Library - Law Offices of Robert Wayne Pearce

Former Essex Securities Broker Fined and Suspended for Unsuitable Mutual Fund Switches

Jennifer Joice Trowbridge, a former broker employed by the Boynton Beach, Florida branch of Essex Securities LLC, submitted a Letter of Acceptance, Waiver and Consent in which she consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that she made unsuitable mutual fund switch recommendations which cost her customers nearly $60,000 in unnecessary commissions. According to FINRA, Jennifer Trowbridge, of Boca Raton, Florida, recommended, on at least 29 occasions and in 7 customer accounts, a series of mutual fund switches which were unsuitable for those customers. Ms. Trowbridge allegedly recommended that the customers purchase Class A mutual funds, for which they paid commissions and sales charges. FINRA alleged she subsequently recommended that they sell the mutual funds within just 1 month to 13 months, with the average being just 6 months that the customers held the funds prior to selling. FINRA found that Ms. Trowbridge used the funds from the sales of the mutual funds to purchase other mutual funds, for which the customers paid additional commissions and fees. FINRA’s findings state that Ms. Trowbridge’s customers paid approximately $60,000 in unnecessary commissions and fees on her recommended switches between mutual funds.

May 15, 2015

Former Fifth Third Securities Broker Permanently Barred For Misappropriating Investor Funds

Former Fifth Third Securities, Inc. (Fifth Third Securities) broker Steven Dunkelberg 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 misappropriated $4,970.08 of a customer’s bank account without the customer’s knowledge or consent. According to FINRA, Steven James Dunkelberg Jr., of Grand Rapids, Michigan, forged his customer’s name on five different occasions on bank account withdrawal slips. Mr. Dunkelberg allegedly made the withdrawals from his customer’s Fifth Third Securities account without the customer’s knowledge or consent. FINRA found that Mr. Dunkelberg misappropriated $4,970.08 from the customer’s account. Consequently, Steven Dunkelberg was barred from association with any FINRA member in any capacity.

May 13, 2015

JP Morgan under Investigation for Possible Breach of Fiduciary Duty in Mutual Fund Sales

JPMorgan Chase & Co (JPMorgan) is under investigation by the Securities and Exchange Commission (SEC) about a potential conflict of interest and breach of fiduciary duty with respect to its sales of mutual funds and other proprietary products. According to InvestmentNews, JPMorgan received subpoenas and inquiries from the SEC and other government authorities about the firm’s sale and recommendations of mutual funds and other proprietary investment products in its wealth management business. At question is the alleged breach of fiduciary duty, which requires that financial advisors put their customers’ best interests ahead of their own.

May 8, 2015

LPL Financial Hit with $11.7 Million Fine for Failure to Supervise Investment Sales

LPL Financial LLC (LPL Financial) was fined $11.7 million by the Financial Industry Regulatory Authority (FINRA) for failing to maintain a proper supervisory system with respect to the sales of complex investment products, such as exchange-traded funds (ETFs), variable annuities, mutual funds, and non-traded real estate investment trusts. Without admitting or denying the findings, LPL Financial consented to FINRA’s sanctions and findings that if failed to enforce its supervisory procedures for the sales of non-traditional ETFs, such as leveraged, inverse, and inverse-leveraged ETFs. Specifically, FINRA found that LPL Financial failed to enforce allocation limits with respect to customers’ investment objectives in its sales of non-traditional ETFs. LPL also failed to ensure that some of its registered representatives were adequately trained to sell the ETFs.

May 6, 2015

Inter-Global Currency & Precious Metals Ordered to Pay $550,000

The U.S. District Court for the Southern District of Florida has ordered Delray Beach Florida resident Stavros Papastavrou and his Pompano Beach, Florida company, Inter-Global Currency & Precious Metals, LLC (IGCPM), to pay nearly $550,000 for allegedly committing illegal off-exchange precious metals fraud. The Consent Order states that IGCPM and Mr. Papastavrou solicited customers by phone to engage in leveraged, margined, or financed precious metals transactions. According to the Order, customers paid at least $1 million to IGCPM for these precious metals transactions, and IGCPM received at least $447,342 in commissions and fees.

May 4, 2015

Liberty Partners Stockbroker Barred by FINRA for the Fraud of an Elderly Client

Ronald Paul Rafaloff, a former registered representative with the Bakersfield, California branch of Liberty Partners Financial Specialists, LLC (Liberty Partners) 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 $168,000 of an elderly customer’s investment funds for his personal use and benefit. According to FINRA, Ronald Rafaloff’s only client, a 74 year old retiree, invested $405,000 of her retirement money into three speculative business entities. The business entities, for which Mr. Rafaloff claimed to provide consulting services, were actually founded and controlled by Mr. Rafaloff. In order to persuade his elderly client to invest, Mr. Rafaloff allegedly promised annual returns of 30-40% and a repayment of her principal in three years. He also allegedly provided the elderly investor with written guarantees against losses, agreeing to personally make payments to the investor if the business entities should default. FINRA found that none of the companies held sufficient funds to cover the return of principal or the high rates of returns promised by Mr. Rafaloff.

May 1, 2015

Former Morgan Stanley Broker Fined and Suspended for Discretionary Trade Violations

Debra Kaye Lyman, a former registered representative with the Holladay, Utah branch of Morgan Stanley, submitted a letter of acceptance, waiver, and consent in which she consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that she entered discretionary trades in several customers’ accounts without the necessary prior written customer authorization. FINRA found that Debra Lyman, of West Jordan, Utah, neglected to obtain the necessary written customer authorization or the acceptance by her firm of the accounts as discretionary when she effected discretionary trades in at least six customers’ accounts. According to FINRA, Debra Lyman had been previously reprimanded and suspended by Morgan Stanley for engaging in similar broker misconduct. Further, Ms. Lyman allegedly misrepresented on a Firm Employee Sales Questionnaire that she had not transacted business on a discretionary basis for any accounts.

Apr 29, 2015

Michael Korson Barred by FINRA for Failure to Disclose Outside Business Activities

Michael Willard Korson, a former registered representative with PFS Investments, Inc. (PFS Investments) and HBW Securities, LLC (HBW Securities) has been barred from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for allegedly failing to report his outside business activities and other industry violations. Without admitting or denying FINRA’s findings, Michael Korson consented to the sanctions and to the findings that he neglected to timely and accurately notify his member firm of his outside business activities. Mr. Korson also falsely stated when his involvement with the outside business first began. According to FINRA, Mr. Korson participated in private securities transactions, involving his outside business, with sales of convertible debentures to firm customers. He also participated in the sale of preferred stock to a non-customer without providing the necessary prior written notice to his firm.

Apr 27, 2015

Former NYLIFE Securities Broker Barred by FINRA for Converting Funds of an Elderly Investor

William Robert Kinyon, a former registered representative with the Castleford, Idaho branch of NYLIFE Securities LLC (NYLIFE Securities) 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 funds from an elderly customer’s account for personal use. According to FINRA, William Kinyon’s elderly brokerage customer told him that she wanted to deposit $3,000 into one of her variable annuity accounts. Mr. Kinyon, however, deposited the check into his personal checking account and allegedly used the funds to make multiple personal purchases at stores such as Walmart and Costco.

Apr 24, 2015

Former Edward Jones Broker Fined by FINRA for Unsuitable Investment Recommendations

Dalas L. Gundersen, a former Registered Representative with the Willows, California branch of Edward Jones, 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) sanction and findings that he made unsuitable investment recommendations to his customers in light of their financial goals. FINRA’s findings alleged that Dalas Gundersen, of Arbuckle California, recommended that a married couple invest in an intermediate municipal bond mutual fund, even though the investor couple had inquired about investing in oil and gas master limited partnerships. According to FINRA, the couple acted upon Mr. Gundersen’s recommendation and purchased nearly $1.26 million in mutual fund, which represented 80% of their net worth.

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