Published on:

Jaime Rodriguez, a former registered representative with HSBC Securities (USA) Inc., has been permanently barred by the Financial Industry Regulatory Authority (FINRA) amid findings that he converted funds of his elderly, legally blind customer.

According to FINRA, Jaime R. Rodriguez, of Yonkers, New York, converted approximately $200,000 from his elderly, legally blind customer, using the money to purchase two apartments in his own name, unbeknownst to his customer.  In the first apartment purchase, FINRA found that Mr. Rodriguez converted approximately $70,000 of his customer’s funds.  In the second apartment purchase, Mr. Rodriguez allegedly converted $130,000 of his customer’s funds.  In both purchases, the customer had no idea that Mr. Rodriguez was the sole owner of the apartments due to the fact that the elderly customer could not see or read the documents.  In the case of the second apartment, FINRA found that Mr. Rodriguez was renting out the apartment and collecting and keeping the rent.  Without admitting or denying FINRA’s findings, Mr. Rodriguez was permanently barred from association with any FINRA member in any capacity. Continue reading →

Published on:

Jay Dee Jordan, a former registered representative with WFG Investments, Inc. submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was barred by the Financial Industry Regulatory Authority (FINRA) for recommending and executing hundreds of unsuitable non-traditional exchange traded fund (ETF) purchases in his customers’ accounts.  FINRA found that Mr. Jordan’s unsuitable recommendations and ETF purchases resulted in his clients’ accounts sustaining realized and unrealized losses of more than $8.4 million.

FINRA found that Jay Dee Jordan, of Oklahoma City, Oklahoma, recommended that his clients purchase over $22 million in non-traditional ETFs. Of the 84 accounts in which Mr. Jordan recommended the  non-traditional ETFs, 79 of these accounts held ETF positions for longer than thirty days, and on numerous occasions, the ETF positions were held for years.  According to FINRA, Mr. Jordan routinely failed to sell these complex products on the same day he purchased them and did not have a reasonable basis to believe that his long-term buy-and-hold recommendations were suitable for his customers.  Continue reading →

Published on:

FSC Securities Corporation has been censured and fined $100,000 and ordered to pay restitution to affected customers of over $492,485.33 for failing to supervise the unsuitable sales of leveraged, inverse and inverse-leveraged exchange-traded funds (non-traditional ETFs).

The Financial Industry Regulatory Authority (FINRA) found that FSC Securities, which is headquartered in Atlanta, Georgia, failed to establish and maintain an adequate supervisory system to ensure the suitability of its sales of non-traditional ETFs.  According to FINRA, FSC Securities executed approximately 6,500 purchases of the non-traditional ETFs, which were worth approximately $92 million and generated roughly $603,000 in commissions.   Continue reading →

Published on:

Mathew M. Serth, of Stone Ridge, Virginia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly placing unauthorized trades in customers’ accounts without their knowledge or consent.

FINRA investigators found that while registered with Morgan Stanley, Mr. Serth entered trade orders in four accounts.  The net costs of the transactions ranged from $15,000 to $86,000.  However, FINRA stated that none of these customers granted Mr. Serth discretionary trading authorization to trade in their accounts.  Upon discovering the unauthorized trades, Mr. Serth’s member firm cancelled the trades and reimbursed a customer for margin interest incurred as a result of the unauthorized trades.  Without admitting or denying FINRA’s findings, Mr. Serth was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for three months.  The suspension is in effect from August 7, 2017 through November 6, 2017. Continue reading →

Published on:

Frank Tegge, a registered representative formerly employed with 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 Financial Industry Regulatory Authority’s (FINRA) findings that he exercised discretion in customer accounts without the necessary prior written authorization.

FINRA found that Frank Allen Tegge, of DeWitt, Michigan, failed to obtain the necessary written authorization from his customer or his member firm when he exercised his discretion and placed orders in customer’s accounts.  According to FINRA, Mr. Tegge placed 64 discretionary transactions in two customer accounts without written authorization from the customer.  Further, FINRA found that Mr. Tegge executed a discretionary transaction in another customer’s account without the customer’s prior authorization, placing the trade after speaking with the spouse, who had no authority to authorize any trading in the account.  Continue reading →

Published on:

Sandra McCabe, a former registered representative employed with Wells Fargo Clearing Services, LLC, (Wells Fargo), submitted a Letter of Acceptance, Waiver, and Consent in which she consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that she falsified documents by photocopying and re-using previously signed customer forms.

FINRA’s findings state that on approximately 36 occasions, Sandra Jayne McCabe, of Holbrook, New York, photocopied and reused signed and partially completed customer forms rather than having them execute new forms.  The forms included ACH authorization agreements which authorize transfers of funds.  FINRA found that Ms. McCabe submitted the forms with non-original signatures and, in two cases, altered information on the forms as well.  Although the customers authorized the underlying transactions, they did not authorize her to falsify the forms. Continue reading →

Published on:

Trident Partners Ltd. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales and suitability of steepeners, a complex, structured product.

Trident Partners, headquartered in Woodbury, New York, was found by FINRA to have failed to establish, maintain, and enforce a supervisory system to ensure that recommendations for its sale of steepeners were suitable.  Steepeners are complex, structured products that are typically longer-term notes and certificates of deposit with maturities spanning from 10-30 years.  They are typically callable by the issuers after a short, pre-specified time.  They pay higher interest rates, but if the steepener is not called after a year, the rates can drop to as low as zero, earning no returns for the remainder of the term.  FINRA found that during the relevant period, steepeners were a significant part of Trident Partners’ business, with approximately 1,600 transactions and accounting for at least 10% of commissions generated.  Continue reading →

Published on:

Robert Hurley, a formerly registered broker with Key Investment Services LLC, submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he altered a customer’s variable annuity form without the customer’s consent.

FINRA’s findings state that Robert Francis Hurley, of Agawam, Massachusetts, altered and initialed the variable annuity distribution form after the client had signed it.  According to FINRA, Mr. Hurley changed the payment frequency and modified how payments would be calculated, allegedly placing the customer’s initials next to both alterations.  Mr. Hurley’s alterations caused his customer to receive a much larger annuity distribution payment than expected. Continue reading →

Published on:

Paul Blum, a former registered representative with RBC Capital Markets, LLC (RBC Capital), submitted a Letter of Acceptance, Waiver and Consent in which he was barred by the Financial Industry Regulatory Authority (FINRA) for failing to appear for on-the-record testimony which was requested amid an investigation into customer complaints and arbitration claims alleging unsuitable recommendations and excessive trading.

FINRA Rule 8210 requires registered representatives to appear for on-the-record testimony at any time.  According to FINRA, Mr. Blum acknowledged that he received FINRA’s request for his testimony in conjunction with the investigation into customer complaints and arbitration claims, but he refused to appear. Mr. Blum’s BrokerCheck report notes that there are nine pending customer disputes and 11 settled disputes involving allegations of, among other things, unsuitable recommendations and excessive trading. Consequently, Paul Vincent Blum, of Jupiter, Florida, was barred from association with any FINRA member in any capacity. Continue reading →

Published on:

Daniel Hushek, a Registered Principal with G.F. Investment Services, LLC, submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the unsuitable exchange traded fund (ETF) recommendations and transactions of a registered representative under his supervision.  As a result, the representative’s recommendations and trades caused losses of more than $2.4 million in customers’ accounts.

According to FINRA, Daniel Joseph Hushek III, of Bradenton, Florida, failed to adequately supervise or respond to red flags in connection with a registered representative of his member firm who recommended and engaged in unsuitable trading in 44 customer accounts (belonging to 41 customers).  FINRA found that from March 2011 through July 2015, the registered representative under Mr. Hushek’s supervision recommended his customers invest almost exclusively in and hold for lengthy time periods non-traditional ETFs, despite the “enormous risks” associated with holding these complex products. FINRA stated that as a result of this employee’s misconduct, customers incurred realized and unrealized losses of over $2.4 million. Continue reading →