Library - Law Offices of Robert Wayne Pearce

Former Wells Fargo Broker Barred by FINRA for Soliciting Customers into Unapproved Investments

Douglas Jay Melzer, a former broker with the Sewickley, Pennsylvania branch of Wells Fargo Advisors, LLC (Wells Fargo), 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 solicited his firm’s customers to invest $2 million in an unapproved outside investment. According to FINRA, Douglas Melzer, aka Dutch Melzer, solicited four of his Wells Fargo customers to invest $2 million in an investment contract that had not been approved by the firm. Mr. Melzer received at least $27,000 for his participation in the securities transactions and a 2.5% member interest in the investment. Further, FINRA found that Mr. Melzer caused the registered representative code on some customer accounts to be changed, which resulted in the firm paying him over $9,500 in commissions that should have gone to his partners. Consequently, Douglas Melzer, of Mars, Pennsylvania, was permanently barred from any association with any FINRA member in any capacity.

Apr 6, 2015

North Hills Management Fined $26 Million for Commodity Pool Fraud

The U.S. Commodity Futures Trading Commission (CFTC) has ordered New York resident Mark Bloom, along with his firm North Hills Management, LLC to pay a $26 million civil monetary penalty for operating a fraudulent commodity pool called North Hills LP and for misappropriating customer funds. The CFTC Order states that Mr. Bloom and North Hills Management misappropriated approximately $13 million from North Hills LP between 2002 and 2009. During this time, Mr. Bloom lived a lavish lifestyle, including the purchase of a $5 million Manhattan apartment. The Consent Order found that Mr. Bloom and North Hills Management made several misrepresentations and omissions to pool participants. On July 30, 2009 Mr. Bloom plead guilty to charges of misappropriation and concealment in a parallel criminal proceeding. Mr. Bloom is still awaiting sentencing in his criminal case and will be required to pay restitution in an amount to be decided by the court.

Apr 3, 2015

Complaint Filed Against Former Calton & Associates Representative for Alleged Bond Mark Ups

A complaint filed against Calton & Associates Inc., located in Tampa, Florida, and Kenneth Harter of Roland, Arkansas alleges that they “charged customers prices that were not reasonable in municipal bond transactions.” The complaint alleges that R.M. Duncan Securities, acting through two of its representatives and, eventually, Calton & Associates and Mr. Harter, sold bonds to its customers at unfair prices. R.M. Duncan Securities representatives allegedly solicited three elderly customers to purchase a total of $215,000 par value of the bonds. According to FINRA, the representatives told their clients the bonds “would receive an 11% tax-free yield on the bond interest payments, despite the fact that the bonds were in default and not paying full interest.” Calton & Associates and Mr. Harter allegedly solicited customers to purchase bonds that were purchased from the R.M. Duncan Securities at a price that was 60% higher than the prevailing market price. FINRA alleges that R.M. Duncan Securities and Calton & Associates worked in “concert” to make the inter-dealer appear higher than the market price to pull off their scheme. FINRA alleges the brokerage firms failed to supervise their municipal securities activities and prices and are currently under investigation.

Mar 30, 2015

Complaint Filed Against Former Arete Wealth Management Representative for Misrepresenting Debentures

A complaint filed by the Financial Industry Regulatory Agency (FINRA) against Jonathan Jay Greenfield of West Hills, California alleges the former representative of Arete Wealth Management (AWM) made fraudulent misrepresentations and omissions through emails with clients regarding features of renewable secured debentures. FINRA alleges that during the period of March 2012 to October 2012, Mr. Greenfield made material and sometimes intentional misrepresentations to three customers regarding connections with their purchases of GWG Renewable Secured Debentures. According to FINRA, Mr. Greenfield made similar misrepresentations to more than fifty other clients who did not end up buying the debentures during this period. In addition, FINRA alleges that between September 2012 and November 2012, Mr. Greenfield “provided twelve customers with GWG sales literature that stated GWG was secured by life insurance policies owned by GWG.” However, the debentures were not secured by insurance policies. These alleged misrepresentations and omissions are violations of NASD Rule 2210 and FINRA Rule 2010. FINRA’s enforcement department has requested sanctions to be imposed and for further findings into which Mr. Greenfield willfully violated the Exchange Act.

Mar 27, 2015

Complaint Filed Against Allstate Representative for Fraud

A complaint filed by the Financial Industry Regulatory Agency (FINRA) against Philip Leonard Grasso Jr. alleges that he, a representative of Allstate Financial Services, LLC (Allstate Financial) “inserted himself into the lives of two elderly customers in order to defraud them of their funds.” FINRA alleged that while Mr. Grasso was on a medical leave of absence from Allstate Financial, he inserted himself into the lives of two elderly customers (ages 89 and 91) in order to defraud them financially. Between December 2013 and January 2014, Mr. Grasso allegedly convinced the two elderly clients to liquidate their various life insurance policies and annuities (approximately $227,150) and open a brokerage account. Mr. Grasso allegedly then took all the funds from the brokerage account and put them in his own bank account. Mr. Grasso used these client funds for personal expenses like his mortgage and stock investments. In an attempt to hide the misconduct, Mr. Grasso allegedly created false documents for his clients and misrepresented their investment. Mr. Grasso was terminated by Allstate Financial due to allegations that he “commingled the customers’ funds” in May 2014. As it’s a current investigation, FINRA has requested sanctions and restitution to be imposed upon Mr. Grasso.

Mar 23, 2015

USA Financial Securities Representative Fined by FINRA For Outside Business Activities

Darrell Vanpamel of Cape Coral, Florida submitted a Letter of Acceptance, Waiver and Consent, in which he consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he engaged in outside business activities for which he received compensation without the approval of member firm, USA Financial Securities Corporation. Between April and May 2013, Mr. Vanpamel allegedly engaged in outside insurance activities with four clients without his firm’s approval. Mr. Vanpamel received approximately $1,400 in total from his four clients for “account set-up fees.” FINRA found that Mr. Vanpamel failed to provide written notice to USA Financial Securities Corp. (USA Financial) for his outside business activities or for his compensation. According to FINRA, Mr. Vanpamel violated FINRA Rules 3270 and 2010. Mr. Vanpamel was fined $5,000 and was suspended from association with any FINRA member in any capacity for one month.

Mar 20, 2015

LaSalle Street Securities Representative Fined For Unapproved Private Placement Offerings

David Leonard Potter, of St. Petersburg, Florida submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he made “negligent misrepresentations to investors” in regard to private offerings his firm, LaSalle Street Securities, had yet to approve. Mr. Potter, former branch manager of LaSalle Street Securities’ Tampa, Florida office, ran an investment advisory business, Platinum Wealth Partners, Inc. (PWP) which he decided to expand in late 2012. Without the capital to do so, Mr. Potter commenced a PWP private placement offering in March 2013 to raise capital through the sale of convertible debenture units. The offering was a minimum and maximum offering requiring at least $1.5 million being raised before distribution.

Mar 18, 2015

SWS Financial Services Representative Fined for Converting Client Funds

William Charlton Mays of Corpus Christi, Texas was barred from association with any FINRA member due to his conversion and misuse of customer funds while he was a representative of SWS Financial Services. Around August 2011, while Mr. Mays was still a member of SWS, he recommended a client to invest $50,000 in stocks and commodities. Mr. Mays allegedly told his client the $50,000 investment would yield 6% annual return. On September 6, 2011, Mr. Mays deposited the client’s $50,000 check into a bank account for May’s Financial Group, an organization Mr. Mays controls. A month later, his client requested his funds be returned, but Mays initially told the investor he couldn’t get the funds (but later gave his client $40,000). FINRA found that between September 2011 and October 2011 Mr. Mays converted and used upwards of $30,000 from his clients’ investment for personal expenses. For violation of FINRA conduct Rule 2150(a) and Rule 2010, Mr. Mays was barred from association with any FINRA member, ordered to pay a $10,000 fine, and ordered to pay restitution.

Mar 16, 2015

WFG Investments Hit with $700,000 Fine for Due Diligence and Supervision Lapses

WFG Investments, Inc. of Dallas, Texas submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but it did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to conduct appropriate due diligence and supervision with respect to a private placement offering and that a registered representative sold an investment away from the firm as an approved private securities transaction. FINRA found that in various times between March 2007 and January 2014, “the Firm failed to commit the necessary time, attention and resources to an array of critical regulatory obligations related to its supervision of registered representatives.” Clients who invested in the private placement offering allegedly lost their entire investment. FINRA also found that WFG Investments failed to supervise its representatives, who allegedly recommended the sale of high risk equity and ETF purchases for a retired client with conservative risk tolerance. In addition, WFG Investments failed to supervise a representative’s private securities transactions. According to FINRA, the WFG representative allegedly structured and sold two funds that had substantial investments (exceeding the 50% limit) without investors’ knowledge. All private placement investors allegedly “lost 100% of their investments resulting from a related entity’s fraudulent business practices.” Consequently, WFG Investments was censured and fined $700,000 by FINRA.

Mar 13, 2015

Geoffrey Richards Securities Fined For Net Capital Problems

Geoffrey Richards Securities Corp. of Hypoluxo, Florida submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny the described sanctions and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it conducted securities business after the firm’s net capital fell below its minimum requirement. FINRA member since 2002, Geoffrey Richards Securities Corp. (Geoffrey Richards) is a firm that specializes in securities. FINRA found “between June 2010 and January 2013, Geoffrey Richards acted as an underwriter in a firm commitment offerings, conducted a securities business while it was net capital deficient, failed to file to the requisite net capital deficiency notifications, filed inaccurate Financial and Operational Combined Uniform Single (FOCUS) Reports, and maintained inaccurate books and records.” Mr. Richards’ alleged involvement as underwriter in the firm commitment offering required deductions to the firm’s net capital to be made. For an eight day period, the firm’s net capital fell below its minimum requirement. For violation of several FINRA, NASD, and SEC Rules, Geoffrey Richards Securities Corp. was fined $40,000.

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