Library - Law Offices of Robert Wayne Pearce

American Portfolios Financial Services Fined By FINRA for Unsuitable Mutual Fund Switches

American Portfolios Financial Services, Inc. (American Portfolios) submitted a letter of Acceptance, Waiver, and Consent (AWC) in which it was censured and fined $50,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise the unsuitable mutual fund switches by two of its registered representatives. According to FINRA, American Portfolios, based out of Holbrook New York, engaged in unsuitable mutual fund switching through two of its registered representatives which resulted in its customers incurring nearly $91,000 in unnecessary sales charges. During the relevant time period, FINRA found that the two American Portfolios representatives recommended 78 unsuitable mutual fund switch transactions in 15 customer accounts.

Mar 7, 2016

Garden State Securities Broker Fined and Suspended by FINRA for Unsuitable Recommendations

Adam R. Tau, a former broker with the New York branch of Garden State Securities, Inc., 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 recommendations to a customer which resulted in substantial losses in the customer’s account. FINRA found that Adam Tau made recommendations to his customer that were unsuitable given his customer’s conservative investment objectives, risk tolerance, and limited assets and income. Mr. Tau recommended five purchases of common stock totaling approximately $204,000. During the relevant time period, the stock experienced several price declines which resulted in a loss of approximately $30,000. Additionally, FINRA found that Mr. Tau exercised discretion in his customer’s account by effecting ten trades without obtaining the necessary written authorization from his customer and neglecting to obtain the written acceptance of the account as discretionary by Garden State Securities.

Mar 4, 2016

WFG Investments Broker Suspended by FINRA for Unsuitable Trading

Larry Michael Crabtree, a former Edmond, Oklahoma based registered representative with WFG Investments, Inc. consented to, but did not admit to or deny, the sanction and the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that he exercised discretion in a customer’s account to make unsuitable securities purchases which resulted in substantial losses to his customer. FINRA found that Larry Crabtree, of Edmond Oklahoma, exercised discretion in the IRA account of an elderly retiree with known health problems, limited income and limited liquid assets. Mr. Crabtree made purchases of securities on his customer’s behalf, one of which was a highly leveraged oil and gas exploration company, which resulted in an almost complete loss when that oil and gas company declared bankruptcy. Mr. Crabtree also exercised discretionary trades in certain customer accounts, neglecting to get the customers’ or WFG Investment’s prior written authorization as required by FINRA Rule 2010. Consequently, Mr. Crabtree was suspended from association with any FINRA member in any capacity for six months. Due to his financial status, no monetary sanctions were imposed.

Mar 1, 2016

Finance 500 Fined for Supervisory Failures

Finance 500, Inc. of Irvine, California, and Robert Lansing Hicks, of Orange, California, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly failing to establish and implement an anti-money laundering (AML) program and numerous supervisory failures. FINRA found that between 2005 and 2014, Robert Hicks, who was Finance 500’s owner President, Chief Executive Officer, Chief Compliance Officer and designated Anti-Money Laundering Compliance Officer, and Finance 500 failed to implement and enforce adequate supervisory policies in order to oversee the market making activities of low-priced stocks, sales of unregistered low-priced securities, the review and retention of emails, and the implementation and delegation of supervisory responsibilities.

Feb 24, 2016

FINRA Complaint Filed Against Former LPL Financial Representative

The Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) filed a complaint against George Zedan, of Whittier California, for allegedly converting a client’s funds for his own personal use. Mr. Zedan entered the securities in 1998 and later in April 2004, when he became associated with FINRA member firm LPL Financial, LLC (LPL). Mr. Zedan remained associated with LPL until March 2013 when he resigned from the firm while under police investigation. FINRA alleges that Mr. Zedan, while associated with LPL, took advantage of an elderly client by using their funds for his own personal use. FINRA also alleges that Mr. Zedan proposed a false and inappropriate real estate investment strategy for an 87 year old client. According to the complaint, Mr. Zedan in 2012, started to discuss a $300,000 investment in a real estate venture with the client, none of which was put down on paper. After agreeing to the proposition, the client allegedly, under the direction of Mr. Zedan, wrote a personal check for $300,000 and with the memo line reading “real estate” and handed it to Mr. Zedan. A week later, September 4, 2012, Mr. Zedan deposited the check into his personal banking account and started using the funds for his own personal expenses.

Feb 22, 2016

Huntington Investment Company Broker Named in FINRA Complaint Alleging Unsuitable UIT Recommendations

David Michael Miller, a former registered representative with Huntington Investment Company (Huntington) was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging unsuitable Unit Investment Trust (UIT) recommendations. The complaint alleges that Mr. Miller, of Columbus, Ohio, had no reasonable basis to recommend UIT purchases which totaled approximately $5.4 million in 129 customer accounts. Further, the complaint alleges that Mr. Miller failed to exercise the necessary due diligence with respect to the UIT recommendations. Specifically, the complaint states that Mr. Miller allegedly did not read the prospectuses, did not know that the underlying closed-end funds were leveraged, and did not know that certain of the closed-end funds invested in junk bonds and that the UIT prospectuses advised that investing in such bonds should be viewed as speculative and subject to numerous risks, including higher interest rates, economic recession, possible downgrades, and defaults of interest and/or principal. The complaint further alleges that Mr. Miller negligently misrepresented and omitted material facts to customers in connection with their UIT purchases totaling $964,000. Also, Mr. Miller allegedly misrepresented to this particular customer that the UIT investment was “safe,” and that if the customer hold the investment until termination of the trust, he would receive his entire principal investment plus the 5% interest payment received during the term of the trust.

Feb 19, 2016

The Law Offices of Robert Wayne Pearce P.A. Wins $1.45 Million Plus Interest Award Against UBS Financial Services and UBS Puerto Rico

In an arbitration proceeding against UBS Financial Services, Inc. (UBS) and UBS Financial Services, Inc. of Puerto Rico (UBS-PR), the Law Offices of Robert Wayne Pearce, P. A. won a $1.45 million plus interest award for one of the firm’s clients this week. The case arose from a series of unsuitable investment recommendations made by a UBS and a UBS-PR financial advisor that our client purchase and hold an excessive concentration of UBS-PR closed-end bond funds in a leveraged UBS-PR account. Because of the financial advisors’ unsuitable recommendations, our client’s investment was not diversified from an asset allocation standpoint and also from a concentration standpoint, as the portfolio was overconcentrated in a single geographic area, namely, Puerto Rico.

Feb 19, 2016

Winter Park, Florida Representative Suspended & Fined for Alleged Fraud

Anthony Grey of Winter Park, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly charging excessive mark-ups to his clients and engaging in other fraudulent activity. Mr. Grey entered the securities industry in the early 1980s and later became associated with Gardnyr Michael Capital, Inc. (GMCI) in 1994. During a routine FINRA member conduct examination in 2009, a FINRA examiner discovered a pattern of trades that revealed Mr. Grey artificially inflated prices of bonds for his retail customers. FINRA found that on ten occasions, Mr. Grey charged his customers unfair mark-ups ranging from 5.36% to 19.12%. In seven of the occasions FINRA further alleged that Mr. Grey charged fraudulently excessive mark-ups that he failed to disclose.

Feb 17, 2016

Former UBS Financial Representative Suspended and Fined

Christian Harkness of La Crosse, Wisconsin submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly violating his broker-dealer conduct rules. Mr. Harkness entered the securities industry in 1998 as a General Securities Representative (GSR). Mr. Harkness became associated with UBS Financial Services Inc. (UBS) in 2007 and later in 2009 to Stifel, Nicolaus & Co. (Stifel) as a GSR. FINRA found that Mr. Harkness violated NASD Rule 2370 and FINRA Rules 3240 and 2010 by borrowing money from a firm client on two occasions as well as failing to disclose outside business activities. FINRA alleged that Mr. Harkness did not receive written permission from his broker-dealer to participate in either of the activities and thereby violated FINRA conduct rules.

Feb 15, 2016

E.S. Financial Services of Miami Florida Fined for Undisclosed Fees

E.S. Financial Services, Inc. (ESF) of Miami, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly charging customers additional commission fees without their knowledge as well as keeping inaccurate books and records. ESF faced similar allegations in 2007 for allegedly failing to maintain accurate books and records. FINRA found that ESF essentially created another source of revenue by charging its customers additional fees. Between September 1, 2011 and October 31, 2012 ESF allegedly charged its customers “a transaction fee and a custody fee in addition to a commission on fixed income transactions.” FINRA alleged that the fees were not related to services provided by ESF and therefore a violation of NASD 2430 and FINRA Conduct Rule 2010.

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