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.
Stockbrokers, registered representatives, and other financial industry professionals have been known to engage in many types of fraudulent and unlawful behavior which violate industry rules and procedures. In order to protect investors from such misconduct, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system. The implementation of the rules requires supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors do not establish and implement these protective measures, they may be a liable to account holders for losses flowing from the misconduct. As a result, account holders who have suffered losses stemming from misrepresentations, omissions, and other broker misconduct can bring forth claims to recover damages against broker-dealers like Merrimac Corporate Securities, which have a duty to supervise its employees in order to prevent the above-described misconduct.
Have you suffered losses in your Merrimac Corporate Securities account due to fraudulent activity by your broker? 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 Merrimac Corporate Securities stockbrokers who may have engaged in misconduct and caused investment losses.
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 visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at email@example.com for answers to any of your questions about this blog post and/or any related matter.