Library - Law Offices of Robert Wayne Pearce

FINRA Fines and Suspends Mitchell Garrett for Distributing Commissions to Non-Members

Mitchell Garrett, a former Fort Lauderdale, Florida-based broker employed by New York, New York-based Lightspeed Trading, LLC, 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 paid all of the approximately $145,142 in commissions that he received from his firm to an unregistered day-trading firm, which in turn distributed the commissions to its owners, who were not registered with a FINRA member firm. FINRA’s findings stated that Mr. Garrett did not keep any of the commissions for himself and was not an owner of the day-trading firm. An uncertain portion of the commissions Mr. Garrett paid the day-trading firm’s owners represented rent from Mr. Garrett for his use of the day-trading firm’s office and equipment. Mr. Garret was assessed a deferred fine of $10,000, suspended from association with any FINRA member in any capacity for 30 business days, and required to cooperate with FINRA in its continuing investigation of this matter.

May 20, 2014

Investors Capital Corp. Censured and Fined for Inadequate Supervision of ETF Sales

Lynnfield, Massachusetts-based Investors Capital Corp. submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to ensure delivery of exchange-traded fund (ETF) prospectuses to customers. The findings stated that the firm violated Section 5(b)(2) of the Securities Act of 1933 by failing to establish an adequate supervisory system, including written supervisory procedures (WSPs), concerning the sale of ETFs and the firm’s obligations to provide ETF prospectuses to customers. The firm did not have any procedures directly concerning the sale of ETFs or its obligations to provide ETF prospectuses to customers and permitted representatives to sell ETFs before completing any firm-mandated training. The firm was censured and fined $100,000

May 16, 2014

UBS Puerto Rico Investor Claims Stockbroker Lost Her Inheritance

The claimant is a 43 year old married housewife raising two children in San Juan, Puerto Rico. Several years ago, her father sold his business, gifting his daughter, $5 million dollars, which she deposited in her UBS Puerto Rico account. At that point in time, she had very little investment experience and a very small account. The claimant relied exclusively upon her UBS Puerto Rico broker for investment advice and management of the investments in her account.

May 6, 2014

FINRA Focused on Broker-Dealers’ Increased Equity Indexed Annuity Sales

InvestmentNews reports broker-dealers are leading the pack in the world of equity indexed annuities, with sales reaching more than $38 billion in 2013, up over 13% from a little over $34 billion in 2012. Most of that growth is attributable to sales activity at large regional firms. At LPL Financial, the largest independent broker-dealer with 13,600 affiliated reps and advisers, sales of fixed annuities and equity indexed annuities have surged in the first quarter of 2014. Sales of variable annuities at the firm, meanwhile, decreased approximately 2% in the first quarter, down to about $198 million.

May 2, 2014

William Coolidge Permanently Barred by FINRA for Unsuitable Recommendations to Elderly Investors

William Bradford Coolidge, a former Registered Representative with Memphis, Tennessee-based Stifel, Nicolaus & Company, Inc. (Stifel Nicolaus) 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 effected approximately 233 trades in the accounts of three elderly customers with neither the customers’ written authorization nor the acceptance by Stifel Nicolaus of the accounts as being discretionary. According to FINRA, William Coolidge, of Cordova, Tennessee, allegedly implemented a trading strategy in an 86 year old customer’s individual retirement account (IRA) wherein he switched from mutual funds and Unit Investment Trusts (UITs) to other mutual funds or UITs after holding them for a time period. Mr. Coolidge’s alleged unsuitable recommendations, especially considering the customer’s age, risk profile and income, caused the elderly investor over $43,000 in losses and paid over $52,000 in commissions.

May 1, 2014

Richard Jameison Permanently Barred by FINRA for Conversion of Clients Funds

Richard David Jameison Jr., a former Registered Principal with New York-based Blackrock Investments, LLC (Blackrock) has been permanently barred by the Financial Industry Regulatory Authority (FINRA). According to FINRA, Richard Jameison, of Devon, Pennsylvania, converted $150,000 from an individual who was not a customer of Blackrock. FINRAs findings stated that Mr. Jameison had the individual, an acquaintance, wire $150,000 into a securities account which was jointly owned between Mr. Jameison and his wife. The money was supposed to be an investment in a business enterprise which Mr. Jameison alleged was along with a small group of investors, including himself. Mr. Jameison, however, never invested the money and instead allegedly converted the funds for his personal use. The acquaintance allegedly asked Richard Jameison repeatedly for the return of his investment plus earnings. Mr. Jameison gave the acquaintance two checks drawn from his jointly held personal accounts, alleging that the monies covered his original investment plus the return on the investment. FINRA found that the checks were dishonored due to insufficient funds. As a result of his unlawful conduct, Richard Jameison was terminated by Blackrock Investments and the acquaintance and his wife have filed a lawsuit against him.

Apr 30, 2014

Pruco Securities Broker Daniel Hudson Fined and Suspended by FINRA

Daniel Lee Hudson of Great Falls, Montana and former registered representative with Bellevue, Washington-based Pruco Securities, LLC, submitted a Letter of Acceptance, Waiver and Consent in which he consented to the Financial Industry Regulatory Authority’s (FINRA) findings that he established Natural Resources Gateway Group, Inc. (NRGG) a wind energy development company in which he was the sole owner and officer without first notifying his firm or receiving prior approval. Further, FINRAs findings stated that Mr. Hudson facilitated the investment of $104,000 by individuals, some of whom were Pruco Securities’ customers, in NRGG. These transactions were again made without the approval of Pruco Securities and in violation of the firm’s policies and procedures regarding outside business activities and private securities transactions. Mr. Hudson was fined $5,000 and suspended from association with any FINRA member in any capacity for six months. The suspension is in effect from February 18, 2014 through August 17, 2014.

Apr 29, 2014

Berthel Fisher Fined by FINRA for Lax Supervision of REIT and ETF Sales

Marion, Iowa-based Berthel Fisher & Company Financial Services, Inc. (Berthel Fisher) and its affiliate, Securities Management Research, Inc. consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to supervise the sale of non-traded real estate investment trusts (REITs) and exchange-traded funds (ETFs) and also made unsuitable recommendations relating to alternative investments.

Apr 28, 2014

Brown Brothers Harriman Receives Record $8 Million Fine for Anti-Money Laundering Violations

New York-based Brown Brothers Harriman & Co. (BBH) consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that BBH allegedly failed to have an appropriate anti-money laundering (AML) program in place to monitor and detect suspicious penny stock transactions. FINRA’s findings also stated that BBH did not sufficiently investigate suspicious penny stock activity, which had allegedly been brought to the firm’s attention, nor did BBH fulfill its Suspicious Activity Report (SAR) requirements. Further, FINRA found that BBH’s supervisory system was inadequate and allowed for the distribution of unregistered securities. FINRA’s findings also included that the firm allegedly knew that customers were depositing and selling large blocks of penny stocks and failed to more closely scrutinize these transactions as potentially being red flags for illegal unregistered distribution.

Apr 23, 2014

Gregg Nussbaum Permanently Barred by FINRA for Exceeding His Trading Authority

Gregg N. Nussbaum, a former Registered Representative with West Palm Beach, Florida-based First Integrity Capital Partners Corp. (First Integrity Capital), 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) sanctions and findings that he intentionally exceeded his trading authority while a proprietary trader at First Integrity Capital. According to FINRA, Mr. Nussbaum, of Deerfield, Florida, had the firm’s authority to engage in riskless principal trading, in which he could simultaneously open and close a U.S. Treasury position of less than $5 million par value. FINRA claims Mr. Nussbaum did not open and close positions simultaneously but instead left the positions open for extended periods throughout the day. Moreover, it alleged he exceeded his firm’s $5 million par value limit. In order to accomplish this misconduct, FINRA found that Mr. Nussbaum intentionally submitted order tickets containing false execution times, in violation of FINRA Rule 2010 and NASD Conduct Rule 3110(a). Mr. Nussbaum’s alleged fraudulent activity caused First Integrity Capital to conduct securities business while net-capital deficient, which is in violation of the required minimum net capital of $100,000. As a result of his unlawful conduct, Gregg Nussbaum was permanently barred from association with any FINRA member in any capacity.

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