FINRA Enforcement Actions 2011

Bart Chad Christensen (CRD #2956167, Registered Representative, South Jordan, Utah)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Promissory Note Fraud Arbitration Attorney, Russell L. Forkey, Esq.

July, 2011:

Bart Chad Christensen (CRD #2956167, Registered Representative, South Jordan, Utah) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Christensen consented to the described sanction and to the entry of findings that he sold approximately $650,000 in a company’s promissory notes to customers without providing his member firm with written notice of the promissory note transactions and receiving the firm’s approval to engage in these transactions. The findings stated that based upon expected interest payments from the promissory notes, some of the customers also purchased life insurance policies from Christensen and another registered representative the firm employed. The findings also stated that these customers expected to use the promissory note interest payments to pay for the life insurance premiums. The findings also included that Christensen received direct commissions from the company related to the sale of the promissory notes to customers and received commissions from the sale of life insurance products to the customers, who intended to fund those policies with the interest payments from the promissory notes.

BGB Securities, Inc.

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Research Fraud and Non-Disclosure FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.

November, 2011:

BGB Securities, Inc. (CRD #36716, Arlington, Virginia) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that the firm, acting through a research analyst, published research reports on subject companies that failed to disclose that the research analyst or a member of his household had a financial interest in the securities of the subject companies. The findings stated that the firm published a research report in which it failed to disclose that it had received trading commissions from the subject company in the past 12 months. The findings also stated that the firm failed to detect and prevent personal trading by a research analyst associated with the firm, and failed to disclose ownership and material conflicts of interest in research reports; the firm failed to adopt and implement WSPs and failed to establish and maintain a supervisory system, and establish, maintain and enforce WSPs reasonably designed to achieve compliance with applicable rules and regulations regarding its research reports and the supervision of its research analysts. The findings also included that the firm failed to prepare accurate order tickets for any of its corporate bond transactions and the order tickets, which were prepared after the transactions were executed, reflected execution times that were later than the actual execution time. FINRA found that the firm failed to accurately report transactions to the Trade Reporting and Compliance EngineTM (TRACETM), double-reported transactions and reported transactions with execution times that were later than the actual execution time. (FINRA Case #2010021055301).

Renee Marie Brown (CRD #3221618, Registered Principal, Golden Valley, Minnesota)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Arbitration Fraud, Misrepresentation and Mismanagement Attorney, Russell L. Forkey, Esq.

July, 2011:

Renee Marie Brown (CRD #3221618, Registered Principal, Golden Valley, Minnesota)

Kiley Partners, Inc. (CRD #37814, Palm Beach Gardens, Florida)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Municipal and Corporate Bond Fraud and Misrepresentation Arbitration Attorney, Russell L. Forkey, Esq.

July, 2011:

Kiley Partners, Inc. (CRD #37814, Palm Beach Gardens, Florida) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $17,500. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it reported municipal securities transactions late to the MSRB, and erroneously reported municipal transactions to the MSRB. The findings stated that the erroneously reported trades consisted of, among other things, purchases reported as sales, sales reported as purchases, incorrect trade volume reported and corrected trades after cancellations were not reported to the MSRB. The findings also stated that the firm reported corporate bond transactions late to TRACE. (FINRA Case #2010021125601).

The GMS Group, LLC (CRD #8000, Livingston, New Jersey)

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Municipal and Corporate Bond Fraud Arbitration Attorney, Russell L. Forkey, Esq.

July, 2011:

The GMS Group, LLC (CRD #8000, Livingston, New Jersey) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $50,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that at various times it failed to deliver official statements by settlement date to numerous customers who had purchased new issue municipal securities during the primary offering disclosure period. The findings stated that in all of these transactions, the firm was neither an underwriter, nor part of the underwriting syndicate but was required to deliver an official statement to each customer by the settlement date because the obligation to deliver the official statement is not limited to the underwriters of the municipal bond issue, but also to firms not participating in the offering that sell the municipal securities during the primary offering period and to secondary market transactions during that period. The findings also stated that the firm failed to enforce its WSPs pertaining to its official statement delivery requirements to customers who purchased new issue municipal securities for secondary market transactions that occurred during the primary offering disclosure period, including those transactions in which the firm was not an underwriter, nor part of the underwriting syndicate, as required by MSRB Rule G-32. (FINRA Case #2009017280701).

Brookstone Securities, Inc. and David William Locy

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Arbitration Private Placement and Variable Annuity Investment Fraud and Misrepresentation Attorney, Russell L. Forkey, Esq.

July, 2011:

Brookstone Securities, Inc. (CRD #13366, Lakeland, Florida) and David William Locy (CRD #4682865, Registered Principal, Overland Park, Kansas) submitted a Letter of Acceptance, Waiver and Consent in which the firm and Locy were censured and fined $25,000, jointly and severally. Without admitting or denying the findings, the firm and Locy consented to the described sanctions and to the entry of findings that the firm, acting through Locy, did not have WSPs addressing due diligence requirements for third-party placements. The findings stated that the firm, acting through Locy, failed to conduct an adequate due diligence of a third-party private placement offering before Locy approved the offering of shares to customers. The findings also stated that Locy’s due diligence efforts did not include any investigation into an equity fund, despite acknowledging that he knew very little about it or the third-party placement and could not get any solid information about the fund, including pending litigation or financial statements. The findings also included that Locy knew nothing about the fund that was not contained in a PPM the issuer prepared, but accepted that the firm representatives forming the offering had conducted due diligence and relied on their opinion of the fund. FINRA found that Locy acknowledged the representatives had limited, if any, experience forming a private placement. FINRA also found that firm representatives sold or participated in sales of shares to customers without notifying Locy or anyone else at the firm, which caused those sales to not be recorded on the firm’s books and records. (FINRA Case #2009019837303).

FINRA Enforcement Actions – July, 2011

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Negligent Supervision and Selling Away Arbitration Attorney, Russell L. Forkey, Esq.

July, 2011:

Periodically, the Financial Industry Regulatory Authority, Inc. (FINRA) publically announces, on its website, enforcement actions that have either recently been settled by or commenced against broker/dealers and/or associated persons.

Robert Marcus Lane, Jr.

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Boca Raton, Florida Securities Fraud and Mismanagement Attorney, Russell L. Forkey, Esq.

June, 2011:

Please keep in mind that the complaints issued by FINRA represents FINRA’s initiation of a formal proceeding in which findings as to the allegations in the complaint have not been made, and does not represent a decision as to any of the allegations contained in the complaint. Because these complaints have not yet been adjudicated, you may wish to contact the respondents before drawing any conclusions regarding the allegations in the complaint.

Chenying Lee Williamson

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

Securities Fraud and Mismanagement FINRA Arbitration Attorney, Russell L. Forkey, Esq.

June, 2011:

Chenying Lee Williamson (CRD #2753331, Registered Representative, Cincinnati, Ohio, formerly licensed with Chase Investment Services Corp.) submitted a Letter of Acceptance, Waiver and Consent in which she was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Williamson consented to the described sanction and to the entry of findings that she altered annuity contracts for customers at her member firm by cutting and pasting incorrect interest rates on the contracts without the firm’s knowledge or approval. The findings stated that Williamson made a misrepresentation to a firm customer and failed to disclose material information to the customer in connection with the customer’s purchase of mutual fund shares. The findings also included that Williamson misrepresented to the customer that her account would not be charged a fee for partially liquidating her mutual fund investment; subsequently, the customer purchased $156,000 in mutual fund shares; $29,346 of which the customer liquidated, and as a result, her account was assessed a contingent deferred sales charge (CDSC) of $299.82 for the liquidation of the shares. FINRA found that Williamson failed to respond to FINRA requests to provide a written statement. (FINRA Case #2009017861401).

Michael Lewis Serota

Published on: July 6, 2012 | By Russell L. Forkey, P.A.

FINRA Securities Arbitration Misrepresentation and Fraud Attorney, Russell L. Forkey, Esq.

June, 2011:

Michael Lewis Serota (CRD #2169739, Registered Principal, Englewood, Colorado, formerly licensed with Newbridge Securities Corporation and Raymond James & Associates, Inc.) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Serota consented to the described sanction and to the entry of findings that he converted a total of $195,421.80 from the brokerage account of a customer of his previous member firm. The findings stated that Serota, without authorization, forged the customer’s signature on LOAs to effectuate the conversion of funds from the customer’s account to bank accounts Serota and a third party controlled for Serota’s personal use. (FINRA Case #2011026905901).