Until recently, Ariel Luis Fernandez was a registered stockbroker with Liberty Partners Financial Services, LLC (Liberty Partners) and a registered Investment Advisor with Liberty Partners Capital Management, LLC in Pembroke Pines, Florida. Rather than face the music, it appears that Mr. Hernandez entered into an agreement with the Financial Industry Regulatory Authority (FINRA) to be barred from any future registration in the securities industry for noncompliance with an industry rule. The FINRA Rule he agreed that he violated was Rule 8210. It requires that registered persons cooperate with ongoing investigations by producing documents and giving testimony. By agreeing not to cooperate, Mr. Hernandez closed down the investigation and avoided severe sanctions.
According to the Letter of Acceptance, Waiver and Consent (AWC), Mr. Hernandez was under an investigation for allegedly wire transferring funds from a client’s fee-based brokerage account to his own Ally Bank account without the customer’s knowledge and authorization. The customer had filed an arbitration claim as well and indicated the damages suffered from the wire transfers amounted to $158,000. These were very serious allegations and FINRA closed its investigation with only an agreement that Mr. Hernandez be barred from the securities industry without any fine or other sanction. It sounds like FINRA took the easy way out as well.
The only ones that came out on the short end are the public investors. Once the AWC is signed, the investigation is closed and the public will never know whether Mr. Hernandez committed the crime of theft. The public will not know how a stockbroker was able to transfer funds from a supposedly secure account at Liberty Partners to his personal account without any detection. Stockbrokers will not be deterred unless they face prison time for theft. Simply telling them they can no longer operate in the securities industry is not going to safeguard the public investors in the future.
Stock brokerage firms also have a duty to supervise their employees. They are required to have policies and procedures in place that will safeguard the funds and securities of customer accounts. Broker-dealers must establish and implement a reasonable supervisory system to protect customers from all types of broker misconduct– not only theft and misappropriation. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered losses due to theft, misappropriation and other misconduct by their broker can bring forth claims to recover damages against broker-dealers. Stock brokerage firms like Liberty Partners should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct and if they don’t and must be held accountable by the courts and arbitrators because FINRA is going to take the easy way out and avoid lengthy investigations and prosecutions which would expose the industry abuses.
Have you suffered losses in your investment account due to your stockbroker’s misconduct? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against stockbrokers for theft, misappropriations, and other illegal conduct.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over , Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.