Recent Posts

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.

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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.

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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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Niyukt Bhasin, Shondeep Balchandani, and Naveen Bhagwani of NSM Securities Named in FINRA Complaint for Numerous Industry Violations

Niyukt Raghu Bhasin, a former Wellington, Florida-based Registered Principal and founder, owner, President and CEO of West Palm Beach, Florida-based NSM Securities, Inc., was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that the firm failed to create and enforce a supervisory system which resulted in many of the firm’s customers suffering significant investment losses. The complaint alleges that Bhasin’s non-compliance resulted in aggressive, unauthorized trading, numerous customer complaints and cold-calling abuses. Two of the firm’s Registered Representatives, West Palm Beach, Florida-based Shondeep Sajan Balchandani and Naveen K. Bhagwani allegedly engaged in churning and excessive trading, and made unsuitable recommendations to NSM Securities customers. FINRA’s complaint even goes so far as to refer to NSM Securities’ supervisory system as “grossly inadequate.”

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Timothy Ruggiero Permanently Barred by FINRA for Stock Price Manipulation

Timothy Burke Ruggiero, a former Plantation, Florida-based registered principal employed by Lazarus Asset Management, LLC and Evora Capital, Inc., also from Plantation, Florida, has been permanently barred by the Financial Industry Regulatory Authority (FINRA). As we first reported back in December, 2012, FINRA had filed a complaint against the former Fort Lauderdale-based Brookshire Securities Corporation registered principal based on findings that Mr. Ruggiero intentionally manipulated stock prices, which violates Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. FINRAs findings further found that Mr. Ruggiero engaged in unlawful trades and forgery on order paperwork to show that there was supervisory review when, if fact, there was not. FINRA also found that Mr. Ruggiero, as the firm’s President and CEO, failed to supervise the trading and electronic communications of the firm, which resulted in illegal trading in violation of Regulation M. As a result of his unlawful conduct, Timothy Ruggiero was barred from association with any FINRA member in any capacity.

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Jack Kelly Barred by FINRA for Converting Customer Funds

Jack Richard Kelly, a former Millington, Tennessee-based registered principal employed by Duluth, Georgia-based PFS Investments Inc. 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 converted a total of $85,000 from customers. FINRA’s findings stated that a customer gave Mr. Kelly checks totaling $40,000 to be invested in a fund that Mr. Kelly had represented would provide 7% interest. The $40,000 in funds had been liquidated from a trust account held at Mr. Kelly’s firm that was intended to provide for the customer’s disabled sister. Rather than investing the $40,000 in the purported high-yield investment, Mr. Kelly converted the funds to his personal use. FINRA’s findings also stated that an elderly customer gave Mr. Kelly a total of $45,000 to be invested in the 7 percent investment, but Mr. Kelly again converted the funds to his personal use. As a result of his conduct, Mr. Kelly was barred from association with any FINRA member in any capacity.

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FINRA Fines Accelerated Capital Group for Violating Industry Rules and Firm Procedures

Irvine, California-based Accelerated Capital Group, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm 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 its website contained misleading information and that it violated escrow account rules and procedures. The firm’s website contained fabricated testimonials and a world map that incorrectly suggested the firm had global offices and wanted to add 250 financial advisers. However, the firm had only two offices and omitted to state that its membership agreement limited the firm to 20 associated persons. FINRA’s findings also stated that two of the firm’s representatives maintained business-related websites that contained false, misleading, exaggerated, and promissory statements. The firm’s representatives distributed power point slides to investors that were unbalanced, failed to present a sound basis for evaluating the offered investment, and violated the prohibitions against exaggerated performance predictions and unwarranted performance claims and forecasts.

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Santander Securities Investors Lose Life Savings

This arbitration arises out of a Santander stockbroker’s recommendation that a retired couple invest their life savings, $500,000 in Westernbank preferred stock. The clients had never made any stock market investments before they met the Santander stockbroker and the Westernbank preferred stock was the only investment in their accounts.

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UBS Puerto Rico Investor Claims Bond Funds Unsuitable and Misrepresented

In 2002 and 2003, the client inherited what she understood to be bonds and mutual funds from her parents’ UBS PaineWebber accounts when they passed away. The client did not know the true nature or risk of the investments that she had inherited and held in her account. She thought she actually owned bonds that would always pay interest until they matured. Neither UBS Puerto Rico nor her UBS Puerto Rico Stockbrokers ever gave her a full explanation of what type of investments she really owned, which were closed-end funds and that what she actually owned was shares of the closed-end funds (like common stock shares) that only paid dividends at the manager’s discretion. She also didn’t know that these were leveraged, illiquid investments which were very risky.

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UBS Puerto Rico Investor Claims For Unsuitable Investments

The UBS Puerto Rico stockbroker has been the client’s primary broker for many years and knows the client’s age, employment status, and financial condition. The stockbroker knew that the client’s life savings were deposited with UBS Puerto Rico and in his hands. The client has been a passive investor and relied exclusively on his stockbroker to make all of the investment decisions in his UBS Puerto Rico account. As a result of the UBS Puerto Rico stockbroker’s recommendations and decisions, the client’s account became highly concentrated (100%!) in Puerto Rico bonds.

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