FINRA Disciplinary Action Report - December 2017

Each month, 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. 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, 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.

 

FINRA Firms & Brokers, Fined & Sanctioned

Noble Capital Markets, Inc. fka Noble Financial Capital Markets (CRD® #15768, Boca Raton, Florida) and Nicolaas Petrus Pronk (CRD #1726101, Lighthouse Point, Florida)

Without admitting or denying the allegations, the firm and Pronk consented to the sanctions and to the entry of findings that they recommended and sold nearly a million shares of a company’s common stock to customers without disclosing the firm’s multiple and material conflicts of interest. The findings stated that the firm and Pronk aggressively promoted and recommended the company’s common stock to prospective investors to profit from the firm’s undisclosed investment banking relationships with the company and their undisclosed arbitrage of the company’s securities, which created a financial incentive for the firm and Pronk to recommend the common stock to customers.

Network 1 Financial Securities Inc. (CRD #13577, Red Bank, New Jersey)

The firm was censured, fined $20,000, and required to review and revise, as necessary, its systems, policies and procedures (written and otherwise) and training with respect to the sale of leveraged, inverse and inverse leveraged exchange-traded funds (non-traditional ETFs). Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish, maintain, and enforce a supervisory system and WSPs reasonably designed to supervise representatives’ sales of non-traditional ETFs. The findings stated that the firm did not have any procedures addressing non-traditional ETFs. The firm added a section to its WSPs that included a general description of ETFs that mentioned some of the risks inherent in non-traditional ETFs, including that the performance of these products “can differ significantly from the underlying index or benchmark during the same time period.” However, this new section did not provide any guidance to the firm’s supervisors regarding how they should supervise non-traditional ETFs in light of the unique features and risks inherent in these products.

Ronald Michael Dolinger (CRD #1056302, Bexley, Ohio)

Dolinger was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Dolinger consented to the sanction and to the entry of findings that he failed to appear and provide FINRA with on-the-record testimony in connection with an investigation concerning allegations that he engaged in undisclosed outside business activities, and that he failed to timely disclose reportable financial events on his Uniform Application for Securities Industry Registration or Transfer (Form U4).

Clement Lancelot Chichester (CRD #1255275, Marina Del Ray, California)

Chichester was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Chichester consented to the sanction and to the entry of findings that he failed to provide FINRA-requested documents and information after initially providing partial responses to a previous request in connection with FINRA’s investigation of his alleged receipt of funds from a customer.

Brittney Jade Sias (CRD #4274432, Marina Del Ray, California)

Sias was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Sias consented to the sanction and to the entry of findings that she failed to respond to FINRA requests for documents and information in connection with an investigation of her alleged receipt of funds from a customer at her member firm.

Dartanian VJ Sanders (CRD #3242448, Abita Springs, Louisiana)

Sanders was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Sanders consented to the sanction and to the entry of findings that during a FINRA on-the-record interview, he refused to answer questions about certain monetary transactions involving an entity that he formed and operated as an outside business activity. The findings stated that FINRA’s investigation concerned Sanders’ acceptance, through the entity, of four loans totaling more than $100,000 and about the expenditure of the proceeds of one of the loans. Sanders refused to answer any questions about how those funds were used.

Steven John Meyer (CRD #4798400, South Plainfield, New Jersey)

Meyer was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Meyer consented to the sanction and to the entry of findings that he engaged in churning and unsuitable excessive trading in customers’ accounts, two of whom were senior citizens. The findings stated that Meyer exercised control over these accounts, and the high costs

Sam Peter Paolini (CRD #6087086, New York, New York)

Paolini was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Paolini consented to the sanction and to the entry of findings that he converted a prospective customer’s funds that were given to him for the purposes of making an investment. The findings stated that because Paolini told the customer he was unsure to whom the customer should make the check payable, the customer left the payee line blank. Instead of applying the check to the investment Paolini had discussed with the customer, he wrote his own name on the payee line, endorsed and then cashed the check, and kept the funds for his own use.

Robert Baldwin Del Guercio (CRD #2639851, Cedar Grove, New Jersey)

Del Guercio was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Del Guercio consented to the sanction and to the entry of findings that he refused to appear for FINRA on-the-record testimony related to an arbitration claim filed by his customers alleging sales practice violations

John A. Crumb (CRD #4453234, Macedon, New York)

Crumb was assessed a deferred fine of $12,500 and suspended from association with any FINRA member in all capacities for four months. Without admitting or denying the findings, Crumb consented to the sanctions and to the entry of findings that he failed to properly disclose two outside business activities to his member firm. The findings stated that Crumb served as CEO of a corporation he had created for tax and accounting purposes in connection with his securities business without providing prior written notice to his firm

Walter Joseph Marino (CRD #2121623, Dix Hills, New York)

Marino was suspended from association with any FINRA member in all capacities for one year. In light of Marino’s financial status, no monetary sanction has been imposed. Without admitting or denying the allegations, Marino consented to the sanctions and to the entry of findings that he recommended unsuitable replacements (also known as exchanges) of non-qualified variable annuities to two customers without having a reasonable basis for recommending the transactions, resulting in benefits to him and substantial financial harm to the customers. The findings stated that Marino received commissions of approximately $60,000 from the unsuitable transactions. Marino’s customers, however, suffered financial harm due to the costs incurred and new or extended surrender periods as a result of the annuity replacements.

Marlon O. Cole (CRD #5054806, Queens Village, New York)

Cole was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 16 months. Without admitting or denying the findings, Cole consented to the sanctions and to the entry of findings that he engaged in excessive trading in senior citizens’ accounts.

Joseph Leigh Cotter (CRD #1263122, Charlotte, North Carolina)

Cotter was assessed a deferred fine of $15,000, suspended from association with any FINRA member in all capacities for nine months, and ordered to pay $100,549.42, plus interest, in deferred disgorgement of commissions received. Without admitting or denying the findings, Cotter consented to the sanctions and to the entry of findings that he engaged in excessive, unsuitable trading in a customer’s accounts.

For the full Disciplinary Action Report from FINRA, visit their website by clicking here.

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