FINRA Broker Disciplinary Action Report: February 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
Merrill Lynch, Pierce, Fenner & Smith Incorporated (CRD #7691, New York, New York)
Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to reasonably supervise an associated person who, together with a third-party individual, engaged in a scheme to defraud a customer of the firm. The findings stated that the associated person introduced the customer to the third party using a fictitious name, falsely representing that the third party was a wealthy and successful businessman who could help the customer with his various, existing business and other financial needs. In fact, the third party was a con man who, together with the associated person, gained the customer’s confidence and then access to his financial accounts, ultimately misappropriating millions of dollars after the associated person left the firm. The findings also stated that the firm failed to reasonably investigate and respond to “red flags” that the associated person was engaged in conduct that appeared to violate its policies and procedures. The firm failed to reasonably investigate and appropriately escalate certain email communications of the associated person, despite having been flagged and reviewed, that would have revealed her close association with the third party, and that she was providing services beyond what the firm permitted and her potential involvement with private securities transactions.
Cetera Advisor Networks LLC (CRD #13572, El Segundo, California)
An AWC was issued in which the firm was censured, fined $700,000 and ordered to pay $691,755.27, plus interest, in restitution to customers. The firm shall also certify to FINRA that it has established and implemented policies, procedures and internal controls reasonably designed to address and remediate the issues identified in the AWC. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to respond reasonably to red flags of unsuitable mutual fund switching and unsuitable stock trading intended to conceal the switching by one of its registered representatives.
Christopher Charles Hellman (CRD #6584084, Plantation, Florida)
Without admitting or denying the findings, Hellman consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information during its investigation initiated after receiving a Form U5 filed by his member firm that terminated his registration for conduct including failure to adhere to firm standards regarding selling away and failure to fully disclose participation in outside business activities.
George Mackley Robertson (CRD #1026646, Pelham, New York)
An AWC was issued in which Robertson was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Robertson consented to the sanction and to the entry of findings that he engaged in outside business activities and a private securities transaction without providing prior written notice to his member firm. The findings stated that Robertson solicited and obtained a $50,000 investment in his outside business, a fund, from a non-firm customer. In addition, Robertson met with and solicited other individual and institutional investors in an attempt to raise $100 million in seed money to launch the fund. Robertson concealed the extent of his fund-related activities from the firm and did not advise the firm that he had received a $50,000 investment from the customer. The findings also stated that Robertson provided false information regarding his outside business activities and the customer’s investment in written responses to a FINRA request and during his on-the-record testimony.
For the full FINRA Disciplinary Report, please click here.