Articles Posted in FINRA Enforcement Actions 2012

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

January, 2012:

James Clement Hanrahan (CRD #5487504, Registered Representative, Alpharetta, Georgia) 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, Hanrahan consented to the described sanction and to the entry of findings that he failed to respond to a FINRA request for information regarding an outside business activity and an outside securities account. The findings stated that Hanrahan notified FINRA staff that he would not provide any of the requested information. (FINRA Case #2011025678701).

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

January, 2012:

Henry Horace Godbee IV aka Chad Godbee (CRD #4536422, Registered Representative, North Little Rock, Arkansas) 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, Godbee consented to the described sanction and to the entry of findings that he failed to respond to a FINRA request to appear for on-the record testimony regarding his sale of a Regulation D offering to customers. The findings stated that Godbee informed FINRA staff he was no longer registered with FINRA, had no intention of ever registering in the future and would not appear for testimony. (FINRA Case #2010022306401).

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

January, 2012:

Dennis Flanagan Jr. (CRD #4199469, Registered Principal, Miami, Florida) submitted an Offer of Settlement in which he was fined $25,000 and suspended from association with any FINRA member in any capacity for two years. The fine must be paid either immediately upon Flanagan’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 allegations, Flanagan consented to the described sanctions and to the entry of findings that he willfully failed to timely disclose material information on his Form U4. The findings stated that Flanagan failed to respond to FINRA requests for documents and information. 

Outside Business Activity and Selling Away FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Richard Henry Elizondo (CRD #2953315, Registered Representative, Harlingen, Texas) 

Selling Away and Outside Business Activity FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Matthew Morgan Dooley (CRD #2507851, Registered Representative, Mill Valley, California) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Dooley failed to respond to FINRA requests for information and documents. The findings stated that Dooley recommended that customers purchase exchange-traded funds (ETFs) that were speculative instruments designed for intra-day trading, when he knew the customers’ investment objectives were growth and income, not speculation and day trading. The fact that Dooley caused the customers to hold the ETFs in their accounts for longer than a day suggests that he did not understand the purpose of the ETFs and the associated risks, so that Dooley’s recommendation to purchase them could not have been based upon reasonable grounds. The findings also stated that these customers lost a total of approximately $45,307. Dooley was paid a commission on most of the transactions at issue in the customers’ accounts. The findings also included that one of the customers contacted Dooley to complain about the losses associated with the ETF trading. The customer subsequently told Dooley to invest in bonds. Instead of following this instruction, Dooley continued to purchase and sell the ETFs. FINRA found that the customer contacted the president of Dooley’s member firm to complain about Dooley’s failure to follow her instructions. The firm’s president contacted Dooley to investigate the complaint; Dooley then contacted the customer and gave her a handwritten note stating that he would pay her $1,000 per month for 18 months, which approximated the $18,764 loss the customer suffered in her account. FINRA also found that Dooley paid the customer $2,500 but did not notify anyone at the firm about these payments and did not obtain the customer’s written authorization to make these payments, and Dooley had not previously transferred any funds into the customer’s account. (FINRA Case #2009020930301).

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

January, 2012:

Thomas Thanh Doan (CRD #4511950, Registered Representative, Honolulu, Hawaii) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Doan converted and misappropriated funds. The findings stated that Doan submitted fraudulent invoices to his member firm’s parent company for reimbursement of expenses he had never actually incurred. Doan requested reimbursement of expenses to rent a conference room in a condominium complex. Each of the reimbursement requests were supported by an invoice and appeared to be issued by the condominium complex, but the name of the condominium complex was misspelled on each invoice. The findings also stated that Doan stamped the invoices “paid” and wrote the date of the invoice over the “paid” notation. As a result of his submission of the invoices to the affiliate, Doan received reimbursement from the affiliate for invoices totaling $2,250. Doan did not receive reimbursement for expenses sought in regard to another invoice because the parent company refused to make the requested payment to Doan after discovering that the invoice was not issued by the condominium complex. (FINRA Case #2009019637001).

Stock Broker Outside Business and Selling Away FINRA Arbitration and Litigation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Bradley John Delp (CRD #1701698, Registered Representative, Deerfield Beach, Florida) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $25,000 and suspended from association with any FINRA member in any capacity for two months. The fine must be paid either immediately upon Delp’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, Delp consented to the described sanctions and to the entry of findings that he failed to provide prompt written notice to his member firm that he was employed by, or accepted compensation from, another person as a result of outside business activities. The findings stated that Delp was a shareholder and employee of an independent insurance agency who brokered fixed-term or whole life settlements for his insurance customers, and his insurance agency received a commission for most of the life settlement transactions it brokered. The findings also stated that many years after Delp joined the firm and disclosed his outside business activity, the firm revised its WSPs to prohibit its registered representatives from participating in life settlements unless processed through the firm and limited to products the firm offered through approved firm sponsors. Delp’s outside business insurance company facilitated insurance company customers’ sales of fixed-term or whole life insurance policies to third-party companies. The life settlements were not brokered through the firm and most were not brokered with approved firm sponsors as required by the firm’s revised procedures. The findings also included that Delp formed a company in which he owned a half-interest. The company’s business was to negotiate, on behalf of Delp and other participating individual insurance brokers, commission rates from life insurance companies for insurance policies that they brokered. FINRA found that Delp’s administrative assistant completed online Firm Element continuing education (CE) training courses for him. FINRA also found that Delp used, or directed his staff to use, copies of signature transparencies for customers to generate third-party checks, wire transfers and to journal money from related customer accounts although the customers had orally authorized the transactions.

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

January, 2012:

Rod R. Cushing (CRD #2479782, Registered Representative, Salt Lake City, Utah) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $15,000 and suspended from association with any FINRA member in any capacity for 45 days. Without admitting or denying the findings, Cushing consented to the described sanctions and to the entry of findings that he instructed administrative personnel at his member firm to prepare forms for clients’ approval that effected changes of address for the customers’ accounts from the customers’ own residential mailing addresses to Cushing’s address. The findings stated that these customers did not live at this address. The findings also stated that Cushing caused administrative personnel to prepare forms for client approval that effected a change of address for an additional customer from the customer’s own residential mailing address to the address of Cushing’s neighbor, who also did not live at this address. The findings also included that Cushing then caused the forms to be signed by the customers and submitted to the firm, which made the firm’s books and records inaccurate.

Theft and Misapprociation FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.

January, 2012:

Richard Paul Counts (CRD #3241105, Registered Representative, Belleair, Florida) 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, Counts consented to the described sanction and to the entry of findings that he misappropriated approximately $18,000 from a customer’s checking account and approximately $73,500 from the same customer’s home equity line of credit; Counts converted these funds to his personal use. The findings stated that Counts failed to respond to FINRA requests for information. (FINRA Case #2010024445201).

Stock Broker Fraud, Misrepresentation and Negligent Supervision Lawyer, Russell L. Forkey, Esq.

January, 2012:

Michael William Bozora (CRD #28009, Registered Principal, Belvedere, 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 Bozora’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, Bozora consented to the described sanctions and to the entry of findings that as 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 Bozora did not have a reasonable basis for believing the recommendation of the entity’s partners to be suitable for any of the firm’s customers. Bozora failed to obtain sufficient information from individuals solicited to invest in the entity’s 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 Bozora’s firm, acting through him, failed to maintain subscription agreements for investors in the entity’s private placement who invested through the firm. The findings also included that Bozora participated in the offer and sale of limited partnership units of an entity he co-founded. Among other things, Bozora 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, in connection with this activity, 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 the foreclosure by a company, the company’s default on its obligations to the entity and the subsequent foreclosure by the entity on the properties that secured those obligations.  Bozora knew, or should have known, that his entity was using new investor proceeds in part to pay the monthly interest obligations to the entity’s current investors and preferred note holders and not for new investments as represented in the entity’s offering documents.  Bozora failed to disclose this material information to those who invested in the entity.