WINDSOR STREET CAPITAL Expelled For Fraudulent Scheme
The Financial Industry Regulatory Authority (“FINRA”) Office of Hearing Officers issued a Default Decision #:2016048912703 on May 28, 2019, expelling Windsor Street Capital and barring two of its employees, Arthur Tacopino and Edwin Rodriguez. FINRA stated that Windsor Street, among other things, committed a fraudulent scheme which caused its investors to suffer losses. Therefore, Windsor Street must pay a $1,000,000 fine, disgorge $256,550 and pay restitution of $61,559.02, plus interest. Here’s more on the Decision:
Windsor Street Capital Engages In Fraudulent Markup And Markdown Scheme
First, FINRA says that Windsor Street Capital violated Section 10(b) of the Securities and Exchange Act, Rule 10b-5 and FINRA Rules by making clients pay excessive markups and markdowns. The firm knew, or was reckless in not knowing, that it engaged in the fraudulent scheme, according to FINRA. Supposedly, the firm charged clients undisclosed markdowns or markups for nearly 200 trades. Also, the findings show that in 962 trades, the firm misrepresented its capacity in executing trades in the client’s accounts. Not only that, but the firm did not tell clients about how much it received for trades.
Windsor Makes Customers Pay Unfair And Unreasonable Charges
Also, FINRA says that Windsor Street Capital broke NASD Rule 2440, IM-2440-1 and FINRA Rules 2121 by imposing excessive charges when executing the 199 trades from January 2013 to March 2016. Supposedly, the total charges (markups, commissions, etc.) exceeded Windsor Street Capital’s costs by five percent. Because of this, FINRA says the charges to clients were unfair, excessive and unreasonable.
Arthur Tacopino And Windsor Street Capital Carry Out Fraudulent Stock Allocation Scheme
Next, FINRA says that Windsor Street Capital and Arthur Tacopino (a non-registered associated person working in the firm’s operations department) violated Section 10(b), Rule 10b-5 and FINRA Rules for their part in a fraudulent stock allocation scheme. From January 1, 2013 to June 30, 2015, the Decision stated, Tacopino chose which trades to place in Windsor’s accounts versus client accounts. Supposedly, Arthur Tacopino watched how the securities fared, and then put profitable trades in his account or in other Windsor Street Capital employee accounts. The Decision stated that Arthur Tacopino allocated unprofitable trades to clients’ accounts. FINRA says that Arthur Tacopino and Windsor Street made unauthorized allocations or at least made those allocations to clients’ accounts without telling them that the trades sustained losses. Consequently, clients of Windsor Street sustained $514,872 in realized and unrealized losses by June 15, 2015.
Edwin Rodriguez Helps Windsor Execute Fraudulent Schemes
The Decision stated that Windsor Street’s order entry clerk, Edwin Rodriguez, also violated the law. Particularly, FINRA stated that Rodriguez violated Section 10(b) of the Exchange Act, Section 17(a) of the Securities Act, Rule 10b-5 and FINRA Rules by helping Tacopino in carrying out the fraudulent scheme. Supposedly, Edwin Rodriguez used Windsor Street Capital’s accounts for making purchases and sales of investments. The Decision reports that Rodriguez allocated the trades by following Tacopino’s directions. And those directions came after Tacopino checked whether the trades were profitable. FINRA says Rodriguez also helped Windsor Street carry out the fraudulent scheme involving markups and markdowns. Apparently, Edwin Rodriguez caused Windsor to charge those undisclosed markups or markdowns. He also helped Windsor Street disguise its capacity when making the trades.
Windsor Street Fails To Supervise Trading, Disclosures To Investors
Notably, Windsor Street Capital violated NASD Rule 3010 and FINRA Rule 3110 because it failed to establish and enforce a supervisory system, according to FINRA. The firm failed to supervise the charges and disclosures of markups and markdowns. Similarly, the firm did not supervise its charging of commissions, markups and markdowns. Also, the firm failed to supervise the trading in its accounts and allocations of trades. Further, Windsor Street Capital failed to supervise the veracity of disclosures in trade confirmations.
Have you experienced losses by investing with Windsor Street Capital (formerly Meyers Associates, L.P.)? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.