A Financial Industry Regulatory Authority (FINRA) panel is ordering Legend Securities, CEO Anthony Fusco, and three of the firm’s former brokers to pay one investor $966,708 in damages. Legend Securities was expelled by the self-regulatory authority two years ago and is no longer in operation.
The claimant, Frederick Blake, alleged the following:
Secretary of the Commonwealth of Massachusetts William Galvin has imposed a $1.1M fine on target=”_blank” rel=”noopener noreferrer”>LPL Financial (LPLA) after finding that the brokerage firm did not properly register 651 of its advisors in the state. Galvin’s office contends that for six years, LPL let these brokers work in Massachusetts despite the lack of registration and that this violates the state’s securities laws.
In Massachusetts, a brokerage firm is required to register its agents before they are allowed to engage in securities-related business in the state. As of May 9, LPL had 4,219 agents who were registered in the state.
However, the lack of registration by 651 of its agents between March 2013 and April 4, 2019 prevented Massachusetts securities regulators from being able to check their qualifications and histories to ensure that investors who worked with them were in safe hands. 441 of these unregistered agents acted as financial advisors to at least one or more state residents during the period at issue. The other 210 agents supervised the agents who were advisors to these customers.
Investment News is reporting that broker-dealers and their brokers that sold GPB Capital Holdings private placements to investors have collectively been paid $167 million in commissions. That large number represents 9.3% of the $1.8 billion that supposedly accredited, wealthy investors paid for these risky private placements. Recent reports had estimated that the commissions paid were lower, at around $100 million (about 7% per transaction), but GPB Capital has apparently confirmed the much larger number.
While brokers and broker-dealers are allowed to make up to a 10% commissions for selling financial products to clients, very few investments pay such a high rate. However, private placements, such as GPB Capital, entice brokers and their firms to sell such risky investments by offering much higher commissions and fees.
For private placements, it is not uncommon for financial representatives to earn around 7% in commissions, with another 2% going to the brokerage firm. In comparison, mutual funds and other similar investments typically pay less than half as much in commissions.
A Financial Industry Regulatory Authority (FINRA) arbitration panel has awarded 23 investors $3M in their claim against Spire Securities, its CEO David Lloyd Blisk, and CCO Suzanne Marie McKeown. The broker-dealer and its executives were accused of inadequately supervising former broker Patrick Evans Churchville, whom the investors contend fraudulently sold them investments that caused them to lose money in a $21M Ponzi scam.
Churchville sold the investments through ClearPath Wealth Management, a registered investment adviser that he operated outside of Spire Securities. Still, the claimants contended that the broker-dealer should have prevented Churchville from causing them financial harm while he was a Spire Securities broker and could have done so had they properly overseen him.
Churchville pleaded guilty in 2016 to criminal charges accusing him of operating a $21M Ponzi scam. In 2017, he was sentenced to seven years in prison for tax evasion and wire fraud.
After failing to cooperate in a probe into allegations of securities violations, George Merhoff, a former ex-Cetera Financial Group adviser, has been barred by the Financial Industry Regulatory Authority (FINRA). He was fired by the brokerage firm in April for allegedly issuing an undisclosed payment to a firm customer.
With over 21 years working in the brokerage industry, Merhoff was a registered Cetera broker for seven years. Before that, he was registered with Pacific West Securities, where he worked for 13 years, and at AAG Securities for less than a year.
Merhoff’s BrokerCheck record shows 27 customer disputes filed since December 2015 that have either been settled or are pending. Allegations include the following:
Former Cetera Broker Allegedly Engaged in Outside Business Activities
The Financial Industry Regulatory Authority (FINRA) announced that it is barring Nina Jessee, a former Cetera Advisors broker. The bar comes after Jessee failed to cooperate with the self-regulatory organization (SRO), which was investigating complaints about her related to alternative investments, including allegations that she had engaged in business activities that were not authorized outside of the brokerage firm.
With more than 30 years in the industry, Jessee has also been a registered broker at five other broker-dealers, including Investors Capital Corp., Financial Securities Network, NAP Financial Corporation, Marketing One Securities, and Mutual of Omaha Fund Management Company.
Jovannie Aquino, a former Windsor Street Capital broker, is now barred by the US Securities and Exchange Commission. Aquino was charged by the regulator last year with allegedly churning in clients’ accounts. The Commission is accusing Aquino of engaging in acts of fraud and omissions that caused customers to lose about $881K, even as he made $935K in commissions.
The SEC, in its complaint, accused the ex-Windsor Street Capital broker of excessive trading in retail customers’ accounts. The regulator said that Aquino allegedly convinced at least seven customers to maintain trading accounts at Windsor and told them he would engage in a trading strategy that would cause them to make money. He suggested frequent, short-term trades and charging fees and commission for each transaction.
The Commission said that because of how often the trading took place, along with the fees and commissions that the clients were charged, from the start they stood to lose money rather than make a profit. This means that Aquino didn’t have reasonable grounds for thinking that his trading strategy would be suitable for the customers despite the fact that suitability for recommending an investment is a requirement. Not only that, but also, for six of the investors who were harmed, the trading levels employed were entirely unsuitable for them in light of their investment goals, financial needs, the level of risk that they could handle, and other specifics.
A federal jury has found Leon Vaccarelli guilty of 21 counts of fraud and money laundering. Vaccarelli, a former registered The Investment Center broker, an ex-IC Advisory Services-associated investment adviser, and the owner of LWLVACC who conducted business through Lux Financial Services, is accused of defrauding investors, including elderly clients, of $1.5M.
Vaccarelli gave investment advice and sold securities and investments to families in Connecticut. According to Justice.gov, from about 2011 and 2017, the ex-former investment adviser and broker defrauded about 15 victims. He falsely represented that their money would be invested in IRA rollover accounts, certificates of deposit, money market accounts, and other investments that would earn interest.
Instead, Vaccarelli put investors’ money into his own business and personal accounts, commingling their funds with his, and used the money to help cover his own mortgage and other personal expenses, as well as certain business costs. Some customers’ monies were used to pay “interest” to other investors whom he was also defrauding.
Jason Nelson, an ex-LPL Financial broker (LPLA), is now barred by the Financial Industry Regulatory Authority (FINRA). The bar comes after Nelson refused to participate in the self-regulatory organization’s (SRO) probe into his sales activities.
LPL fired Nelson early last year after finding that he misrepresented customer financial information related to annuity sales. Without denying or admitting to FINRA’s findings, Nelson consented to the entry of findings and the bar. He worked nearly 14 years as a formerly registered broker. Previous to working with LPL Financial, Nelson was an Edward Jones broker.
It was just last month that FINRA permanently barred ex-LPL Financial broker Philip John Nalesnik, whom the broker-dealer also fired last year.
James Anderson, an ex-Ameritas Investment Corp. adviser, is now barred by the Financial Industry Regulatory Authority (FINRA) after he failed to participate in a probe into allegations that he had taken part in selling away. Ameritas fired Anderson earlier this year after the brokerage firm’s own investigation found that he had engaged in selling promissory notes and indexed annuities that it had not approved.
Anderson was at Ameritas for 14 years. In April, a claimant filed a FINRA arbitration case accusing of making unsuitable recommendations by pushing promissory notes. The allegations are related to the selling away charges against him. The claimant is asking for $400K in damages.
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