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 significant Florida related actions for August 2012.Follow this link to the FINRA website for the entire report for the month of August 2012 as well as to access earlier time periods.
Merrimac Corporate Securities, Inc. Altamonte Springs, Florida was fined $18,500. The National Adjudicatory Council (NYSE:NAC) imposed the sanction based on findings that
the firm sold private placements, real estate investment trusts (REITs), limited partnerships and direct participation programs not authorized by its FINRA membership agreement. The findings stated that the firm failed to establish, maintain and enforce WSPs to supervise
the sale of these products and variable annuities. The findings also stated that the firm failed to maintain adequate books and records with respect to emails by willfully failing
to preserve all business-related incoming emails and internal emails, willfully failing to preserve emails in an easily accessible place, willfully failing to preserve emails in a nonerasable, non-rewritable format, and failing to notify FINRA that its emails would be maintained on electronic storage media. FINRA found that the firm failed to make and keep current blotters for its direct application mutual fund and variable annuity businesses.
Because these actions were deemed willful violations, Merrimac is statutorily disqualified.
Andrew Paul Arno --West Melbourne,Florida, a broker with H.D. Vest, was barred from association with any FINRA member in any capacity. The sanction was based on findings that Arno misused customers' funds by redirecting individual retirement account (IRA) contributions from customers' accounts to a bank account he controlled, instead of investing them in IRAs as he had represented to the customers and their relatives. The findings stated that after failing to receive account statements for an extended period of time, one of the customers contacted the IRA entity directly and learned that they did not have a record of any IRA contributions for one year. When the customer raised this with Arno, he claimed that the firm was holding the funds directly. When the customer contacted the firm, she learned that this was not true and confronted Arno, who reimbursed the customer and her relative for approximately $30,000, in aggregate.
Similarly, another customer filed a complaint with the firm, claiming that Arno had stolen $64,000 from him and his relative by taking funds that they told him to invest in their IRAs.
Shortly after this complaint, Arno reimbursed the customer and his relative. The findings also stated that Arno failed to respond to FINRA requests for information and testimony.
Christopher Andrew Carra, of Deerfield Beach,
Florida and formerly with Newbridge Securities Corporation submitted a Letter of Acceptance, Waiver and Consent in which he was fined $20,000 and suspended from association with any FINRA member in any capacity for one
Carra consented to the described sanctions and to the entry of
findings that he was attempting to procure investment banking and consulting business from a publicly traded company and posted comments on an Internet message board about the company under numerous author names or handles. Several statements in the postings were unwarranted and misleading; some involved conversations between his different handles in which he embellished the prospects for the company and provided the allusion of consensus regarding the company's prospects.
Carra used two outside email addresses to communicate with
company representatives about business-related matters, in violation of his firm's WSPs. One of the outside email addresses may have given the impression that it was a firmprovidedemail address when it was not one.
The suspension is in effect from July 16, 2012, through July 15, 2013.
Marcelo Ivan Jacir of Weston, Florida formerly with Morgan Keegan and Merrill Lynch submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association
with any FINRA member in any capacity.
Jacir consented to the described sanction and to the entry of findings that he directed two individuals, one of whom was a customer of his member firm, to deposit checks totaling $37,500 for an investment in a company into his personal checking account. The findings stated that Jacir converted the funds to his own use and benefit by making cash
withdrawals and using the funds to pay personal expenses.
William Thomas Johnson Jr. of North Palm Beach,
Florida, a broker formerly with Kovack Securities, submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity.
Johnson consented to the described sanction and to the entry of findings that he received approximately $47,000 from a customer after Johnson made the representation, which was false when made, that he would use the funds to purchase corporate bonds for the customer. Johnson accepted the funds, deposited them into a bank account under his control and made improper use of the funds, which included payment of personal expenses, and never purchased the corporate bonds.
The findings also stated that Johnson received approximately $53,000 from another customer after he made the representation, which was false when made, that he would use the funds to purchase a certificate of deposit (CD) for the customer. Johnson accepted the funds, deposited them into a bank account under his control and made improper use of the funds, which included payment of personal expenses, and never purchased the CD. Johnson's misrepresentation to his
customer and improper use and conversion of his customer's funds constituted a failure in the conduct of his business to observe high standards of commercial honor and just and
equitable principles of trade.
Alejandro C. Rotundo of Miami, Florida, formerly with Morgan Keegan submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and
suspended from association with any FINRA member in any capacity for 30 business days.
Rotundo consented to the described sanctions and to the entry of findings that he executed option trades in a customer's account without the customer's written authorization and without his member firm's acceptance of the account as
discretionary. The findings stated that Rotundo's discretionary trading activity resulted in customer losses of $489,230, which his firm reimbursed to the customer.
The suspension was in effect from June 18, 2012, through July 30, 2012.
Valerie Helen Silverstein of Coconut Creek,
Florida, formerly a broker at Raymond James submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity.
Silverstein consented to the described sanction and to the entry of findings that she had a pre-existing relationship with an individual when he became a customer of her member firm. In an effort to advance a fraudulent scheme to misappropriate funds from the firm, Silverstein created a false deposit receipt indicating that the customer had deposited a check for $7.8 million into his firm account when he had not. The findings stated that in further promotion of the scheme, Silverstein sent several letters on her firm's letterhead, and one email from her firm's email account, to the customer making various false and misleading statements about the deposit and withdrawal of funds. The findings also stated that the firm closed the account when the customer attempted to
make withdrawals from the account using a debit card, despite never funding the account, and the firm discovered he had a criminal past. The findings also included that, on several
occasions, the customer used the documents Silverstein created. The first was when his attorney sent Silverstein's firm a letter demanding that his client's funds be returned.
In support of the demand request, the attorney included documents Silverstein created as attachments to the letter. The second and third occasions were when the customer
provided the documents to other firm branch offices in an attempt to reopen his account and withdraw funds.
Harold James Swart Jr. of Kissimmee, Florida, formerly a broker with New England Securities submitted a Letter of Acceptance, Waiver and Consent in which he was barred from
association with any FINRA member in any capacity.
Swart consented to the described sanction and to the entry of findings that he willfully filed inaccurate Form U4s and failed to make other material disclosures on his Form U4s regarding an SEC suspension as well as a related administrative complaint filed by the State of Florida's Board of Accountancy. The findings stated Swart failed to disclose
his outside business activities to his member firm and his role as compensated registered agent for numerous additional entities. The findings also stated that Swart provided a
misleading response to FINRA in connection with a request for information concerning whether any of his outside business activities had ever been alleged or accused to have
breached any contract, engaged in any type of fraud or misrepresentation, engaged in any unfair or unethical business practice or violated any rule, regulation, statute or ordinance
of law. Swart's response was misleading because one of his outside business activities was the subject of several filed lawsuits involving such allegations. Swart knew, or should have known, about each of these lawsuits, because, among other things, he was properly served in each of the cases.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.