Articles Tagged with FINRA

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FINRA Broker Check reports that a complaint, dated 26 February 2019, was filed against James Bradley Schwartz (“Schwartz”) (Disciplinary Proceeding. 201605170430), while associated with Aegis Capital Corp. (“Aegis” or the “Firm”). The Complaint by FINRA’s Division of Enforcement alleges that Schwartz and Aegis (a FINRA-regulated broker-dealer), churned and excessively traded the accounts of four customers from August 2014 through May 2016.

During that period, Schwartz purportedly executed approximately 535 trades in the customer accounts – resulting in annualized turnover rates ranging from 19.9 to 54.7, and annualized cost-to-equity ratios (or break-even points) ranging from 87% to 120%.

The FINRA Complaint further alleges that Schwartz’s churning and excessive trading was unsuitable, unauthorized and caused combined losses of more than $660,000 in these four customers’ accounts. At the same time, Schwartz’s trading generated gross sales credits and commissions of approximately $277,705, of which Schwartz received more than $194,000.

Three penny-stock companies and their CEO – Cherubim Interests, Inc. (CHIT), PDX Partners, Inc. (PDXP), Victura Construction Group, Inc. (VICT), and Patrick Jevon Johnson  were the subject of an SEC action to enforce  subpoenas this week. SEC v. v. Cherubim Interests, Inc., PDX Partners, Inc., Victura Construction Group, Inc., and Patrick Jevon Johnson, No. 2:18-mc-00175 (C.D. Cal. filed December 21, 2018)

According to the SEC’s application as described in Litigation Release 24380 dated 26 December 2018,  on December 21, 2018 The SEC announced it sought enforcement of its subpoenas in the   U.S. District Court for the Central District of California.

The subject of the investigation is to determine whether individuals or entities engaged in a potential pump-and-dump scheme. The securities implicated were CHIT, PDXP, and VICT.

The Financial Institutions Regulatory Authority (FINRA) has ejected broker Mark Kaplan from the securities industry. Kaplan was found to have churned the account of a 93 year old client.

According to the Letter of Acceptance, Waiver and Consent agreed to by Kaplan, the 93 year old was stricken with dementia.

The churning occurred over  4 years. $723,000 in trading losses occurred. Kaplan reportedly generated a like amount of commissions and mark ups for himself and his employer, Vanderbilt Securities.

On December 19, 2018, the SEC announced additional charges against an additional 13 individuals and 10 companies for unlawfully selling securities of Woodbridge Group of Companies LLC to retail investors.

Woodbridge collapsed into bankruptcy in December 2017. The SEC previously  charged the owner, the company and others of operating a $1.2 billion Ponzi scheme. Top sales agents were also accused.

The supplemental defendants, all 13, of selling more than $350 million of unregistered securities to about 4,400 investors. The defendants told the purchasers that the Notes were “safe” Investments.

“Churning” of a brokerage account occurs when a stock broker buys and sells stocks to generate commissions for himself without regard to the interests of the customer. It is the equivalent of theft.

In January 2018 a FINRA panel has awarded an investor the entire amount of the investor’s claim, $1.67 million in compensatory and punitive damages against her broker.

The specific legal claims were churning, unauthorized trading, unsuitable trading, breach of fiduciary duty and failure to supervise.

December 25, 2018

According to The Financial Industry Regulatory Authority (FINRA) former advisor Scott Kozak (Kozak). has been accused by his former firm and barred by FINRA over unapproved securities.  Kozak has four customer complaints on his record.

The charge was “selling away” securities, not approved by the broker Kozak was affiliated with. The activity occurred between July 2011 and March 2017. Kozak was associated previously with Cetera Advisors LLC (Cetera) in Highlands Ranch, Colorado.

Times can get complicated when a broker was romantically involved in the past with a client. Sometimes seemingly good contacts are not so good. Then charges and countercharges fly back and forth. A prior sexual relationship may or may not have influenced this case.  A lot of money was lost.

We emphasize that the information below relates to a FINRA  “complaint.” Always, as part of our Blog and general practice, the reader must await the “other side of the story” as to the complaint.  But, previously, a FINRA arbitration Panel ordered payment  of $34 million to the estate of Home Shopping Network co-founder Roy Speer because of unauthorized trading, churning  and other violations by Ms. Forte.  Ms. Forte was fired in March 2016 by Morgan Stanley. But a lot of the facts seem to have been established by an Arbitration hearing which preceded the FINRA Complaint.

The fundament of the FINRA complaint and preceding arbitration, of course, was churning of a customer’s account.  http://www.BrokerFraud.Net