Articles Tagged with financial industry regulatory authority

AdvisorHub reported on January 23, 2017 that the SEC permanently barred Ane Plate from the securities industry for stealing from her elderly clients.  Ms. Plate was most recently registered as a broker from May 2005 to June 2014 with Wells Fargo Advisors Financial Network, LLC out of the broker-dealer’s Orlando, Florida office.

The Securities and Exchange Commission (SEC) Order detailed that from October 2013 to April 2014, she made 15 unauthorized sales of securities from her elderly clients’ accounts totaling over $176,000.  In a regulatory action brought by the Financial Industry Regulatory Authority (FINRA), Ms. Plate submitted a Letter of Acceptance, Waiver and Consent No. 2014041705101 (AWC) where she accepted and consented to findings by FINRA that she facilitated the $176,000 to be transferred to her client’s bank account where she then arranged for 15 checks to be issued from the customer’s account, payable to her.  The AWC detailed that in total, Ms. Plate converted $140,058 from her brokerage customer, and that this conduct violated FINRA Rules 2150 (Improper Use of Customers’ Securities or Funds) and 2010 (Standards of Commercial Honor and Principles of Trade).  Ms. Plate was terminated from her employment with Wells Fargo for this same conduct, according to her publicly available BrokerCheck report as maintained by FINRA.

The SEC Order stated that on May 20, 2015, Ms. Plate pled guilty to one count of Theft, Embezzlement, or Misapplication by a Bank Officer or Employee, in violation of Title 18, United States Code, Section 656, in the United States District Court for the Middle District of Florida.  Ms. Plate’s criminal case is titled United States v. Ane Plate, Case No. 6:15-cr-00084-GKS-GJK (M.D. Fla).

It was reported by AdvisorHub on January 24, 2017 that the firm terminated three high producing brokers who were being investigated internally.  The three brokers were members of the PC Wealth Management Group.

The first broker, Michael Paesano, was reported to

have been terminated over “concerns” of his “exercise of discretion and investment strategy,” according to the AdvisorHub article.  According to Mr. Paesano’s publicly available BrokerCheck report, as maintained by the Financial Industry Regulatory Authority (FINRA), he has been the subject of 15 customer complaints, spanning his employment and registration at two broker-dealers, including Morgan Stanley from May 2011 to January 2017 and UBS Financial Services, Inc. from August 2005 to May 2011.  According to Mr. Paesano’s BrokerCheck report and the AdvisorHub article, the most recent customer complaint, alleging unsuitable investments and $1,000,000 in damages, resulted in a settlement of $245,000 to the customer.

Generally speaking, it’s usually not a good thing when when a company is fined for similar conduct multiple times.

Just this month, UBS Financial Services, Inc. submitted a Letter of Acceptance, Waiver and Consent No. 2013038351701 (AWC) that detailed a $250,000 fine for failures in supervision regarding sales of mutual fund shares to investors.  According to the AWC, for a four year period, from approximately 2009 to 2013, UBS failed to provide sales charge waivers to customers entitled to waivers through rights of reimbursement.  The AWC detailed that this conduct created a violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade).

Mutual fund class A shares generally require the investor to pay an upfront sales charge, except where the mutual fund waives the charge, such as when the mutual fund is purchased with a right of reimbursement.  The AWC detailed that investors sometimes purchase class A shares with right of reimbursement when they reinvest proceeds from earlier redemptions of Class A shares in the same fund or fund family within a specific time period.

The securities attorneys at Malecki Law are interested in hearing from customers who have complaints against Joseph L. Bess, II.  Mr. Bess was recently registered to sell securities with Waddell & Reed, in Edmond, Oklahoma, From April 2014 to July 2016, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).  Mr. Bess was registered by J.P. Morgan Securities, LLC from October 2012 to April 2014, according to BrokerCheck records.

Mr. Bess has fined and suspended from association with any FINRA member broker-dealer for two months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014041059901 (AWC).  According to the AWC, Mr. Bess violated FINRA Rules 4511 (General Requirements) and 2010 (Standards of Commercial Honor and Principles of Trade) because from “January 2013 through January 2014, Mr. Bess marked a total of 139 order tickets for the purchase of exchange traded funds in the accounts of 21 customers as ‘unsolicited’ when, in fact, Bess had solicited each order by bringing the relevant ETF transaction to the attention of each customer.”

The AWC makes clear that pursuant to FINRA Rule 4511, broker-dealers must make and preserve books and records, and inherent in the Rule is the obligation that the records be accurate.  The AWC confirmed that “by mismarking the order tickets, Bess caused his member firm to keep inaccurate books and records.”

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Robert E. Heath.  Mr. Heath was previously employed and registered with Presidential Brokerage, Inc. at the broker-dealer’s Colorado Springs, Colorado office, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Heath was previously employed and registered by AXA Advisors, LLC from December 2008 to December 2012, and employed by VALIC Investment Services Company from September 1990 to December 2008.

In 2016, Mr. Heath was fined and suspended from association with any FINRA member broker-dealer for three months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2015046946301 (AWC).  According to the AWC, Mr. Heath violated FINRA Rules 3240 (Borrowing From or Lending to Customers) and 2010 (Standards of Commercial Honor and Principles of Trade) because in July 2012, “while associated with AXA Advisors, Heath borrowed $7,500 from his customer … made one monthly interest payment to [the customer] in August 2012,” even though AXA Advisors prohibited their registered representatives to borrow money from their customers under any circumstances.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Michael Margiotta.  Mr. Margiotta has been employed and registered since June 2015 with Merrill Lynch, Pierce, Fenner & Smith, Inc., a broker-dealer, according to his publicly available BrokerCheck, as maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, prior to his employment Merrill Lynch, Mr. Margiotta was employed by UBS Financial Services Inc. from October 2008 to June 2015, and with Citigroup Global Markets Inc. from December 2003 to November 2008, as well as other prior firms.

Mr. Margiotta’s BrokerCheck report indicates that he has received two customer complaints.  The first complaint received by Mr. Margiotta involved allegations that he purchased securities that were unsuitable for the investor and sought damages of $1 million, according to the BrokerCheck report.  That complaint resulted in a settlement to the investor of $355,000 to the investor the BrokerCheck report details.  The second complaint received by Mr. Margiotta alleged unsuitability and that the broker informed the client “oil had bottomed out for sure prompting [the investor] to purchase securities which plummeted,” according to BrokerCheck records.

According to a recent InvestmentNews article, Preferred Apartment Communities Inc. began selling an investment known as a Nontraded Preferred Share after 2011.  The article detailed that the investment is redeemable back to Preferred Apartment Communities Inc. after five years, and if the investor needs to redeem it before five years, they must pay a redemption fee that decreases over time.  If the investor seeks to redeem during the first year, the redemption fee is 13%, according to the article.

Nontraded REITs (Real Estate Investment Trusts) have long been an area of concern for securities regulators like the Financial Industry Regulatory Authority (FINRA) because they are generally illiquid investments that pay high upfront commissions to the brokers who sell them.

Nontraded REITs pose suitability concerns for investors.  Brokers who recommend them must make sure the investors are not over-concentrated in the investment, and that they have disclosed all of the risks associated with them, including the investment’s illiquid nature and the high fees earned, leading to questions of whether the investment is in the best interest of the investor.