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Adam Fritzsche, a stockbroker formerly registered with LPL Financial Corporation (LPL Financial), submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was suspended for one year for allegedly making unsuitable recommendations of a speculative, illiquid investment to three elderly retirees.

According to FINRA, Adam Stuart Fritzsche, of Canterbury, Connecticut, recommended that three of his customers purchase an investment in a business development company, which was a speculative, illiquid investment that was suitable only as a long-term investment for those with no need for liquidity.  His customers were ages 81, 89, and 61 at the time of Mr. Fritzsche’s recommendations.  Continue reading →

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Jeffry Vargas, a former registered representative employed by Wells Fargo Advisors, LLC, submitted a Letter of Acceptance, Waiver, and Consent (AWC) 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 accepted third-party wire transfer orders without prior written authorization from the customer and falsely representing to his member firm that he had verbally confirmed the wire transfers which turned out to be fraudulent requests from an imposter.

Jeffry Benjamin Vargas, of Coral Gables, Florida, allegedly requested that his firm effect a wire transfer based upon a fraudulent email requesting $7,500 be sent to a third-party bank account.  FINRA found that Mr. Vargas falsely stated that he had spoken with the client over the phone to verify the client’s identity.  The customer’s account lacked sufficient funds for the wire transfer, so the customer’s assistant allegedly instructed Mr. Vargas to sell stock shares in the customer’s account for approximately $53,000 in order to complete the transaction.  Again, FINRA found that Mr. Vargas failed to have the customer’s written authorization, but still liquidated the customer’s stocks.  Continue reading →

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Kelly Clayton Althar, a former registered representative with Financial West Group, submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was barred from association with any FINRA member in all capacities amid allegations that he made unsuitable recommendations and excessively traded two accounts held by an elderly customer.

According to FINRA, Mr. Althar, of San Pablo, California, was the registered representative for an elderly customer with hopes of retiring in a few years.  Without admitting or denying FINRA’s findings, Mr. Althar consented to FINRA’s findings that he exercised de facto control over two of his customer’s accounts and utilized that control to place frequent trades without consulting his customer in order to generate increased commissions for himself.  FINRA found that Mr. Althar often purchased, sold, and subsequently repurchased the same security in his customer’s accounts in order to generate commissions while his customer suffered substantial losses.   During the relevant period, FINRA stated that Mr. Althar generated approximately $91,000 in commissions from his excessive IRA trades, and an additional $48,000 in commissions in his customer’s individual. His customer, who was close to retirement and purportedly only wanted low-risk investments, suffered extensive losses in the value of her two accounts, which dropped by more than 50%. Continue reading →

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Gary Saitowitz, of Marietta, Georgia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $10,000, suspended for 18 months, and ordered to pay $11,455 plus interest in restitution to a customer for several violations related to the sale of non-traded real estate investment trusts (REITs).

Gary Saitowitz, a former registered representative with Transamerica Financial Advisors, Inc. (Transamerica) was found by FINRA to have recommended that four customers, including a senior citizen, allocate unsuitable amounts of their assets in non-traded REITs. As a result of Mr. Saitowitz’ recommendations, the customers’ accounts were allegedly overconcentrated and therefore unsuitable in light of their investment goals and risk tolerances.  FINRA also alleged that Mr. Saitowitz tried to circumvent the firm’s concentration limits on the amount of a customer’s liquid assets that could be invested in non-traded REITs by overstating the liquid net worth of certain customers.  Continue reading →

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Mauricio Jaramillo, a stockbroker formerly registered with Ultralat Capital Markets, Inc., submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $7,500 and suspended for four months.  Without admitting or denying FINRA’s findings, Mauricio Jaramillo, of Bogota, Colombia, consented to the entry of findings that he recommended unsuitable and overconcentrated short-term trading in bonds in the accounts of three customers.

Ultralat Capital Markets (Ultralat) provides retail brokerage services for customers based in Latin America referred by Ultrabursatiles S.A. Comisionista de Bolsa.  While registered with Ultralat as a foreign associate, Mr. Jaramillo allegedly engaged in short-term bond trading which included bond swap transactions.  According to FINRA, due to Mr. Jaramillo’s recommendations, the customers’ accounts were almost totally (98%) concentrated in bonds denominated in Brazilian Reais.  Further, FINRA alleged the customers had significant margin balances in their accounts as well.  Mr. Jaramillo allegedly had no basis for such short-term, unsuitable, and overconcentrated bond recommendations, especially in light of the fact that two of the three customers involved had conservative investment objectives.  Consequently, Mr. Jaramillo was assessed a deferred fine of $7,500 and suspended for four months.  The suspension is in effect from January 17, 2017 through May 16, 2017. Continue reading →

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Steve Dale Heath, of Newport News, Virginia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly executing unsuitable mutual fund trades, including switches, in the account of an elderly customer with conservative investment goals, causing the customer to suffer losses of approximately $7,207.

FINRA alleged that Steve Heath recommended and effected short-term mutual fund trades in the account of an elderly customer.  Mutual funds are intended as longer-term investments. However, Mr. Heath allegedly recommended selling after only 249 days on average.  Further, some of the trades involved mutual fund switches, which were allegedly unsuitable for his customer in light of the customer’s conservative investment objectives. Mutual fund “switching” is simply the process of transferring an investment from one mutual fund to another, sometimes for good reasons and other times to defraud clients. Some brokers attempt to effect numerous switches in client accounts in order to generate commissions.  Continue reading →

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John Corsi, a registered representative with Sterne Agee Financial Services, Inc. (Sterne Agee) submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $20,000 by the Financial Industry Regulatory Authority (FINRA) for engaging in outside business activity and making unsuitable promissory note recommendations to his customers.

According to FINRA, John Paul Corsi, of Parma, Ohio, failed to fully disclose his involvement in an outside business activity to his member firm, failed to disclose his role in fundraising and the promissory notes issued by his outside business activity that he was allegedly recommending to firm customers for compensation. Mr. Corsi was found by FINRA to have received a fee of 5% for these promissory note recommendations, of which his customers invested a total of $1,790,041.  Of those customers, three were allegedly unsuitably invested in 20% or more of their stated net worth.  These customers’ investment objectives were allegedly much more conservative then the promissory notes’ significant risk profile. Continue reading →

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Christopher Ariola, of Santa Monica, California, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in a default decision made by FINRA’s Office of Hearing Officers for allegedly recommending that elderly retirees invest a large portion of their retirement assets in high-risk gold and energy stocks, causing the customers to lose a combined total of $137,993.13

FINRA alleged that while associated with Bay Mutual Financial, LLC, Christopher Ariola recommended his customers invest heavily in gold and energy stocks. The investment recommendations, including stocks that were purported to produce high-yield dividends, exposed his customers to significant risk.  Two of the customers who allegedly took Mr. Ariola’s investment recommendation were a married couple who lost $93,052.21.  Another customer lost $44,940.92 as a result of Mr. Ariola’s alleged unsuitable recommendations.  Mr. Ariola was barred from association with any FINRA member in any capacity and required to pay $137,993.13 plus interest in restitution to customers. Continue reading →

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Matthew Meehan, a stockbroker previously registered with E.J. Sterling, LLC, of Garden City, New York, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was suspended for 12 months and ordered to pay restitution to his customers totaling $21,813.54, plus interest.  Without admitting or denying FINRA’s allegations, Matthew Meehan, of Winter Garden, Florida consented to the entry of FINRA’s findings that he engaged in quantitatively unsuitable trading in three customers’ accounts.

According to FINRA, Mr. Meehan engaged in excessive and unsuitable trading in the accounts of three customers.  This unsuitable trading resulted in sustained losses to the affected accounts of $21,813.54.  Further, FINRA found that Mr. Meehan exercised discretion at various times in the relevant accounts without the necessary written authorization from the customers or the approval of his member firm.  Mr. Meehan was suspended from association with any FINRA member in any capacity for 12 months, assessed a deferred fine of $15,000, and ordered to pay deferred restitution to customers in the amount of $21,813.54 plus interest.  The suspension is in effect from January 17, 2017 through January 16, 2018. Continue reading →

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Keith Testaverde, a registered representative with Network 1 Financial Securities, Inc. has been fined $25,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for six months for allegedly failing to disclose the existence of outside securities accounts which he owned or controlled at another firm.

Without admitting or denying FINRA’s findings, Keith Testaverde consented to the findings that he neglected to disclose to his member firm, Network 1 Financial Securities (Network 1 Financial), that he maintained control over and executed trades in a securities accounts which were held at another member firm.  According to FINRA, Mr. Testaverde made approximately 121 trades in one of the accounts, many of which were on Network 1 Financial’s “watch list,” meaning that they required preapproval.  FINRA found that 12 of the trades made by Mr. Testaverde were prohibited outright.  Further, Mr. Testaverde falsely represented on his firm’s annual compliance questionnaire that he did not have any undisclosed outside securities accounts.  Due to the foregoing misconduct, FINRA assessed a fine of $25,000 and suspended Mr. Testaverde for six months.  The suspension is in effect from January 17, 2017 through July 16, 2017. Continue reading →