FINRA Broker Disciplinary Action Report: January 2020
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
Philip Joseph Sparacino (CRD #3243960, Staten Island, New York)
Without admitting or denying the findings, Sparacino consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA while it was investigating allegations that he engaged in unauthorized, excessive and unsuitable trading while registered through his member firm.
Jun Zhou (CRD #2825595, Chicago, Illinois)
Without admitting or denying the findings, Zhou consented to the sanction and to the entry of findings that she participated in private securities transactions with sales of $16,050,000, and selling compensation of $199,000, without providing written notice to, or receiving approval from, her member firm. The findings stated that Zhou, both individually and through a small real estate company she wholly owned and controlled, participated in the sale of membership interests in private real estate funds managed by a third party and in a promissory note with that third-party fund manager. The fund membership interests and the promissory note were securities. In addition, Zhou formed a private real estate fund managed by Zhou’s real estate company. Zhou subsequently filed, on behalf of the fund, a notice of exempt offering of securities with the Securities and Exchange Commission (SEC) related to transactions through which Zhou and her real estate company sold membership interests in the fund to investors, including firm customers. In connection with these transactions, Zhou’s real estate company received from the fund a sourcing fee and a quarterly asset management fee.
Lance Roman Armstrong (CRD #4592423, Lafayette, New Jersey)
Without admitting or denying the findings, Armstrong consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation of his activities. The findings stated that Armstrong’s member firm filed a Form U5 disclosing that it had discharged him after he solicited and accepted multiple loans from customers in connection with an undisclosed outside business activity.
Fredrick Martin Randhahn (CRD #1338801, South Ogden, Utah)
Without admitting or denying the findings, Randhahn consented to the sanctions and to the entry of findings that he engaged in unapproved private securities transactions involving the sale of promissory notes to investors, some of whom were also customers of his member firm. The findings stated that Randhahn solicited investors to purchase $625,000 worth of promissory notes related to a purported real-estate investment fund. Randhahn personally invested $125,000 in the promissory notes and received $33,167.67 in commissions in connection with these transactions. Later, the fund filed a voluntary Chapter 11 bankruptcy petition. The United States District Court for the Southern District of Florida issued final judgments against, among others, the fund and its former owner. Those judgments required the fund and its former owner to, among other things, disgorge their ill-gotten gains and also required the former owner to pay a civil penalty. The findings also stated that Randhahn failed to make any disclosure of the fund to the firm in response to firm questionnaires. On the questionnaires, Randhahn denied participating in any private securities transactions or selling any non-securities investment products.
For the full FINRA Disciplinary Report, please click here.
