Anthony Arthur Grey, a former broker employed by Mobile, Alabama-based Gardnyr Michael Capital, Inc., has been sanctioned based on the Financial Industry Regulatory Authority's (FINRA) findings that he traded in municipal bonds for his own account and his own benefit, interposing his personal accounts between his customers and the market, which allowed him to charge excessive markups ranging from 8.62 percent to 19.12 percent markups. Mr. Grey allegedly did not disclose to his customers either his personal involvement in the transactions or that the intermediary transactions resulted in higher prices to the customers. Mr. Grey's alleged use of his personal accounts in intermediary transactions created a conflict of interest because he acted as a trader with a self-interest and as a broker with a duty to act in the interest of his customers. FINRA also found that Mr. Grey structured the transactions and set the prices in a way that evidences he acted knowingly and intentionally. The bulk of the markups were hidden in the transactions routed through Mr. Grey's personal accounts, which made it appear that the firm charged a markup within the industry standard, but the customers were paying a price far higher than the prevailing market price. Mr. Grey, of Winter Park, Florida, was fined $30,000, ordered to pay $16,000 in disgorgement to customers, and suspended from association with any FINRA member firm in any capacity for two years. The decision has been appealed to the National Adjudicatory Council and the sanctions are not in effect pending review.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages stemming from excessive markup schemes by their broker can bring forth claims to recover against broker-dealers like Gardnyr Michael Capital, Inc., which should consistently oversee its brokers' activities in order to prevent the above-described prohibited conduct.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.