Naming Names: FINRA's August Disciplinary Action Report

Reading FINRA’s monthly Disciplinary Action Report is a little like reading a police blotter. There’s an almost endless list of brokers under scrutiny for trying to get away with dumb, reckless, or malevolent acts. They get investigated, fined, and/or expelled by FINRA. The report for August 2013 recently came out, and again we found the usual stunning array of villains and victims. For instance…

 Wikipedia Creative Commons

Wikipedia Creative Commons

One broker who allegedly impersonated his own client while on the phone with his own brokerage company in order to re-route his client’s statements to him. One would assume did this to hide massive losses from his client.

Another broker duped his own grandmother, who was suffering from dementia, into purchasing shares in a fictional company the broker owned.

Still another bad broker deceived his parents by diverting almost $1.5M in funds from their investment accounts into bank accounts he controlled.

And of course the report includes far too many brokers who convinced their customers to give them personal loans. Don’t ever loan your financial advisor money!

Normally, we soak up the FINRA report and keep an eye out for new trends and schemes in broker misconduct. But this month, for the first time, we thought we’d share. Since FINRA’s reports don’t have nearly as wide a readership as they deserve, we figured we’d run down some of the cases that caught our attention and that also might have affected more customers than those mentioned in FINRA’s summaries. In other words, if you’ve been the victim of investment fraud or broker misconduct, you might want to scan our abridged list of alleged offenders below--then take a look at FINRA’s complete list by clicking here, or try their wonderful tool called BrokerCheck by clicking right here. Enough with the build-up, it’s time to name names…

Charles Crotts, a broker based in Lexington, North Carolina and formerly of American Portfolios Financial Services (APFS) and Royal Alliance Associates, has been barred from FINRA for allegedly improperly borrowing money from clients, making unsuitable investment recommendations, and getting into some shady “undisclosed outside business activities” (hm). Read more here.

Darrell Frazier of Dublin, Ohio and formerly of Park Avenue Securities LLC, got himself barred from FINRA membership for allegedly guaranteeing customers not only protecting against loss of principal but a 7 or more percent return on their investments in a variable annuity he was promoting. Although Frazier neither admitted nor denied it, the claim also alleged that he lied to customers when they did not see their “guaranteed” return, and that he made all kinds of other glaringly unsuitable recommendations.

Read more here.

Based out of McGregor, Texas, Roger Fuller, formerly of Chase Investment Services, got himself barred from FINRA in a claim that stated he may have forged documents and had ownership interests in securities accounts at an executing member firm.

Read more here.

FINRA barred broker Jon Guay of San Jose, California and formerly of Cuna Brokerage Services, QA3 Financial Corp, and Wunderlich Securities for a claim that Guay neither admitted nor denied that found Guay taking his customers’ money for a futures trading account or to invest in a specific company only to deposit the funds, guess where, into a bank account he controlled. Guay also allegedly got involved in a dodgy mutual fund scheme.

Read more here.

From the Big Apple, New York, New York, Juan Carlos Parets formerly of Westrock Advisors, Joseph Gunnar & Co, and John Carris Investments, settled with FINRA and was suspended for allegedly misleading customers and omitting material in a promissory note offering. According to the claim, which Parets neither admitted nor denied, he also did not understand the product he was selling to his customers, nor was the product suitable for them.

Read more here.

In addition to actions taken, FINRA also provides a list of complaints that are unresolved and should therefore not be taken as an indication of culpability or guilt. But…

Richard Blair of Austin, Texas and formerly of Murchison Investment Bankers, IMS Securities, and Wealth Solutions Inc. was named in a claim alleging that Blair mislead his clients and did not put their interest before his own when steering them toward a real estate investment trust, the Cole REIT. Also, Blair allegedly provided retail customers with false or misleading forms in deals involving the purchase of those pesky variable annuities.

Read more here.

John Carris Investments LLC along with brokers Jason Barter, George Carris, and Andrey Tkatchenko can’t be happy about a complaint filed against them by FINRA that alleges they were involved in a highly complex and manipulative “intentional prearranged trading” scheme.

Read more here.

Jeremy Tintle of Atlanta, Georgia and formerly of Morgan Keegan & Company and Oppenheimer & Company will have to fight the claim filed against him by FINRA that alleges he inappropriately recommended private securities that were speculative and illiquid to a retail investor, losing her around $150,000.

Read more here.

If you’ve lost money and you think it may be due to broker misconduct but you don’t see your broker’s name above, please check FINRA’s complete report or enter your broker’s name into BrokerCheck.

And, as always, if you or someone you know think you’ve been the victim of broker misconduct or investment fraud, please contact us immediately for a free consultation.