Articles Posted in Stockbrokers In The News

James Bradley Schwartz of New York, New York submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he allegedly churned, excessively traded and engaged in unauthorized transactions in willful violation of Section 10(b) of the Securities Exchange Act, Rule 10b-5, and FINRA Rules 2111, 2020 and 2010.

From June 2013 through June 2016, James Bradley Schwartz was registered with Aegis Capital Corp. as a General Securities Representative. According to the FINRA findings, James Bradley churned and excessively traded customer accounts.  He executed approximately 535 trades in four customers’ accounts resulting in a combined loss of more than $660,000. The findings also stated that Schwartz’s received more than $194,000 of the generated gross sales and commissions of approximately $277,705. In addition to the FINRA findings, James exercised de facto control over the customers’ accounts and executed 261 trades with a value of approximately $10 million without his customers’ authorization, including unauthorized trades in a deceased customers account. FINRA stated that Schwartz did not have a reasonable basis to believe that his trading in the customers’ accounts were suitable. Continue Reading

Daniel Gordon Maughan submitted an Offer of Settlement to the  Financial Industry Regulatory Authority (FINRA) in which he allegedly churned, excessively traded and made unsuitable recommendations in a customer’s account in violation of Section 10(b) of the exchange Act of 1934, Rule 10b-5, and FINRA Rules 2020 and 2010.

From May 18, 2010 until August 17, 2017, Daniel Maughan was registered with Financial West as a General Securities Representative. According to FINRA, Mr. Maughan exercised de facto control over a customer’s trust account, executing approximately 1,648 trades, totaling $70 million. FINRA stated that Daniel Maughan’s churning and excessive trading generated commissions of $841,000 while causing the account to incur losses of $812,000. FINRA’s findings also stated the trading was inconsistent with the customer’s objectives and financial needs, and Mr. Maughan did not have a reasonable basis to believe the transactions were suitable. In addition, FINRA stated that by churning and seeking to maximize his own financial benefit Daniel Maughan acted either with intent to defraud the account or with reckless disregard for the customer’s interests. Daniel Maughan has been barred from association with any FINRA member in all capacities. Continue Reading

Kalos Capital Inc. and Darren Michael Kubiak submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which Kalos Capital was fined for allegedly failing to supervise Darren Michaels unsuitable recommendations all in violation of NASD Rules 3010(a) and 3010(b) and FINRA Rules 3110(a), 3110(b), 2111 and 2010.

Darren M. Kubiak joined Kalos Capital as an investment company and variable contracts products representative in January 2007. According to FINRA Kubiak recommended the purchase of Leveraged and Inverse Exchange Traded Funds (LIETFs) to 17 customers without having a sufficient understanding of the risks and features. The FINRA findings stated that the customers only held the LIEFTs for 722 days during which they incurred losses of $98,000. FINRA also stated that the Kalos Capital Inc. failed to ensure Kobiak had reasonable basis to recommend the LIEFT’S and failed to enforce its supervisory system designed to ensure compliance of laws, regulation, NASD and FINRA Rules in relation to the sales. In addition, FINRA stated that Kalos Capital failed to provide training to all representatives before permitting them to sell the product. Continue Reading

Robert Wayne Pearce, P.A. is investigating and representing investors against brokerage firms and financial advisors who offered and sold securities issued by affiliates of EquiAlt, LLC.  EquiAlt is a private real estate company which organized at least four private placements: EquiAlt Fund, LLC; EquiAlt Fund II, LLC; EquiAlt Fund III, LLC; and EA Sip, LLC (collectively referred to as the EquiAlt Funds).  According to a recent SEC Complaint, EquiAlt CEO Brian Davison and Managing Director Barry Rybicki offered and sold $170 million of unregistered debentures issued by the EquiAlt Funds to over 1,100 investors across the United States.

The SEC Complaint alleged that Brian Davison, Barry Rybicki, and others misrepresented the unregistered debentures as “safe,” “low risk,” and “conservative.”  Also, while investors were promised “that substantially all of their money would be used to purchase real estate in distressed markets in the United States and their investments would yield generous returns … EquiAlt, Davison, and Rybicki misappropriated millions in investor funds for their own personal use and benefit.”  According to the SEC Complaint, the revenues generated by the EquiAlt Funds became insufficient to pay the interest owed to investors.  Because of this insufficiency, the SEC alleged the Defendants resorted to fraud (a Ponzi scheme), using new money from investors to pay the returns promised to existing investors.

While many of the sales were solicited by unregistered EquiAlt salespersons, there were reportedly many sales by small offices of registered salespersons associated with large independent FINRA-registered brokerage and insurance firms in Arizona, California, Nevada, and many other states nationwide. Continue Reading

Timothy Robert Millis of Lake Orion, Michigan submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been suspended for allegedly making unsuitable recommendations in violation of FINRA Rules 2111 and 2010.

In 2002, Millis joined NYLIFE Securities as General Securities Representative and Insurance Agent. According to FINRA, Millis recommended 66 unsuitable short-term Class A mutual fund share transactions in ten customers’ accounts. FINRA stated that the ten customers were charged approximately $174,725 in upfront sales charges and five customers accrued losses totaling approximately $33,391. FINRA also found that Millis recommended to another customer an unsuitable switch from a variable annuity to Class A mutual fund shares which resulted in a surrender charge of $14,866 and upfront sales charges of $15,340.  In addition, FINRA stated that Millis did not have a reasonable basis to believe these recommendations were suitable therefore violated the customer-specific suitability obligation. Continue Reading

Jun Zhou of Chicago, Illinois submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in private transactions in violation of FINRA Rules 3280 and 2010.

In November 2015, Jun Zhou joined Leaders Group as an Investment Company and Variable Contracts Products Representative. According to FINRA, between April 2017 and August 2018, Zhou’s real estate company received $179,000 in compensation from 27 private securities transactions, with sales of $16,050,000 without notice or approval from her Firm. The findings stated that Zhou also formed a private real estate fund that was managed by her real estate company and filed a notice of exempt offering of securities with the Securities and Exchange Commission related to 12 transactions through which they sold $2,000,000 in membership interests. In addition to the findings, Leaders Group filed a form U5 on August 2, 2018, reporting that Zhou had been discharged for unauthorized outside business activity that involves a private securities transaction. Continue Reading

Fredrick Martin Randhahn of South Ogden, Utah 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 private securities transactions in violation of FINRA Rules 3280 and 2010.

In January 2012, Randhahn joined Sigma Financial as a General Securities Representative. According to FINRA, Randhahn sold $625,000 in promissory notes related to a real estate investment fund to five investors, two of whom were also customers of Sigma Financial. The FINRA findings stated that Randhahn invested $125,000 in the promissory notes and received $33,167.67 in commissions in connection with these transactions. In addition, FINRA found that Randhahn denied participating in any private securities transactions or selling any non-securities investment products in response to firm questionnaires. Continue Reading

Elizabeth Ann Guarino of East Meadow, New York submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which Guarino was fined and suspended by the Financial Industry Regulatory Authority (FINRA) for alleged unsuitable recommendations and unauthorized transactions in violation of FINRA Rules 2111 and 2010.

From May 2008 until November 2017, Elizabeth Ann Guarino was registered with Wells Fargo as a General Securities Representative. According to FINRA, Guarino recommended that an elderly customer invest $85,000 in oil and natural gas limited partnerships that were speculative securities transactions. The FINRA findings stated that the partnerships’ earnings were inadequate to cover fixed charges and proceeds raised from the preferred securities would be applied to reduce outstanding debt. As a result of declining oil and gas prices, the company filed for bankruptcy and the customer sustained loses of over $150,000. The firm compensated the customer for her losses and filed a Uniform Termination Notice for Securities Industry Registration (“Form U5”) terminating Guarino. Continue Reading

David Quentin Kendrick of Shreveport, Louisiana 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 engaging in private transactions in violation of NASD Rule 3040 and FINRA Rules 3270, 3280 and 2010.

From May 2002 until May 2018, David Quentin Kendrick was registered with NYLife as a General Securities Representative. According to FINRA from November 2011 through January 2017, Kendrick engaged in an outside business activity with an investment club and also engaged in 9 separate private securities transactions without notice or approval from his firm. The FINRA findings stated in November 2011, Kendrick became officer and manager of an investment club, TC, but did not disclose his participation to his firm until August 2015. FINRA also stated that NYlife denied approval, and Kendrick continued his business with TC. According to FINRA Kendrick recommended and facilitated investments totaling $290,000 in three private placements and personally invested $106,297 in six different private placements. In addition, FINRA found, Kendrick failed to disclose all of his personal investments away from his firm and made false statements on six annual compliance questionnaires and five branch audit questionnaires concerning his private securities transactions. Continue Reading

Roger Lee Owens of Elkton, Maryland 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 engaging in private securities transactions in violation of FINRA Rules 3280 and 2010.

In July 2007, Roger Lee Owens registered with Cetera Advisors as an Investment Company Products Variable Contracts Representative. According to FINRA, Owens was discharged by his firm for allegedly engaging in private securities transactions without approval from Cetera. The findings stated that Owens sold $1,170,000 in promissory notes to 14 investors, four of whom were Cetera customers, relating to Woodbridge, a purported real-estate investment fund. The findings also stated that he received $59,471 in commissions and personally invested $75,000 in the notes. In addition, Owens falsely attested in compliance questionnaires that he had not engaged in any private securities transactions without the approval from Cetera. Continue Reading