Library - Law Offices of Robert Wayne Pearce

Former Ameriprise Representative Under FINRA Investigation for Outside Business Activities

Jim Seol of Lake Forest, California was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges he engaged in outside business activities and participated in private securities transactions without providing notice or receiving approval from his associated firm. Mr. Seol entered the securities industry in 1997 and was registered as a General Securities Representative (GSR) for Ameriprise Financial Services, Inc. (Ameriprise) until his termination in May 2014. The FINRA complaint alleges that from September 21, 2011 through June 4, 2014, Mr, Seol engaged in outside business activities and participated in private securities transactions without providing prior written notice or receiving written approval by his member firm. While still associated with Ameriprise, Mr. Seol formed Western Regional Center, Inc. (WRCI), a California corporation, as President and CEO. Through WRCI, Seol solicited investments in California Energy Investment Fund I, LP (CEIFI), a limited partnership formed by Seol, through WRCI.

Jul 29, 2016

Miami CP Capital Securities Representative Suspended for Private Placement Offering Violations

Charles McInnis of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) in connection with a contingent private placement offering of senior secured notes issued by a Columbian energy company. FINRA found Mr. McInnis did not understand the specific requirements of two exemptions from registration applicable for the private placement offering and failed to ensure that his customer’s purchases of the notes complied with the requirements of either of the exemptions. From July 2009 through his resignation in August 2013, Mr. McInnis acted as President, Chief Executive Officer and Chief Compliance Officer for CP Capital Securities, Inc. (CP Capital). During this time period, Mr. McInnis was delegated responsibility to supervise CP Capital and its associated persons’ participation in a minimum contingency private placement offering. A private placement is generally an offering between only a select few investors in order to raise capital without registration with the Securities and Exchange Commission (SEC). Private placement offerings must satisfy certain conditions (safe harbors) to avoid registration with the SEC. For this offering, the Notes were unregistered securities exempt from the registration requirements of Section 5 of the Securities Act pursuant to the Rule144A safe harbor and the Regulation S exemption.

Jul 27, 2016

Oakbridge Financial Advisor Under FINRA Investigation for Alleged “Church” Bond Scheme

Steven Larson of Nisswa, Minnesota was named as a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges he made “numerous misstatements or omissions of material facts concerning the present values and safety of church bonds.” These “church” bonds were issued by religious organizations to build, upgrade, or better church property and cannot be used directly to generate revenue. Mr. Larson has been associated with FINRA since 1993 as a broker dealer and has been registered with Oakbridge Financial Services, Inc. (Oakbridge) since August 2011. FINRA alleges that between May 2013 and March 2015, while associated with Oakbridge, Mr. Larson made a series of false statements and material omissions of fact, both to his customers and to FINRA.

Jul 22, 2016

C. L. King named in FINRA Complaint For Allegedly Taking Advantage of Elderly

C. L. King & Associates, Inc. (CL King) of Albany, New York was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges CL King assisted customers in a scheme to profit from the deaths of vulnerable, elderly and terminally ill patients. The complaint alleges that CL King failed to establish and maintain proper supervisory procedures and failed to recognize suspicious activity in regard to a death-put investment scheme. The FINRA investigators found that two CL King customers recruited terminally ill individuals by offering to pay them between $10,000 and $15,000 in exchange for their agreement to open a joint brokerage account. Between January 2012 and October 2013, CL King opened 36 accounts for its customers with individuals often signing agreements relinquishing their rights over, and responsibilities for, the assets in their accounts. Once the accounts were opened, the CL King customers used the joint accounts to purchase discounted corporate bonds, notes, and market-linked CDs (MLCDs) containing a survivor’s option or “death put,” which allowed the customers to redeem the investments for the full principal amount prior to maturity upon the death of a beneficial owner.

Jul 20, 2016

California Broker Barred for Unsuitable Mutual Fund Switching

Leonard Goldberg of Rancho Mirage, California submitted an offer of settlement to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for an alleged mutual fund “switching” scheme. In June 1986, the NYSE fined Mr. Goldberg $25,000 and suspended him for misconduct similar to these FINRA allegations. Mr. Goldberg acted as a GSR, GSP and OP for FINRA member firm Newport Coast Securities Inc. (Newport) from October 22, 2010 through his termination in November 2014 for failing to follow procedures. FINRA investigators found that from August 2007 through August 2014, while associated with Newport and J.P. Turner & Company, LLP, Mr. Goldberg caused over $123,600 in losses to five customers in connection with 300 mutual fund and Exchange Traded Fund (ETF) transactions that netted him $77,900 in ill-gotten gains. FINRA alleged that over the five year period, Mr. Goldberg engaged in a practice of fraudulent and unsuitable short term switches of Class A mutual funds in client accounts.

Jul 18, 2016

Former Merrill Lynch Representative Barred For Failing to Cooperate

Scott Muirhead of Jacksonville, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to provide documents and information as requested by FINRA staff. Mr. Muirhead first became associated with a FINRA member firm in April 2006. Mr. Muirhead was registered with four other FINRA member firms as a GSR before joining Merrill Lynch, Pierce, Fenner & Smith, Inc. in March 2014. During the course of an investigation into allegations that Mr. Muirhead engaged in unapproved private securities transactions and misused customer funds, FINRA requested that Mr. Muirhead provide documents and information, in correspondence with FINRA Rule 8210, by February 12, 2016. Mr. Muirhead acknowledged that he received FINRA’s request and that he would not provide the requested documents and information at any time.

Jul 15, 2016

Former Wells Fargo Representative Suspended For Unsuitable Mutual Fund “Switching”

Brent Burgesser of Chandler, Arizona 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. Burgesser became registered in the securities industry in May 2000 as a General Securities Representative (GSR).From October 2008, through July 2012, Mr. Burgesses was an associated member with Wells Fargo Advisors, LLC. FINRA alleged that between January 2009 and May 2012, Mr. Burgesser effected 83 unsuitable mutual fund switches in the accounts of several customers, resulting in more than $63,700 in customer losses. Mutual fund “switching” is simply the process of transferring an investment from one fund to another, sometimes for good reason 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. Burgesser, FINRA found that the former Wells Fargo representative generated approximately $109,500 in commissions for himself as a result of mutual fund “switching.”

Jul 13, 2016

New York Princor Investment Representative Fined and Suspended for Unsuitable Annuity Recommendations

Michael Taylor of Buffalo, New York was registered with FINRA as an Investment Company Products and Variable Contracts Limited Representative through Princor Financial Services Corporation (Princor) from 2010 until March 16, 2016. Mr. Taylor submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly failing to identify and submit seven variable annuity purchases as annuity replacements even though each was funded by the sale of another annuity. According to FINRA, from December 2010 through May 2011, Mr. Taylor “circumvented Princor’s compliance procedures by failing to identify and submit seven variable annuity purchases as annuity replacements even though each was funded by the sale of another annuity. In addition, Taylor provided inaccurate information on the annuity transaction documents further concealing that they were replacements.” This alleged conduct would be in violation of NASD Conduct Rule 3110 and FINRA Rule 2010.

Jul 11, 2016

Florida Wells Fargo Representative under Investigation for Converting Client Funds

Jeffrey Krupnick of Sarasota, Florida was named as a respondent in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly converting a client’s funds for his own personal use. FINRA alleged that Mr. Krupnick, between January 2012 and November 2014, while registered with FINRA member firm Wells Fargo Advisors, LLC (Wells Fargo) converted approximately$143,000 from his half-brother, a Wells Fargo customer. FINRA alleged that due to over $50,000 in accumulated credit-card debt, Mr. Krupnick attempted to take advantage of his half-brother in a scheme to cover his losses. The FINRA investigators found that Mr. Krupnick opened several brokerage accounts for his half-brother for which he took control over and took funds from. FINRA alleged that Mr. Krupnick removed over $170,000 from 4 brokerage accounts he had created for his half-brother in October 2013. Furthermore, FINRA found that Mr. Krupnick named himself as the primary account holder on the joint accounts and assumed primary control over them even though he never contributed funds to the accounts and instead used the ill-gained funds to pay credit card bills, home payments, and other luxuries including a wedding in Hawaii.

Jul 8, 2016

PNC Investments Agrees to Pay Mutual Fund Customers Restitution of $224,750

PNC Investments LLC (PNC) of Pittsburgh, Pennsylvania submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly disadvantaging customers in sales of mutual fund shares. PNC has been a FINRA member since December 2003 and has over 1,982 branch offices throughout the U.S. FINRA found that from at least July 1, 2009, PNC disadvantaged certain retirement plan customers that were eligible to purchase Class A shares in certain mutual funds without a front-end sales charge. There are typically three classes of mutual fund shares: A, B, and C; all with different sales charges, management fees and other terms and conditions. Class A shares generally have the highest initial sales charge and Class B and C shares typically do not carry a front-end sales charge but have significantly higher distribution and service fees and may be subject to a contingent deferred sales charge.

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