FINRA Broker Disciplinary Action Report: July 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
Dominic Anthony Tropiano (CRD #4761462, Lyndhurst, Ohio)
Tropiano was barred from association with any FINRA member in all capacities. No restitution was ordered, because Tropiano’s member firm paid a total of $1,526,500 to its customers for losses suffered as a result of nontraditional exchange-traded funds (ETFs) transactions solicited by Tropiano while at the firm. Without admitting or denying the findings, Tropiano consented to the sanction and to the entry of findings that he recommended transactions involving non-traditional ETFs to customers without having a reasonable basis to believe those transactions were suitable for anyone, due to his lack of understanding of the unique risks, terms and features of the products. The findings stated that Tropiano’s recommendations involving non-traditional ETFs were also unsuitable for those customers in light of their investment profiles, which included conservative investment objectives. The findings also stated that Tropiano caused non-traditional ETF transactions to be placed in customers’ securities accounts without their knowledge or consent, and in the absence of written or oral authorization for him to place such trades. The findings also included that Tropiano engaged in the securities business of his firm by soliciting the purchase and sale of non-traditional ETFs in the accounts of firm customers while not properly registered with FINRA.
Michael Anthony Bastardi (CRD #6015424, Warwick, New York)
Bastardi was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Bastardi consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA in connection with an investigation into the allegations disclosed on a Form U5 amendment submitted by his former member firm. The findings stated that the Form U5 disclosed that Bastardi was the subject of a customer complaint alleging that he had engaged in unsuitable margin trading, unauthorized trading, fraud and forgery when he was registered through two firms, resulting in damages of approximately $250,000.
Benjamin Frank Bourgeois Jr. (CRD #2145555, Harvey, Louisiana)
Bourgeois was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Bourgeois consented to the sanction and to the entry of findings that he failed to produce documents and information requested by FINRA during the course of an investigation into allegations reported on his Form U5 that he, among other things, borrowed money from a customer, converted customer funds and committed fraud.
Frederick David Holloway (CRD #248814, Easton, Maryland)
Holloway was barred from association with any FINRA member in all capacities. The sanction was based on findings that Holloway cheated on continuing education courses by having his secretary complete his coursework. The findings stated that Holloway claimed credit for several continuing education courses necessary for his license to sell variable annuities in the state of Maryland. The findings also stated that Holloway withheld documents and produced falsified documents in connection with a FINRA investigation. FINRA directed Holloway to obtain information from his customers; however, before production, he caused the alteration of several documents including several annuity application documents that were altered to include investment time horizons.
Christopher Michael Dowden (CRD #4089978, Denham Springs, Louisiana)
Dowden was fined $10,000 and suspended from association with any FINRA member in all capacities for two months. Harger was fined $15,000 and suspended from association with any FINRA member in all capacities for three months. Without admitting or denying the findings, Dowden and Harger consented to the sanctions and to the entry of findings that Harger permitted customers to sign partially completed variable annuity exchange forms, and later entered missing information on the forms. The findings stated that after recommending and discussing a proposed variable annuity exchange with a customer, Harger permitted the customer to sign without a date a partially completed variable annuity exchange form. The variable annuity exchange form did not include all required information concerning variable annuity product fees and surrender charges, though he had disclosed that information to the customer while discussing the proposed exchange. Harger subsequently entered the information that was missing on the variable annuity exchange form and submitted the form to Dowden for review and approval. The findings also stated that although Dowden was not aware that the customers had signed the forms while partially complete, he observed that the customers had left their signatures undated. Upon approving the transactions, Dowden altered the variable annuity exchange forms by writing in dates for the customers’ signatures, using the date that he had approved the transaction. After approving the proposed variable annuity exchanges, Dowden provided a copy of the completed variable annuity exchange forms to the customers. The findings also included that by this conduct, Dowden and Harger caused their member firm to create and maintain inaccurate books and records.
Michael Joseph Clarke (CRD #1078211, Jersey City, New Jersey)
Clarke was barred from association with any FINRA member in all capacities and ordered to pay $612,400, plus interest, in restitution to his colleagues and their business associate, who was also an advisory client of their member firm. The sanctions were based on findings that Clarke engaged in unethical conduct by converting $612,400 advanced to him from the colleagues and their business associate for the purpose of purchasing and reselling sports tickets. The findings stated that although Clarke told his colleagues he would use their money to purchase tickets, he used these funds to pay for personal expenses and to repay other creditors. Clarke’s undisclosed diversion was both intentional and unauthorized. To date, Clarke has not repaid the funds. The findings also stated that Clarke acted unethically by misrepresenting to his colleagues his use of loan proceeds to obtain the money. To obtain money, Clarke deceived his colleagues as to the reason for the loans, enticing them with the prospect of lucrative business profits while secretly intending to use the money for his own purposes. Clarke’s deception continued even after he received the funds, putting off his lenders with false promises, bogus assurances and made-up excuses. At one point, Clarke falsely represented that over $300,000 earmarked for seat licenses was safe in an escrow account, when in fact the money was gone. The findings also included that Clarke acted unethically by passing bad checks. Clarke wrote checks and authorized electronic transfers with ample reason to know the transactions would not clear. Clarke authored at least 60 checks and electronic transfers that did not clear because of insufficient funds. Clarke wrote bad checks when he knew that other checks had been returned and the account was necessarily unfunded. Clarke wrote bad checks in accounts that he had just opened and into which he had not deposited funds, so that the insufficiency of deposited funds was certain.
For the full FINRA Disciplinary Report, please click here.