Martin Benjamin Feibish, formerly with Springfield, Massachusetts based MML Investors Services, submitted a letter of acceptance, waiver, and consent in which he was banned from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity. Mr. Feibish, of Warwick, Rhode Island, consented to the FINRA sanction and to the entry of findings that he created a scheme to steal more than $5 million from an elderly customer by investing her money in fake investment vehicles, and forging her relatives' signatures. Mr. Feibish began using a company he established to create false investment vehicles. Mr. Feibish then created false promissory notes through the company, which manifested an alleged interest in mortgage-backed securities. The findings also stated that Mr. Feibish persuaded the customer to purchase false promissory notes. Mr. Feibish created and provided the customer with false documentation representing the mortgage-backed securities and IRS Form 1099s, to convince the customer that she was invested in legitimate investment vehicles. Mr. Feibish took funds from the customer for the non-existent investments and placed them in a bank account he controlled in his company's name. FINRA's findings stated that through his conduct, Mr. Feibish purposefully violated the Securities Exchange Act of 1934, FINRA rules, and NASD rules.
FINRA also included that over time, Mr. Feibish had checks issued from his company's bank account to the customer. Mr. Feibish told the customer that these payments represented the interest payments from the investments, but were really a return of the customer's own money. Thereafter, Mr. Feibish convinced the customer to reinvest the money in additional fictitious investment vehicles, including promissory notes from a bank. FINRA stated that in furtherance of this misconduct, Mr. Feibish forged the names of the customer and her relatives to open trust accounts in their names at the bank. Just as in the previous sham investments, payments issued from the accounts at the bank were not proceeds from the investments, but simply a return of the customer's money. Mr. Feibish continued to convince the customer to reinvest the supposed proceeds in other false investment vehicles to avoid having to return the money to the customer.
Moreover, FINRA found that Mr. Feibish managed insurance plans belonging to the customer, which were for the benefit of her relatives. Mr. Feibish told the customer he was paying the premiums on those policies, when in fact he had forged the relatives' signatures and borrowed approximately $280,000 against them. Mr. Feibish regularly had false documentation issued to the customer, including false promissory notes and falsified account statements.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Feibish's fraudulent activity can bring forth claims to recover losses against MML Investors Services, which should have prevented Mr. Feibish from committing the described illegal activity.
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.