Citigroup, J.P. Morgan, LPL Financial, Morgan Stanley and Merrill Lynch All Fined in FINRA Crackdown

In a News Release issued on December 26, 2019, the Financial Industry Regulatory Authority (FINRA) announced sanctions against Citigroup Global Markets Inc.; J.P. Morgan Securities LLC; LPL Financial LLC; Morgan Stanley Smith Barney LLC; and Merrill Lynch, Pierce, Fenner & Smith Incorporated for failure to supervise.  According to FINRA, the five firms “did not know essential facts about customers with custodial accounts established pursuant to the Uniform Transfers to Minors Act (UTMA) and Uniform Gifts to Minors Act (UGMA).”

In total, the five firms paid a fine of $1.4 million for violating FINRA Rule 2090.  FINRA Rule 2090, also known as the “Know Your Customer” rule requires that FINRA members use reasonable diligence in knowing and retaining the essential facts of customer accounts and the authority of each person acting on behalf of a customer.

UTMA and UGMA accounts allow for a person to transfer property to a minor beneficiary without the formalities of a trust.  According to FINRA, the five firms allowed customers to open UTMA and UGMA accounts which would enable a custodian to make investment decisions on behalf of a minor until the age of majority, but “failed to establish, maintain, and enforce reasonable supervisory systems and procedures to track or monitor whether custodians transferred control over custodial property to UTMA and UGMA account beneficiaries.”

The five firms’ failure to supervise accounts resulted in custodians making investment transactions after beneficiaries reached the age of majority and should have had the property transferred to their possession.

While none of the firms admitted or denied the charges, all firms consented to the fine and “agreed to review their policies, systems, and procedures to ensure they are reasonably designed to supervise custodial accounts and to achieve compliance with FINRA Rule 2090.”

Financial fraud attorney Brian Levin has dedicated his practice to recovering money for investor victims who have suffered financial losses due to broker misconduct and broker-dealers’ failure to supervise.  If you have sustained financial losses because of a brokerage firm’s failure to supervise, you may be able to recover damages through a FINRA arbitration.  Contact Levin Law today at (305) 402-9050 or co*****@********pa.com for a free, no-obligation case consultation.

FINRA Takes Regulatory Action Against Broker Darren Kubiak

As part of an ongoing investigation of brokers who made unsuitable recommendations of GPB Capital Holdings, Levin Law has filed a case involving Kalos Capital Broker Darren Michael Kubiak (CRD#:  1239086).  The pending suit alleges $500,000 in damages based on his recommendation and sale of GPB Capital and other private placements..

In addition to three (3) pending customer disputes, Kubiak has now been suspended by the Financial Industry Regulatory Authority (FINRA) for making unsuitable recommendations and failed to perform reasonable due diligence on investments prior to recommending and selling them to customers.  According to his Letter of Acceptance, Waiver, and Consent (AWC), Kubiak has worked in the securities industry since 1983.  Kalos Capital, Inc. has employed him since 2007.

Sanctions Against Kubiak and Kalos Capital

Following the regulatory action taken by FINRA, Kubiak agreed to a three (3) month suspension from associating with any FINRA member firm in all capacities and a $5,000 fine.  His employer, Kalos Capital, agreed to a censure, $30,000 fine, and to pay restitution in the amount of $86,614 plus interest.

According to the AWC, “Kubiak recommended the purchase of Leveraged and Inverse Exchange Traded Funds (LIETFs) to 17 customers without having a sufficient understanding of the risks and features associated with the LIETFs and thereby failing to have a reasonable basis to make these recommendations.”  In their findings, the regulatory agency notes that LIETFs, which are considered non-traditional ETFs, reset daily and are, therefore, “unsuitable for retail investors who plan to hold them for longer than one trading session.” In Mr. Kubiak’s case, the LIETFs were held by customers for an average of 722 days.  This extraordinarily long holding period resulted in losses of approximately $98,000 to those investors.

FINRA sanctioned Kalos Capital for failing to establish, maintain, and enforce a supervisory system.  Their failure to reasonably supervise Kubiak ultimately caused investors to incur significant losses.

FINRA Rule 2111 (Suitability)

Under FINRA Rule 2111, all brokers must make suitable recommendations to their investors.  FINRA members are required “to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors.”  Additionally, under Rule 2111, brokers must have a firm understanding of the risks and rewards associated with their investment offered and recommended to customers.

If you believe that you have suffered investment losses through unsuitable private placements, ETFS, or other investment products, contact Levin Law today for a free consultation.  Founding attorney Brian levin has recovered tens of millions on behalf of investors throughout the world. Call Levin Law today at (305) 402-9050 or contact us through an online form for a free case evaluation.

Craig Siegel Suspended for Failing to Respond to Regulatory Agency

The Financial Industry Regulatory Authority (FINRA) suspended against Former Broker Craig Landon Siegel (CRD#: 5759415).  According to FINRA’s BrokerCheck, Siegel failed to respond to requests for information.  This failure to respond resulted in a two-month suspension under FINRA Rule 9552.  The suspension was lifted on July 16, 2019, but Siegel is not currently registered as a broker.

According to FINRA’s BrokerCheck, Siegel has three (3) pending customer disputes. A customer dispute from August 2016, alleges that the formerly registered broker engaged in “unsuitable recommendations, unsuitable concentration, breach of fiduciary duty, breach of contract, material misrepresentation/omission, negligence.”  The claimant is seeking damages in the amount of $240,463.93 and has presented claims of respondeat superior and Failure to Supervise against Mr. Siegel’s employer.

In April 2018, another customer dispute alleges Mr. Siegel was involved in “excessive trading, churning, unsuitable transactions, failure to supervise, respondeat superior” during a three year period.  The claimant is requesting damages in the amount of $99,300.56.

The most current dispute, initiated in October 2018, alleges that Mr. Siegel made “unsuitable investment recommendations, breach of regulatory requirements, breach of fiduciary duty, negligence and gross negligence and churning.”

Mr. Siegel was employed with Portfolio Advisors Alliance, LLC from June 2013 until August 2018.  Prior to that, he worked for John Thomas Financial, a firm that was eventually expelled by FINRA for several violations.

If you or a loved one has experienced losses because of a broker’s misconduct, you may be able to recover your losses through a FINRA arbitration.  Levin Law has successfully recovered millions on behalf of their clients. Contact Levin Law at (855) 865-4247, or through a contact form, today for more information and a free and confidential case consultation.

Investors Allege Broker Defrauded Them Out of Millions

On July 1, 2019, the Financial Industry Regulatory Authority (FINRA) issued a Letter ofAcceptance, Waiver and Consent (AWC) against Former Broker James T. Booth, CRD#: 1906145.  According to the AWC, Booth was involved in allegedly defrauding multiple customers out of at least $1,000,000 over the course of five (5) years.  The investors alleged that Booth caused them to invest money into shell companies owned by him and then used the funds for his own personal use instead of investment purposes.

According to FINRA’s BrokerCheck, there is a pending investigation being conducted by the Securities and Exchange Commission.  According to the allegations, “Booth conducted a multi-year scheme that defrauded approximately 40 investors out of nearly $4 million.”  In order to obtain these funds, “Booth made false or misleading statements” to his clients, many of which were “unsophisticated investors.”  Booth currently has over 20 pending customer disputes, according to FINRA’s BrokerCheck.

Prior to being barred indefinitely by FINRA from acting as a broker or otherwise associating with a broker-dealer firm, Mr. Booth worked for LPL Financial LLC.  On May 30, 2019, Booth was discharged from his position with the company. During the time when the alleged misconduct took place, Mr. Booth was also separately employed by Invest Financial Corporation for a period of 13 years.

If you believe that you were the victim of investment fraud or broker misconduct, you might be entitled to recovery through a FINRA arbitration.  Levin Law has helped clients recover millions when they have been defrauded.  Call attorney Brian Levin today for a free case consultation at (305) 402-9050, contact through an online form.