FINRA Broker Disciplinary Action Report November 2018
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.
Brokers & Brokerages Barred, Suspended, or Fined by FINRA
Brokerbank Securities, Inc. (CRD #130116, Minnetonka, Minnesota)
The firm was censured, fined $5,000, and required to submit a certification to FINRA that the firm has enhanced its supervisory system, including its WSPs, to ensure it obtains customer account information, in accordance with Securities and Exchange Commission (SEC) Rule 17a-3(a)(17). A lower fine was imposed after considering, among other things, the firm’s revenue and financial resources. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to conduct and document reasonable due diligence of a private placement sold by a registered representative of the firm, and did not have a supervisory system reasonably designed to ensure the firm complied with its due diligence obligations.
Lincoln Investment Planning, LLC (CRD #519, Fort Washington, Pennsylvania)
Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to implement reasonably designed surveillance procedures to monitor its registered representatives’ rates of effecting variable annuity exchanges. The findings stated that the firm only tracked exchanges where it was the broker of record for the variable annuity that was being exchanged. In so doing, the firm did not track variable annuity exchanges where the firm was not the broker of record for the variable annuity that was being exchanged. More than half of the variable annuity exchanges effected by the firm’s representatives were excluded from its surveillance report. After FINRA raised this issue with the firm, it corrected its surveillance report to include all variable annuity exchanges.
Mark Charles Cohen (CRD #4534879, New York, New York)
Without admitting or denying the allegations, Cohen consented to the sanction and to the entry of findings that he converted at least $14,606.94, from his member firm by preparing several false expense reports and submitting them to it seeking reimbursement pursuant to its marketing reimbursement program. The findings stated that the expense reports were false because the corresponding preapproved client-marketing events did not occur and, therefore, Cohen did not incur any costs for the events. Nonetheless, Cohen created false transaction records to evidence the preapproved expenses, submitted at least five of these false records to the firm, and requested reimbursement of approximately 50 percent of these phantom expenses. The findings also stated that Cohen caused the firm to maintain inaccurate books and records by preparing and submitting false transaction records in support of the false expense reports he caused to be submitted to it.
Stephen Thomas Hurtuk (CRD #848484, Boardman, Ohio)
Without admitting or denying the findings, Hurtuk consented to the sanction and to the entry of findings that he refused to appear for FINRA on-the-record testimony in connection with its investigation into potentially unsuitable recommendations by Hurtuk to customers.
Benjamin S. Johnson (CRD #5742748, Canal Winchester, Ohio)
Without admitting or denying the findings, Johnson consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information in connection with its investigation concerning his failure to timely disclose to FINRA several reportable financial events, including seven liens and judgments.
Howard Raymond Utz (CRD #2672208, Mars, Pennsylvania)
Without admitting or denying the findings, Utz consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information in connection with its review of allegations reported by his member firm on his Uniform Termination Notice for Securities Industry Registration (Form U5) that he accepted checks from clients made personally payable to him, with subsequent conversion to personal use
Jacob Daniel Bourne (CRD #2778063, Scarsdale, New York)
Without admitting or denying the findings, Bourne consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information in connection with its investigation concerning his involvement in a potential mismarking incident on his member firm’s U.S. inflation desk.
Leslie George Markus Jr. (CRD #2688964, Bethlehem, Pennsylvania)
Markus was fined $10,000 and suspended from association with any FINRA member in all capacities for two years. The sanctions were based on findings that Markus executed unauthorized mutual fund purchases in a customer’s account. The findings stated that Markus misrepresented facts to his member firm on two occasions. Markus misrepresented in his firm’s client notes software system that he had spoken to the customer and that the customer had authorized his mutual fund purchases. In addition, when reversing the mutual fund purchases in the customer’s account, Markus misrepresented on trade correction forms that he understood he had a mandate to enter the trades. By these actions, Markus was intentionally concealing his misconduct from the firm.
John W. Ferramosca (CRD #5363444, Hoboken, New Jersey)
Without admitting or denying the findings, Ferramosca consented to the sanctions and to the entry of findings that he caused his member firm’s books and records to contain inaccurate information by changing in the firm’s computer system customers’ telephone numbers to his own telephone number.
Timothy Jay Scherwa (CRD #2743773, Rockaway Township, New Jersey)
Without admitting to or denying the findings, Scherwa consented to the sanctions and to the entry of findings that he exercised discretionary trading authority by executing trades in non-discretionary customer accounts without written authorization from the customers and without prior written acceptance of the accounts as discretionary from his member firm. The findings stated that Scherwa falsely stated on firm annual compliance certifications that he did not have accounts for which he exercised discretion over trading activities
For the full Disciplinary Action Report from FINRA, visit their website by clicking here.