FINRA BROKER DISCIPLINARY ACTION REPORT: JULY 2015


FINRA JULY 2015 BROKER DISCIPLINARY REPORT

Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter on money matters. 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, schemes, products, or securities.

For our part, in addition to circulating the entire FINRA broker-dealer disciplinary report to help get the word out about these alleged misdeeds, 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. In this particular report, we noticed repeated alleged offenses of financial abuse against elderly clients and the misuse and lack of supervision of nontraditional or leveraged ETF investment products.

TNP Securities, LLC (CRD® #149178, Costa Mesa, California) and Anthony Warren Thompson (CRD #445556, Irvine, California). The firm was expelled from FINRA membership and Thompson was barred from association with any FINRA member in any capacity.

Brookstone Securities, Inc. (CRD #13366, Lakeland, Florida), Christopher Dean Kline (CRD #2597293, Baraboo, Wisconsin), David William Locy (CRD #4682865, Overland Park, Kansas) and Antony Lee Turbeville (CRD #1721014, Lakeland, Florida). The firm was censured, fined $1,000,000 and required to pay, jointly and severally with Kline and Turbeville, $1,620,100, plus prejudgment interest, in restitution to their respective customers. Kline and Turbeville were barred from association with any FINRA member in any capacity. The sanctions were based on findings that in connection with the purchase or sale of collateralized mortgage obligations (CMOs), the firm, acting through Turbeville and Kline, fraudulently made material misrepresentations of fact and omitted material facts that misled senior and retired customers concerning the risks associated with CMOs, in willful violation of Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

Broker Dealer Financial Services Corp. (CRD #8073, West Des Moines, Iowa) submitted an AWC in which the firm was censured and fined $75,000. Before executing this AWC, the firm made restitution totaling $24,564.18 to customers. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that acting through some of its registered representatives, it recommended leveraged or inverse exchange-traded funds (nontraditional ETFs) to customers without a reasonable basis for believing that the transactions were suitable. The findings stated that the firm did not investigate nontraditional ETFs before allowing its registered representatives to recommend them to customers, did not train its personnel in the appropriate use of nontraditional ETFs, and did not adequately supervise and monitor nontraditional ETF activity in customer accounts.

Cadaret, Grant & Co., Inc. (CRD #10641, Syracuse, New York) submitted an AWC in which the firm was censured; fined $75,000; ordered to pay $236,242, plus interest, in restitution to a customer; and required to conduct a comprehensive review of the adequacy of its policies, systems, and procedures (written or otherwise) with respect to the supervision of non-exchange variable annuity (VA) surrenders and the creation and maintenance of books and records regarding non-exchange VA surrenders.

John Michael Bannon (CRD #1062813, Waxhaw, North Carolina) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Bannon consented to the sanction and to the entry of findings that he failed to appear for a FINRA-requested on-the-record interview involving an investigation into allegations in a civil complaint that he converted at least $74,000 in customer funds.

Bryan Andrew Carnahan (CRD #3103811, Gahanna, Ohio) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Carnahan consented to the sanction and to the entry of findings that he converted approximately $169,500 from his member firm’s customer by causing fund transfers to be made from the customer’s brokerage account to her bank account.

Anthony Diaz (CRD #4131948, East Stroudsburg, Pennsylvania) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Diaz consented to the sanction and to the entry of findings that he induced several customers to enter into variable annuity (VA) exchanges, often subject to significant surrender charges, without a reasonable basis for recommending those exchanges. Diaz failed to conduct any quantitative analysis of the financial benefit or detriment of the exchanges to his customers, failed to make an individualized assessment of the advantages and disadvantages of the recommended exchanges, and failed to understand the features of the VA product.

Thomas Morley Hogle (CRD #3047483, Houston, Texas) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Hogle consented to the sanction and to the entry of findings that he failed to provide FINRA-requested documents and information involving an investigation into allegations that he made unsuitable investment recommendations in a 101-year-old customer’s securities account.

Robert Anthony Klotz (CRD #4573586, Bristol, Pennsylvania) submitted an AWC in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for three months.

Ryan Lincoln Rayford (CRD #6103871, Missouri City, Texas) was barred from association with any FINRA member in any capacity. The sanction was based on findings that Rayford failed to respond to FINRA requests for information and documents involving an investigation into allegations that he had been discharged by his member firm because he had engaged in a check-kiting scheme.

Alejandro Ariel Torres (CRD #5631211, Hollywood, Florida) submitted an AWC in which he was barred from association with any FINRA member in any capacity and ordered to pay $59,600, plus interest, in a deferred restitution to a customer. Without admitting or denying the findings, Torres consented to the sanctions and to the entry of findings that he converted at least $59,600 from his member firm’s customer, a 64-year-old widow, who he had approached for the purported purpose of partnering with in a start-up venture. The findings stated the customer provided Torres with a check in the amount of $75,000, as a capital investment in the start-up venture, after agreeing to enter into the partnership with each individual owning 50 percent of the venture. However, Torres used at least $59,600 of the funds to pay for personal expenses rather than for any business purposes related to the venture.

FINRA Securities Litigation Lawyers

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If you or someone you know has been the victim of broker misconduct or investment fraud, please contact our experienced securities litigation attorneys immediately by calling 1-855-462-3330 or by using our online contact form.