In a FINRA disciplinary proceeding against former Newport Coast Securities broker Marc Arena, FINRA made the following findings as to Arena in deciding to accept his offer of settlement.
That from September 2008 through May 2013 Newport Coast Securities failed to prevent five of its registered representatives (Douglas Leone, David Levy, Antonio Costanzo, Andre LaBarbera and Donald Bartelt) from excessively trading (churning) customer accounts.
FINRA found that this conduct should have drawn scrutiny from the firm’s managers because the cost to equity ratios were extremely high and turnover rates were over 100 in some accounts. In addition, client accounts were overly concentrated and heavily margined, leveraged ETFs and ETNS were allowed to remain in client accounts for extended periods, and management failed to intervene when trade confirmations were marked as unsolicited, when in fact the trades had been solicited by Newport Coast’s brokers.
FINRA found that the managers at Newport Coast and the firm’s compliance department observed the misconduct but failed to take meaningful steps to curtail it, and in fact, profited from it through overrides on the excessively traded accounts.
In addition to the allegations of churning, FINRA charged that the firm allowed registered representatives to make unsuitable recommendations, and failed to establish an adequate and effective system of procedures to supervise its sales force.
Newport Coast Securities registration and disciplinary history
In order to lawfully sell investments to the public, one must either be registered or exempt from registration. Newport Coast Securities is registered with the SEC, two self regulatory organization and in 5o states and territories.
According to FINRA’s CRD disclosure report, Newport Coast Securities has been the subject of two customer complaints and ten regulatory investigations.
The Law Office of David Liebrader practices exclusively in the field of investment loss recovery and our securities attorneys have successfully resolved over 1000 investment loss cases over the past 20 years. Recoveries for clients top $40 million. The types of claims we have successfully handled include those involving unsuitable investments (suitability claims), excessive trading or “churning”, misrepresentations and omissions, unauthorized trading, over-concentration of illiquid or overly risky investments, pump and dump scams involving “penny stocks”, direct participation programs (private placements) involving real estate investment trusts (REITS), oil and gas exploration programs, leasing equipment deals and receivable financing, promissory notes whether sold through a broker dealer or as part of the outside business activities of a registered representative, ponzi scheme losses, failure on the part of the broker dealer to perform due diligence, state securities law (blue sky) violations and failure to supervise.
Investment losses can be recovered through a process known as FINRA arbitration. FINRA regulates broker dealers that sell investments, and provides an arbitration forum to resolve investor disputes. Investors can pursue claims against their brokerage firms in the FINRA arbitration forum. Common claims in the forum are those for suitability, breach of fiduciary duty, misrepresentations and omissions, negligence, violation of FINRA rules, state and federal securities laws violations, elder abuse, breach of contract and failure to supervise. On average, the recovery process takes approximately a year, from start to finish.
FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).
If you have suffered investment losses please call The Law Office of David Liebrader at (702) 380-3131 for a free, confidential consultation