Securities Lawyer Blog | Victim of Fraud?

TAG | failure by broker to get signatures

Feb/12

28

Palm Harbor, FL, Rep Barred by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Neal Seth Smalbach (CRD #1459854, Registered Principal, Palm Harbor, Florida)
 
submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity.
 
Without admitting or denying the allegations, Smalbach consented to the described sanction and to the entry of findings that he fraudulently misrepresented the risks and omitted material facts, for the sale of an oil and gas private placement
investment to retired, senior citizen customers. The findings stated that Smalbach claimed to have conducted his own due diligence, which included reviewing the PPM, subscription agreement, promotional material and speaking with employees of the issuer and firm due diligence personnel.
 
These findings also stated that Smalbach told investors that the investment was safe and high-yielding, which was false and misleading, and Smalbach virtually guaranteed his customers a yearly dividend and the return of their principal after three years but omitted telling them that the company had no significant assets, no current cash flow, and no prior operating history which was disclosed in the subscription agreement and PPM.
 
In addition, FINRA determined that Smalbach’s recommendations were unsuitable to unaccredited customers in light of the customers’ age, limited investment experience, conservative risk tolerance and need for the preservation of principal and also unsuitable for accredited investors because of his misrepresentations and omissions of material fact.
 
These findings also included that Smalbach’s member firm required customers to complete a client information new account form that asked for customers’ contact information, investment experience, risk tolerance, investment objectives, net worth, annual income, liquid net worth, retirement horizon and other background information, and to complete subscription agreements the firm kept and maintained, but Smalbach asked customers to sign blank information forms and subscription agreements and initial risk and financial disclosures on the subscription agreement without giving some of the customers the opportunity to read what they were signing. FINRA found that Smalbach had an administrative assistant complete the forms with false information Smalbach provided, which enabled him to shroud unsuitable transactions from the firm’s supervisory review.
 
Moreover, FINRA found that Samlbach falsified client information new account forms and subscription agreements that the firm kept and maintained caused its books and records to be inaccurate. FINRA also found that as a result of these fraudulent misrepresentations, omissions and acts, Smalbach caused customers to sustain approximately $840,116 in net out-of-pocket losses on the $925,000 investment they purchased, and Smalbach received $74,000 in gross commissions from his activities. Furthermore, FINRA found that Smalbach failed to adequately respond to FINRA requests for information and documents.
(FINRA Case #2010021972801)
 

The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide.
For a free consultation with an attorney, please call 888-760-6552, or visit our website at: www.securitieslawyer.com.

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Feb/12

28

Florida Rep Fined and Suspended by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s ‘Disciplinary Actions, February 2012.”
 
Charles Rainsford Marks Jr. (CRD #4727907, Registered Representative, South Jacksonville, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which he was fined
$5,000 and suspended from association with any FINRA member in any capacity for 10 business days. The fine must be paid either immediately upon Marks’ reassociation 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.
 
Without admitting or denying the findings, Marks consented to the described sanctions and to the entry of findings that he exercised discretion in the accounts of customers who had authorized him to use discretion, but without their written authorization and without his member firm’s acceptance, in writing or otherwise, of the accounts as being discretionary.
 
These findings stated that Marks exercised discretion in a customer’s accounts without written authorization by executing a number of trades without first contacting the customer and without his firm’s prior approval. The findings also stated that Marks exercised discretion in another customer’s accounts by selling shares in several mutual funds valued at approximately $10,000 and reinvesting the proceeds in various stocks, without the customer’s written authorization and without his firm’s prior approval. The suspension was in effect from December 19, 2011, through January 3, 2012.
(FINRA Case #2010021318501)
 
The information from FINRA’s website has ended.
 
Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. For a free consultation with an attorney, please call 888-760-6552, or visit our website at:  www.securitieslawyer.com.

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Feb/12

7

Florida Rep Fined and Suspended by FINRA

Comments off · Posted by Securities Lawyer in FINRA

The following information was obtained on FINRA’s website’s “January, 2012, Disciplinary Actions:”
 
Jason Christopher Dayton aka Jason Krupar (CRD #4504624, Registered Principal, Oviedo, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 20 business days. The fine must be paid either immediately upon Dayton’s reassociation 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.
 
Without admitting or denying the findings, Dayton consented to the described sanctions and to the entry of findings that he failed to properly review and supervise a joint brokerage account application shared by a registered representative employed at his firm and a firm customer, and approved the opening of the account even though it violated firm policies and procedures that prohibited such joint accounts. The findings stated that as a registered principal of the firm, Dayton was responsible for supervising the opening of new accounts for a registered representative and periodically reviewing the accounts the registered representative handled to ensure that they were in compliance with the firm’s policies and procedures.
 
The findings also stated that Dayton admitted that he signed and approved the application for the joint brokerage account for the registered representative and the customer as both a field supervisor and registered principal. Dayton acknowledged
that firm policies and procedures prohibited joint accounts between customers and any
registered representatives of the firm unless they were family members.
 
The findings also included that Dayton stated that he could grant approval for joint accounts between non-family customers and the firm’s registered representatives under exceptional circumstances but that was not done in this instance.

FINRA found that Dayton admitted that he did not examine any documentation prior to the opening of the joint account. Dayton stated that since he was the registered principal, it was his responsibility to verify the completeness of the application, to ensure that the investment objectives and risk tolerance were acceptable, and that all required signatures were included on the application. Dayton admitted that he did not review the application carefully and acknowledged that the joint brokerage account application he approved was in violation of firm prohibitions contained in the firm’s policies and procedures. FINRA also found that Dayton failed to adequately supervise the registered representative who handled the joint account.

The suspension was in effect from December 5, 2011, through January 3, 2012.

(FINRA Case #2010021224802 )

This concludes the information obtained on FINRA’s website.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses. To speak with an attorney call 888-760-6552, or visit our website at: www.securitieslawyer.com.
 
Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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