FINRA Broker Disciplinary Action Report: November 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
Jack David Stone (CRD #437327, Chicago, Illinois)
Without admitting or denying the findings, Stone consented to the sanction and to the entry of findings that he refused to appear for on-therecord testimony requested by FINRA in connection with an investigation into his securities activities while at his member firm, including possible misrepresentations to customers, use of discretion and unauthorized transactions.
Clayton Holman Wertz (CRD #2931973, Dallas, Texas)
Without admitting or denying the findings, Wertz consented to the sanction and to the entry of findings that he created false account statements for a customer in connection with helping the customer secure a bank loan for $1.872 million. The findings stated that Wertz created a false account statement for the customer by changing the name, address and account number on another customer’s statement that showed the account holding more than $3 million in securities. Wertz gave the false account statement to the bank’s loan officer. Because the bank required copies of account statements each month, he created a false account statement for the customer every month. Wertz knew the account statements contained false values and that they would be submitted to the bank to obtain and maintain the loan. Based in part on the false account statement, the bank loaned the customer’s entity $1.872 million.
Thomas Stappas (CRD #855198, Bridgewater, New Jersey)
Without admitting or denying the findings, Stappas consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA in connection with its investigation into allegations that he engaged in outside business activities, and recommended private securities transactions to customers of his member firm. The findings stated that neither of these activities were disclosed to the firm.
Donald Edward Teboe (CRD #4407610, Clinton, Michigan)
Without admitting or denying the findings, Teboe consented to the sanction and to the entry of findings that he refused to appear for on-therecord testimony requested by FINRA in connection with an investigation into allegations that he engaged in unsuitable trading while registered through multiple member firms.
Joseph Hersey Pratt (CRD #719416, Radnor, Pennsylvania)
Without admitting or denying the findings, Pratt consented to the sanction and to the entry of findings that he misused the confidential information obtained from insiders at a public biopharmaceutical company by communicating it to several of his member firm’s customers. The findings stated that Pratt knew insiders at the company, including a director, a member of the company’s scientific advisory board and a doctor involved in the United States Food and Drug Administration (FDA) clinical trials. On numerous occasions, Pratt failed to disclose these relationships to his firm as required. The company sent the firm a letter stating that Pratt had been attempting to obtain confidential information from several company insiders. In response, the firm prohibited Pratt from speaking with the company’s employees. Despite this prohibition, Pratt continued to seek information from the company. In response to Pratt’s inquiries, the company’s insiders sent Pratt documents and emails containing confidential information concerning its ongoing FDA clinical trials, including patient data from the trial, newly discovered data that the company felt warranted a patent, and a confidential timeline of upcoming FDA filings. The findings also stated that although Pratt received approval to make a one-time personal investment in a speculative private, start-up company, he did not provide his firm with prior written notice or obtain prior approval for his subsequent personal investments totaling $119,000 in shares of the company that were made away from the firm. Additionally, Pratt failed to provide prior written notice or obtain prior approval for his solicitation of investors in private securities transactions in the company. In addition, Pratt solicited individuals, some of whom were his customers at the firm, to invest approximately $436,000 in shares of the company.
For the full FINRA Disciplinary Report, please click here.
