Library - Law Offices of Robert Wayne Pearce

Source Capital Group Broker Barred For Forgery

Joey Cless Broussard, of Princeton, Texas, was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in a default decision made by FINRA’s Office of Hearing Officers for allegedly forging his customer’s signature on a false letter he created to cancel a request for rescission of a purchase of an investment in an oil and gas limited partnership. FINRA alleged that while associated with Source Capital Group, Inc. of Allen, Texas, Mr. Broussard sold an interest in Bayou City Exploration, Inc. (Bayou City) oil and gas limited partnership to an elderly customer. The investment gave investors a right of rescission if they requested it in writing within ten days of purchase. The customer sent a rescission letter to Bayou City to cancel her investment. Upon learning this, FINRA alleged that Mr. Broussard contacted the customer to get her to keep the investment, explaining that she needed to send a second letter to Bayou City to cancel her rescission request. The customer did not send the letter. Instead, FINRA alleged that Mr. Broussard handwrote a letter purportedly from the customer to cancel the rescission request, forged her signature, and faxed the letter to Bayou City. Joey Broussard did not have the customer’s permission to write the letter or forge her signature. As a result of the default decision, Mr. Broussard was barred from association with any FINRA member in any capacity.

Dec 13, 2016

Huntington Investment Company Broker Suspended for Unsuitable UIT Recommendations

Richard Graham, a former registered representative with Huntington Investment Company of Lafayette, Indiana, submitted a letter of Acceptance, Waiver and Consent (AWC) in which he was suspended and assessed a deferred fine of $10,000 by the Financial Industry Regulatory Authority (FINRA) for Unit Investment Trust (UIT) recommendations which were unsuitable for his customers given their investment objectives. According to FINRA, Richard Dale Graham, of Lebanon, Indiana, recommended that his customer, a 98-year old woman, invest in three UITs which made up approximately 42% of her net worth. Given the woman’s moderately conservative investment goals and age, the recommendations were found by FINRA to be unsuitable, and the UITs lost $29,493 in value.

Dec 9, 2016

JP Turner Broker Barred by the SEC for Fraudulent Investment Scheme

The Securities and Exchange Commission (SEC) announced that it has accepted an Offer of Settlement submitted by Levi Lindemann in which he is barred from the securities industry for allegedly operating a fraudulent scheme through his private company, Gershwin Financial, Inc. and his sole proprietorship, Alternative Wealth Solutions. The SEC alleged in its complaint that Levi Lindemann, of West Lakeland, Minnesota, raised approximately $976,000 from six investors, including elderly individuals, and told the investors that their money would be used to purchase various investments including notes and interests in a unit investment trust (UIT). The SEC complaint alleged that in reality, none of Mr. Lindemann’s purported investments were ever made. Mr. Lindemann is a former registered representative with J.P. Turner & Company, LLC (J.P. Turner). His BrokerCheck report shows that Mr. Lindemann is currently involved in four (4) pending customer disputes while he was employed by J.P. Turner for allegations including breach of fiduciary duty, misrepresentations, violation of Minnesota Uniform Securities Act, and negligence.

Dec 7, 2016

Ameriprise Financial Fined $850,000 for Wire Transfer Supervisory Failures

Ameriprise Financial Services, Inc. (Ameriprise) submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for alleged supervisory failures in connection with wire transfers from customer brokerage accounts and the resulting conversion of over $370,000 by one of its registered representatives. Ameriprise is headquartered in Minneapolis, Minnesota and employs nearly 14,000 registered representatives in approximately 3,800 branch offices. FINRA found that from October 2011 to September 2013, a registered representative, working as an office manager, converted more than $370,000 from five Ameriprise customers. The customers happened to also be the registered representative’s family members, including his mother, step-father, grandparents and domestic partner. FINRA’s findings state that the Ameriprise employee’s conversion, which occurred via nine wire transfers, went undetected for two years by Ameriprise.

Dec 6, 2016

Cambridge Investment Research Broker Suspended For Unsuitable Mutual Fund Switches

Robert Lyons, of Augusta Georgia, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly executing unsuitable mutual fund switches in the accounts of three customers. FINRA alleged that between January 2011 and December 2013, Robert Lyons recommended and effected fourteen unsuitable mutual fund switches in the accounts of three customers, resulting in unnecessary fees for his customers. Mutual fund “switching” is simply the process of transferring an investment from one mutual fund to another, sometimes for good reasons and other times to defraud clients. Some brokers attempt to effect numerous switches in client accounts in order to generate commissions. In the case of Mr. Lyons, FINRA found that the former Cambridge Investment Research representative caused unnecessary losses to his clients and additional commissions for himself as a result of the mutual fund “switches” he recommended. FINRA found that Mr. Lyons recommended his customers purchase Class A and Class T shares for the switches, which were only advantageous if the customers held them on a long-term basis, usually several years or more. In this case, the switches recommended and effected by Mr. Lyons were held for less than one year and all of the customers involved incurred added and unnecessary commission charges.

Dec 1, 2016

Merrill Lynch Hit with $7 Million Fine for Failing to Supervise Securities-Backed Leveraged Accounts

The Financial Industry Regulatory Authority (FINRA) has hit Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) with a fine of more than $7 million for failing to properly supervise its customers’ use of leverage in loan management accounts and for improper supervision regarding unsuitable and highly overconcentrated accounts invested in Puerto Rican municipal bonds and closed-end bond funds. Without admitting or denying the charges, Merrill Lynch consented to FINRA’s findings that it failed to adequately educate its representatives about its loan management accounts (LMAs) or train them on the differences between purpose and non-purpose LMAs. LMAs are lines of credit that enable customers to borrow money from, in this case, Bank of America (the owner of Merrill Lynch) using the securities in their accounts as collateral. FINRA notes that Merrill Lynch brokers earned compensation if the customers used the line of credit. Merrill Lynch must pay $6.25 million for its failure to supervise these LMAs.

Nov 29, 2016

VALIC Financial Hit with $1.75 Million Fine for Compensation Conflicts

Houston, Texas-based VALIC Financial Advisors, Inc. (VALIC) was hit with a $1.75 million fine by the Financial Industry Regulatory Authority (FINRA) for failing to prevent compensation conflicts. VALIC is alleged to have incentivized its registered representatives to sell its own annuities and discouraged them from selling non-proprietary products. FINRA found that from October 2011 to October 2014, VALIC failed to maintain a reasonable supervisory system to address the potential conflicts of interest created by its compensation policy, which incentivized its representatives for recommending that customers move funds from VALIC variable annuities to the firm’s fee-based platform or a VALIC fixed index annuity. Further, FINRA found that VALIC made the compensation conflict worse by prohibiting its representatives from receiving compensation when moving customer funds from a VALIC variable annuity to a non-VALIC variable annuity, mutual fund or other non-VALIC product.

Nov 25, 2016

FTB Advisors Fined for Variable Annuity Supervisory Failures

FTB Advisors, Inc., headquartered in Memphis, TN, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1986, FTB Advisors currently has 355 associated persons and 82 branch offices. FINRA found that from January 2013 to December 2014, FTB Advisors failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Further, FINRA found that FTB Advisors failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that FTB Advisors allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 23, 2016

Kestra Investment Services Fined for Variable Annuity Supervisory Failures

Kestra Investment Services, Inc., headquartered in Austin, Texas, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1997, Kestra Investment Services currently has 1,845 registered representatives and 639 branch offices. FINRA found that from October 1, 2013 to June 30, 2014, Kestra Investment Services failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Further, FINRA found that Kestra Investment Services failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Kestra Investment Services allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Nov 21, 2016

VSR Financial Services Fined for Variable Annuity Supervisory Failures

VSR Financial Services, Inc., headquartered in Overland Park, Kansas, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1984, VSR Financial Services currently has 215 registered representatives and 58 branch offices. FINRA found that from January 2013 to December 2014, VSR Financial Services failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Additionally, FINRA found that VSR Financial Services failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that VSR Financial Services allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

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