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  • March 2013 FINRA Disciplinary Actions Sanction Stock Brokers And Broker Dealers 0 comments
    Mar 17, 2013 11:58 PM

    By Robert H. Rex, Esq.
    The Financial Industry Regulatory Authority (FINRA) issues a report on disciplinary and other actions involving registered brokers, investment advisers and brokerage firms every month.

    Here are some of the most significant actions for March 2013. Follow this link to the FINRA website for all of the March 2013 disciplinary actions as well as those for prior periods.

    Lampost Capital, L.C.-Boca Raton, Florida,and Gregg Allan Pollack (CRD #2653630, Registered Principal, Boca Raton, Florida submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $50,000. Pollack was fined $5,000 and suspended from association with any FINRA member in any principal capacity for two months. The firm and Pollack consented to the described sanctions and to the entry of findings that the firm, acting through Pollack, failed to adequately implement its anti-money laundering (AML)program, so it did not identify suspicious trading that occurred in two accounts. The firm's AML program required Pollack, its chief compliance officer (NYSE:CCO), to monitor for potentially suspicious activity and AML "red flags," investigate potentially suspicious activity, and report suspicious activity by filing a SAR-SF form as appropriate.

    The customer's accounts and the trading in those accounts raised a number of red flags identified in the firm's procedures, but the firm, through, Pollack, did not adequately investigate and respond to them.

    The suspension is in effect from February 19, 2013, through April 18, 2013.

    FINRA records indicate Pollack previously worked for Sterling Financial Group, First Union Securities and JW Genesis Securities.

    Advisors Asset Management, Inc.
    CRD #46727, Monument, Colorado
    the firm was censured and fined $65,000. The firm consented to the described sanctions and to the entry of findings that FINRA conducted a review of the firm's municipal transactions and found transaction reporting errors, inaccurate capacity disclosures, inaccurate transaction classifications and inaccurate capacity information on the firm's internal order memorandum. The findings stated that with respect to these violations, the firm has corrected these issues. The findings also stated that the firm did not have written supervisory procedures (WSPs) reasonably designe

    to achieve compliance with Municipal Securities Rulemaking Board (MSRB) rules concerning reports of sales and purchases and customer confirmations. The firm's reports of sales and procedures relied upon MSRB "not affirmed" emails to ensure compliance. The firm's customer confirmation procedures were inadequate in that they did not call for a review of the firm's delivery versus payment/receive versus payment (DVP/RVP) confirmations.
    (FINRA Case #2011026883101)

    Allied Beacon Partners, Inc.
    (CRD #46227, Richmond, Virginia) was censured and fined $20,000 and the firm consented to the described sanctions and to the entry of findings that it failed to develop and enforce written procedures reasonably designed to achieve compliance with NASD Rule 3010(d)(2) regarding the review of electronic correspondence and failed to enforce its WSPs regarding heightened supervision. The firm failed to place

    representatives under heightened supervision when its procedures called for this action based upon the representatives' derogatory regulatory history, and failed to implement the heightened supervision plan it had developed for another representative. The findings also stated that the firm made commission payments to representatives in its branch offices through non-registered entities. Those entities were owned by the principals of the branch offices and were entities through which they conducted business. The findings also included that the firm prepared and distributed executive summaries for certain private offerings that did not provide a sound basis for the investment returns/yields and income, and failed to provide an explanation concerning how the monthly income, annual income or cash yields were derived. The executive summaries failed to provide a sufficient balance of the risks and potential rewards associated with the investments, given that potential annual yields are presented on multiple pages in a manner that suggests that investors
    will positively receive the return without any caveats or conditions disclosed. FINRA found that the firm prepared presentations regarding companies that omitted any discussion of the risks associated with an investment, which, according to the offering documents, were significant, thereby failing to provide a sound basis for evaluating the product. The firm's branch offices created websites that included testimonials, but failed to disclose the fact that the testimonials may not be representative of the experience of other clients, the fact that the testimonials are no guarantee of future performance or success, and, if applicable, whether the firm paid for the testimonials. The websites contained various statements that were exaggerated, unwarranted and/or misleading. (FINRA Case #2011025598801)

    Archipelago Securities L.L.C.
    (CRD #102500,Chicago,Illinois) was censured, fined $17,500 andrequired to revise its written supervisory procedures regarding Order Audit Trail System (OATS TM ) reporting.

    The firm consented to the described sanctions and to the entry of findings that it transmitted reports to OATS that contained inaccurate destination codes and market participant identifiers (MPIDs). The findings stated that the firm's supervisory system did not adequately provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning OATS reporting. (FINRA Case #2011029631601)

    The Baker Group, LP
    (CRD #7888, Oklahoma City, Oklahoma) was censured and fined $16,000 and consented to the described sanctions and to the entry of findings that it failed to report S1 transactions in Trade Reporting and

    the firm was censured and fined $42,500. Without admitting the firm was censured and fined $15,000. Without admitting Compliance Engine® (TRACE®)-eligible agency debt securities to TRACE within 15 minutes of the execution time. The findings stated that the firm failed to report the correct trade execution time for transactions in TRACE-eligible securitized products. The inaccurate reports of securitized products constituted 33 percent of the matched inter-dealer reports the firm submitted to TRACE during the period. (FINRA Case #2011027521501)

    Barclays Capital Inc.
    (CRD #19714, New York, New York)
    Two Cases

    Case One

    the firm was censured and fined $42,500. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to accept or decline transactions in reportable securities in the FINRA/
    NASDAQ Trade Reporting Facility (OTC:FNTRF) within 20 minutes after execution when, as the order entry identifier (OEID), it was required to do so. The findings stated that the firm effected transactions in securities while trading halts were in effect with respect to these securities.
    (FINRA Case #2010023164201)

    Case Two Vs. Barclays Capital

    the firm consented to the described sanctions and to the entry

    of findings that it captured inaccurate trade times for an MPID, which resulted in the firm's failure to report information regarding purchase and sale transactions effected

    in municipal securities to the Real-time Transaction Reporting System (RTRS) within 15 minutes of trade time, report the correct trade time to the RTRS in municipal securities

    transactions, and show the correct entry time on the trade memoranda for transactions in municipal securities. The findings stated that the firm's supervisory system did not provide for supervision reasonably designed to achieve compliance with the applicable securities laws, regulations and MSRB rules concerning municipal trade reporting for the MPID.

    ( FINRA Case #2011028810101 )

    The Benchmark Company, LLC
    (CRD #22982, NewYork,New York) was censured and fined $72,500, $10,000 of which was joint and several with two individuals. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to establish, maintain and enforce adequate written supervisory control policies and procedures that identified producing managers, ensured designation of supervisors for producing managers, and were reasonably designed to provide heightened supervision over the activities of each producing manager responsible for generating 20 percent or more of the revenue of the business units supervised by the producing manager's supervisor. The firm failed to enforce its written supervisory control procedures concerning the calculation of the 20 percent threshold. The findings stated that the firm failed to establish, maintain and enforce written supervisory control policies and procedures reasonably designed to review and monitor all transmittals of funds or securities from customers to third-party accounts, to outside entities and/or to locations other than a customer's primary residence; customer changes of address and the validation of such changes of address; and customer changes of investment objectives and the validation of such changes of investment objectives. The findings also stated that the firm failed to submit to senior management annual reports for two years detailing the firm's system of supervisory controls, the summary of the test results and significant identified exceptions, and any additional or amended supervisory procedures created in response to the test results. The firm, acting through its co-chief executive officers (CEOs), caused them to certify annually that, for the two years, the firm had processes in place to establish, maintain and review policies and procedures reasonably designed to achieve compliance with applicable FINRA rules, MSRB rules and federal securities laws and regulations, but failed to evidence such policies and procedures in a written report for the co-CEOs to review. The findings also included that the number of sales personnel the firm employed increased, which constituted a material change to the firm's business, but the firm failed to obtain FINRA's approval before initiating this material change in its business. The firm failed to conduct an annual internal inspection of the activities of an Office of Supervisory Jurisdiction (OSJ). FINRA found that the firm failed to implement procedures contained in its anti-money laundering compliance program (AMLCP) concerning monitoring accounts for suspicious activity. The report used to monitor suspicious activity the firm reviewed was limited to retail customer accounts and did not include transactions institutional clients conducted. The firm's AMLCP failed to describe the procedures to be followed in order to monitor the accounts of its institutional customers for suspicious activity, which constituted the vast majority of the firm's business. Despite the fact that its AMLCP did not describe any review for institutional customers, the firm's former AML compliance officer (AMLCO) stated that he reviewed those accounts for suspicious activity by reviewing daily trading activity reports. Such reviews were inadequate because they did not allow for the detections of patterns that could indicate potential suspicious activity. Nor were such reviews for suspicious activity documented or otherwise evidenced. FINRA also found that the firm'sprocedures regarding the review of institutional accounts were not reasonably designed to detect and cause the reporting of transactions required by 31 U.S.C. 5318(g) and the implementing regulations thereunder.

    Moreover, FINRA found that the firm failed to implement a restricted or watch list, and its procedures failed to adequately address the placement of a security on, or removal from, the firm's restricted list or watch list; supervision of inter departmental communication; restricting access to material nonpublic information; instances where employees are brought "over the wall"; and the conduct of investigations relating to potential insider trading. (FINRA Case #2009016245301)

    Centara Capital Securities, Inc.
    (CRD #130702, San Diego, California)
    was censured and fined $20,000 and to the entry of finding
    that it distributed various pieces of sales literature concerning
    a private placement fund that violated the content standards set forth in FINRA advertising rules. The findings stated that each of the sales literature communications failed to balance the described benefits of a fund with the specific risks associated with the fund, including the potential loss of capital; limited liquidity, including the lack of a secondary
    market; the restricted redemption program; lack of initial dividends; and the small and non-diverse nature of the portfolio. The findings also stated that each of the sales literature communications contained various false, exaggerated, unwarranted and/or misleading statements. The findings also included that the PowerPoint presentation and the fund snapshot included statements that constituted impermissible predictions, projections, claims, opinions and/or forecasts of future performance.
    (FINRA Case #2011029747201)

    Dougherty & Company LLC
    (CRD #7477, Minneapolis, Minnesota)
    was censured, fined $47,500 and required to revise its WSPs regarding interest rate-reporting requirements and consented to the described sanctions and to the entry of findings that it failed to submit interest rate reset information for variable rate
    demand obligations (VRDO) to the MSRB's Short-Term Obligation Rate Transparency (SHORT) system within the time requirements. The findings stated that the firm failed to
    record correct information on the order memoranda regarding the interest rate reset for the VRDO transactions reported to the SHORT system. The findings also stated that the firm's supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and MSRB rules concerning interest rate-reporting requirements. The firm failed to submit accurate information regarding the result of an interest rate VRDO reset in numerous instances to the SHORT system within the time requirements, and failed to submit accurate information regarding the interest rate reset time to the SHORT system within the time requirements. The findings also included that the firm failed to document certain information related to submissions made to the SHORT system, failed to submit accurate information regarding the result of an interest rate VRDO reset for a Committee on Uniform Securities Identification Procedures (CUSIP) number to the SHORT system within the time requirements, and failed to submit accurate information regarding the interest rate reset time for the CUSIP number in some
    instances to the SHORT system within the prescribed time requirements.
    (FINRA Case #2010025312801)

    First Allied Securities, Inc.
    (CRD #32444, San Diego, California)
    was censured and fined $40,000. and the firm consented to the described sanctions and to the entry of findings that it did not have adequate written procedures regarding the delivery of exchange-traded fund (NYSEMKT:ETF) and unit-investment trust (UIT) prospectuses.

    The findings stated that the firm signed an agreement with a company for delivery of ETF and UIT prospectuses. Although the firm retained the company to deliver its ETF and UIT prospectuses, it remained the firm's responsibility to review transaction activity on a regular basis and verify that a prospectus was properly delivered when required. The
    findings also stated that to assist the firm in fulfilling its delivery obligations, the company made available daily and monthly exception reports via its online report center. These
    exception reports listed all prospectuses that were not delivered on a trade date and the reason each prospectus was not delivered. The findings also included that the firm failed
    to adequately review the exception reports the company provided and failed to otherwise review and monitor the functions it delegated to the company and, as a result, the firm
    failed to detect that the company failed to deliver numerous prospectuses. Accordingly, the firm failed to deliver the required prospectuses or written descriptions in connection with ETF and UIT purchases.
    (FINRA Case #2012033328601)

    Hallmark Investments, Inc.
    (CRD #135003, New York, New York) was censured and fined $15,000 and the firm consented to the described sanctions and to the entry of findings that it failed to establish a reasonable supervisory system and procedures related to its retention and review of electronic communications. The findings stated that the firm's WSPs did not reflect the firm's intended practice of maintaining emails in hardcopy format. The firm did not establish a system to confirm that all electronic communications were contemporaneously printed for retention. The findings also stated that the firm moved office locations and discovered that some of its business records, namely emails maintained in hardcopy format, were destroyed by water damage. The firm first notified FINRA, in response to a FINRA Rule 8210 request, that the records were destroyed; however the firm did not provide notification to the Securities Exchange Commission (SEC) and FINRA as SEC Rule 17a-11required. The findings also included that
    the firm failed to accrue an adverse arbitration award in the amount of $115,258 and, as a result, conducted a securities business while it was net capital deficient.
    (FINRA Case #2010020940701)

    H.D. Vest Investment Securities, Inc. dba H.D. Vest Investment Services
    (CRD #13686,Irving, Texas)
    censured and fined $50,000 and the firm consented
    to the described sanctions and to the entry of findings that FINRA sent it numerous electronic Central Registration Depository Website (Web CRD®) letters advising the firm of
    information that might have required it to amend the Uniform Application for Securities Industry Registration or Transfer (Form U4) for a registered representative, and the firm
    failed to respond to the letters. The findings stated that with respect to some of those letters, the firm requested information from the registered representative mentioned in the letter, but did not receive a response from the representative, and the firm failed to pursue any of these letters further. The firm did not take any action regarding some of the letters. The findings also stated that as a result of its failure to respond appropriately to the CRD disclosure letters, the firm failed to learn that some individuals were statutorily disqualified while associated with the firm, but were allowed to register or associate with the firm for
    protracted periods. One of the individuals, although statutorily disqualified, was permitted under the terms of FINRA Regulatory Notice 09-19 to continue his association with the firm without an application for readmission, provided the firm did not seek to register him as a principal. The findings also included that the firm's failures were a direct outgrowth of
    inadequate WSPs. The lack of effective supervisory procedures concerning the disclosure queue fostered confusion within the firm regarding who was responsible for monitoring CRD communications, so the firm either failed to follow up on requests for information sent to registered representatives in response to disclosure letters or failed to take any action in response to those disclosure letters. (FINRA Case #2010024282701)

    HSBC Securities (NYSE:USA) Inc.
    (CRD # 19585, New York, New York)

    Two Cases
    Case One
    was censured, fined $65,000 and required to revise its written procedures regarding FINRA Rules 6182 and 6624, and SEC Rules 200(g) 203(a), 203(b)(1), 203(b)(4), and 204 of Regulation SHO. Without admitting or denying the
    findings, the firm consented to the described sanctions and to the entry of findings that it had a fail-to-deliver position at a registered clearing agency in a threshold security for 13 consecutive settlement days and failed to immediately thereafter close out the failto- deliver position by purchasing securities of like kind and quantity. The firm continued to have a fail-to-deliver position in the security at the registered clearing agency on 79 additional settlement days, which it failed to close out when required. The firm had failto-
    deliver positions at a registered clearing agency in the same security that resulted from a sale of a security that the seller was deemed to own pursuant to §242.200 and intended to deliver once all restrictions on delivery had been removed, and did not close the fail-todeliver positions by purchasing securities of like kind and quantity within the time frame
    prescribed. The findings stated that the firm accepted orders in deemed-to-own over-thecounter (OTC) equity securities and failed to properly mark the orders as short; as a result,
    the firm executed short sale transactions and failed to report each of these transactions to the OTC Reporting Facility with a short sale indicator. The findings also stated that the
    firm's supervisory system did not provide for supervision reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning
    FINRA Rules 6182 and 6624 (trade reporting of short sales), and SEC Rules 200(g) (order marking), 203(a) (long sales), 203(b)(1) (locate requirement), 203(b)(3) (threshold close out
    requirement) and 204 (close out requirement).
    (FINRA Case #2010021555401)

    Case Two VS HSBC Securities

    the firm was censured and fined $250,000 and the firm consented to the described sanctions and to the entry of findings that its middle office system erroneously left off short sale indicators when communicating with its back office system, which reported the firm's Blue Sheets. The findings stated that as a result, the firm misreported short sale transactions as long sales on Blue Sheets during a four-year period. The findings also stated that the firm failed to deliver prospectuses or offering memoranda that were required to be delivered in connection with fixed income transactions. The findings also included that the firm experienced a breakdown in its automated feeds, resulting in its failure to append certain investment banking disclosures to its research reports. The firm learned that it had failed to include certain debt offerings in the definition of investment banking that was used to determine the appropriate disclosures for its research reports. As a result of these deficiencies, the firm issued equity research reports without required disclosures. Moreover, due to incorrect mapping of company identifiers, some of the firm's research reports initially failed to contain proper disclosures. FINRA found that despite the firm's policy of disabling text messaging on employee Blackberries, certain non-technology employees had Blackberries with inbound texting functionality. The firm took steps to eliminate this
    functionality but some registered employees still had Blackberries with texting capability.

    The firm failed to retain Blackberry text messages received by certain employees.
    (FINRA Case #2011027202401)

    Mesirow Financial, Inc.
    (CRD #2764, Chicago, Illinois)
    was censured, fined $100,000 and required to revise its WSPs (written supervisory procedures) regarding SEC Rules 200(g), 203(a), 203(b)(1), 203(b)(3) and 204T and the firm consented to the described sanctions and to the entry of findings that it had fail-to-deliver positions at a registered clearing agency in
    equity securities that resulted from long sales, and did not close the fail-to-deliver positions by purchasing securities of like kind and quantity within the prescribed time frame. The
    firm had fail-to-deliver positions at a registered clearing agency in an equity security that were attributable to market-making activities, and did not close the fail-to-deliver positions by purchasing securities of like kind and quantity within the prescribed time frame. The findings stated that in instances involving two equity securities, the firm accepted short sale orders from another person, or effected short sales for its own account, without first borrowing the security, or entering into a bona fide arrangement to borrow the security,
    and had a fail-to-deliver position at a registered clearing agency in such security that had not been closed out in accordance with the requirements of paragraphs (a) and (b) of
    SEC Rule 204T. The findings also stated that the firm knew or had reasonable grounds to believe that the sale of an equity security was or would be effected pursuant to an order
    marked long, and failed to deliver the security on the date delivery was due. The findings also included that the firm's supervisory system did not provide for supervision reasonably
    designed to achieve compliance with applicable securities laws, regulations and FINRA rules concerning short sales. The firm's WSPs failed to provide for minimum requirements for adequate WSPs concerning SEC Rules 200(g), 203(a), 203(b)(1), 203(b)(3) and 204T.
    (FINRA Case #2009018893101)

    M. Ramsey King Securities, Inc.
    (CRD #29318, Burr Ridge, Illinois)
    was censured and fined $17,500 and the firm consented to the described sanctions and to the entry of findings that it failed to verify the identities of all of its investment adviser customers. The findings stated that the firm did not obtain documents showing the existence of each entity nor did it verify the identities of these customers through non-documentary methods. The findings also stated that the firm failed to establish an adequate customer identification program in that its procedures did not address the
    firm's obligations to verify the identities of its investment adviser customers and how it would perform that verification. The findings also included that the firm failed to identify
    and conduct due diligence for each of its correspondent accounts for foreign financial institutions. Specifically, the firm failed to maintain documentation to evidence that it
    determined whether each correspondent account was subject to enhanced due diligence, assessed the money-laundering risk each correspondent account presented, and applied
    risk-based procedures and controls to each correspondent account to detect and report known or suspected money-laundering activity. As such, the firm failed to comply with the requirements of the Department of Treasury. FINRA found that the firm failed to ensure adequate testing of its AML compliance program for three years. The firm did not conduct any testing to ensure that the identities of the firm's adviser customers were verified.

    Additionally, the firm's independent test summaries for these years did not evidence a review to determine whether any firm customers were excluded from the definition of
    customer contained in the Bank Secrecy Act.
    (FINRA Case #2010021009401)

    National Securities Corporation
    (CRD #7569, Seattle, Washington)
    was censured, fined $18,000 and ordered to pay $8,964.55, plus interest, in restitution and to the entry of findings that it
    sold or bought corporate bonds to or from customers, and failed to sell or buy such bonds at a price that was fair, taking into consideration all relevant circumstances, including market conditions with respect to each bond at the time of the transaction, the expense involved and that the firm was entitled to a profit. (FINRA Case #2009020773001)

    Newbridge Securities Corporation
    (CRD #104065, Ft. Lauderdale, Florida)
    was censured, fined $50,000 and required to revise its WSPs (written supervisory procedures) to address the requirements of an imposed undertaking, relating to its handling fee on equity security trades, and provide related training to all associated persons. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it charged its customers a fee for handling, in addition to a commission, on equity security trades, and its characterization of the charge as being for handling was improper. The findings stated that the firm's handling fee varied in amount from trade to trade, and the particular dollar amount charged was not attributable to any specific cost or expense the firm incurred in executing the trade, or determined by any formula applicable to all customers. The findings also stated that rather, it was determined by the individual representative executing the order, who had discretion to set the dollar amount of the fee within a particular range the firm set. The range the firm authorized varied from branch to branch; consequently, customers of different branches might be assessed substantially different amounts for handling on otherwise identical trades. The findings also included that although reflected on customer trade confirmations as a charge for handling, a portion of the fee actually served as a source of additional transaction-based remuneration or revenue to the firm, in the same manner as a commission, and was not directly related to any specific handling services the firm performed, or handling-related expenses the firm incurred, in processing the transaction. By designating the charge as a handling fee on customer trade confirmations, the firm understated the amount of the total commissions it charged and misstated the purpose of the handling fee.
    (FINRA Case #2012032048401)

    Oppenheimer & Co. Inc.
    (CRD #249, New York, New York) was censured and fined $20,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that its customer confirmations were inaccurate or incomplete, in that the firm failed to disclose the correct type of remuneration and failed to disclose that the price the customer received was an average price, failed to disclose the correct type of remuneration on customer confirmations, and failed, on one occasion, to disclose the correct type of remuneration and failed to disclose the correct capacity in which it acted.

    The findings stated that the firm transmitted reports to OATS that contained incorrect customer instruction flags or incorrect route reports. The findings also stated that the firm transmitted reports to the FNTRF that contained inaccurate data.
    (FINRA Case #2010021596901)

    Portfolio Resources Group, Inc.
    (CRD #31155, Miami, Florida)
    was censured and fined $25,000 and consented to the described sanctions and to the entry of findings that it began to offer a hybrid-type of billing arrangement to its
    customers with non-discretionary accounts (the agreement). In lieu of charging standard commissions on equity transactions, the firm charged an annual fee, billed quarterly based on the size of the account; a fixed ticket charge; and a postage and handling fee. The agreement did not address the imposition of ticket charges on fixed income transactions
    but did provide that customers would not be subject to any additional trading charges. The findings stated that for more than five years, on transactions in customer accounts subject
    to the agreement, the firm overcharged $4,672.51 in commissions and other fees on equity trades, bond trades, option real estate investment trust (REIT)/UIT trades and mutual fund trades. The overcharges ranged from a low of $1.61 to a high of $550.50.

    The findings also stated that after FINRA advised the firm of the overcharges, it refunded the overcharges to the affected customers. The findings also included that the firm failed to establish and maintain a supervisory system, including written procedures, reasonably designed to ensure that its accounts subject to the agreement were not charged commissions and
    other fees on transactions in excess of contractually-agreed amounts. FINRA found that the agreement, which the firm provided to customers, contained false and misleading
    language because the firm charged markups/markdowns on fixed income transactions in customer accounts subject to the agreement. With the exception of the fixed income trades, the firm did not impose ticket charges on fixed income transactions subject to the agreement. Because the agreement did not disclose that markups/markdowns would be charged on fixed income transactions, the agreement did not provide a sound basis for evaluating the costs associated with it. (FINRA Case #2011025680301)

    StockCross Financial Services, Inc.
    (CRD #6670, Beverly Hills, California) was censured and fined $100,000.

    Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it filed a Financial and Operational Combined Uniform Single (FOCUS) Report with the SEC and FINRA. The findings stated that Part II of the FOCUS Report contained the firm's computation of its monthly net capital and stated that
    t had net capital of $16,173,033. As a market maker, the firm was subject to a $1 million net capital requirement. The firm calculated its excess net capital to be $15,173,033. The findings also stated that FINRA's Department of Risk Oversight and Operational Regulation (ROOR) conducted a financial/operational and sales practice examination of the firm and reviewed the firm's compliance with the net capital rule and related rules. ROOR issued its examination report, noting the firm's noncompliance with Securities and Exchange Act of 1934 (Exchange Act) Rule 15c3-1. The firm held approximately $85 million in certificates of deposits (CDs) at 12 banks. The firm failed to take a required concentration deduction on the aggregate value of CD positions it held at nine banks that exceeded 30 percent of the firm's tentative net capital of $5,811,390. The firm should have deducted $19,872,425 from its net capital, but did not, so the firm had a net capital deficiency of $4,699,392, rather than excess net capital as it had reported in its FOCUS Report.

    The findings also included that the firm failed to take deductions against net capital for its CD positions that exceeded 30 percent of its tentative net capital for four months, which resulted in net capital deficiencies during these months. The firm filed inaccurate FOCUS Reports for these
    months because the reports did not reflect the net capital deficiencies that resulted from the failure to take the required deductions. FINRA found that on the same date that FINRA
    issued its examination report, the firm notified the SEC and FINRA of the deficiency in its net capital, as required, and that it had operated a securities business during that period.
    Simultaneously, the firm filed an amended FOCUS Report, taking the appropriate charge against its bank CD positions, and also filed another FOCUS Report with the corrected net
    capital computation. In its notification to the SEC, the firm stated that it may not have been in capital compliance prior and subsequent to the review for FINRA's examination. (FINRA Case #2011027611101)

    Waddell & Reed, Inc.
    (CRD #866, Overland Park, Kansas) was censured and fined $75,000 and to the entry of findings that it failed to deliver numerous purchase confirmations for mutual-fund
    asset-allocation products (MAP) accounts, and those confirmations would have confirmed multiple mutual-fund share purchases that occurred in numerous investment-advisory clients' accounts.

    The findings stated that although the failure to deliver purchase confirmations resulted from the actions of a third-party service provider, the firm remained responsible at all times for compliance with its obligations under all applicable securities laws and regulations. The findings also stated that until a certain date, all purchase transactions in MAP accounts resulted in the delivery of contemporaneous trade confirmations. On that date, however, the third-party service provider made a coding change to the software system it provided to the firm's subsidiary and other entities. The
    third-party did not intend for the coding change to affect the MAP accounts in any way, and neither the subsidiary nor the firm requested the change. Nonetheless, one effect of
    the coding change was to prevent customers from receiving confirmations when cash in a MAP account was allocated to individual mutual funds. FINRA found that a MAP-account
    customer contacted a firm representative to ask why the firm was no longer issuing fund allocation confirmations. The representative contacted the subsidiary, but did not alert the
    firm's compliance department of the situation. The subsidiary conducted an internal review and determined that the subsidiary's coding change had created the problem but did not apprise the firm's compliance department of the situation at that time. The third-party provider began researching the issue and working on a solution. The initial work did not
    completely solve the problem and it implemented a second fix that, through subsequent testing, verified that the problem was fully resolved. (FINRA Case #2011029075101)

    Johan Mary-Lyn Akal
    (CRD #4050242, Registered Representative, Sarasota, Florida) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Akal forged a bank customer's signature on cash withdrawal slips and effected cash withdrawals from the customer's account totaling $47,186.58 without the permission or authority from the customer or the bank, thereby misappropriating the funds. The bank later reimbursed the customer in full. The findings stated that
    Akal failed to respond to FINRA requests for information and testimony.

    Akal previously worked for Suntrust Investment Services, Inc. and prior to that The Huntington Investment Company.

    (FINRA Case #2011030662501)

    David Appel
    (CRD #1026798, Registered Representative, Brooklyn, New York) was barred from association with any FINRA member in any capacity. Without admitting or denying the findings,
    Appel consented to the described sanction and to the entry of findings that he failed to completely respond to FINRA requests for information and documents in connection with
    inquiries concerning sales of promissory notes.

    Appel previously worked for Park Avenue Securities, Royal Alliance Associates and Berkshire Equity Sales.

    (FINRA Case #2009020303101)

    James Arthur Avery Jr.
    (CRD #1101660, Registered Representative, Richmond, Virginia) was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Avery consented to the described sanction and to the entry of findings that he failed to amend his Form U4 to disclose an unsatisfied lien. The findings stated that Avery refused to provide FINRA-requested testimony in connection with its investigation regarding his possible failure to disclose unsatisfied judgments and liens.

    Avery was previously registered with Ameriprise Financial Services, IDS Life Insurance Company and IDS Financial Services.
    (FINRA Case #2012032279701)

    Michael Jon Binstock
    (CRD #2728462, Registered Representative, Victoria, Minnesota) was fined $30,000 and suspended from association with any FINRA member in any capacity
    for four months. The fine is due and payable when Binstock returns to the industry. The sanctions were based on findings that Binstock falsified account documents in customers'
    accounts by copying customers' signatures from existing documents and pasting the signatures on new forms, without the customers' authorization.

    The findings stated that Binstock retained in his files a signed but incomplete or blank customer transfer-on-death
    form. The findings also stated that these misleading documents were maintained in Binstock's member firm's files, causing the firm to retain inaccurate books and records. The findings also included that Binstock settled a customer complaint by depositing $515.76 into the customers' checking account without his former firm's knowledge or approval.

    Although Binstock was no longer with the firm at the time he paid the customers, he was still obligated to notify the firm.
    The suspension is in effect from January 7, 2013, through May 7, 2013.

    Binstock has been registered with Thrivent Investment Management Inc. since 1996.
    (FINRA Case #2009018377601)

    Robert Keith Brooks aka Robert Keith Stuart
    (CRD #1571789, Registered Principal,
    Miami, Florida)was fined $7,500 and suspended from association with any FINRA member in any capacity
    for two months. Without admitting or denying the findings, Brooks consented to the described sanctions and to the entry of findings that he commingled his personal funds
    with investors' funds for an oil-and-gas offering he solicited through a private placement memorandum. Brooks ultimately raised $87,633.50, which he deposited into a bank
    account designated as an operating account for the oil-and-gas project. Brooks used the account to pay expenses related to the oil-and-gas project. During the same time period, Brooks deposited $8,912.50 of his personal funds into the bank account where the investors' funds were deposited, thus commingling the funds.

    The suspension is in effect from February 4, 2013, through April 3, 2013.

    Brooks is currently registered with EZ Stocks, Inc. and previously worked for Richfield Orion International, Inc. and Source Capital Group, Inc.
    (FINRA Case #2011030168001)

    Andrew Dominic Carava
    (CRD #4293048, Registered Principal, Homewood, Illinois)
    was fined $7,500, suspended from association with any FINRA member in any principal capacity for two years, concurrently suspended from association with any FINRA member in any capacity for 30 days, and required to requalify by examination as a principal before acting again in a principal capacity. Without admitting or denying the allegations, Carava consented to the described sanctions and to the entry of findings that his member firm's CCO gave a FINRA request for information letter to Carava related to a customer's complaint, and asked him to assemble the firm's response to FINRA. The findings stated that Carava created several separate letters, purporting to show that information had been requested of the firm's registered
    representatives who handled the customer's account,
    regarding the customer's complaint.

    In fact, these letters were never sent to the representatives and were fabricated by Carava. Carava also created a second set of fictitious letters that were backdated and done to show
    that he had not received a response from the representatives to his first written request; they were never sent either. Carava represented in a letter to FINRA that he attempted to
    communicate with the representatives, attached the fictitious letters, and represented that he had sent the letters to the representatives. The findings also stated that Carava wrote notes on the letters, made copies of the letters, placed them in his firm's customer complaint files and destroyed the original fictitious letters. The findings also included that the SEC began an investigation of the representatives and requested that the firm provide documentation relating to its receipt and investigation of the customer's complaint. In response to the SEC's requests, the firm accessed its customer complaint files, retrieved the fictitious letters Carava created and provided them to the SEC; therefore, Carava caused the
    firm's books and records to be inaccurate.

    The suspension in any principal capacity is in effect from February 19, 2013, through February 18, 2015. The suspension in any capacity is in effect from February 19, 2013, through March 20, 2013.

    Carava is currently registered with Brewer Financial Services and previously worked for LaSalle St. Securities and TD Waterhouse Investor Services.
    (FINRA Case #2010021822701)

    Tiffany Lea Chamberlain
    (CRD #4204733, Registered Principal, Hollywood, Florida)
    was fined $7,500 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Chamberlain's reassociation with a FINRA member firm following her suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the allegations, Chamberlain consented to the described sanctions and to the entry of findings that an affiliate bank of her member firm issued her a credit card to be used for legitimate business of the affiliate only, and was not to be used for personal charges under any circumstances.

    The findings stated that Chamberlain, on separate occasions,
    attested that she had read the affiliate's Code of Conduct, which stated that proper use of corporate assets is her responsibility and must not be used for personal use, and completed the affiliate's business ethics training, which required reviewing the Code of Conduct. The findings also stated that Chamberlain knew that the affiliate's policy prohibited her from using her corporate-issued credit card for personal expenses. Nonetheless she repeatedly used the credit card to make cash withdrawals from automated teller machines (ATM) and improperly used the proceeds to pay for her personal expenses. Chamberlain used her corporate-issued credit card numerous times to improperly withdraw approximately $40,342 in cash to pay for personal expenses, in violation of the affiliate's policies, notwithstanding the fact that she typically paid her credit card bill in full on or near the
    due date. Chamberlain improperly paid for personal expenses using the proceeds of the cash withdrawals made with her corporate credit card. The findings also included that
    Chamberlain never obtained permission from her firm or its affiliate to use the affiliate's funds to pay for personal expenses. Chamberlain used the withdrawn funds in a manner
    she was not authorized or entitled to use them, and knowingly violated the affiliate's policies she had accepted and acknowledged as part of her association and as a condition
    of being issued the credit card.

    The suspension is in effect from January 22, 2013, through July 21, 2013.

    Chamberlain's is not registered currently. Her prior registrations include Morgan Keegan, Riverstone Wealth Management, Inc. and Electronic Access Direct.
    (FINRA Case #2011026351101)

    Ronald Eugene Cleveland
    (CRD #2924946, Registered Representative, Stone Mountain,
    Georgia) was fined $10,000 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Cleveland's reassociation with a FINRA member firm following his suspension, or prior to the filing of any application
    or request for relief from any statutory disqualification, whichever is earlier.

    Without admitting or denying the findings, Cleveland consented to the described sanctions and to the entry of findings that he sold equity-indexed annuities (EIAs), which were not securities, totaling approximately $4,991,272 to individuals, some of whom had accounts at Cleveland's member firm, and received commissions totaling approximately $403,737, without providing prior written notice of these sales to his firm. The findings stated that
    Cleveland filed outside business activity questionnaires at the firm that omitted these sales despite firm policies and procedures that required the disclosure of all outside business
    activities and receipt of compensation from other entities.

    The suspension is in effect from January 7, 2013, through July 6, 2013.

    Cleveland is not currently FINRA registered. His previous registrations have been with Chase Investment Services, Corp., Edward Jones and First Wall Street Corp.
    (FINRA Case #2010025838101)

    Thomas Baxter Cordingly
    (CRD #1166058, Registered Principal, Alto, Michigan) was fined $7,500 and suspended from association with any FINRA member in any capacity for 10 business days. Without
    admitting or denying the findings, Cordingly consented to the described sanctions and to the entry of findings that he recommended numerous inverse floater collateralized
    mortgage obligations (Inverse Floater CMOs)
    transactions to some of his customers without having a reasonable understanding of the nature, risks and rewards of each
    transaction he recommended. The findings stated that Cordingly lacked a reasonable basis to recommend the purchase and sale of Inverse Floater CMOs to his customers, and failed to perform a reasonable investigation or appropriate due diligence of each Inverse Floater CMO he recommended. Cordingly also failed to investigate each Inverse Floater
    CMO he recommended with respect to several key risk factors, including, but not limited to, the Inverse Floater CMO's mortgage pool, its structure and its expected average life.

    The total amount of revenue Cordingly earned in connection with these Inverse Floater CMO transactions was approximately $59,000. The findings also stated that Cordingly did not have any prior experience selling Inverse Floater CMOs to retail customers, and had not received any training that provided him with specific, objective criteria or guidelines to use in conducting an analysis of each Inverse Floater CMO prior to making a purchase or sale recommendation.

    The suspension was in effect from February 4, 2013, through February 15, 2013.

    Cordingly, who is not currently registered , previously was employed by Sammons Securities, Leonard & Company and prior to that Fifth Third Securities.
    (FINRA Case #2011025852101)

    Steven Joseph Corzan
    (CRD #4426114, Registered Representative, Aliso Viejo, California) was barred from association with any FINRA
    member in any capacity. Without admitting or denying the allegations, Corzan consented to the described sanction and to the entry of findings that he engaged in private securities
    transactions that his member firm had not approved and were not available for sale through the firm.

    The findings stated that Corzan never disclosed his agreement with a company's marketing subsidiary to his firm, did not give his firm notice of his intention to participate in the sale of the contracts or notes, and did not obtain his firm's written
    approval to engage in these transactions. Corzan told potential investors that the company owned a private pool of income-producing real estate and that an investor who purchased
    the notes would receive a guaranteed annual return of either 9 percent (for notes that were reportedly reinsured by a third party) or 12 percent (for notes that were not reinsured).
    The findings also included that that the SEC filed a lawsuit against the company. The U.S.District Court's Receiver reported that the company had raised about $222.6 million, but it was a Ponzi scheme in which distributions to existing investors were made with funds from new investors. FINRA found that Corzan's firm first received written notice that Corzan had participated in the sale of the investment product when it was served with a statement of claim naming the firm as a respondent in an arbitration initiated by a customer who
    had purchased a note from Corzan. The firm and its parent company have been named as respondents and defendants in actions filed by all of the investors who purchased the notes
    from Corzan.

    Corzan is not currently registered. He previously was registered with Lighthouse Capital Corporation, Chelsea Financial Services and MML Investors Services.
    (FINRA Case #2009018768501)

    Michael Jason Cox
    (CRD #4703349, Registered Representative, Knoxville, Tennessee) was barred from association with any FINRA member in any capacity. Without admitting or denying the
    findings, Cox consented to the described sanction and to the entry of findings that he misappropriated more than $11,700 from his mother-in-law's bank account. The findings stated that Cox advised and assisted his mother-in-law with her banking and investment accounts. Through that relationship, Cox obtained a debit card associated with her bank account without her knowledge or consent. Cox then used the card to withdraw funds and make financial transactions for his personal benefit, all without his mother-in-law's knowledge or authorization. The findings also stated that on multiple occasions, Cox used the card to obtain cash advances from ATMs totaling $7,900, plus fees. Cox also used the card without authorization to pay wireless telephone and utilities bills and make retail purchases for his benefit.

    Cox previously worked for Cambridge Investment Research and MML Investors Services.
    (FINRA Case #2012032213801)

    Joseph Kenneth Critelli
    (CRD #2707711, Registered Representative, Northport, New York) was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Critelli consented to the described sanction and to the entry of findings that in the course of an investigation, FINRA sought on-the-record testimony from Critelli concerning his personal trading activities and recommendations that he made to clients to purchase certain securities while he was registered with his member firm. The findings stated that before the scheduled interview, Critelli told FINRA that he would not appear to testify at the on-the-record interview or at any other scheduled interview. The findings also stated that while registered at his firm, Critelli opened a personal securities account at another
    member firm and bought and sold securities in that account. Critelli never notified that firm that he was registered with his member firm and also failed to notify his firm that he had opened an account at another firm.

    Critelli previously worked for Obsidian Financial Group, LLC and Westrock Advisors, Inc.
    (FINRA Case #2012033227401)

    Michael John Dubek
    (CRD #1789755, Registered Representative, Murray, Utah) was fined $5,000 and suspended from association with any FINRA member in any capacity for one month. The fine must
    be paid either immediately upon Dubek's reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Dubek consented to the described sanctions and to the entry of findings that he recommended to some customers various illiquid, private-placement investments in amounts representing greater than 15 percent of each respective customer's total net
    worth.

    The findings stated that this concentration in illiquid, high-risk investments exposed the customers to a risk of loss that was inconsistent with their investment objectives and
    financial needs, in particular their need to protect retirement savings in order to fund retirement living expenses.

    The suspension was in effect from January 22, 2013, through February 21, 2013.

    Dubek is not currently registered with FINRA. His previous employments have been with QA3 Financial and Securities America, Inc.
    (FINRA Case #2011028380101)

    Paul Elvidge Jr.
    (CRD #1852650, Registered Principal, Port St. Lucie, Florida) was barred from association with any FINRA member in any capacity and ordered to pay $620,177.90, plus interest, in restitution to customers. Without admitting or denying the findings, Elvidge consented to the described sanctions and to the entry of findings that he wrongfully and without authorization converted funds for his own use and benefit from his member firm's customer brokerage accounts by submitting wire transfer requests totaling $690,152.90 to the firm, ostensibly on the customers' behalf, but the funds were wired into the operating account for Elvidge's office. The findings stated that Elvidge admitted that he forged the customers' signatures on the wire transfer requests, and none of the customers were aware of or authorized the transfers. Once the funds were in Elvidge's operating account, the majority were transferred to a futures trading account Elvidge owned and controlled, where the funds were lost due to trading activity. The findings also stated that Elvidge repaid one customer.

    Elvidge is not currently registered. He previously was with Cape Securities, Inc. and Seacoast Investor Services, Inc.
    (FINRA Case #2012034412101)

    Eileen Jean Fern
    (CRD #1068655, Registered Representative, Parma Heights, Ohio)was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Fern consented to the described sanction and to the entry of findings that she served as a trustee of a living trust for a public customer who also maintained a securities
    account with her member firm that she serviced and caused $15,764 to be withdrawn from the customer's fixed annuities without the customer's knowledge or consent, as compensation for acting as trustee for the living trust. The findings stated that these withdrawals were $10,986 more than Fern was entitled to receive in fees pursuant to the trust agreement. Fern directed the $10,986 to a bank account she controlled, then converted the $10,986 for her personal use or for some purpose other than the benefit of the customer or the customer's living trust. The findings also stated that Fern became aware that the customer was questioning the trustee fees Fern had paid herself.

    In order to reimburse the customer, Fern borrowed $35,000 from a different firm customer whose securities account Fern serviced, and paid approximately $31,764 to the customer's living trust, so it was more than reimbursed for the excess fees Fern had charged the trust. The findings also included that this borrowing of funds from a customer was done against the
    firm's WSPs (written supervisory procedures) because Fern did not notify the firm of the borrowing arrangement with the customer and borrowed the $35,000 from the other customer without obtaining the firm'swritten pre-approval. Fern did not discuss the borrowing arrangement with her firm until it confronted her about it.

    Fern last worked for Independence Capital Co.. Prior to that she was registered with WRP Investments, Inc.
    (FINRA Case #2012031533801)

    Susan Roughton Gibbs
    (CRD #4803882, Registered Representative, Lakeland, Florida) was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Gibbs consented to the described sanction and to the entry of findings that apart from her responsibilities with her member firm, she also performed administrative tasks that were related to a registered representative's approved outside business, and misappropriated $856.84 from the representative by charging personal expenses on a corporate credit card issued by the representative's approved outside business.

    The findings stated that at the time Gibbs made each of the personal charges, she was aware that she was prohibited from using the corporate card to charge personal expenses. The
    findings also stated that Gibbs repaid $237.69 of the $856.84, but did so only after the representative confronted her about the unauthorized charges he had detected. Gibbs has never repaid the representative for the remainder of the personal charges she made to the corporate card.

    Gibbs last worked for Allen & Company. Prior to that she was with AXA Advisors, LLC. and before that Woodbury Financial Services.
    (FINRA Case #2011029417901)

    George Robert Hunt
    (CRD #2568842, Registered Principal, Sarasota, Florida) was fined $10,000, suspended from association with any FINRA member in any capacity for one year and ordered to pay $63,500, plus interest, in restitution to a customer. The fine and restitution amounts must be paid either immediately upon Hunt's reassociation with a FINRA member firm following
    his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Hunt consented to the described sanctions and to the entry of findings that he borrowed a total of $63,500 from a customer in a series of loans, with a promise to repay the loans at an annual interest rate of 12 percent, and that, to date, he has failed to repay any of the loans or the interest due to the customer. The findings stated that at the time of the loans from the customer, Hunt was aware of his member firm's policies and procedures, which prohibited borrowing money from customers. Hunt also represented in annual compliance questionnaires that he had not borrowed any funds from customers.

    The findings also stated that on separate occasions, Hunt recommended that the customer liquidate securities in her firm account and use the proceeds to fund certain of the loans made to him. Hunt did not have a reasonable basis for recommending these transactions.

    The suspension is in effect from February 4, 2013, through February 3, 2014.

    Hunt last worked for Quest Capital Strategies, Inc. Before that he was with Linsco Private Ledger (LPL Finanical) and prior thereto with A.G. Edwards & Sons. (FINRA Case
    #2012031960001)

    James Alan Issel
    (CRD #1350223, Registered Representative, Wayne, Illinois) was fined $15,000 and suspended from association with any FINRA member in any capacity for 10 business days. Without
    admitting or denying the findings, Issel consented to the described sanctions and to the entry of findings that he engaged in a pattern of unsuitable mutual fund recommendations in the accounts of his member firm's customers.

    The findings stated that after reviewing the various share class options offered by an entity, Issel concluded that the entity's Class-T shares provided his customers the best balance of upfront sales charges and ongoing annual fees. Later, Issel began recommending to new mutual fund customers that they
    invest in the entity's Class-C shares because they did not have any upfront sales charge, but ongoing annual fees that were approximately .5 percent higher than those of Class-T
    shares. Issel's rationale for recommending the Class-C shares to his new customers was that eliminating the upfront sales charge would generate a higher return for the new customer in the short term and, therefore, increase the likelihood of the new customer remaining with Issel for the long term. The findings also stated that Issel made these recommendations to his existing customers who had not experienced any change in their financial situation or investment objectives. Issel made the recommendations because he wanted all his customers to be invested in the same Class-C shares, which he believed
    would result in easier recordkeeping and more efficient exchanges within the various mutual funds. The findings also included that although the customers that converted to
    Class-C shares did not pay an upfront sales charge, the amount of ongoing annual expenses each customer paid increased by .5 percent, so the overall return was reduced and each of the customers was subjected to a one-year contingent deferred sales charge (CDSC) that did not exist with their Class-T shares. Some of the customers lost the opportunity to take advantage of break-point reductions in annual expenses that might have been available for new investments had they remained in the Class-T shares. FINRA found that as a result of the customers' conversion to Class-C shares, the ongoing fees paid to Issel and his member firm increased commensurate with the increase in annual fees attributable to Class-C shares.

    The suspension was in effect from February 19, 2013, through March 4, 2013.

    Issel is registered with Cetera Advisor Networks. He has previously been registered with:

    • Mack Investment Securities
    • Waterstone Financial Group
    • Terra Securities Corp.
    • (FINRA Case #2011025553601)

    Robert Stanton Jersey

    (CRD #1592359, Registered Principal, Cary, Illinois) was fined $5,000 and suspended from association with any FINRA member in any capacity for 30 days. Without admitting or denying the findings, Jersey consented to the described sanctions and to the entry of findings that he failed to timely amend his Form U4 to disclose an unsatisfied tax lien.

    The findings stated that Jersey completed his member firm's annual employee certification on which he provided a false answer when he answered "No" to a question about whether he had any unsatisfied judgments or liens against him.
    The suspension was in effect from February 4, 2013, through March 5, 2013.

    Jersy is currently employed by Gar Wood Securities. His previous employment includes:

    • Spike Financial Services
    • Horwitz & Associates, Inc.
    • Preferred Trade, Inc.

    (FINRA Case#2011027998801)

    Alan Richard Joyce

    (CRD #1683601, Registered Principal, Jacksonville, Florida) was fined $7,500 and suspended from association with any FINRA member in any capacity for 60 business days. Without
    admitting or denying the findings, Joyce consented to the described sanctions and to the entry of findings that he recommended stock and mutual fund transactions in a customer's account without having reasonable grounds for believing that such transactions were suitable in view of the customer's account objectives and financial situation and needs.

    The findings stated that the customer won lottery proceeds in her home state. In connection with the opening of the customer's account with Joyce's member firm, an Index Advisory Service Agreement was executed that set forth the parties' responsibilities as it pertained to the measuring index, which basically represented the desired asset allocation to be
    maintained in the account. The findings also stated that the Index Agreement required that Joyce, on the firm's behalf, assist the customer in determining an initial measuring index,
    consult with the customer in making changes to the measuring index, and obtain final approval of the measuring index (as well as any recommended changes to the measuring index) from a third party assisting the customer in the handling of her lottery winnings.

    Joyce deviated from the 98 percent fixed income and 2 percent cash asset allocation the customer and the third party approved, to include equities and mutual funds. Other than
    the initial measuring index, Joyce did not obtain the approval of the customer or the third party for any of the changes to the measuring index menu. The findings also included that the overconcentration in mutual funds and equities resulting from Joyce's investment allocation was unsuitable for the account, given the customer's financial resources and needs. Joyce also recommended and effected trades in the account that caused an unsuitable overconcentration of account funds in certain individual stocks. Over the course of a year, the account suffered losses of approximately $183,355.57, resulting in a balance of $48,720.64. With little remaining assets in the account, and distributions continuing at the same rate, the balance had further dwindled and a final distribution of $4,281.33 was sent to the customer. Joyce received $2,457.32 in total compensation for handling the account. FINRA found that at various times, Joyce exercised discretionary power in the trust account established for the customer's benefit, without the trustee's written authorization to place discretionary trades and without his firm's written acceptance of the account as discretionary.

    The suspension is in effect from February 4, 2013, through April 30, 2013. Joyce is currently employed by Raymond James & Associates. Prior to that he worked for Deutsche Bank Securities and Prudential Securities.

    (FINRA Case #2010024156301)

    Thomas Lloyd Kunkel

    (CRD #2510614, Registered Representative, Eau Claire, Wisconsin) was fined $5,000 and suspended from association with any FINRA member in any capacity for 30 business days. Without admitting or denying the findings, Kunkel consented to the described sanctions and to the entry of findings that he made unsuitable recommendations to a customer, who was an elderly and unsophisticated investor, for alternative investments with high-risk financial products. The findings stated that Kunkel recommended investments in private placements and REITs to the customer, who accepted the recommendations and invested a total of $595,000 in the offerings. The source of funds for nearly the entire amount of
    these investments was the liquidation of mutual funds and variable annuities, and by the end of nearly two years, approximately 55 percent of the customer's liquid net worth was concentrated in these alternative investments. The customer eventually lost approximately $235,000 of the $595,000 that he invested in the alternative investments that Kunkel recommended.

    The findings also stated that the investments that Kunkel recommended were also illiquid. Many of them restricted investors from transferring their shares for certain periods of time or imposed penalties on such transfers. The findings also included that given the information available to Kunkel concerning the customer's financial needs and personal circumstances, he did not have reasonable grounds for believing that the alternative investments that he recommended to the customer were suitable for him.

    The suspension is in effect from February 19, 2013, through April 2, 2013. Kunkel is employed by Capital Financial Services. He previously worked for Thrivent Investment Management and Lutheran Brotherhood Securities Corp.

    (FINRA Case #2011026362601)

    Kenneth Raden Miller

    (CRD #1009775, Registered Representative, Lafayette, Louisiana) was fined $20,000 and suspended from association with any FINRA member in any capacity for six months. The fine must be paid either immediately upon Miller's reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Miller consented to the described sanctions and to the entry of findings that he made material misrepresentations or omissions in connection with the purchases or sales of an entity's limited partnership interests to several customers in the total amount of $1,375,000.

    The findings stated that despite the descriptions of the entity
    as high risk and the potential for total loss of principal set forth in the entity's offering memorandum, Miller made negligent misrepresentations to customers falsely representing the safety of the investments and that the investments were 100 percent guaranteed. The findings also stated that the entity began experiencing financial difficulties because of repayment defaults from loans it had extended and, consequently, it ceased making income distributions to individual investors, including Miller's customers. The SEC filed a complaint alleging offering and accounting fraud on the part of this entity. Investors in the entity have been unable to liquidate their investments, and as a result, have effectively lost the entire amount of their principal investments. The findings also included that
    Miller sent consolidated quarterly account statements to public customers that reflected an inaccurate value for their limited partnership investments, and omitted material facts. FINRA found that Miller failed to submit the consolidated statement template or the outgoing statement to his member firm for review and approval, and failed to retain records of outgoing statements. FINRA also found that for more than four years, Miller effected numerous discretionary transactions in a customer's account without obtaining
    the customer's prior written authorization and having his firm accept the account as discretionary.
    The suspension is in effect from January 22, 2013, through July 21, 2013. Miller is not registered. He previously was employed by:

    • Prospera Financial Services, Inc.
    • Securities America
    • NFP Securities, Inc.

    (FINRA Case #2011029137801)

    Antoine Rogers III

    (CRD #4938028, Registered Representative, Fort Worth, Texas) was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Rogers consented to the described sanction and to the entry of findings that he took the Series 65 examination at a testing center, and during the test, took a break and reviewed materials pertaining to the examination that he had previously placed on top of a locker in the break room. The findings stated that Rogers appeared for investigative testimony with FINRA, and during the examination, FINRA discovered that Rogers had improperly recorded the testimony on his cell phone. The recording was unilateral, undisclosed and without FINRA's express written permission, which is prohibited as described in Notice to Members 00-18.

    Rogers previously worked for:

    • H.D. Vest Investment Services
    • USAA Financial Advisors, Inc.
    • NYLife Securities

    (FINRA Case #2012033782401)

    Jim Eugene Scala Jr.

    (CRD #2493873, Registered Representative, Palm Harbor, Florida) was fined $5,000 andsuspended from association with any FINRA member in any capacity for 15 business days.FINRA gave Scala credit for serving a suspension imposed by his member firm while it investigated his private securities transactions. Without admitting or denying the findings, Scala consented to the described sanctions and to the entry of findings that he engaged in private securities transactions when he sold shares he owned in an alternative energy company to individuals that included customers of his firm. The findings stated that Scala was required to give his firm prior written notice and obtain prior written approval to sell his shares of the company and he failed to do so.

    The suspension was in effect from February 19, 2013, through March 11, 2013. Scala currently is employed by Dalton Strategic Investment Services. Prior to that he worked for Brookstone Securities and GunnAllen Financial.

    (FINRA Case #2011025846001)

    Glen Edward Smith Jr.

    (CRD #1023145, Registered Principal, Lake Worth, Florida) was barred from association with any FINRA member
    in any capacity. Without admitting or denying the allegations, Smith consented to the described sanction and to the entry of findings that he failed to respond to FINRA requests to appear and testify regarding information needed regarding his disclosed outside business activity, and his involvement in its sale of the entity's collateralized notes. The findings stated that Smith's failure to respond impeded FINRA's investigation and prevented FINRA from completing its regulatory responsibility to fully investigate potential
    rule violations.

    Smith's prior employment includes:

    • Capstone Partners, L.C.
    • Hardman Financial Services, Inc.
    • American First Capital, Corp.

    (FINRA Case #2011028081101)

    Randy Willis Hayes III (CRD #5361647, Registered Representative, West Palm Beach,
    Florida) was named a respondent in a FINRA complaint alleging that he withdrew a total of $11,491 from customers' IRAs without the customers' or the bank's permission,
    thereby converting the funds. The complaint alleges that Hayes closed a customer's savings account, which held $50,881.23 at the time, without the customer's or bank's
    permission or authority. Hayes transferred, without the customer's or bank's permission or authority, $41,000 to a money market account in the customer's name but did not credit the new bank account with the $9,881.23 difference. Hayes later deposited $6,378 into the account.

    The complaint also alleges that the customer complained to the bank and Hayes about the unauthorized withdrawal of funds from his bank account. Hayes credited $9,400 to the customer's account, which was done one day after he transferred the same amount from the other customers' IRAs. Hayes later credited an additional $500 to the customer's account, bringing the total credited to just over the $9,881.23 amount that he had converted from the customer's bank account. The complaint further alleges that Hayes withdrew $800 from another customer's CD without the customer's or the bank's permission or authority, and on the same day, deposited $500 into the previous customer's bank account. Hayes converted a total of $22,172.23 from bank customers' accounts, which included the $9,400 credited to one customer. In addition, the complaint alleges that Hayes forged customers' signatures on bank forms to effect the unauthorized withdrawals and transfers. Moreover, the complaint alleges that Hayes failed to respond to FINRA requests for information and to appear for testimony.

    Hayes previously was employed by Wells Fargo Advisors, LLC.

    (FINRA Case #2011026546701)

    Paul James Marshall (CRD #1889692, Registered Supervisor, Marietta, Georgia) was named a respondent in a FINRA complaint alleging that he converted funds totaling $25,000 from his member firm's customer for purposes of investment in a real estate entity. Marshall had solicited the customer to invest in the entity and provided her with a written contract, which she signed, to invest $30,000 in earnest money for the real estate project. Marshall failed to invest the funds on the customer's behalf, converted the funds to his own use and benefit, and to date, has failed to return any of the funds to the customer. The complaint alleges that while he was associated with another member firm, Marshall provided a business card to a customer that reflected false and misleading information. Specifically, the business card reflected that Marshall was a managing director of a certain division of another member firm. At no time was Marshall associated with or employed by the company, nor did he receive his firm's approval to use the card. The complaint also alleges that Marshall failed to fully respond to FINRA requests for information and documents.

    The requested documents were material to FINRA's investigation, and Marshall's failure to produce them impeded FINRA's ability to conduct the investigation.

    Marshall is not currently registered. He previously worked for:

    • American Wealth Management, Inc
    • Oppenheimer & Co. Inc.
    • Bear, Stearns & Co. Inc.

    (FINRA Case #2011029657101)

    If you have a question about your brokerage account or complaint about the way it is being handled, don't hesitate to contact us. We have been helping investors recover stock market losses for 25 years.

    Rex Securities Law

    561 391 1900

    Nationwide representation.

    Free consultation.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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