Securities Fraud Lawyer Blog

Maxwell SImon fined by FINRA.

In December, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Maxwell Simon of Minneapolis, MN submitted an acceptance, waiver and consent letter regarding its failure to supervise its registered representatives in their sales of unregistered microcap securities. In agreeing to the AWC, the firm was fined $20,000.

FINRA’s allegations against Maxwell Simon concerned micro-cap securities sales.  FINRA found that the firm failed to properly investigate the sales, failed to respond to red flags concerning the transactions and failed to establish, maintain and enforce an effective system of reviewing the transactions to ensure that the transactions were in compliance with the securities laws, in particular Rule 144.

Geneos Wealth Management fined by FINRA.

In December, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Geneos Wealth Management of Centennial, CO submitted an acceptance, waiver and consent letter regarding its failure to supervise its registered representatives in their sales of limited partnership interests to customers. In agreeing to the AWC, the firm was fined $12,500.

FINRA’s allegations against Geneos Wealth Management concerned reps whose outside business activities included the sales of limited partnership units.  FINRA found that the reps met with, discussed and provided clients with information on the limited partnership interests, including providing customers with private placement memorandums, and receiving compensation, but the firm failed to record the transactions on their books and maintain them in their records.

Capital Securities Management fined $470,000.

In December, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Capital Securities Management of Glen Allen, Virginia submitted an acceptance, waiver and consent letter regarding its sales of four million dollars of reverse convertible notes (RCNs) to its clients, and the firm’s failure to effectively implement a reasonable supervisory system designed to achieve compliance with the securities laws. In agreeing to the AWC, the firm was fined $470,000 and ordered to pay over two hundred thousand dollars in restitution.

FINRA’s allegations against Capital Securities Management concerned the sales of RCNs, and the over concentration of RCNs in customer accounts.  FINRA found the firm failed to establish, maintain and enforce a reasonable supervisory system to address the sale of RCNs to its customers, and to prevent over concentration.  FINRA also criticized the firm for its anti-money laundering program which failed to detect suspicious activity regarding the deposit and sale of low priced securities through the firm.

Daniel Crowley suspended by FINRA.

Daniel Crowley, a registered representative from New Canaan, CT, formerly with Rochdale Securities of Stamford, CT was suspended from FINRA membership for violations of Rule 9554.

FINRA Rule 9554. Failure to Comply with an Arbitration Award or Related Settlement or an Order of Restitution or Settlement Providing for Restitution

FINRA suspends J.R. Gladden a year.

In July, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that J.R. Gladden of La Mesa, California formerly with Securities Equity Group of El Cajon, CA  submitted an acceptance, waiver and consent letter whereby he was suspended from association with any FINRA member in any capacity for one year and fined $15,000. The FINRA complaint alleged that Gladden participated in an unapproved outside business activity whereby created two funds designed to raise money to make loans to churches.  Gladden solicited over two million dollars of investments for the ventures, but failed to inform his broker dealer of his fund raising activities.

Registration and disciplinary history

Caldwell International Securities Charged by FINRA with sales practice violations.

In a complaint filed by the FINRA Department of Enforcement on December 16, 2105 Caldwell International Securities of Fisher, TX and its principal owner Greg Caldwell, Lennie Freiman, its president, chief compliance officer Paul Jacobs, along with registered reps Alain Florestan, Alex Etter, Lucas Lichtman, Richard Lim and Richard Lee were charged with sales practice and supervisory violations.  The allegations include charges that the reps made unsuitable recommendations to customers, engaged in over aggressive trading for the purpose of generating commissions and failed to disclose risk to customers.  FINRA accused the supervisors of failing to monitor and detect wrongdoing, which resulted in over one million dollars of client losses while generating over a million dollars in commissions.

The claim filed by FINRA is not final, and until the allegations have been proven in a court of law, no adverse inferences should be drawn.

FINRA bars Stifel broker Andy Quinn.

In February, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Andy Quinn of Reno, NV, formerly working out of Stifel Nicolaus’ Reno office was barred from association with any FINRA member in any capacity for borrowing money from an elderly widow, then defaulting on the repayment obligations.  FINRA also found that Quinn refused to cooperate with the investigation, and that in responding to his firm’s annual compliance questionnaire, Quinn failed to disclose the existence of the loan, a violation of firm policy.

Registration and disciplinary history

Besty Marcom suspended four months

In February, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Betsy Marcom of Georgetown, TX, formerly with Next Financial Group of Georgetown, TX submitted an acceptance, waiver and consent letter whereby she was suspended from association with any FINRA member in any capacity for four months and fined $15,000. The FINRA complaint alleged that Marcom made unsuitable investment recommendations to her clients by concentrating their account in non-investment grade corporate bonds.  The client, a church, suffered over $100,000 in losses due to the over concentration of their account in these risky investments.

Registration and disciplinary history

FINRA suspends Charles Laverty.

In February, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Charles Laverty of Newport Beach, CA, formerly with Oppenheimer and Co. and Calton & Associates submitted an acceptance, waiver and consent letter whereby he was suspended from association with any FINRA member in any capacity for eighteen months. The FINRA complaint alleged that Laverty borrowed over one million dollars from his customers  without obtaining permission from his firm.  One of the loans remains outstanding. FINRA also found that Laverty failed to report the loans on his annual compliance questionnaires.

Registration and disciplinary history

Finra bars Rick Esparza

In February, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Rick Esparza of Rancho Murieta, CA, formerly with Princor Financial Services of Rancho Murieta, CA submitted an acceptance, waiver and consent letter whereby he was barred from association with any FINRA member in any capacity. The FINRA complaint alleged that Esparza failed to cooperate with FINRA during its investigation into whether Esparza borrowed money from a firm customer, a violation of firm policy and FINRA rules.

Registration and disciplinary history