Stockbrokers In The News - Law Offices of Robert Wayne Pearce

Oct 20, 2014

Richard Happle Fined and Suspended for Failure to Execute a Trade Order

Richard Happle, a former registered representative with Tampa, Florida-based Raymond James & Associates, Inc. (Raymond James) submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he failed to execute a customer trade order, thereby allegedly causing his customer to suffer approximately $28,000 in losses. According to FINRA, Richard Happle, of St. Petersburg, Florida, was instructed by his customer to sell all shares of a certain stock held in his account at the market open the following day. The next day, Richard Happle allegedly decided not to sell the customer’s stock shares due to the fact that the stock price was falling rapidly and he wanted to talk over the decision to sell with his customer. The customer, however, lived in Alaska and Richard Happle delayed contacting him by a few hours due to the time zone difference.

Oct 9, 2014

Richard Morello, Junior Alexis, and Florida Company Vertical Integration Group Charged With Illegal Precious Metals Transactions

Lake Worth, Florida-based company Vertical Integration Group, LLC, along with its Managing Members Richard V. Morello, also of Lake Worth, and Boynton Beach, Florida-based Junior Alexis have been ordered by a Federal Court to pay monetary sanctions for their part in illegal, off-exchange precious metals transactions. According to the Order of Default Judgment by the U.S. District Court for the Southern District of Florida, Vertical Integration Group, by and through Richard Morello and Junior Alexis, solicited investors to engage in off-exchange leveraged, margined, or financed precious metals transactions, executed through Hunter Wise Commodities LLC. The precious metals included gold, silver, platinum and palladium. The Order states that approximately 39 customers of Vertical Integration Group invested over $1 million and ended up losing $893,859 of their monies to trading losses, commissions, fees and other charges. The Order further states that Vertical Integration Group received commissions and fees totaling $554,566 for these precious metals transactions.

Oct 6, 2014

The SEC Charges Positron Corp, Patrick Rooney, and John Rooney with Market Manipulation Scheme

The Securities and Exchange Commission (SEC) has brought charges against Westmont, Illinois-based Positron Corporation (Positron), then-CEO of Positron, Patrick G. Rooney of Westmont, Illinois, and John R. Rooney, of Jupiter Florida. The SEC has charged them with orchestrating a market manipulation scheme involving the company’s stock. The SEC’s complaint alleges that Positron, Patrick Rooney, and John Rooney made an inducement payment to a stock promoter who would purchase shares of Positron ahead of planned press releases in order to manipulate the stock by giving the appearance of market activity, thereby increasing the trading price and volume.

Sep 30, 2014

The SEC Charges Two Former Wells Fargo Employees With Insider Trading Scheme

The Securities and Exchange Commission (SEC) has brought charges against two former Wells Fargo employees, Gregory T. Bolan Jr. (Bolan) of Nashville, Tennessee and Joseph C. Ruggieri (Ruggieri) of Raleigh, North Carolina, for an alleged insider trading scheme involving buying or short selling stocks ahead of research analyst reports which contained ratings changes. According to the SEC order, Bolan was a research analyst at Wells Fargo Securities, LLC (Wells Fargo) and provided Ruggieri, a former trader at Wells Fargo, with advance notice of forthcoming rating changes. This advanced information allegedly led to Ruggieri trading ahead of the ratings changes; short selling stock ahead of a downgrade and buying stock ahead of upgrades. Ruggieri allegedly generated over $117,000 in gross profits for Wells Fargo and was terminated from Wells Fargo after compliance questioned him about communications involving Bolan. Bolan resigned from Wells Fargo after being questioned by compliance personnel. The SEC’s order, instituting a litigation proceeding, charged Bolan and Ruggieri with violating Sections 17(a) and 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The administrative proceeding will determine what, if any, relief is in the public interest, including disgorgement of ill-gotten gains, prejudgment interest, monetary penalties and other remedial measures. Illegal insider trading is the act of buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about a company. Insider trading violations may also include “tipping” such information; trading by the person tipped – the “tippee,” and trading by those who misappropriate such information. Section 10(b) of the Securities and Exchange Act of 1934 makes it unlawful for any person to “use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” To implement Section 10(b), the SEC adopted Rule 10b-5, which makes it unlawful to engage in fraud or misrepresentation in connection with the purchase or sale of a security.

Jul 31, 2014

Former Aegis Capital Broker Malcolm Segal Under Investigation for Unauthorized Transfers

According to the Financial Industry Regulatory Authority (FINRA), former Aegis Capital Corporation (Aegis) stockbroker Malcolm Segal, of Langhorne, Pennsylvania and Boynton Beach, Florida, is under investigation for a Pennsylvania-based customer complaint alleging that $225,000 was transferred from his account without his authorization. According to FINRA records, “Mr. Segal failed to cooperate with an internal investigation into a customer complaint alleging that in December 2013, Mr. Segal, on an unauthorized basis, transferred monies via wire from the client’s account.” Malcolm Segal was discharged by Aegis on July 28, 2014.

Jul 23, 2014

Meyers Associates Broker Craig Josephberg Arrested

Last week, Craig L. Josephberg, a Meyers Associates, LP stockbroker, was arrested for engaging in a penny stock fraud scheme involving many securities including CodeSmart Holdings, Cubed, Inc., StarStream Entertainment, Inc. and The Staffing Group, LTD. He was indicted along with A.J. Discala, Marc E. Wexler, Kyleen Cane, Victor Azrak and Ira Schapiro for allegedly defrauding investors and potential investors in several public companies. The scheme in which Mr. Josephberg allegedly participated was “built on lies, deceit and manipulated trading activity to defraud the securities markets and investing public,” according to the US Attorney’s office for the Eastern District of New York. Mr. Joesphberg’s alleged “pump and dump” scheme included false and misleading press releases and SEC filings, stock market manipulation techniques such as “wash trades,” “matched trades,” “marking the close,” and unauthorized trading for clients who entrusted the stockbrokers with their life savings. As in all such schemes, the price of the various public corporations climbs for no real reason and then falls from the sky with the investors holding worthless stock. Mr. Josephberg’s clients were allegedly on the dumping side of the scheme. According to the FBI, some of the victims had no idea that the stock was being purchased in their accounts by the stockbrokers. The fraudulent scheme purportedly took place in 2013 and this year.

Jul 21, 2014

Former WFG Investments Broker Matthew Bell Arrested

Last week, Matthew A. Bell, a former WFG Investments, Inc. stockbroker was arrested for engaging in a penny stock fraud scheme involving many securities, including CodeSmart Holdings, Cubed, Inc., StarStream Entertainment, Inc. and The Staffing Group, LTD. He was indicted along with A.J. Discala, Marc E. Wexler, Kyleen Cane, Victor Azrak and Ira Schapiro for allegedly defrauding investors and potential investors in the 4 public companies. The alleged scheme was “built on lies, deceit and manipulated trading activity to defraud the securities markets and investing public,” according to the US Attorney’s office for the Eastern District of New York. The defendants alleged “pump and dump” scheme included false and misleading press releases and SEC filings, stock market manipulation techniques such as “wash trades,” “matched trades,” “marking the close,” and unauthorized trading for clients who it entrusted the stockbrokers with their life savings. As in all such schemes, the price of the various public corporations climbs for no real reason and then falls from the sky with the investors holding worthless stock. According to the FBI, some of Mr. Bell’s victims had no idea that the stock was being purchased in their accounts by the stockbroker.

Jul 17, 2014

John Warren DuBrule Barred by FINRA for Misrepresenting Hedge Fund Values to Investors

John Warren DuBrule, a former Orlando, Florida registered principal employed by Altamonte Springs, Florida-based Merrimac Corporate Securities, Inc., submitted an Offer of Settlement 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 engaged in securities fraud by knowingly causing the distribution of summary quarterly statements that contained false information about the valuation of a hedge fund in willful violation of industry rules and regulations. FINRA found that Mr. DuBrule allegedly inflated the value of the fund’s assets on its quarterly statements by including the face value and promised interest of defaulted promissory notes as assets of the fund. FINRA found that the quarterly statements falsely inflated the value of investors’ interests in the fund. Further, that the summary quarterly statements contained false and misleading statements that the fund utilized the services of an independent firm to prepare statements and tax reports, and that they were prepared in accordance with generally accepted accounting principles (GAAP). According to FINRA, Mr. DuBrule allegedly failed to disclose that the valuation of the fund was also based on defaulted and cancelled promissory notes. Mr. DuBrule allegedly misappropriated investor funds by withdrawing the funds despite knowing that the promissory notes had been cancelled and the fund’s value had decreased substantially. Mr. DuBrule allegedly made materially false and misleading statements and omissions to customers to entice them to invest $3.8 million into the fund. Consequently, John DuBrule was barred from association with any FINRA member in any capacity.

Jun 20, 2014

Raymond James Broker Barred by FINRA for Alleged Ponzi Scheme

Claus Foerster, a Greenville, South Carolina-based stockbroker formerly employed by Raymond James, has been barred by the Financial Industry Regulatory Authority (FINRA) for allegedly running a Ponzi scheme. FINRA’s complaint alleged that Mr. Foerster had solicited investments for a purported investment fund known as S.G. Investments, which was actually a bank account controlled by Mr. Foerster. FINRA further alleged that Mr. Foerster instructed thirteen (13) customers to move funds from their brokerage accounts to their personal bank accounts and then write checks payable to S.G. Investments. FINRA accused Claus Foerster of stealing nearly $3 million from the clients since 2000. Mr. Foerster signed a letter accepting FINRA’s punishment without admitting or denying FINRA’s allegations.

Jun 9, 2014

FINRA Fines and Suspends Jon Larson for Unauthorized ETF Sell Order

Jon Fred Larson, a Lakeland, Florida-based securities representative formerly employed by Allen & Company of Florida, Inc. (Allen & Co.), also of Lakeland, Florida, submitted a Letter of Acceptance, Waiver and Consent 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 entered an unauthorized sell order for an Allen & Co. customer who held an exchange traded fund (ETF) which was valued at approximately $16,000 in his account. Jon Larson allegedly entered the ETF sell order without the customer’s knowledge, consent or authorization. Consequently, Mr. Larson was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for 10 business days. The suspension was in effect from March 17, 2014 through March 28, 2014.