JAMES MARTIN HIGGS FINED AND SUSPENDED BY FINRA FOR SELLING AWAY EQUITY-INDEXED ANNUITIES

James Martin Higgs, formerly with Newark, New Jersey based Pruco Securities, LLC, submitted a letter of acceptance, waiver, and consent in which he consented to sanctions and to the entry of Financial Industry Regulatory Authority (FINRA) findings that after his member firm placed him on probation for selling equity-indexed annuities (EIAs) to customers outside of its sponsored programs, Mr. Higgs continued to sell EIAs to individuals outside the scope of his employment. FINRA stated that some of the individuals who purchased EIAs were the firm's customers, but Mr. Higgs did not provide his firm with prior written notice of the business activity. Mr. Higgs, of Parkersburg, West Virginia, was fined $10,000 and suspended from association with any FINRA member in any capacity for seven months. The fine must be paid either upon Higgs' re-association with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.
Selling away is the inappropriate practice of an investment professional who sells or solicits securities or investments not held or approved by the brokerage firm with which the professional is associated with. Under NASD and FINRA rules, brokerage firms must approve investments offered by their investment professionals and supervise its sales.
Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.
Mr. Higgs' undisclosed EIA sales totaled approximately $674,804.61, and he received approximately $22,838.50 as compensation for the transactions. Investors who may have suffered damages caused by the EIAs they purchased should know that Pruco Securities can be held liable for Mr. Higgs' selling away activities because it either failed to establish a reasonable supervisory system, or because it failed to implement an existing reasonable supervisory system. Even if Pruco Securities did not know of Mr. Higgs' activities, it can still be liable to investors for damages.
Have you suffered losses in your Pruco Securities, LLC brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Pruco Securities, LLC stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

JANICE LOUISE HALLETT FINED AND SUSPENDED FOR MISREPRESENTING OIL AND GAS INVESTMENTS

Janice Louise Hallett, a broker with Schertz, Texas based The Tidal Group, submitted a letter of acceptance, waiver, and consent in which Ms. Hallett consented to sanctions and to the entry of Financial Industry Regulatory Authority (FINRA) findings that she offered and sold oil and gas interests to her firm's customers that were securities offerings issued by the firm's affiliate. While discussing the offerings, Ms. Hallett negligently made inaccurate statements to several investors relating to the returns they could expect from the investment and the affiliate's track record. FINRA's findings also stated that Hallett negligently advised some investors considering purchasing interests in an offering that they could expect a return of their principal investment in one to three years. Since oil and gas investments are considered speculative in nature, such returns are not probable. Ms. Hallett, of Cibolo, Texas, was fined $10,000 and suspended from association with any FINRA member in any capacity for 20 business days - the suspension was in effect from January 7, 2013 through February 4, 2013.
Oil and gas investments vary in form, which can include limited partnerships, ownership of fractional undivided interests in leases, and general partnerships. Tax consequences and investor liability, depending on the type investment program, can vary as well. In a general partnership, investors actively participate in the operations of the venture, and they are personally liable for partnership debts. In a drilling limited partnership, an oil or gas company sells partnership units to investors and uses the money it raises to lease property and drill wells. In return for managing the project, the sponsor company usually takes an upfront fee that averages about 15% of one's investment (commonly referred to as tangible and intangible drilling costs) and also shares in a percentage of any revenue generated. In return, the promoter offers the investor the prospect of a substantial first year tax write-off and quarterly cash distributions from the sale of any oil and gas the partnership finds until the wells run dry. Drilling partnerships have always been a gamble, but recently, they have proven somewhat riskier than usual. This type of investment is very speculative, is a highly illiquid investment, and can have a long holding period.
In addition, FINRA found that while selling interests in an oil and gas venture, Ms. Hallett negligently advised a customer that the firm's affiliate had drilled "24 straight successful wells" in a particular area. In fact, the affiliate had drilled at least one dry hole in the area and drilled other wells in the area that yielded very limited gas or oil production.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Ms. Hallett's misrepresentations can bring forth claims to recover losses against The Tidal Group, which should have prevented Ms. Hallett from committing the described negligent activity.
Have you suffered losses in your The Tidal Group brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against The Tidal Group stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

JAMES DOUGLAS GRIMES BANNED BY FINRA FOR FORGERY AND MISAPPROPRIATING FUNDS

James Douglas Grimes, formerly with Washington, Pennsylvania based Financial Network Investment Corporation, submitted an offer of settlement after the Financial Industry Regulatory Authority (FINRA) entered findings that he transferred $306,000 from customers' accounts to a business account in the name of another customer without any of the customers' consent or knowledge. Mr. Grimes consented to sanctions and to FINRA's findings that he affected the unauthorized transfers by submitting written journal request forms to his firm that contained forged client signatures. Mr. Grimes wrote numerous checks payable to cash totaling $250,446, withdrew funds from the business account, and converted the proceeds for his own use. Mr. Grimes forged the signature of the holder of the business account on the checks. Mr. Grimes, of Lawrence, Pennsylvania, was banned from association with any FINRA member in any capacity.
FINRA's findings also stated that the firm kept the journal request forms and the numerous checks as part of its books and records. Those documents appeared to contain genuine customer signatures. However, the signatures were forged so the records were therefore inaccurate. By falsifying journal requests and checks, Grimes caused his firm's books and records to be inaccurate.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Grimes's fraudulent activity can bring forth claims to recover losses against Financial Network Investment Corporation, which should have prevented Mr. Grimes from committing the described illegal activity.
Have you suffered losses in your Financial Network Investment Corporation brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Financial Network Investment Corporation stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

MARTIN BENJAMIN FEIBISH BANNED BY FINRA DUE TO FRAUDULENT ACTIVITY INVOLVING ELDERLY INVESTORS

Martin Benjamin Feibish, formerly with Springfield, Massachusetts based MML Investors Services, submitted a letter of acceptance, waiver, and consent in which he was banned from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity. Mr. Feibish, of Warwick, Rhode Island, consented to the FINRA sanction and to the entry of findings that he created a scheme to steal more than $5 million from an elderly customer by investing her money in fake investment vehicles, and forging her relatives' signatures. Mr. Feibish began using a company he established to create false investment vehicles. Mr. Feibish then created false promissory notes through the company, which manifested an alleged interest in mortgage-backed securities. The findings also stated that Mr. Feibish persuaded the customer to purchase false promissory notes. Mr. Feibish created and provided the customer with false documentation representing the mortgage-backed securities and IRS Form 1099s, to convince the customer that she was invested in legitimate investment vehicles. Mr. Feibish took funds from the customer for the non-existent investments and placed them in a bank account he controlled in his company's name. FINRA's findings stated that through his conduct, Mr. Feibish purposefully violated the Securities Exchange Act of 1934, FINRA rules, and NASD rules.
FINRA also included that over time, Mr. Feibish had checks issued from his company's bank account to the customer. Mr. Feibish told the customer that these payments represented the interest payments from the investments, but were really a return of the customer's own money. Thereafter, Mr. Feibish convinced the customer to reinvest the money in additional fictitious investment vehicles, including promissory notes from a bank. FINRA stated that in furtherance of this misconduct, Mr. Feibish forged the names of the customer and her relatives to open trust accounts in their names at the bank. Just as in the previous sham investments, payments issued from the accounts at the bank were not proceeds from the investments, but simply a return of the customer's money. Mr. Feibish continued to convince the customer to reinvest the supposed proceeds in other false investment vehicles to avoid having to return the money to the customer.
Moreover, FINRA found that Mr. Feibish managed insurance plans belonging to the customer, which were for the benefit of her relatives. Mr. Feibish told the customer he was paying the premiums on those policies, when in fact he had forged the relatives' signatures and borrowed approximately $280,000 against them. Mr. Feibish regularly had false documentation issued to the customer, including false promissory notes and falsified account statements.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to Mr. Feibish's fraudulent activity can bring forth claims to recover losses against MML Investors Services, which should have prevented Mr. Feibish from committing the described illegal activity.
Have you suffered losses in your MML Investors Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against MML Investors Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

DONALD RICHARD DAHN SUSPENDED BY FINRA FOR UNDISCLOSED LOANS FROM CUSTOMERS

Donald Richard Dahn, a Former Mutual Service Corporation broker located in Palm City, Florida, submitted a letter of acceptance, waiver, and consent in which he was suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for six months. Due to Mr. Dahn's financial situation, no fine was imposed. Mr. Dahn consented to the sanction and to the entry of findings that he borrowed a total of $240,900 in business loans from customers, for operating expenses for a company Mr. Dahn and his brother operated, but he failed to disclose the loans to his member firm. FINRA's findings stated that in two of the cases, Mr. Dahn co-signed promissory notes executed on behalf of the customers even though the firm's written supervisory procedures prohibited borrowing money from customers. Mr. Dahn failed to repay the loans to the customers, which his firm ultimately reimbursed.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages can bring forth claims to recover losses against Mutual Service Corporation due to Mr. Dahn's failure to disclose and promissory note co-signatures, which clearly violated Mutual Service Corporation's written supervisory procedures prohibiting such activity.
Have you suffered losses in your Mutual Service Corporation brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Mutual Service Corporation stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

RICHARD GRANT CODY FINED AND SUSPENDED FOR UNSUITABLE AND EXCESSIVE TRADING

Former Leerink Swann & Co. broker, Richard Grant Cody of Boston, Massachusetts, was fined and suspended from association with any Financial Industry Regulatory Authority FINRA member in any capacity for one year. The United States Court of Appeals for the First Circuit affirmed a Securities and Exchange Commission (SEC) decision, which had sustained a National Adjudicatory Council (NAC) decision. The sanction was based on findings that Mr. Cody engaged in unsuitable and excessive trading in customers' accounts at Boston, Massachusetts based Leerink Swank & Co., gave his customers account summaries that contained materially misleading account values, and failed to timely update his Form U4 to disclose settlements with customers. The fine imposed totaled $27,500, and the suspension is in effect from January 7, 2013 through January 6, 2014.
Excessive trading or "churning" involves excessive trading by a broker in a client's account mainly to generate commissions. Churning is considered an illegal and unethical practice that violates SEC rules and securities laws. Although there is no quantitative measure for churning, frequent buying and selling of securities that does little to meet a client's investment objectives may be construed as evidence of churning. Churning may result in substantial losses in a client's account, and even if profitable, may generate a tax liability for a client.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from churning and similar abuses. If broker-dealers do not establish a reasonable supervisory system, they may be liable to investors for damages. Therefore, investors who have suffered damages can bring forth claims to recover losses against Leerink Swann & Co. due to Mr. Cody's churning.
Have you suffered losses in your Leerink Swann & Co. brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Leerink Swann & Co. stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

CHRISTOPHER MICHAEL BONES FINED AND SUSPENDED FOR UN-AUTHORIZED TRADES IN CLIENT ACCOUNTS

Christopher Michael Bones, a broker at Summit Brokerage Services, Inc. in Eugene, Oregon, submitted a Letter of acceptance, waiver, and consent in which he was fined $5,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any capacity for 15 business days. Mr. Bones, who is currently with Ameriprise Financial Services, Inc. in Eugene, Oregon, consented to the sanction and to the entry of findings that he exercised trading discretion in customers' accounts following an agreed-upon investment strategy, but he did not consistently notify the customers prior to placing a trade in their accounts.
A discretionary account is an account that allows a broker to buy and sell securities without the client's consent. The client must sign a discretionary disclosure with the broker in order to document the client's consent. A discretionary account sometimes referred to as a "managed account." Sometimes certain guidelines are set by the client regarding trading in the account - a client might only permit investments in blue chip stocks.
In this case, none of the customers provided Mr. Bones with written authorization to exercise any discretionary power, and his member firm did not authorize these accounts as discretionary. FINRA's findings stated that in fact, as was known to Mr. Bones, his member firm's policies prohibited the exercise of discretionary power in any client's account.
Have you suffered losses in your Summit Brokerage Services brokerage account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Summit Brokerage Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.