The Financial Industry Regulatory Authority (FINRA) has rendered a default decision against John Michael Babiarz, a former broker with Worcester, Massachusetts based Jesup & Lamont Securities Corp., for settling customer complaints without Jesup & Lamont Securities knowledge or approval. FINRA's findings stated that Mr. Babiarz deceived Jesup & Lamont Securities by concealing the customer complaints, which kept Jesup & Lamont Securities from participating in or approving the settlements. Mr. Babiarz's actions delayed the regulatory filings requiring the disclosure of complaints and settlements. FINRA also stated that Mr. Babiarz caused solicited trading orders to be miscoded as unsolicited and miscoded order tickets in customer accounts. As a result, the Jesup & Lamont Securities' trade confirmations sent to customers, generated from the order entry information, falsely identified solicited orders as unsolicited. Due to Mr. Babiarz's misconduct, the Jesup & Lamont Securities' books and records, including the orders and trade confirmations, were inaccurate and contained false information. FINRA further stated that Mr. Babiarz exercised discretion in customer accounts without written authorization. The customers gave Mr. Babiarz verbal grants of discretion, but none of them provided Mr. Babiarz with written authorization to exercise discretion, and Jesup & Lamont Securities never accepted the accounts as discretionary. During the time Mr. Babiarz was employed by Jesup & Lamont Securities, it prohibited its registered representatives from exercising discretion in customer accounts. Still, Mr. Babiarz was able to conceal the discretionary nature of his trading from Jesup & Lamont Securities for almost four years. Mr. Babiarz, of Peabody, Massachusetts, was fined a total of $20,000 and suspended from association with any FINRA member in any capacity for a total of 90 business days. The fines are due and payable when and if Mr. Babiarz seeks to re-enter the securities industry, and the suspensions are in effect from February 19, 2013 through June 26, 2013.
Broker-dealers must establish and implement a reasonable supervisory system to protect their customers' interests. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from broker misconduct.
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.