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In an arbitration proceeding against UBS Financial Services, Inc. and UBS Financial Services, Inc. of Puerto Rico, the Law Offices of Robert Wayne Pearce, P.A. won $4.25 million in compensatory damages plus interest at 6.25% from February 28, 2014 and costs of $170,000 for one of the firm’s clients last month.

This arbitration arose out of a series of unsuitable recommendations by a UBS-PR and UBS financial advisor that our clients purchase and then hold an excessive concentration of Puerto Rico Bonds and UBS-PR Closed-End Funds.  As a result, our clients’ investment portfolios were not diversified from not only an asset allocation standpoint but also overly concentrated in securities from a single geographic area – Puerto Rico.  The excessive concentration in Puerto Rico securities and leverage strategy implemented made the accounts highly speculative, which was inconsistent with not only our clients’ investment objectives but also the UBS-PR and UBS financial advisor’s representations.  UBS and UBS-PR, through their representatives, disseminated false and misleading information to our clients about the nature, mechanics and risks of owning leveraged and concentrated positions in Puerto Rico Bonds and UBS-PR Closed-End Funds and the investment strategy employed in their accounts. Continue Reading

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On November 1, 2018, an OHO (Office of Hearing Officers) decision became final and James Randall Clay has been barred for allegedly engaging in private securities transactions and misrepresenting facts to his member firm and FINRA in violation of FINRA Rules 3270 and 2010.

James Randall Clay was employed with U.S Bancorp from August 2012 until December 2013 when his firm filed a Uniform Termination Notice of Securities Registration (“Form U5”) for violating the firm’s Code of Ethics. FINRA stated that Clay engaged in private securities transactions without written notice or approval from his member firm. On December 7, 2013, while associated with U.S. Bancorp, he started a company under the name “Clay Enterprises, LLC” which he intended to use to manage rental properties. According to FINRA, Clay purchased real estate from an elderly customer from his member firm under terms that only benefited himself. Clay allegedly drafted and signed an agreement to purchase the customers property for $1 million, with the customer financing the amount and borrowed an additional $500,000 to fund the down payment on the property. In addition, Clay established a limited liability company to manage the rental and began collecting rent. The findings stated that Clay never provided notice to his member firm and when the customer’s family complained, he claimed he was not the purchaser and only helped his sister purchase the property. Continue Reading

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Michael Jason Gamez of Corsicana, Texas submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been fined and suspended for allegedly engaging in unauthorized trading and unsuitable recommendations in violation of NASD Conduct Rules 2510(b) and FINRA Rules 2111 and 2010.

From October 29, 2007 to December 15, 2014, Michael Jason Gamez was registered with Edward Jones as a General Securities Representative. According to the FINRA findings, Gamez exercised discretion in 15 customer accounts without obtaining prior written authorization from the customers. Gamez also allegedly executed 4,448 unsuitable trades in 74 customer accounts. FINRA stated that Gamez did not discuss with the customers the shares he intended to purchase, the amount of funds available in the account. Further, he did not consider how the deposited funds limited the transaction size in a given month. In addition, Gamez did not inform the customers on the actual trade date and only notified them after he purchased the securities. FINRA concluded Gamez did not understand the potential risks and rewards associated with the recommended trades and lacked a reasonable basis for his recommendations. Continue Reading

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Noel Carino of Blue Springs, Missouri submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been barred for allegedly refusing to provide documents and information requested violating FINRA Rules 8210 and 2010.

From August 2006 until October 2017, Carino was registered with General Securities Corp. as a General Securities Representative. According to FINRA, Carino violated FINRA Rules 8210 and 2010 by failing to provide documents and information requested. FINRA stated that Carino refused to provide information during a FINRA investigation into whether he engaged in outside business activities without written notice to his firm, whether he engaged in private securities transactions, and whether he reported all outside brokerage accounts in which he had an interest in the firm. FINRA further stated that they sent out two letters on separate dates to acquire the information requested and Carino allegedly failed to comply both times. Continue Reading

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Frank Roland Dietrich of Fairfax Station, Virginia submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) and agreed to be barred for allegedly engaging in private securities transactions in violation of NASD Rule 3040 and FINRA Rules 3280 and 2010.

Frank Roland Dietrich was registered with Quest Capital Securities as a General Securities Representative from March 2013 through April 2019. According to FINRA, Dietrich engaged in private securities transactions totaling more than $10.8 million without written notice or approval from his firm. The FINRA findings stated Dietrich solicited investors to purchase promissory notes relating to the Woodbridge Group of Companies LLC (“Woodbridge”), a purported real estate investment fund, which later filed a voluntary Chapter 11 Bankruptcy petition. FINRA stated that he sold $10,831,645 in the funds’ notes to 58 investors, 30 of whom were customers of Quest Capital and received $260,864 in commissions in connection with the transactions. Continue Reading

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Sean J. Waters of Hemet, California submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been barred for allegedly engaging in churning and excessive and unsuitable trading in violation of Section 10(b) of the Exchange Act; Exchange Act Rule 10b-5; and FINRA Rules 2020, 2111, and 2010.

From December 2010 until April 2017, Mr. Waters was registered with Financial West Group as a General Securities Representative. Between January 2013 and March 2016, Waters engaged in churning and excessive and unsuitable trading in two accounts held by one customer. FINRA stated that during the relevant period, Waters exercised de facto control over and made all trading decisions in the customer’s account including which specific securities to buy and sell, the quantity of securities to buy and sell, and when to buy and sell the securities. According to FINRA, Waters executed 540 purchase transactions and executed 510 sale transactions. FINRA further stated that Water’s trading resulted in more than $88,000 in losses of the $150,000 the customer initially transferred to the firm. Waters allegedly earned 40 percent of his commissions solely from the trading in the customer’s account totaling $115,000. Continue Reading

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Xavier Patino of Burr Ridge, Illinois submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which Patino was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for allegedly making an unsuitable recommendation and making guarantees against loss in violation of FINRA Rules 2010 and 2150(b).

From October 2012 through May 2017, Patino was registered with JP Morgan Securities as a General Securities Representative.  According to FINRA, sometime in 2014 and 2016, Patino allegedly made material misstatements to a customer guaranteeing the customer against a loss in connection with a variable annuity purchase. The FINRA findings stated Patino recommended that the customer purchase a $192,000 variable annuity contract. FINRA further found that Patino gave the customer documents to sign stating she would be able to take out some of her investment without penalty, and she would not lose any of her investments because they were guaranteed. FINRA stated that Patino knew the information was false but signed the documents anyways and by 2017 the variable annuity lost value. Continue Reading

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David Howard Fagenson of Palm Beach Gardens, Florida submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which Fagenson was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in quantitatively unsuitable trading in the accounts of three seniors.

From September 2010 until October 2016, Fagenson was registered with UBS Financial Services Inc. (UBS) as a General Securities Representative. According to FINRA, between January 2012 and September 2016, Fagenson engaged in excessive and unsuitable trading of the accounts of three customers. FINRA stated that these customers had not proposed any trades and allowed Fagenson de facto control over the accounts. The FINRA findings found that Fagenson’s actions led to major losses in each customer’s account. The account held by one of the customers incurred losses of $283,314, while the other, belonging to the married couple, incurred losses of $239,000. In conclusion, FINRA also stated that Fagenson received $470,000 in commission from these accounts. On March 16, 2018, Respondent Fagenson filed a Chapter 7 bankruptcy petition pursuant to Title 11, United States Code. Accordingly, no monetary sanction is being assessed in this matter. Continue Reading

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Kyusun Kim of San Diego, California submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was barred by the Financial Industry Regulatory Authority (FINRA) for allegedly making unsuitable recommendations in violation of NASD Rules 3110, 2310 and 2110 and FINRA Rules 4511, 2111 and 2010.

In February 2006 Kyusun Kim joined Independent Financial Group LLC (IFG) as a General Securities Representative. According to FINRA, between 2008 and 2015, Kim made unsuitable recommendations to numerous senior customers who were retired. FINRA stated that Kim failed to disclose to his customers any risks associated with the products, including that the securities were speculative and illiquid. Kim was also allegedly accused of providing inaccurate and inflated net worth to certain customers so that they appeared to be eligible to purchase certain speculative investments. FINRA concluded that these customers suffered substantial losses due to Kim’s recommendations. Continue Reading

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Andrew Jay Lowe of Leesburg, Alabama submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which he was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for allegedly recommending unsuitable trades and failing to timely amend his Uniform Application for Securities Industry Registration or Transfer (“Form U4”).

From January 2009 until September 2014, Andrew Lowe was registered with Sterne Agee Financial Services (Sterne Agee) as a General Securities Representative. According to FINRA, during the relevant period, Mr. Lowe recommended and engaged in unsuitable trading of Class A mutual funds in 24 customers’ accounts. Certain portions of those investments were then liquidated within a short time period and were unsuitable. FINRA stated that Mr. Lowe caused these customers to incur unnecessary sales charges in their accounts. The FINRA findings found that Lowe received approximately $36,180.87 in commissions. Since then, the firm has reimbursed $102,446.47 back to the customers that resulted from the unsuitable recommendations. In conclusion, FINRA also stated that Lowe allegedly failed to timely amend his Form U4 to disclose a federal tax lien of 183,380.57. Continue Reading