Category: Broker Investigations

FINRA Bars Ft. Lauderdale FL Broker, Aaron Parthemer, for Failure to Disclose Outside Business Activities

Posted by finralawyer on November 14, 2017 with 0 Comment

The Hanley Law (239) 649-0050 recently discovered that according to FINRA’s Disciplinary and Other FINRA Actions publication, Aaron Parthemer (CRD No. 2546369) was barred from associating with any FINRA member after he failed to disclose his outside business activities.
FINRA alleged that from 2009 to 2013 Parthemer failed to disclose his involvement in the nightclub, Club Play. Additionally, Parthemer allegedly did not disclose his involvement with an internet branding set up and a tequila marketing operation. Furthermore, Parthemer made unapproved loans to clients in connection with the club and advised clients to invest in the branding startup. (See FINRA Case No. 2011030405801)

Aaron Parthemer was an active broker for 20 years with the following member firm(s):

WELLS FARGO ADVISORS, LLC
CRD # 19616
FORT LAUDERDALE, FL
10/2011 – 4/2015

MORGAN STANLEY SMITH BARNEY
CRD # 149777
FORT LAUDERDALE, FL
6/2009 – 11/2011

CITIGROUP GLOBAL MARKETS, INC.
CRD # 7059
FORT LAUDERDALE, FL
11/2006 – 6/2009

BANC OF AMERICA INVESTMENT SERVICES, INC.
CRD # 16361
FORT LAUDERDALE, FL
4/1998 – 11/2006

BARNETT INVESTMENTS, INC.
CRD # 14897
JACKSONVILLE, FL
5/1997 – 4/
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
CRD # 7691
NEW YORK, NY
10/1995 – 3/1997

L.C. WEGARD & CO., INC.
CRD # 3722
NEW YORK, NY
10/1994 – 10/1995

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors who have been victims of securities fraud. If you have lost money as a result of securities fraud, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a free initial consultation.

FINRA Fines Royal Bank of Canada (RBC) over $1 Million for Sale of Reverse Convertible Securities

Posted by finralawyer on November 14, 2017 with 0 Comment

The Hanley Law (239) 649-0050 recently discovered that according to FINRA’s Disciplinary and Other FINRA Actions publication, Royal Bank of Canada (CRD No. 31194) was fined $1,000,000.00 and ordered to pay approximately $434,000.00 in restitution after allegedly selling improper structured investment products to more than 200 investors.

FINRA alleged that between January 2008 and December 2010 Royal Bank of Canada’s capital markets unit failed to adequately supervise 99 of its financial advisors in the sale of 364 reverse convertible securities in 218 accounts that were unsuitable for those customers. The customers involved lost approximately $1.1 million. (See FINRA AWC No. 2010022918701)

FINRA has issued warnings to investors regarding these risky and complex products. A reverse convertible is a structured product that typically consists of a high-yield, short-term note of the issuer that is linked to the performance of an unrelated reference asset, usually common stock, a basket of stocks, an index or another instrument. Reverse convertibles can have complex pay-out structures involving multiple variables that can make it difficult for registered representatives and their customers to accurately assess their risks, costs and potential benefits.

FINRA Bars Douglas Jay Melzer for Soliciting $2million from Clients for Investment Outside of Firm

Posted by finralawyer on November 14, 2017 with 0 Comment

The Hanley Law (239) 649-0050 recently discovered that according to FINRA’s Disciplinary and Other FINRA Actions publication, Douglas Jay Melzer (CRD No. 5438362) was barred from associating with any FINRA member after allegedly soliciting clients to invest $2,000,000.00 in an outside investment, without providing his firm prior written notice or receiving written approval. Furthermore, Melzer was compensated at least $26,500.00 for his participation in the transactions.

Additionally, FINRA alleged that Melzer misappropriated funds from his firm for his personal benefit. Melzer caused the registered representative code on certain customer accounts to be changed, which resulted in the firm to pay him more than $9,500.00 in commissions that should have been paid to his partners. (See FINRA AWC No. 2013035601301)

Douglas Jay Melzer was an active broker for 6 years with the following member firm(s):

PARK AVENUE SECURITIES, LLC
CRD #46173
PITTSBURGH, PA
3/2013 – 1/2015

WELLS FARGO ADVISORS, LLC
CRD # 19616
SEWICKLEY, PA
1/2008 – 1/2013

Former Financial Advisor, Matthew Katke, Pleaded Guilty

Posted by finralawyer on November 14, 2017 with 0 Comment

According to the Department of Justice, Matthew Katke (CRD No. 4679645) pleaded guilty to conspiracy to commit securities fraud in Hartford, CT Federal Court for his alleged participation in a multimillion dollar securities fraud scheme. Katke was registered with RBS Securities, Inc. (RBS Securities), during the time of the DOJ’s investigation. Katke was associated with Nomura Securities International, Inc. from August 2013 until April 2015.

The Department of Justice alleged that between April 2008 and August 2013 Katke was a managing director at RBS Securities in Stamford, Connecticut. Katke and other members of RBS’s Asset Backed Products division traded fixed income investment securities in residential mortgage-backed securities (RMBS) and collateralized loan obligations (CLOs) through RBS trading floor. Katke admitted in his guilty plea that he and others conspired to increase RBS’s profits on CLO bond trades at the expense of their own customers by, among other things, making misrepresentations to induce customers to pay inflated prices and telling customers to accept deflated prices for CLO bonds. Furthermore, Katke misrepresented the CLO seller’s asking price to the buyer and kept the difference between the price paid by the buyer and the price paid to the seller for RBS. In another device used by Katke he misrepresented to the CLO buyer that bonds held in RBS’s inventory were being offered for sale by a fictitious third-party seller invented by Katke, which allowed Katke to charge extra commission. The Department of Justice’s investigation found several fraudulent transactions that cost at least 20 victims millions of dollars.

Matthew Katke was an active broker for 11 years with the following member firm(s):

NOMURA SECURITIES INTERNATIONAL, INC.
CRD # 4297
NEW YORK, NY
8/2013 – 4/2015

RBS SECURITIES, INC.
CRD # 11707
STAMFORD, CT
7/2008 – 6/2013

BEAR, STEARNS & CO.
CRD # 79
NEW YORK, NY
8/2003 – 7/2008

Financial Advisor Pasquale “Pat” Vitucci -Variable Annuity Sales Complaints

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s BrokerCheck, Pasquale Vitucci (CRD No. 29604) has been the subject of at least nineteen customer complaints alleging that he made unsuitable investments, primarily in variable annuity related products. Additional claims involving Vitucci include allegations of misrepresentations, breach of fiduciary duty, churning and fraud. In total investors have complained of over $1 million in investment losses.

Over the last several years the notoriety of annuities have grown and annuities are often the subject of sales practice complaints. The reason for this is simple, annuities are often sold to customers because the selling commission is among the highest of all financial products available for sale to retail customers and because the commission is paid by the insurance company directly to the broker. The high commissions stockbrokers generate on variable annuities is just one of the reasons why annuities are recommended to customers. Annuities also provide a steady stream of commissions and sales charges to both the broker and the insurance company. Indeed, stockbrokers who sell annuities are often also paid an ongoing trailing commission. Annuities are also laden with administrative fees and mutual fund sub-account management fees.

According to public records Vitucci operates out of a DBA business called Vitucci & Associates Insurance Services. He has been an active broker for 22 years with the following member firm(s):

NATIONAL PLANNING CORPORATION
CRD # 29604
WALNUT CREEK, CA & SAN JOSE, CA
10/2008 – PRESENT

AIG FINANCIAL ADVISORS, INC.
CRD # 133763
WALNUT CREEK, CA
10/2005 – 10/2008

SUNAMERICA SECURITIES, INC.
CRD # 20068
PHOENIX, AZ
7/2000 – 10/2005

SECURITIES AMERICA, INC.
CRD # 10205
LAVISTA, NE
5/1994 – 7/2000

CALIFORNIA ONE INVESTMENTS
CRD # 27037
12/1992 – 6/1994

The Securities Law Firm of Hanley Law is experienced in helping investors who have been victims of negligent misrepresentations and fraud related to the solicitation or sale of variable annuities, index annuities, fixed annuities, variable life insurance and other insurance products. If a broker failed to discuss with you the risks of variable annuities or other insurance products or if the type of investment was unsuitable for you given your age, financial situation, and other factors, you may be able to recover your financial losses.

LPL Financial Advisor Karl Romero and LaeRoc Income Fund

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s BrokerCheck, Karl Romero (CRD No. 6413) has been the subject of at least nine customer complaints alleging that he made unsuitable investments, mainly in private placements and alternative investment related products. The claims against Romero include breach of fiduciary duty and unsuitable investments. Some of the unsuitable investment claims may involve Romero’s recommendations to invest in the LaeRoc Income Fund, which is a troubled real estate private placement.

The LaeRoc Funds manage more than $650 million in assets and focus on income producing properties in the Western United States. In 2011 the LaeRoc 2005-2006 Income Fund LP tried to raise $11 million – $14.5 million to pay off approximately $49 million in debt.

According to public records, Romero operates out of a DBA business called Karl H. Romero & Associates, Inc. He has been an active broker for 43 years with the following member firm(s):

LPL FINANCIAL GROUP, INC.
CRD # 6413
SANTA ANA, CA
12/1989 – PRESENT

LINSCO FINANCIAL GROUP, INC.
CRD # 524
10/1987 – 12/1989

COOPERATIVE FINANCIAL PLANNERS, LTD.
CRD # 16891
5/1986 – 10/1987

FINANCIAL NETWORK INVESTMENT CORPORATION
CRD # 13572
7/1983 – 10/1987

FNI CAPITAL CORPORATION
CRD # 14814
6/1984 – 9/1985

THE VARIABLE ANNUITY MARKETING COMPANY
CRD # 5081
2/1973 – 5/1985

UNIVERSITY SECURITIES CORPORATION
CRD # 6518
5/1979 – 9/1983

TRAVELERS EQUITIES SALES, INC.
CRD # 833
4/1973 – 12/1980

THE VARIABLE ANNUITY MARKETING CO. OF SOUTHERN
CRD # 1000002

FINRA Takes Action Against Delray Beach FL Broker

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Wendy Ann Wurst aka Wendy Ann Minerd, Wendy A Minero and Wendy Ann Minero (CRD No. 1902879) was fined $50,000.00 and suspended from associating with any FINRA member for three months, and suspended in any principal capacity for six months, after allegedly failing to reasonably supervise her firm’s registered representative’s involvement with three outside business that operated as unregistered broker-dealers.

FINRA alleged that as the CCO and registered principal Wurst failed to reasonably supervise a registered representative’s activities. As such, FINRA alleged that the registered representative effectuated securities transactions for compensation away from the firm through entities that were not registered as broker-dealers.
Furthermore, FINRA alleged that Wurst made misleading and inaccurate statements concerning the unregistered broker-dealers to corporate bond dealers in connections with the opening of certain delivery-versus-payment brokerage accounts for the unregistered broker-dealers. (See FINRA AWC No. 2012033514202)

Wendy Ann Wurst’s suspension in any capacity is in effect from March 2, 2015 to June 1, 2015 and her suspension in any principal capacity is in effect from March 2, 2015 to September 1, 2015. Wurst has been an active broker for 21 years with the following member firm(s):

PMK SECURITIES & RESEARCH, INC.
CRD # 40145
DELRAY BEACH, FL
11/2003 – 5/2014

STANFORD GROUP COMPANY
CRD # 39285
HOUSTON, TX
8/2003 – 11/2003

STERLING FINANCIAL INVESTMENT GROUP, INC.
CRD # 41506
BOCA RATON, FL
6/2002 – 8/2003
FINRA EXPELLED THE FIRM IN 1/2008

PMK SECURITIES & RESEARCH, INC.
CRD # 40145
DELRAY BEACH, FL
3/2000 – 7/2002

DMG SECURITIES, INC.
CRD # 15480
GREAT FALLS, VA
5/1994 – 3/2000

JWGENESIS SECURITIES, INC.
CRD # 33832
BOCA RATON, FL
7/1998 – 3/2000

JWGENESIS FINANCIAL SERVICES, INC.
CRD # 11025
ST. LOUIS, MO
1/1994 – 3/2000

JWGENESIS FINANCIAL GROUP, INC.
CRD # 38166
BOCA RATON, FL
2/1999 – 3/2000

GSG SECURITIES, INC.
CRD # 38166
BOCA RATON, FL
4/1995 – 12/1998

STOWE INVESTMENT COMPANY
CRD # 8528
WINTER HAVEN, FL
3/1995 – 3/1995

Former Delray Beach FL Broker, Roger Kumar, Fined and Suspended by FINRA

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA’s Disciplinary and Other FINRA Actions publication, Roger Kumar Jr. (CRD No. 2702488) was fined $50,000.00 and suspended by FINRA for one year after he allegedly made misleading and inaccurate statements to numerous corporate bond dealers so that he could participate in and obtain allocations of bonds for an unregistered proprietary trading firm.

FINRA alleged that Kumar operated three disclosed, but unregistered, outside businesses entities for the sole purpose of purchasing securities, mainly IPOs. Kumar allegedly misrepresented the nature of the entities’ business operations, value of assets under management and status, as a minority business qualified institutional buyer and/or institutional account. (See FINRA AWC No. 2012033514201)

Roger Kumar Jr. is not currently registered in the securities industry. His suspension is in effect from March 2, 2015 to March 1, 2016. Prior to his suspension from the industry, he was an active broker for 18 years with the following member firm(s):

HENNION & WALSH, INC.
CRD # 25766
DELRAY BEACH, FL
12/2013 – 3/2015

PMK SECURITIES & RESEARCH, INC.
CRD # 40145
DELRAY BEACH, FL
10/1996 – 5/2014

FINRA Takes Action Against Miami Firm Souza Barros Securities, Inc. for Failing to Implement Adequate Anti-Money Laundering Program

Posted by finralawyer on November 14, 2017 with 0 Comment

According to FINRA, Souza Barros Securities, Inc. (CRD No. 149032) was censured and fined $75,000.00 after failing to implement an adequate Anti-Money Laundering program designed to detect and report suspicious transactions, which is required under the Bank Secrecy Act and its implementing regulations.

FINRA alleged that some of Souza’s foreign institutional clients engaged in activity, like high-turnover securities and trading and high-volume cash movement. Additionally, FINRA alleged that other firm clients engaged in intra-day bond trading and trading of US dollar denominated foreign bonds. Souza allegedly failed to adequately investigate such activity. Furthermore, FINRA alleged that Souza did not consistently monitor account activity, review and investigate alerts or maintain and preserve all electronic correspondence. (See FINRA AWC No. 2012033169201.)

FINRA Censured and Fined Morgan Stanley $675,000 Over Bond Interest Payments

Posted by finralawyer on November 14, 2017 with 0 Comment

The Financial Industry Regulatory Authority (FINRA) fined and censured Morgan Stanley Smith Barney (CRD No. 149777) and Morgan Stanley & Co. (CRD No. 8209) after the firms allegedly misrepresented municipal bond interest paid to clients as tax-exempt when in actuality the interest payments were taxable.

FINRA alleged that between July 2009 and December 2013 Morgan Stanley paid clients approximately $880,000.00 in interest, which customers believed was tax-exempt interest from municipal bonds that were held in their accounts. FINRA alleged that during the relevant period, Morgan Stanley generated or held more than 1,500 short positions in tax-exempt municipal securities that corresponded to long positions in customer accounts. FINRA alleged that the short positions resulted primarily from trading and operational errors. In these instances, Morgan Stanley paid the interest to the customer and the interest was therefore taxable.

As a result of the foregoing, FINRA alleged that during the relevant period Morgan Stanley failed to disclose to customers that, because the firm was short on the security, they were not receiving tax exempt interest from the issuers of the municipal securities reflected on their account statements. FINRA further alleged that the firm also sent inaccurate account statements and Forms 1099s to at least 1,500 customers who were receiving firm-paid interest. FINRA alleged that these customers’ monthly and yearly account statements inaccurately stated that the interest they received was “tax exempt income” and the year-end Forms 1099s that Morgan Stanley sent to these customers inaccurately stated that the interest paid by the firm was “tax-exempt interest”. (See FINRA Case No. 2013038306401)