FINRA Enforcement Actions 2012

William Slay Stevens (CRD #2889238, Registered Representative, Montgomery, Alabama)

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

Broker/Dealer and Account Executive Fraud, Misrepresentation and Mismanagement FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

William Slay Stevens (CRD #2889238, Registered Representative, Montgomery, Alabama) 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, Stevens consented to the described sanction and to the entry of findings that he made recommendations to a customer that were unsuitable based on the customer’s risk tolerance and investment objectives, and involved an over concentration of liquid net worth in an illiquid investment. The findings stated that Stevens recommended that a customer invest in promissory notes issued by a newly-formed holding company in the process of acquiring his member firm and other affiliates. Based upon Stevens’ recommendation, the customer invested $250,000 in the company’s promissory notes. The findings also stated that Stevens approached the customer about investing in the company’s preferred stock involving a private placement offered pursuant to SEC Regulation D, Rule 506. Based upon Stevens’ recommendation, the customer purchased some shares of each series of the company’s preferred stock in blocks of $65,000, for a total investment of $260,000. The customer’s aggregate investment in the company’s securities at this point was $510,000, which accounted for about a quarter of the customer’s net worth and all of his liquid net worth. The concentration level of his investments in the company compounded the risk of these high-risk investments. The findings also included that Stevens recommended that the customer convert the promissory notes he held into additional shares of the company’s preferred stock. The customer converted the company’s promissory notes into several shares of one of the company’s preferred stocks. According to a disclosure document for alternative investments, the second purchase of the company’s preferred stock represented 57 percent of the customer’s liquid net worth at that point. Shortly thereafter, the company ceased business and defaulted on all dividend payments on its preferred stock. FINRA found that Stevens had no reasonable basis for recommending that the customer invest in a concentrated position of high-risk investments in the company’s securities.

Elva Luz Solis (CRD #5527297, Registered Representative, Dodge City, Kansas)

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

Broker/Dealer and Account Executive Fraud and Misrepresentation Lawyer, Russell L. Forkey, Esq.

January, 2012:

Elva Luz Solis (CRD #5527297, Registered Representative, Dodge City, Kansas) 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, Solis consented to the described sanction and to the entry of findings that she misappropriated $23,223 in cash premiums from customers of her member firm’s affiliated insurance company and another affiliated insurance company. The findings stated that Solis received cash premium payments totaling $6,465 from customers, entered the payments into the Agent’s Credit Advice (ACA) system, which generates receipts, and failed to promptly deposit and apply the money towards the customers’ insurance policies. Instead, she applied certain of the premiums toward earlier customers’ past due insurance policies by crediting the earlier policies. In addition, Solis used cash premiums for her own personal expenses, thus misappropriating the $6,465. The findings also stated that Solis’ customers paid her cash premiums totaling $16,758 for insurance policies with another insurance company, which the ACA system did not cover, and failed to place the premiums into a Premier Trust bank account, which would then be electronically swept from the bank directly to the insurance company. Instead, Solis applied certain of the premiums toward other customers’ past due insurance policies and used cash premiums to pay her personal expenses, thereby misappropriating the $16,758. The findings also included that in response to questions by her insurance company’s auditor, Solis admitted to using cash premium payments for personal reasons. Solis has repaid the $16,758 owed to the affiliated insurance company’s account, but to date has not repaid the insurance company account shortages in the amount of $6,465. (FINRA Case #2010025009001).

Joseph James Sciarra Jr. (CRD #1576322, Registered Principal, Wellington, Florida)

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

FINRA Arbitration Customer Theft and Fraud Attorney, Russell L. Forkey, Esq.

August, 2011:

Joseph James Sciarra Jr. (CRD #1576322, Registered Principal, Wellington, Florida) was named as a respondent in a FINRA complaint alleging that he received a total of $393,935 from a member firm customer for investment purposes, endorsed the checks and either cashed them or deposited them into a bank account. The complaint alleges that Sciarra never deposited the checks or the proceeds from the checks into the customer’s account at his firm. The complaint also alleges that Sciarra has not repaid the customer’s estate the $393,935 he received from the unauthorized ownership and control he exercised over the customer’s $393,935. The complaint further alleges that Sciarra’s firm expressly prohibits its representatives from converting customer payments or funds to their own account or accounts the representative controls. In addition, the complaint alleges that Sciarra failed to respond to FINRA requests for information. (FINRA Case #2010022840501).

Ronnie Charles Saliba (CRD #2625194 Registered Supervisor, Old Westbury, New York)

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

Trade Allocation Fraud and Misrepresentation FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.

January, 2012:

Ronnie Charles Saliba (CRD #2625194, Registered Supervisor, Old Westbury, New York) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for two years. Without admitting or denying the findings, Saliba consented to the described sanction and to the entry of findings that he improperly used his block trading account to allocate favorable trades to two of his customers to the detriment of a discretionary, advisory account managed by the branch manager for the private client group in a branch of his member firm. The findings stated that Saliba engaged in such cherry-picking activity by effecting buy or sell orders through his block trading account without designating the account or accounts for which he was conducting the trade at the time of order execution. Instead, Saliba allocated the trades after the order was filled and the price of the security had been obtained. The findings also stated that his member firm’s policies and procedures required the representative to designate the customer and the quantity to be allocated to the customer when placing an order using the block account. The findings also included that if the price was favorable, Saliba allocated the trade to either one of his customers’ accounts, or both, from which he earned commissions. If the price was not favorable, Saliba allocated the trade to the account the branch manager managed, from which he earned management fees. FINRA found that one of the cherry-picked trades was also an unauthorized trade because the branch manager had not authorized any trade activity for that security. FINRA also found that Saliba’s cherry picking and unauthorized trading cost the discretionary advisory account approximately $60,000. The firm reimbursed that account for its losses, with Saliba contributing to the reimbursement amount.

Charles Bacon Rowley, III (CRD# 842096 Registered Principal) Waltham, Massachusetts

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

Fraud, Churning and Unsuitable Recommendation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Charles Bacon Rowley III (CRD #842096, Registered Principal, Waltham, Massachusetts) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000, suspended from association with any FINRA member in any capacity for six months, and ordered to disgorge commissions and pay $23,684, plus interest, in partial restitution to a customer. The fine and restitution must be paid either immediately upon Rowley’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Rowley consented to the described sanctions and to the entry of findings that he recommended and engaged in excessive, unsuitable trading in customers’ accounts. The findings stated that Rowley did not have reasonable grounds for believing that the recommended trades were suitable for the customers, and the trading was inconsistent with the customers’ age, investment objectives, financial situation and needs. The findings also stated that Rowley’s trades generated total gross commissions of approximately $79,433. One customer’s account decreased in value by approximately $177,000 and the other customer’s account experienced a realized loss of $143,166.26.

Ronald Sherman Ross, Jr. (CRD# 2796527, Registered Representative) Janesville, Wisconsin

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

Stock Broker Misrepresentation, Fraud and Mismanagement FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.

January, 2012:

Ronald Sherman Ross Jr. (CRD #2796527, Registered Representative, Janesville, Wisconsin) 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, Ross consented to the described sanction and to the entry of findings that he failed to respond to FINRA requests to appear for on-the-record testimony. (FINRA Case #2010022038501).

Timothy Roberts Redpath (CRD #728164, Registered Principal) Sausalito, California

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

Private Placement Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Timothy Roberts Redpath (CRD #728164, Registered Principal, Sausalito, California) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $50,000 and suspended from association with any FINRA member in any capacity for two years. The fine must be paid either immediately upon Redpath’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Redpath consented to the described sanctions and to the entry of findings that as a principal of his member firm, he failed to conduct adequate initial and/or ongoing due diligence in relation to an entity’s private placement offered and sold through his firm. The findings stated that Redpath did not have a reasonable basis for believing the recommendation of the entity’s partners to be suitable for any firm customer. Redpath failed to obtain sufficient information from individuals solicited to invest in the offering during the relevant time period to ascertain whether a recommendation to invest in the entity would be suitable for them based upon their financial circumstances and needs. The findings also stated that the firm, acting through Redpath, failed to maintain subscription agreements for investors in the entity’s private placement who invested through the firm. The findings also included that Redpath participated in the offer and sale of limited partnership units of an entity he co-founded. Among other things, Redpath provided information about the entity to other broker-dealers for the purpose of facilitating the offer and sale of the entity by those firms; and he distributed, or caused the distribution of, a PPM that contained material misrepresentations and omitted to disclose material facts regarding the entity’s operations and financial condition. The PPM failed to disclose a company’s foreclosure, the company’s default on its obligations to the entity and the entity’s subsequent foreclosure on the properties that secured those obligations.

Robert Allen Pierce,(CRD #363323, Registered Principal) Battle Ground, Washington

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

Broker/Dealer and Registered Representative Fraud, Mismanagement and Misrepresentation Lawyer, Russell L. Forkey, Esq.

January, 2012:

Robert Allen Pierce (CRD #363323, Registered Principal, Battle Ground, Washington) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for four months. In light of Pierce’s financial status, no monetary sanctions have been imposed. Without admitting or denying the findings, Pierce consented to the described sanction and to the entry of findings that he effected, or caused to be effected, securities transactions in customers’ accounts without their knowledge or consent, and in the absence of written or oral authorization to exercise discretion in those accounts. The transactions included purchases totaling approximately $10,328.37 and sales totaling approximately $54,733.15. The findings stated that Pierce failed to timely amend his Form U4 to disclose that he had received written complaints from a customer. The suspension is in effect from December 19, 2011, through April 18, 2012. (FINRA Case #2009020245901).

Peter Martin Peterson (CRD #2825535, Registered Principal, Tampa Florida)

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

Stock Broker Fraud and Misrepresentation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Peter Martin Peterson (CRD #2825535, Registered Principal, Tampa Florida) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Peterson failed to respond to FINRA requests for documents. (FINRA Case #2009017968701).

Jonathan Clark Peterson (CRD #4199364, Registered Representative, Alpine, Utah)

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

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

January, 2012:

Jonathan Clark Peterson (CRD #4199364, Registered Representative, Alpine, Utah) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $82,033, which included disgorgement of $82,033, representing proceeds from the sales of shares of a security and the value of the shares used for a vehicle purchase, and suspended from association with any FINRA member in any capacity for two years. The fine must be paid either immediately upon Peterson’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Peterson consented to the described sanctions and to the entry of findings that as his member firm’s trader and market maker, he filed, on his firm’s behalf, Form 211 applications to quote the securities of two issuers on the OTCBB and prepared a Form 211 for one of the issuers and signed the application as the person FINRA should contact for additional information regarding the application, and began entering quotations in the securities. The findings stated that neither Peterson nor his firm provided bona fide services, including investmentbanking services, to either issuer, or to any other person or entity affiliated with or related to either company. The findings also stated that shares of one of the issuers were delivered to a former firm principal in certificate form; Peterson and the former firm principal transferred more than half of the shares to Peterson’s relative and the remainder to entities affiliated with his family and persons associated with the firm. Peterson sold 33,850 shares for total proceeds totaling $70,454; thereby accepting a payment or other consideration, directly or indirectly, for submitting Form 211 applications in connection with the securities, publishing quotations and acting as a market maker. The findings also included that Peterson arranged for a relative to transfer shares to an automobile dealership in exchange for the purchase of a car and to facilitate the purchase, Peterson arranged for the dealership to open a securities account at his firm for the sole purpose of depositing shares and promptly selling them back to him or his firm; the dealership transacted no other trades in any other securities in its firm account. Peterson purposefully selected a share price for the transaction so that when multiplied by the number of shares, it would total the vehicle’s purchase price. FINRA found that Peterson published or circulated, or caused to be published or circulated, a communication reporting a transaction in a security without believing that the transaction was a bona fide purchase or sale, and quoted the bid price and ask price in the security, without believing that such quotations represented a bonafide bid for, of offer of, the security.