2014 through April 4, 2014.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account is sometimes referred to as a managed account. Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks, for instance.
Niyukt Raghu Bhasin, a former Wellington, Florida-based Registered Principal and founder, owner, President and CEO of West Palm Beach, Florida-based NSM Securities, Inc., was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm failed to create and enforce a supervisory system which resulted in many of the firm's customers suffering significant investment losses. The complaint alleges that Bhasin's non-compliance resulted in aggressive, unauthorized trading, numerous customer complaints and cold-calling abuses. Two of the firm's Registered Representatives, West Palm Beach, Florida-based Shondeep Sajan Balchandani and Naveen K. Bhagwani allegedly engaged in churning and excessive trading, and made unsuitable recommendations to NSM Securities customers. FINRA's complaint even goes so far as to refer to NSM Securities' supervisory system as "grossly inadequate."
According to the FINRA complaint, NSM Securities, Mr. Balchandani and Mr. Bhagwani were in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Further, NSM Securities is liable for the alleged fraudulent misconduct of Mr. Balchandani and Mr. Bhagwani, which includes, in the case of Mr. Bhagwani, the alleged falsification of documents and forgery of customers' signatures. Further, the FINRA complaint alleges that Mr. Bhasin failed to report customer complaints, failed to disclose some of his Form U4 information, and that his firm's "grossly inadequate" supervisory system failed to prevent telephone solicitations to people with numbers which were on the firm-specific and national do-not-call lists.
Timothy Burke Ruggiero, a former Plantation, Florida-based registered principal employed by Lazarus Asset Management, LLC and Evora Capital, Inc., also from Plantation, Florida, has been permanently barred by the Financial Industry Regulatory Authority (FINRA). As we first reported back in December, 2012, FINRA had filed a complaint against the former Fort Lauderdale-based Brookshire Securities Corporation registered principal based on findings that Mr. Ruggiero intentionally manipulated stock prices, which violates Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. FINRAs findings further found that Mr. Ruggiero engaged in unlawful trades and forgery on order paperwork to show that there was supervisory review when, if fact, there was not. FINRA also found that Mr. Ruggiero, as the firm's President and CEO, failed to supervise the trading and electronic communications of the firm, which resulted in illegal trading in violation of Regulation M. As a result of his unlawful conduct, Timothy Ruggiero was barred from association with any FINRA member in any capacity.
Jack Richard Kelly, a former Millington, Tennessee-based registered principal employed by Duluth, Georgia-based PFS Investments Inc. submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he converted a total of $85,000 from customers. FINRA's findings stated that a customer gave Mr. Kelly checks totaling $40,000 to be invested in a fund that Mr. Kelly had represented would provide 7% interest. The $40,000 in funds had been liquidated from a trust account held at Mr. Kelly's firm that was intended to provide for the customer's disabled sister. Rather than investing the $40,000 in the purported high-yield investment, Mr. Kelly converted the funds to his personal use. FINRA's findings also stated that an elderly customer gave Mr. Kelly a total of $45,000 to be invested in the 7 percent investment, but Mr. Kelly again converted the funds to his personal use. As a result of his conduct, Mr. Kelly was barred from association with any FINRA member in any capacity.
Irvine, California-based Accelerated Capital Group, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority's (FINRA) findings that its website contained misleading information and that it violated escrow account rules and procedures. The firm's website contained fabricated testimonials and a world map that incorrectly suggested the firm had global offices and wanted to add 250 financial advisers. However, the firm had only two offices and omitted to state that its membership agreement limited the firm to 20 associated persons. FINRA's findings also stated that two of the firm's representatives maintained business-related websites that contained false, misleading, exaggerated, and promissory statements. The firm's representatives distributed power point slides to investors that were unbalanced, failed to present a sound basis for evaluating the offered investment, and violated the prohibitions against exaggerated performance predictions and unwarranted performance claims and forecasts.
FINRA's findings also included that the firm failed to have any system or procedures applicable to the review and approval of websites, including procedures that addressed whether they would be permitted, who would be responsible for their review and approval, and how that approval would be documented.
The Law Offices of Robert Wayne Pearce, P.A. filed a claim against Santander Securities LLC (Santander). A summary of the allegations the Claimants made against the Puerto Rico based brokerage is below.
This arbitration arises out of a Santander stockbroker's recommendation that a retired couple invest their life savings, $500,000 in Westernbank preferred stock. The clients had never made any stock market investments before they met the Santander stockbroker and the Westernbank preferred stock was the only investment in their accounts.
The clients first met the Santander stockbroker when he cold-walked into the clients' family owned sporting goods store. The clients were in their 70's and on the verge of retirement after running their small business for over 30 years.
The Law Offices of Robert Wayne Pearce, P.A. filed yet another claim against UBS Financial Services Incorporated of Puerto Rico (UBS Puerto Rico). A summary of the allegations the Claimant made against the Puerto Rico based brokerage is below. The client is over 62 years old and is unmarried and lives alone in San Juan, Puerto Rico. She is a Clinical Psychologist, earning a modest income. The client is also dependent upon income earned on an inheritance from her parents that was deposited in her UBS Puerto Rico brokerage accounts. Two individuals served as her UBS Puerto Rico stockbrokers during the period of relevance.
In 2002 and 2003, the client inherited what she understood to be bonds and mutual funds from her parents' UBS PaineWebber accounts when they passed away. The client did not know the true nature or risk of the investments that she had inherited and held in her account. She thought she actually owned bonds that would always pay interest until they matured. Neither UBS Puerto Rico nor her UBS Puerto Rico Stockbrokers ever gave her a full explanation of what type of investments she really owned, which were closed-end funds and that what she actually owned was shares of the closed-end funds (like common stock shares) that only paid dividends at the manager's discretion. She also didn't know that these were leveraged, illiquid investments which were very risky.
 In 2008 and 2009, Client loaned money to a friend. During the period 2009 through 2011, Client was unemployed. The UBS Puerto Rico stockbroker persuaded her to withdraw funds from a collateralized loan account with a UBS Puerto Rico affiliate rather than to sell investments in her account to generate the money to loan her friend and support herself.
Robert Wayne Pearce, P.A. filed another arbitration claim against UBS Financial Services Incorporated of Puerto Rico (UBS Puerto Rico). A summary of the client's allegations against UBS Puerto Rico is below. The Claimant is 73 years old and living alone in San Juan, Puerto Rico. He retired from the Veterans Administration pharmacy department. After retiring from the V.A., he went back to work part-time as a Pharmacist to supplement his income. Currently, he supports himself with his V.A. pension, part-time employment income and dividends from his securities account at UBS Puerto Rico.
The UBS Puerto Rico stockbroker has been the client's primary broker for many years and knows the client's age, employment status, and financial condition. The stockbroker knew that the client's life savings were deposited with UBS Puerto Rico and in his hands. The client has been a passive investor and relied exclusively on his stockbroker to make all of the investment decisions in his UBS Puerto Rico account. As a result of the UBS Puerto Rico stockbroker's recommendations and decisions, the client's account became highly concentrated (100%!) in Puerto Rico bonds.
Joshua Daniel Mosshart, a former Malibu, California-based registered principal employed by Boston, Massachusetts-based LPL Financial LLC, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority's (FINRA) findings that he earned commissions for referring investors to Enviro Board Corporation (Enviro) without his firm's approval. Mr. Mosshart sought his firm's permission to be a "sales representative" for Enviro, a company involved in selling manufacturing machines for building panels. However, Mr. Mosshart referred about 20 investors, some of whom were the firm's customers, to the company. The investors invested nearly $5 million in the company, and Mr. Mosshart received roughly $485,000 in referral fees. FINRA's findings stated that although the firm approved this outside business activity, it specifically advised Mr. Mosshart that he was not to solicit any individuals to invest in the company and required him to inform the firm about any material changes to his role with the company. Mr. Mosshart never provided prompt and accurate written notice to the firm that he was: 1) referring investors to the company, 2) receiving fees for those referrals, 3) and serving as the company's president. Mr. Mosshart was barred from association with any FINRA member in any capacity as a result of his failure to receive his firm's written approval to engage in those private securities transactions.