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Jan 18, 2017

FINRA Fines and Suspends Former Morgan Stanley Broker for Discretionary Trade Violations

Tom Puentes, a former registered representative with the Langley, Washington branch of Morgan Stanley, 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 entered discretionary trades in at least fourteen customer accounts without the necessary prior written authorization. FINRA found that Tom Abel Puentes, of Langley, Washington, failed to obtain the necessary written authorization from his customers or his member firm when he exercised time and price discretion in the accounts of fourteen customers.  According to FINRA, Mr. Puentes exercised discretion to purchase municipal bonds on approximately 220 occasions in his customers’ accounts, in contravention of his firm’s policies.  Further, Mr. Puentes falsely answered “no” on his firm’s annual compliance questionnaire to the question asking if he had any accounts in which business is transacted on a discretionary basis. 

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Jan 16, 2017

Essex Securities Broker Suspended by FINRA for Forged Customer Signatures

Lawrence Thomas, a registered representative formerly employed with Essex Securities LLC, 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 directed his assistant to forge the signatures on account documents without the customers’ knowledge or approval. FINRA’s findings state that Lawrence Marshall Thomas, of North Attleboro Massachusetts, instructed his assistant to forge the signatures of three customers on approximately ten occasions from January 2015 through September 2015.  Mr. Thomas’ assistant copied and pasted authentic client signatures onto new firm documents, including new account forms and applications.  Although the customers requested the underlying transactions, they did not know of or approve of the falsified signatures.

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Jan 13, 2017

Morgan Stanley Representative Fined and Suspended for Fraudulent Wire Transfers

Debra J. Ferrara, a non-registered associate employed by New York NY-based Morgan Stanley Smith Barney (Morgan Stanley), submitted a letter of Acceptance, Waiver, and Consent (AWC) in which she consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that she falsely represented that she had verbally confirmed five wire transfers totaling $108,680 which turned out to be fraudulent requests from a customer’s hacked email account. Debra Jean Ferrara, of Old Bridge, New Jersey, allegedly caused five fraudulent wire disbursements to be transferred from a customer’s account to a third-party bank.  According to FINRA, Ms. Ferrara, a client services associate with Morgan Stanley, was sent an email with a request for a wire transfer of $27,750 from the hacked account of a client to a third party account.  Ms. Ferrara completed the wire processing form stating falsely that she had verbally confirmed the transfer request when she had not.  FINRA found that two days following the first hacked account wire request, Ms. Ferrara received another email from the imposter from an email that looked similar, but was different.  The “m” in the email address had been changed to an “n” this time.  Again, Ms. Ferrara processed the wire transfer requests, falsely attesting to verbally confirming the request when she had not.

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Jan 11, 2017

Caldwell International Securities Broker Suspended for Unsuitable and Excessive Trading

Richard Lee, former registered representative with Caldwell International Securities Corp., submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was suspended for 18 months and required to requalify by exam before reentering the securities industry in any capacity.  Richard Lee, of West Nyack New York, was found by FINRA to have recommended an unsuitable active trading strategy to his customers without understanding the risks involved, whether or not the strategy was suitable for his clients, or the impact the staggering commissions and fees generated by his recommended strategy would have on his customers’ accounts. According to FINRA, Richard Lee generated new customers by cold calling them and generally targeted customers who would agree to speculation as their investment objective.  FINRA noted that Mr. Lee allegedly believed that once a customer selected “speculation,” that any investment strategy or trade was suitable.  Moreover, FINRA states that the funds in customers’ accounts were considered “gambling money” that the customer could afford to lose.  FINRA found that when customers did complain, Mr. Lee allegedly failed to report the complaints, but rather tried to hide his behavior by reducing sales charges.  For instance, FINRA stated that when one of Mr. Lee’s customers sent him an email telling him to stop trading and “I am very disappointed in you.   You have abused my trust,” Mr. Lee agreed to stop charging the customer commissions until the account was even. 

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Jan 5, 2017

SWS Financial Broker Suspended for Unsuitable Short-Term Trading Recommendations

David Lockey, a stockbroker formerly employed with SWS Financial Services, Inc. n/k/a Hilltop Securities Independent Network, Inc., submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was assessed a deferred fine of $10,000, suspended for six months, and ordered to pay disgorgement of portion of his commissions of $46,447.38 and restitution to customers.  Without admitting or denying FINRA’s allegations, David Randall Lockey, of Carrollton Texas, consented to the entry of findings that he recommended and engaged in a pattern of unsuitable trading of open-end mutual funds (OMFs), unit investment trusts (UITs), and/or closed-end funds (CEFs) in the accounts of four customers. According to FINRA, David Lockey engaged in unsuitable short-term trading and switching in OMFs and/or UITs in the accounts of four customers.  In two of those four customers’ accounts, Mr. Lockey is alleged to have made unsuitable trades and switches in CEFs.  FINRA stated that David Lockey executed 37 trades in OMFs and/or UITs in the customers’ accounts in which they were held for less than one year. Those products are generally intended to be held long-term in order to off-set their fees.  He also allegedly executed 23 unsuitable transactions in CEFs in two of the four customers’ accounts. 

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Jan 3, 2017

Caldwell International Securities Broker Suspended for Unsuitable and Excessive Trading

Former Caldwell International Securities Corp. broker, Alex Etter, submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was assessed a deferred fine of $10,000, suspended for two years, and ordered to pay disgorgement of ill-gotten gains of $227,395.45 and restitution to customers.  Without admitting or denying FINRA’s allegations, Alex Etter consented to the entry of findings that he recommended an unsuitable active trading strategy to his customers despite a lack of understanding of the risks involved or the impact the staggering commissions and fees generated by his recommended strategy would have on his customers’ accounts. According to FINRA, Alex Evan Etter, of Old Tappan, New Jersey, failed to conduct any due diligence into the active trading strategy he was recommending to his customers and routinely recommended the strategy despite the fact that he never reviewed his customers’ accounts to determine if the strategy was successful or suitable for this customers.  FINRA found that when customers did complain, Mr. Etter allegedly failed to report the complaints, but rather tried to hide his behavior by reducing sales charges.  For instance, FINRA stated that when one of Mr. Etter’s customers expressed concerned about the poor performance and excessive commissions in his account, Mr. Etter offered to stop charging commissions for the next ten trades instead of reporting the complaint.  Alex Etter was suspended by FINRA for two years.  The suspension is in effect from October 17, 2016 through October 16, 2018.

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Dec 29, 2016

FINRA Bars Former UBS Broker Amid Allegations of False Account Reports

Jeffrey Hamilton Howell, a registered representative formerly employed by UBS Financial Services, Inc. (UBS) submitted a Letter of Acceptance, Waiver and Consent in which he was barred by the Financial Industry Regulatory Authority (FINRA) amid findings that he failed to provide documents and information FINRA had requested and failed to appear and provide on-the-record testimony in relation to allegations that he sent his customer false weekly reports that overvalued the account by as much as $3 million. FINRA found that beginning in September 2008 and continuing through November 2014, Jeffrey Howell, of Wentzville, Missouri, created and sent his customer over 300 weekly reports that supposedly reflected the customer’s portfolio value.  In actuality, the report misstated the account value in amounts ranging from $289,000 to approximately $3 million.  In order to conceal his fraudulent misconduct, Mr. Howell allegedly altered three UBS account statements to match the information purported in his falsely created portfolio reports.  When asked by FINRA to appear for testimony regarding the allegations, Mr. Howell acknowledged that he received the request and would not appear to provide testimony.  By refusing to respond to FINRA’s request, Mr. Howell was in violation of FINRA Rules 8210 and 2010.  Without admitting or denying the findings, Mr. Howell was permanently barred by FINRA.

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Dec 27, 2016

Former LPL Financial Broker Suspended for Unsuitable UIT Recommendations

Mark Tauzin, a former registered representative with LPL Financial LLC submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $20,000 by the Financial Industry Regulatory Authority (FINRA) for engaging in unsuitable short-term trading of front-loaded Unit Investment Trusts (UITs) which resulted in sales charges to the customers of more than $316,000. According to FINRA, Mark Tauzin, of Lafayette, Louisiana, effected 215 UIT transactions in the accounts of 14 households that were sold within a 12 month time period.  UITs are not designed to be used as trading investments, particularly not to be used for short-term trading, and typically carry significant upfront charges.  As a result of Mr. Tauzin’s unsuitable UIT transactions, the customers incurred sales charges of $316,840.50 and Mr. Tauzin received $205,115.02 in commissions.

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Dec 19, 2016

Wells Fargo Broker Suspended for Unsuitable Discretionary Trades

Robert Batchen, a broker formerly employed with the Skokie, Illinois 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 made unsuitable discretionary trades in his customer’s accounts, causing losses in excess of $56,000. FINRA found that Robert James Batchen, of Wheeling, Illinois, exercised discretion in his customer’s accounts without the written authorization of the customer of his member firm, in violation of NASD Rule 2510(b).  Mr. Batchen is alleged by FINRA to have effected more than 900 discretionary trades during the relevant time period. 

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Dec 16, 2016

Waddell & Reed Broker Barred For Forgery and Conversion

Gregory Russel Bauer, of Saxonburg, Pennsylvania, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly forging his customers’ signatures, intercepting checks in the mail, and converting more than $400,000 for his personal use. FINRA’s findings state that while associated with Waddell & Reed, Inc. of Pittsburgh, Pennsylvania, Mr. Bauer, allegedly forged the signatures of his customers, who were Mr. Bauer’s parents, on withdrawal request forms he submitted.  These forged documents enabled securities to be sold from his parents’ accounts and for checks to be issued to his parents, which Mr. Bauer allegedly intercepted and deposited into his personal bank account.  FINRA found that Mr. Bauer then allegedly used the ill-gotten funds, over $400,000, for his personal expenses. As a result of the aforementioned fraudulent misconduct, Gregory Bauer was barred from association with any FINRA member in any capacity. 

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