Unsuitable

Another Win for UBS Yield Enhancement Strategy (YES) Customers, Second Award in March 2021

Published on: April 1, 2021 | by Iorio Altamirano

On March 31, 2021, a FINRA Dispute Resolution Services arbitration panel in Columbus, Ohio, ordered UBS Financial Services, Inc. (“UBS”) to pay customers over $372,000 in compensatory damages and fees. The claimants, Matthew and Lisa Fisher alleged that UBS and brokers Ortal Shachar and Richard Mark Held presented the Yield Enhancement Strategy (“YES”), an options strategy, as low risk. In actuality, the complexity and nature of YES exposed the Claimants to a significant risk of loss.

This order is the second arbitration award against UBS in March 2021 concerning YES and the third since December 2020. On March 5, 2021, another FINRA arbitration panel in Denver, Colorado, ordered UBS to pay customers over $1 million in compensatory damages. In December 2020, a FINRA arbitration panel in Boca Raton, Florida, awarded a customer nearly $90,000.

UBS has faced numerous lawsuits from customers in the form of FINRA securities arbitrations related to YES, a complex managed options strategy that UBS marketed as safe and market-neutral. The customers have claimed that the strategy was not suitable for them and that UBS materially misrepresented and omitted the risks of the strategy.

FINRA Sanctions Securities America, Inc. For Failing to Supervise the Sale of the LJM Preservation and Growth Fund

Published on: March 30, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has sanctioned Securities America, Inc. (“Securities America”) for failing to reasonably supervise brokers’ recommendations of the LJM Preservation & Growth Fund. On March 29, 2021, FINRA and Securities America entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) whereby Securities America accepted the following sanctions:

a censure;
a $100,000 fine;

FINRA Sanctions J.W. Cole Financial, Inc. For Failing to Supervise the Sale of the LJM Preservation and Growth Fund

Published on: March 30, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has sanctioned J.W. Cole Financial, Inc. (“J.W. Cole”) for failing to reasonably supervise brokers’ recommendations of the LJM Preservation & Growth Fund. On March 18, 2021, FINRA and J.W. Cole entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) whereby J.W. Cole accepted the following sanctions:

a censure;
a $50,000 fine;

FINRA Sanctions Cambridge Investment Research, Inc. For Failing to Supervise the Sale of the LJM Preservation and Growth Fund

Published on: March 30, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has sanctioned Cambridge Investment Research, Inc. (“Cambridge”) for failing to reasonably supervise brokers’ recommendations of the LJM Preservation & Growth Fund. On March 29, 2021, FINRA and Cambridge entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) whereby Cambridge accepted the following sanctions:

a censure;
a $400,000 fine;

St. Augustine, Florida Financial Advisor Charles Thomas Stevens, Formerly of D.H. Hill Securities, LLP, BARRED by FINRA

Published on: March 29, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has barred stockbroker Charles Thomas Stevens from the securities industry for failing to appear and provide on-the-record testimony.

On December 1, 2020, FINRA’s Department of Enforcement filed a three-cause complaint against Mr. Stevens. The first cause of action charged that Mr. Stevens willfully failed to disclose a judgment and three tax liens on his Uniform Application for Securities Industry Registration or Transfer (Form U4). The second cause of action alleged that Mr. Stevens falsely represented to his firm that he did not have any unreported liens. The third cause of action alleged that Mr. Stevens failed twice to appear and testify at an on-the-record interview.

Mr. Stevens then failed to appear at two-pear hearing conferences scheduled by the hearing officer. FINRA’s Department of Enforcement then requested a default decision, which the hearing officer granted.

Broker, Jeremy Johnson, Formerly of Torch Securities, LLC, BARRED by FINRA – Murrieta, CA

Published on: March 29, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has barred broker Jeremy Taylor Johnson from the securities industry. FINRA expelled Mr. Johnson from the brokerage industry for refusing to cooperate with a FINRA investigation into the suitability and potential misrepresentations and omissions related to Johnson’s offer and sale of two securities offerings while associated with Torch Securities, LLC.

Mr. Johnson entered the securities industry in 2019 when he associated with Torch Securities, LLC (“Torch Securities”) and registered with FINRA as a Private Securities Offerings. His employment ended in April 2021.

Securities and Exchange Commission Settlement

Another Day, Another Disciplinary Action Against Aegis Capital Corp.

Published on: March 24, 2021 | by Iorio Altamirano

**Update: November 11, 2021** On November 8, 2021, Aegis Capital Corp agreed to pay nearly $2.7 million in sanctions for supervisory failures related to excessive and unsuitable trading by its brokers from July 2014 through December 2018. Click on the following link to read more: Aegis Capital Corp. Ordered to Pay Nearly $2.7 Million for Supervisory Failures Related to Rampant Excessive and Unsuitable Trading

Customers of Aegis Capital, including customers that have been notified that they may be receiving restitution, should consult with a securities arbitration law firm. If you or a loved one were a customer of Aegis Capital, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.

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Broker Chad Mackland, Who Is Facing Felony Criminal Charges, BARRED by FINRA

Published on: March 23, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has barred broker Chad Mackland from the securities industry. Mr. Mackland was barred from the brokerage industry for refusing to cooperate with a FINRA investigation into alleged theft and fraudulent sales practices.

According to his BrokerCheck report, Mr. Mackland is facing four felony charges in the District Court of Pottawattamie County in Iowa. He is accused of committing fraudulent sales practices and theft by deception.

Mr. Mackland was associated with Lion Street Financial, LLC in Council Bluff, Iowa, from December 2018 to February 2020.

Western International Securities Compliance Officer BARRED by FINRA – Pasadena, CA

Published on: March 23, 2021 | by Iorio Altamirano

The Financial Industry Regulatory Authority (“FINRA”) has barred compliance officer Corey White from the securities industry and fined him $20,000. Mr. White was expelled from the brokerage industry for supervisory failures during his tenure as a compliance officer for Financial West Group in Westlake Village, CA, from January 2013 to July 2017. Among other things, Mr. White was accused of failing to respond to red flags that indicated brokers were excessively trading customer’s accounts. FINRA previously barred Financial West Group from the securities industry in February 2020.

Mr. White left Financial West Group in August 2017 to become a compliance officer at Western International Securities, Inc. in Pasadena, CA.

Financial West Group and Western International Securities Inc. seem to be cut from the same cloth. Earlier this month, FINRA filed a disciplinary proceeding complaint against former Western International Securities broker Megurditch Patatian (aka Mike Patatian), alleging that he unsuitably recommended illiquid REITs to 59 customers. Mr. Patatian worked out of the firms’ branch office in Westlake Village, CA. You can read more about the charges here:

Trevor Rahn, Former J.P. Morgan Securities Broker, Suspended for Unauthorized Trades, Unsuitable Recommendations, and Mismarked Orders – Los Angeles, CA

Published on: March 22, 2021 | by Iorio Altamirano

FINRA has suspended financial advisor Trevor B. Rahn from the securities industry for 18 months and fined him $10,000.

FINRA alleged that Mr. Rahn engaged in a pattern of breaking up customer orders for execution in violation of FINRA Rules. Specifically, from January 2014 to September 2018, Mr. Rahn recommended an “average pricing” investment strategy to his customers in which he executed orders by breaking them into multiple small trades, each generating a separate commission. Mr. Rahn lacked a reasonable basis to believe this strategy was suitable for his customers. Connected with this strategy, Mr. Rahn exercised time and price discretion on over 7,500 trades without the required authorization.

FINRA also alleged that Mr. Rhan executed 577 unauthorized trades in a customer’s account and that he mismarked 4,714 solicited trades in three customer accounts as “unsolicited” in violation of FINRA Rules.