Articles Posted in Broker Misconduct

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Corinne Renae Mittag, of Omaha, Nebraska, was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that she executed numerous unauthorized trades in a customer’s account while employed with BancWest Investment Services, Inc. (BancWest).

According to FINRA’s complaint, an imposter posing as a customer sent emails to Ms. Mittag requesting that she sell securities in order to fund a wire request to a third party.  Ms. Mittag allegedly executed the sale of six corporate bond positions and one mutual fund position based upon the imposter’s email.  FINRA alleges that at no time prior to submitting the trades did Ms. Mittag contact or attempt to contact the customer by phone, as was required.  The complaint further alleges that Ms. Mittag falsely represented to BancWest that she had spoken with the customer by phone in order to process the trades.  Continue reading →

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Jarred M. Lawson, of Jacksonville, Florida, 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 making negligent misrepresentations with respect to the sale of Class A and C mutual funds.

FINRA alleged that while registered with Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch), Mr. Lawson made negligent misrepresentations or omissions regarding the sale of Class A and C mutual funds during phone calls with numerous customers.  According to FINRA, Mr. Lawson failed to discuss the share classes and the fees associated with them.  Further, Mr. Lawson allegedly misrepresented the fees associated with a managed account.  Continue reading →

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Jose Enrique Jimenez, a former registered principal with PFS Investments, Inc., submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $10,000 by the Financial Industry Regulatory Authority (FINRA) for allowing his son, who was unregistered, to solicit prospective customers and recommend the purchase of mutual funds.

According to FINRA, Jose Jimenez, of Inglewood, California, allowed his unregistered son to solicit prospective customers, make over 100 mutual fund presentations, and recommend the purchase of mutual funds which resulted in total sales of over $800,000 in approximately 35 accounts.  Further, Mr. Jimenez allowed his son to assist customers with completion of the necessary documents and to enter client information into the firm’s computer system utilizing his personal credentials.  FINRA found that Mr. Jimenez falsely stated on three firm compliance questionnaires that he did not allow an unregistered individual to engage in securities activities.  Continue reading →

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Curtis Randle El, of Pittsburgh, Pennsylvania, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly recommending and executing unsuitable unit investment trust and mutual fund trades, including switches, in the accounts of elderly customers with conservative investment goals, causing the customers to suffer losses of approximately $33,185.00.

FINRA alleged that Mr. Randle El recommended and effected unsuitable trades in the accounts of three elderly customers who had conservative investment objectives.  Whereas Class A mutual funds and unit investment trusts (UITs) are designed to be longer-term investments, Mr. Randle El allegedly recommended that the customers sell them after an average of just 60 days.  Furthermore, some of the transactions involved mutual fund switching – a practice where Class A mutual fund shares’ proceeds are used to purchase other Class A mutual fund shares. Mutual fund switching violates the antifraud provisions of federal securities laws when stockbrokers, in order to increase their compensation, induce investors to incur the fees associated with redeeming shares of one mutual fund and purchasing the shares of another fund and the benefit to the customer does not justify those costs. Continue reading →

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A FINRA hearing panel has expelled Red River Securities, LLC and barred its CEO, Brian Keith Hardwick, for fraudulent sales in five oil and gas offerings.  They have also been ordered to pay $24.6 million in restitution to investors.  According to FINRA, over the course of four years, Red River Securities and Brian Hardwick made misrepresentations and omissions in connection with the sales of interests in oil and gas joint ventures issued by Regal Energy, LLC, a close affiliate of Red River Securities.

FINRA found that Red River Securities and Brian Hardwick fraudulently misrepresented and omitted facts relating to the risky offerings.  For example, they allegedly misrepresented the amount of income distributed to investors, failed to disclose material facts regarding the risk involved, and omitted information about the fees involved.  The FINRA panel referred to this aforementioned misconduct as egregious and noted the “extent of the respondents’ monetary gain,” in which investors received total distributions less than $50,000 from the more than $25 million they invested in the offerings. Continue reading →

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Dion Rey Padilla, of San Antonio, Texas, submitted an Offer of Settlement to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly making an unauthorized purchase of a variable annuity for a customer and misrepresenting to the customer on numerous occasions that it was not a variable annuity.

FINRA found that, while employed by NEXT Financial Group, Inc., Dion Padilla misrepresented a variable annuity investment to his customers, who stressed to him that they did not want any of their funds invested in a variable annuity due to the fees and their desire for liquidity.  Mr. Padilla allegedly presented a variable annuity application to the customer, assuring him that it was not for a variable annuity, but a type of managed money investment.  Mr. Padilla’s misrepresentations, however, were false and misleading. Continue reading →

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Austin Wayne Morton, a previously registered broker with Edward D. Jones & Co. L.P. (Edward Jones), was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he converted $36,000 from his former customer, an elderly man suffering from dementia.

According to the FINRA complaint, Austin Wayne Morton, of Spiro, Oklahoma, allegedly kept $22,000 in cash that his elderly customer, whom Mr. Morton apparently knew since childhood, had withdrawn from his closed IRA account.  Mr. Morton is alleged by FINRA to have used those funds for his own benefit. Continue reading →

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Matthew Maczko, a former registered representative with Wells Fargo Advisors, LLC, submitted a Letter of Acceptance, Waiver and Consent (AWC) 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 four brokerage accounts held by an elderly customer.

According to FINRA, Matthew Christopher Maczko, of Downers Grove, Illinois, was the registered representative for his now 93 year old customer’s four brokerage accounts.  According to FINRA, Mr. Maczko allegedly controlled the four brokerage accounts.  During the relevant period, January 2009 to April 2016, FINRA found that Mr. Maczko effected over 2800 transactions in this customer’s accounts.  FINRA stated that Mr. Maczko’s excessive trading strategy generated approximately $581,650 in commissions, $84,270 in fees, and allegedly caused his customer $397,000 in trading losses.  Without admitting or denying the findings, Mr. Maczko was barred from association with any FINRA member in any capacity. Continue reading →

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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 →