Every month and again on a quarterly basis, the agency that regulates the financial industry, FINRA, produces a report that runs down all disciplinary actions taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names. For our part, we like to pick out some of the highlights from each report. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases brought through the FINRA arbitration process. In other words, we name names here because we hope to raise awareness out there about certain brokers and products that might otherwise go unnoticed except for the case appearing in the report. So, without further ado, here goes:
Virginia-based broker Ramnik Singh Aulakh of Success Trade Securities, Inc. was censured and barred by FINRA for failure to respond to requests for information regarding his allegedly participating in a huge $18 million fraud involving the offering of promissory notes.
Georgia-based broker James Arnold Busch of Wells Fargo Financial Advisors, LLC was barred from FINRA for allegedly using elderly customers’ bank accounts to misappropriate around $1.3 million. According to FINRA, in some cases Mr. Busch also allegedly liquidated securities from his clients brokerage accounts in order to use the funds himself.
Mary Alice Faher, of WR Rice Financial Services, was fined and suspended from FINRA for allegedly recommending and effecting purchases of unsuitable investments for customers who were retired or of limited financial means, including membership interests, diversified land contracts, and limited partnerships. These investments allegedly exposed her clients to high levels of risk and illiquidity.
Broker Francis Melvin Johnson of Newport Coast Securities was barred from FINRA for allegedly borrowing more than $1 million from the family trust of one of his clients.
Martin John Maloney, a broker at Metflife Securities, was barred from FINRA for allegedly diverting a customer’s funds into his own pocket when he represented that the money was going into an indoor golf and driving range.
Christopher Ryan Reber Orlando (that’s a mouthful) of PlanMember Securities Corporation was fined and suspended from FINRA for two years for allegedly handling private securities transactions to the tune of $7 million that were executed outside his firm. Big no-no.
Dallas-based broker Bryan Mark Rigg of WFG Investments, Inc. was censured and suspended by FINRA for allegedly participating in private securities transactions without approval from his brokerage, including $500,000 worth of the company’s preferred stock.
Broker Lawrence Spaulding Rule of Wells Fargo Advisors (Wachovia) was suspended from FINRA for allegedly getting up to some excessive unsuitable trading of customer, including trades totaling over $2.3 million.
Los-Angeles-based broker Scott Donovan Schroeder of Milkie Ferguson Investments, Inc. was barred from FINRA for allegedly making unsuitable investment recommendations to elderly customers, including high-risk life settlement contracts and private placements.
Daniel Edmund Walsh of Securities America, Inc. was suspended from FINRA for allegedly selling almost $5 million worth of equity indexed annuities (EIAs) to customers outside the scope of his employment and without notifying his brokerage.