Brokerage Firms In The News - Law Offices of Robert Wayne Pearce

Aug 12, 2016

Oriental Financial Services Fined for Municipal Securities Mismanagements

Oriental Financial Services Corp. (OFS) of San Juan, Puerto Rico submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Market Regulation of the Financial Industry Regulatory Authority (FINRA) for allegedly purchasing municipal securities for its own account from customers and then selling those municipal securities to other customers at prices that were not fair or reasonable. Between July 1, 2013 and September 30, 2013 FINRA investigators found multiple transactions in which OFS was not fair or reasonable to its customers. FINRA alleged OFS failed to take into consideration all relevant factors, including the best judgment of the broker as to the fair market value of the securities at the time of the transaction and of any securities traded in connection with the transaction. Additionally, FINRA alleged that OFS didn’t account for the expense involved in effecting the transaction, the fact that the broker is entitled to a profit, and the total dollar amount of the transaction.

Aug 10, 2016

TradeSpot Markets and Owner Under FINRA Investigation for Unsuitable Penny Stock Transactions

TradeSpot Markets Inc. (TradeSpot) and its President, Chief Operating Officer and owner Mark Beloyan of Davie, Florida were named as Respondents in a Financial Industry Regulatory Authority (FINRA) complaint that alleges the firm, acting through its representatives, engaged in penny stock transactions without complying with Section 15(h) and Rule 15g-9 of the Securities Exchange Act of 1934 and FINRA conduct rules. Section 15(h) of the Exchange Act prohibits brokers and dealers from “using the mails or any means or instrumentality of interstate commerce to effect any transaction in penny stock by any customer except in accordance with the requirements of Section 15(h) and the rules and regulations prescribed thereunder.” Rule 15g-9 of the Exchange Act makes it “unlawful for a broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, any person unless, prior to the transaction, the broker or dealer has approved the person’s account for transactions in penny stocks and has received from the person an agreement to the transaction.”

Aug 8, 2016

Meyers Associates of New York and Co-Founder Fined for Misleading Investors

Meyers Associates, L.P. (the firm) and Bruce Meyers of New York, New York were subject to disciplinary action from the Financial Industry Regulatory Authority (FINRA) for allegedly misleading prospective investors in connection with claims surrounding a medical drug company. Meyers Associates has been a FINRA member since 1994 and has faced 10 FINRA disciplinary actions similar to this case. Mr. Meyers, cofounder of the firm, entered the securities industry in 1982 and acted as a General Securities Representative (GSR) and General Securities Principal (Principal). Between May 2008 and September 2011, Meyers Associates began to raise between $1.5 million and $6 million for SignPath Pharma, Inc. (SignPath) through a private offering of convertible preferred stock and warrants. SignPath had not generated revenue and had an accumulated deficit of over $13.4 million. Meyers Associates and Mr. Meyers collectively owned more than 60 percent of shares in SignPath’s common stock during which time Mr. Meyers sent over 1,037 emails about SignPath to potential investors with whom he had no pre-existing or substantive relationship.

Aug 5, 2016

BancWest and US Bancorp Representative Name in FINRA Complaint Alleging Unsuitable Broker Activity

John Hudnall of Pacifica, California was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleged he participated in undisclosed and/or unapproved outside business activities while associated with a FINRA member firm. Mr. Hudnall entered the securities industry in 2000 and was associated with FINRA member firms BancWest Investment Services, Inc. (BancWest) and US Bancorp Investments, Inc. (US Bancorp) during the relevant period. FINRA alleged that Mr. Hudnall, while associated with US Bancorp and Bancwest, participated in an undisclosed and unapproved private securities transaction, made unapproved and undisclosed financial sales promotions to firm customers, recommended and sold an unsuitable variable annuity product and provided false information in response to FINRA information requests. FINRA’s investigators also alleged that in connection with an undisclosed securities transaction in May 2012, Mr. Hudnall artificially split a customer’s $400,000 REIT investment into two parts and submitted only the smaller part ($40,000) to his firm for supervisory review and approval generating himself $25,000 in ill-gotten commissions.

Aug 1, 2016

Former Ameriprise Representative Under FINRA Investigation for Outside Business Activities

Jim Seol of Lake Forest, California was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges he engaged in outside business activities and participated in private securities transactions without providing notice or receiving approval from his associated firm. Mr. Seol entered the securities industry in 1997 and was registered as a General Securities Representative (GSR) for Ameriprise Financial Services, Inc. (Ameriprise) until his termination in May 2014. The FINRA complaint alleges that from September 21, 2011 through June 4, 2014, Mr, Seol engaged in outside business activities and participated in private securities transactions without providing prior written notice or receiving written approval by his member firm. While still associated with Ameriprise, Mr. Seol formed Western Regional Center, Inc. (WRCI), a California corporation, as President and CEO. Through WRCI, Seol solicited investments in California Energy Investment Fund I, LP (CEIFI), a limited partnership formed by Seol, through WRCI.

Jul 29, 2016

Miami CP Capital Securities Representative Suspended for Private Placement Offering Violations

Charles McInnis of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in connection with a contingent private placement offering of senior secured notes issued by a Columbian energy company. FINRA found Mr. McInnis did not understand the specific requirements of two exemptions from registration applicable for the private placement offering and failed to ensure that his customer’s purchases of the notes complied with the requirements of either of the exemptions. From July 2009 through his resignation in August 2013, Mr. McInnis acted as President, Chief Executive Officer and Chief Compliance Officer for CP Capital Securities, Inc. (CP Capital). During this time period, Mr. McInnis was delegated responsibility to supervise CP Capital and its associated persons’ participation in a minimum contingency private placement offering. A private placement is generally an offering between only a select few investors in order to raise capital without registration with the Securities and Exchange Commission (SEC). Private placement offerings must satisfy certain conditions (safe harbors) to avoid registration with the SEC. For this offering, the Notes were unregistered securities exempt from the registration requirements of Section 5 of the Securities Act pursuant to the Rule144A safe harbor and the Regulation S exemption.

Jul 27, 2016

Oakbridge Financial Advisor Under FINRA Investigation for Alleged “Church” Bond Scheme

Steven Larson of Nisswa, Minnesota was named as a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges he made “numerous misstatements or omissions of material facts concerning the present values and safety of church bonds.” These “church” bonds were issued by religious organizations to build, upgrade, or better church property and cannot be used directly to generate revenue. Mr. Larson has been associated with FINRA since 1993 as a broker dealer and has been registered with Oakbridge Financial Services, Inc. (Oakbridge) since August 2011. FINRA alleges that between May 2013 and March 2015, while associated with Oakbridge, Mr. Larson made a series of false statements and material omissions of fact, both to his customers and to FINRA.

Jul 22, 2016

C. L. King named in FINRA Complaint For Allegedly Taking Advantage of Elderly

C. L. King & Associates, Inc. (CL King) of Albany, New York was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges CL King assisted customers in a scheme to profit from the deaths of vulnerable, elderly and terminally ill patients. The complaint alleges that CL King failed to establish and maintain proper supervisory procedures and failed to recognize suspicious activity in regard to a death-put investment scheme. The FINRA investigators found that two CL King customers recruited terminally ill individuals by offering to pay them between $10,000 and $15,000 in exchange for their agreement to open a joint brokerage account. Between January 2012 and October 2013, CL King opened 36 accounts for its customers with individuals often signing agreements relinquishing their rights over, and responsibilities for, the assets in their accounts. Once the accounts were opened, the CL King customers used the joint accounts to purchase discounted corporate bonds, notes, and market-linked CDs (MLCDs) containing a survivor’s option or “death put,” which allowed the customers to redeem the investments for the full principal amount prior to maturity upon the death of a beneficial owner.

Jul 20, 2016

California Broker Barred for Unsuitable Mutual Fund Switching

Leonard Goldberg of Rancho Mirage, California submitted an offer of settlement to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for an alleged mutual fund “switching” scheme. In June 1986, the NYSE fined Mr. Goldberg $25,000 and suspended him for misconduct similar to these FINRA allegations. Mr. Goldberg acted as a GSR, GSP and OP for FINRA member firm Newport Coast Securities Inc. (Newport) from October 22, 2010 through his termination in November 2014 for failing to follow procedures. FINRA investigators found that from August 2007 through August 2014, while associated with Newport and J.P. Turner & Company, LLP, Mr. Goldberg caused over $123,600 in losses to five customers in connection with 300 mutual fund and Exchange Traded Fund (ETF) transactions that netted him $77,900 in ill-gotten gains. FINRA alleged that over the five year period, Mr. Goldberg engaged in a practice of fraudulent and unsuitable short term switches of Class A mutual funds in client accounts.

Jul 18, 2016

Former Merrill Lynch Representative Barred For Failing to Cooperate

Scott Muirhead of Jacksonville, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to provide documents and information as requested by FINRA staff. Mr. Muirhead first became associated with a FINRA member firm in April 2006. Mr. Muirhead was registered with four other FINRA member firms as a GSR before joining Merrill Lynch, Pierce, Fenner & Smith, Inc. in March 2014. During the course of an investigation into allegations that Mr. Muirhead engaged in unapproved private securities transactions and misused customer funds, FINRA requested that Mr. Muirhead provide documents and information, in correspondence with FINRA Rule 8210, by February 12, 2016. Mr. Muirhead acknowledged that he received FINRA’s request and that he would not provide the requested documents and information at any time.