FINRA Broker Disciplinary Action Report January 2019
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, and/or Fined by FINRA
James Randall Clay (CRD #5748560, Clarksville, Tennessee)
Clay was barred from association with any FINRA member in all capacities. The sanction was based on findings that Clay engaged in outside business activities without providing prior written notice to his member firm. The findings stated that Clay used his relationship with an elderly customer to buy real estate from the customer under terms that benefited only himself. Clay drafted and signed a hand-written agreement to purchase the customer’s rental property for $1 million, with the customer financing the entire amount. Under the agreement, Clay also borrowed $500,000 from the customer to fund Clay’s down payment on the property and improvements to it. Clay established a limited liability company to manage the rental property and began collecting rent. Clay never provided written notice of this outside business to his firm. The findings also stated that after the customer’s family complained to the firm, Clay falsely told the firm his sister purchased the rental property, and he was not personally involved in the purchase or subsequent management of the property.
Marc Anthony Last (CRD #6366775, Conshohocken, Pennsylvania)
Last was barred from association with any FINRA member in all capacities. Without admitting or denying the allegations, Last consented to the sanction and to the entry of findings that he converted $5,000 from one of his customer’s variable annuity accounts. The findings stated that Last forged the customer’s signature on a partial withdrawal form and directed the transfer of the funds to his personal bank account without the customer’s knowledge or authorization.
Gopi Krishna Vungarala (CRD #4856193, Decatur, Texas)
The NAC barred Vungarala from association with any FINRA member in any capacity and ordered him to disgorge $9,682,629, plus interest. The NAC affirmed the findings and sanctions imposed by OHO. The sanctions were based on findings that Vungarala willfully violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder and FINRA Rules 2020 and 2010 by making materially false and misleading statements to conceal his commissions on investments made by a Native American tribe he was employed by to manage its investment portfolio. The findings stated that Vungarala persuaded the tribe to invest in real estate investment trusts (REITs) and business development companies through a broker-dealer firm where he told the tribe he parked his registration. As a result, Vungarala received over $9 million in commissions. Through false and misleading statements, Vungarala repeatedly led the tribe to believe that he did not receive commissions on its transactions and that he had no conflict of interest. The findings also stated that Vungarala willfully misled the tribe regarding its eligibility for volume discounts, failing to disclose to the tribe that it was eligible to receive more than $3.3 million in volume discounts. Vungarala personally benefited from his misstatements and omissions concerning volume discounts because the discounts would have reduced his commissions.
Matthew David Rubin (CRD #4869755, Wayne, New Jersey)
Rubin was barred from association with any FINRA member in all capacities. The NAC affirmed the findings and the sanctions imposed by the OHO. The sanction was based on findings that Rubin acted unethically by initiating 12 unfunded Automated Clearinghouse (ACH) requests for electronic fund transfers from his personal bank account to his brokerage account with his member firm, totaling approximately $18 million, to create the false impression that his brokerage account and his securities trading activities were funded by significantly greater amounts than they actually were.
Melissa Lynn Alverio (CRD #5844392, Downingtown, Pennsylvania)
Alverio was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Alverio consented to the sanction and to the entry of findings that she improperly used the funds of customers and her member firm to conceal her improper transfer of $500,000 from the firm’s clearance account into a customer’s account. The findings stated that a customer initiated a non-automated customer account transfer of $500,000 from the customer’s outside account to the customer’s account with the firm.
Robert Lee Basile (CRD #2392772, Chino, California)
Basile was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Basile consented to the sanction and to the entry of findings that he converted over $130,000 from his elderly mother’s brokerage account at his member firm, without her knowledge or consent.
Fallan E. King (CRD #5481720, Smyrna, Delaware)
King was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, King consented to the sanction and to the entry of findings that she refused to appear for on-the-record testimony requested by FINRA during the course of an investigation into allegations that she submitted false expense reports to her member firm.
For the full FINRA Disciplinary Report, please click here.