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V. Cullen Kempson III, a/k/a Voigt C. Kempson, a stockbroker formerly employed by Commonwealth Financial Network, submitted a letter of Acceptance, Waiver, and Consent (AWC) in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he made unauthorized discretionary trades in his deceased customer’s accounts.

Voigt Kempson, of Sparta, New Jersey, was found by FINRA to have effected 40 discretionary trades in the accounts of his deceased customer even though he was aware of his customer’s death.  Although Mr. Kempson had been authorized to effect discretionary trades while the customer was alive, Mr. Kempson continued to trade in the customer’s accounts even after her death.  Further, FINRA found that Mr. Kempson neglected to inform his member firm of the customer’s death.   Continue reading →

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WFG Investments, Inc. has submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which it has been fined $150,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise its registered representative’s unsuitable trading despite numerous red flags.

WFG Investments is headquartered in Dallas, Texas and currently has approximately 237 registered representatives and 118 branch offices.  FINRA found that WFG Investments failed to appropriately supervise the sales practices of a registered representative who had engaged in unsuitable trading in his customers’ accounts by overconcentrating them in low-priced securities.  For example, FINRA found that during 2012, the WFG representative’s account purchases were 66% low-priced securities.  In 2013, FINRA’s findings state that the account purchases were 80% concentrated in these securities and/or illiquid and highly speculative private placement and REIT investments. Continue reading →

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William McWilliams, a registered representative formerly employed with Raymond James Financial Services, Inc. (Raymond James), submitted a Letter of Acceptance, Waiver, and Consent (AWC) in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he exercised discretion at least 28 times in eight customer accounts without the necessary prior written authorization.

FINRA found that William Harrison McWilliams, of Columbia, Missouri, failed to obtain the necessary written authorization from his customers or his member firm when he exercised discretion in the accounts of eight customers.  According to FINRA, Mr. McWilliams exercised discretionary trading authority in response to customer liquidation requests six times in four customers’ accounts without the requisite prior written authorization from customers and without the accounts accepted as discretionary by his member firm.  Further, FINRA found that Mr. McWilliams exercised discretionary trading authority at least 22 times in four other customer accounts without discussing the trades with the customers on the day of the trades, which was required by the firm. Continue reading →

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Edward McFarlane, a registered representative formerly employed with Oppenheimer & Co. Oppenheimer), submitted a Letter of Acceptance, Waiver, and Consent (AWC), in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he recommended and effected unsuitable ETF recommendations in his customer’s account, resulting in losses to his customer of approximately $48,524.79.

Edward Thomas McFarlane, of Glenside, Pennsylvania, allegedly recommended and effected approximately 169 transactions involving inverse, leveraged, and inverse-leveraged exchange-traded funds (ETFs).  FINRA found that Mr. McFarlane recommended that the non-traditional ETFs be held in his customer’s account for as long as 470 days, with an average holding time of 40 days.  The ETFs recommended by Mr. McFarlane were intended to be short-term trading vehicles and not meant to be long-term investments.  Continue reading →

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Stephen J. Landa, of Easton, Connecticut, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined $5,000 and suspended for two months for recommending and engaging in a short-term mutual fund trading strategy in the accounts of retirees on a fixed income and conservative investment goals.

FINRA found that while employed with INVEST Financial Corporation, Stephen Landa engaged in an unsuitable short-term mutual fund trading strategy in two customers’ accounts.  The customers were 60 years old at the time, retired, and living on a fixed income.  Further, the customers had conservative investment objectives and moderate risk tolerances.  Notwithstanding their conservative investment profiles, FINRA found that Mr. Landa recommended they purchase mutual fund shares and shortly thereafter (on average, just six months), he recommended they sell the shares.  Consequently, the customers suffered losses of $18,156.53.  Continue reading →

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Joseph Farah, a former registered representative with Gold Coast Securities, was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint for allegedly engaging in a fraudulent churning scheme, causing his customer to suffer substantial losses.  Joseph C. Farah, of Hacienda Heights, California, is alleged by FINRA to have acted with intent to defraud and reckless disregard for his customer’s interests by churning his customer’s account.

According to FINRA, Mr. Farah allegedly executed more than 600 trades in his customer’s account, causing the account to diminish in value by over 25%.  The FINRA complaint alleges that Mr. Farah failed to inform his member firm that he had discretionary authority over the customer’s account, which Mr. Farah suggested she open at TD Ameritrade.  FINRA’s complaint notes that the customer’s annual income was listed as just $25,000 – $49,999, which was correct, but her investment experience was incorrectly described as 1-2 years of experience.  FINRA found that she actually had no investing experience.  Continue reading →

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Anthony John Cummings, a former registered representative with Edward Jones, consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) sanction and findings that he converted a customer’s funds for his personal use.

According to FINRA, Anthony Cummings, of Cockeysville, Maryland, solicited $60,000 from a customer for his personal expenses.  The money came directly from the customer’s Edward Jones account.  FINRA found that Mr. Cummings kept the funds and neglected to repay his customer.  FINRA’s finding state that Mr. Cummings acted unethically by accepting the client’s money without the means or intent to repay the customer.  Consequently, Anthony Cummings was permanently barred from association with any FINRA member in any capacity. Continue reading →

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Tracy Rae Turner, a former broker with Colorado Financial Service Corporation, was barred by the Financial Industry Regulatory Authority (FINRA) amid findings that he offered and sold over $4.1 million in interests in saltwater disposal wells used in oil and gas production without the approval of his member firm.

FINRA found that Tracy Turner, of San Marcos, California, offered and sold interests in saltwater disposal well facilities (SWDs) to 12 investors, 8 of whom were Colorado Financial customers, without providing the firm with the required written notice of his participation in the securities transactions.  According to FINRA, Mr. Turner marketed the sale of the SWD interests by creating and making available online an Offering Memorandum which purportedly touted a “25.4% cash-on-cash return” on the investment.  FINRA found that Mr. Turner’s statements made unwarranted predictions about the returns investors could expect and were therefore misleading.  Mr. Turner was barred from association with any FINRA member in all capacities and fined $272,879.04 plus prejudgment interest.  The amount of the fine assessed is equal to the commissions Mr. Turner received from the sales of the SWD interests. Continue reading →

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Legend Equities Corporation has agreed to pay more than $2.3 million in restitution to customers who were overcharged in certain mutual fund purchases.  According to the Financial Industry Regulatory Authority (FINRA), between July 1, 1009 and January 1, 2017, Legend Equities disadvantaged certain retirement plan and charitable organization customers that were eligible to purchase Class A shares of certain mutual funds without a front-end sales charge.  The customers were instead sold Class A shares with a front-end sales charge or Class B or C shares with back-end sales charges and higher ongoing fees and expenses.

According to the Letter of Acceptance, Waiver and Consent (AWC) submitted to FINRA, Legend Equities failed to reasonably supervise the application of the sales charge waivers to the eligible mutual fund sales, relying on its financial advisors to determine the applicability of sales charge waivers.  Further, Legend Equities allegedly failed to adequately notify and train its financial advisors regarding the availability of mutual fund sales charge waivers for eligible customers.  Without admitting or denying the findings, Legend Equities was censured and agreed to pay restitution to eligible customers who were overcharged of an estimated $2,300,188.00, the amount eligible customers were overcharged, inclusive of interest.  Continue reading →