Library - Law Offices of Robert Wayne Pearce

Cetera Financial Representative Suspended for Outside Business Activities

John Oates Jr. of Yardley, Pennsylvania submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in outside business activities without his firm’s approval. Mr. Oates first became associated with FINRA in 1997 as an Investment Company Products and Variable Contracts Representative. From 2004 through 2014, Mr. Oates was a General Securities Representative (GSR) for Cetera Financial Specialists LLC (Cetera Financial). According to FINRA Rule 3270, all representatives must notify and obtain written approval to participate in outside business activities. FINRA found that between March 2011 and October 2011, while registered with Cetera Financial, Mr. Oates participated in the purchase of approximately $1.4 million in alternative investment products to two customers (one was a Cetera Financial client). FINRA alleged that Mr. Oates received approximately $69,000 in compensation for participation in the transaction. Mr. Oates did not obtain written approval from Cetera Financial to engage in this outside business and therefore violated FINRA Rules 3270 and 2010.

Jan 1, 2016

Edward Jones Representative Barred for Misappropriation

Anthony Gray of Baton Rouge, Louisiana submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for allegedly misappropriating funds from two elderly client bank accounts. Mr. Gray first became associated with FINRA in 2012 through a member firm. In July 2013, Mr. Gray became registered with Edward Jones; he remained there until his termination in October 2015. FINRA found, between December 2013 and September 2015, Mr. Gray misappropriated $138,000 from two Edward Jones customers. Mr. Gray allegedly convinced the clients to transfer funds from their firm account to their personal banking account as well as provide him with blank checks to pay for alleged firm fees. Instead of using the blank checks to his alleged intention, FINRA found that Mr. Gray made the checks payable to himself or a business he is affiliated to.

Dec 31, 2015

Coral Springs, Florida GMS Group Representative Barred for Misconduct

Jason Figueroa of Coral Springs, Florida submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in unsuitable transactions in leveraged and inverse leveraged exchange traded funds (ETF’s) that he did not understand. Mr. Figueroa first became associated with FINRA through The GMS Group, LLC (GMS) in 2006. In March 2015, Mr. Figueroa was terminated by GMS due to a series of client complaints and settlements. In June 2009, FINRA released a regulatory notice pertaining to ETF’s. It stated that it was the responsibility of the firm and its representatives to understand the unique features of ETFs and their typical holding period (one day). In 2011, Mr. Figueroa revised his investment strategy for 4 client accounts who were inexperienced in investing and had moderate risk tolerance.

Dec 28, 2015

Capitol Securities Management Fined for Supervisory Failures

Capitol Securities Management, Inc. (CSM) of Glen Allen, Virginia submitted a Letter of Acceptance, Waiver and Consent to the Financial Industry Regulatory Authority (FINRA) for several alleged supervisory failures and unsuitable purchases of Reverse Convertible Notes (RCN’s). CSM has been a FINRA member since 1985 and has over 60 branch offices including its main headquarters in Glen Allen, Virginia. FINRA found, between January 2008 and August 2011, a registered representative for CSM recommended and executed 24 unsuitable purchases of customizable RCN’s totally approximately $4 million. FINRA alleged that the eight clients affected were not suitable candidates for these RCN purchases due to their risk tolerance, age, and financial experience. By executing these transactions, CSM, through a registered representative, failed to maintain and enforce proper supervisory procedures.

Dec 25, 2015

Roswell, Georgia Representative Suspended and Fined for Excessive Trading

Denny Darmodihardjo of Roswell, Georgia submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority for allegedly recommending and making unstable investments on behalf of a client. Mr. Darmodihardjo first became associated with FINRA through a member firm in 1995. From 2006 through 2015, Mr. Darmodihardjo was a General Securities Representative (GSR) through Rockwell Global Capital LLC (Rockwell). FINRA found that between 2009 and 2011, Mr. Darmodihardjo engaged in excessive trading in three of a client’s accounts. FINRA further alleged that Mr. Darmodihardjo recommended unsuitable short selling and margin use to his customers’ in violation of FINRA and NASD conduct rules. At the time of these investments, Mr. Darmodihardjo had limited experience in margin trading and was recommending investments that did not comply with his clients risk tolerance and objectives. In October 2010, Mr. Darmodihardjo executed thirteen short sales accounting for $897,057 traded on margin. This excessive trading resulted in four margin calls in that month alone, and further losses in the account.

Dec 23, 2015

Former Calton & Associates, Synergy Investment Group and Capital Investment Group Representative Barred

Randy Burke of Ferguson, North Carolina submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Department of Enforcement of the Financial Industry Regulatory Authority for allegedly engaging in private securities transactions without his employer member firm’s knowledge. Mr. Burke first became registered with FINRA in 1996. In 2002 Mr. Burke became register through Synergy Investment Group (Synergy). After his termination in 2011, Mr. Burke registered with Capital Investment Group, Inc. (CIG) and remained there until 2013. Mr. Burke is currently registered with Calton & Associates, Inc. (Calton).

Dec 21, 2015

Woodbury Financial Services Representative Fined for Converting Client’s Funds

Joseph Butler of Brandywine, Maryland was barred by the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) for allegedly converting a customer’s funds for his own personal use. Mr. Butler entered the insurance industry in 1967 and in 1994 became registered with Woodbury Financial Services, Inc. (Woodbury) as an investment company and variable contracts products limited representative. In 2012, Mr. Butler was terminated after he failed to disclose he was listed as a beneficiary for multiple client banking accounts. In August 2013 FINRA filed a complaint against Mr. Butler alleging that he converted a client’s funds for his own personal use. FINRA alleged that Mr. Butler violated Woodbury policies and took advantage of an elderly client using their funds to pay his taxes. This client was an elderly widow with diminishing mental health. Mr. Butler frequently visited this client and noticed her mental and physical health was declining and that she was not paying her bills. In 2009 Mr. Butler was added as a joint account holder to her bank accounts. On that same day, FINRA found that Mr. Butler transferred $25,000 from his clients account to his own personal account. In 2009 alone, Mr. Butler wrote a cashed three checks from his clients account.

Dec 18, 2015

Boca Raton, Florida GMS Supervisor Suspended and Fined

Carmine Capone of Fort Lauderdale, Florida and The GMS Group (GMS) of Livingston, New Jersey submitted an Acceptance, Waiver and Consent to the Financial Industry Regulatory Authority for allegedly failing to supervise one of their registered representatives. A FINRA member since 1979, GMS has 7 branch offices and over 100 registered representatives. Mr. Capone has been associated with GMS since August 1985 and is a General Securities Sales Supervisor for the firm. FINRA found, that between 2011 through 2013 a registered representative, who was supposed to be under Mr. Capone’s supervision, recommended and engaged in several unsuitable trades in ETF’s in four customer accounts. During the relevant period, FINRA found that the registered representative for GMS did not understand the unique features and specific risks of the ETF transactions. All four clients realized thousands of dollars in losses while the GMS representative generated commissions of $210,754. FINRA alleged that the ETF’s were nontraditional and exposed the clients to more risk than they could tolerate.

Dec 16, 2015

Lincoln Financial Advisors Fined for Supervisory System Failures

Lincoln Financial Advisors Corporation (LFA) of Fort Wayne, Indiana 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 implement and enforce reasonable supervisory procedures related to the recommendation of private placement variable annuities (PPVA). LFA has been a FINRA member since 1969 and has nearly 2,500 registered representatives and over 500 branch offices. FINRA found that between October 2008 and April 2009, representatives from two of LFA’s branch offices recommended customers to invest in a hedge fund that engaged in a complex option trading strategy. FINRA alleged that the complexity of the hedge fund exposed the LFA clients to a high degree of financial risk. LFA however approved the recommendations and 25 firm customers invested approximately $11.7 million in the hedge fund. In 2010, the hedge fund was shut down.

Dec 11, 2015

Can You Recover Your Oil and Gas Master Limited Partnership Investment Losses?

Master limited partnerships (MLPs) in oil and gas have been a highly recommended investment over the past few years. Many brokerage firms and financial advisors have advised clients to invest in these oil and gas energy stocks for the high yield or income potential. Touted to investors as secure, high quality income generating investments with only a moderate risk, these investments were anything but. Oil and gas MLPs are, in fact, risky and speculative because of their connection with oil prices. The massive slides in oil prices have caused these MLP investments to lose substantial value, which has resulted in substantial investment losses for many investors. Brokerage firms and financial advisors should never have sold these risky investments to investors with conservative or moderate investment objectives. Unfortunately, these MLPs were often recommended to retirees and conservative investors who needed to protect their principal or earn income.

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