Bad Brokers

According to FINRA, Jacob David Frankel was suspended from association with any FINRA member in all capacities for four months for willfully failing to timely disclose multiple felony charges on his Form U4. Frankel was charged with multiple third-degree counts of Possession of a Controlled Dangerou...

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According to FINRA, Jacob David Frankel was suspended from association with any FINRA member in all capacities for four months for willfully failing to timely disclose multiple felony charges on his Form U4. Frankel was charged with multiple third-degree counts of Possession of a Controlled Dangerous Substance in New Jersey, each punishable by at least one year imprisonment. He did not disclose the charges to his firm or via amended Form U4 until approximately one year late, and falsely certified he had never been charged with a felony.

Additionally, Frankel improperly removed and retained non-public personal customer information from firms without authorization or customer consent. The documents contained social security numbers, driver's license and passport numbers, and account numbers for over 200 customers. He retained these documents until they were secured by his new firm after a manager discovered and confiscated them.

Form U4 disclosures about criminal charges are critical for firms to assess whether representatives should continue working with customers and whether enhanced supervision is needed. Felony drug charges raise serious questions about judgment and character. The one-year delay in disclosure and false certification demonstrate deliberate attempts to conceal material information.

The theft of customer information is equally serious. This sensitive data could be used for identity theft or other fraudulent purposes. Taking it without authorization when changing firms is a significant breach of trust and privacy. In light of Frankel's financial status, no monetary sanctions were imposed, but the four-month suspension removes him from the industry temporarily while sending a clear message about the seriousness of these violations.

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According to FINRA, Justin Howard Parkhurst was fined $5,000 and suspended from association with any FINRA member in all capacities for one month for causing his member firm to maintain inaccurate books and records. Parkhurst had entered into an agreement to share commissions with another representa...

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According to FINRA, Justin Howard Parkhurst was fined $5,000 and suspended from association with any FINRA member in all capacities for one month for causing his member firm to maintain inaccurate books and records. Parkhurst had entered into an agreement to share commissions with another representative and a retired representative using a joint representative code. However, he changed the representative code on trades from the joint code to a different code he shared only with the other active representative.

Parkhurst's system prepopulated trades with the correct joint representative code, but he manually changed the codes, causing trade confirmations to show inaccurate information. He mistakenly believed his agreement with the retired representative did not apply to new assets added to the accounts. As a result, Parkhurst received higher commissions than he was entitled to under the agreement.

Accurate books and records are fundamental to securities regulation. When representatives falsify trade records, it undermines the integrity of firm records and can lead to improper commission payments. Although Parkhurst's actions were based on a mistaken belief rather than intentional theft, he had a responsibility to verify his understanding before changing the codes.

After the violation was discovered, the firm paid restitution to the retired representative, and Parkhurst reimbursed the firm $70,617—the approximate amount of additional commissions he received. The one-month suspension and fine emphasize that representatives must maintain accurate records and cannot unilaterally change commission arrangements without proper authorization and verification.

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According to FINRA, Daniel Hernan Vatterott was fined $5,000 and suspended from association with any FINRA member in all capacities for six months for causing his member firm to maintain inaccurate books and records. Similar to the Parkhurst case, Vatterott had an agreement to share commissions with...

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According to FINRA, Daniel Hernan Vatterott was fined $5,000 and suspended from association with any FINRA member in all capacities for six months for causing his member firm to maintain inaccurate books and records. Similar to the Parkhurst case, Vatterott had an agreement to share commissions with the estate of a former representative using a joint representative code, but he changed the codes on trades to a different representative code.

The firm's system correctly prepopulated trades with the joint representative code, but Vatterott manually changed them, resulting in him receiving a higher percentage of commissions than entitled under the joint production agreement. Vatterott mistakenly believed the agreement did not apply to new assets added to accounts and that he was authorized to use the other representative code.

What distinguishes this case is that Vatterott did not verify his understanding before changing the codes. He did not ask the estate whether he could change the representative codes or speak with his firm to verify whether the transactions were subject to the joint production agreement. This failure to confirm his assumptions before acting resulted in a longer six-month suspension compared to the one-month suspension in the similar Parkhurst case.

After the violation was discovered, Vatterott reimbursed the firm approximately $87,500—the additional commissions he received as a result of changing the codes. This case emphasizes that representatives have an obligation to verify their understanding of commission agreements before making changes that affect compensation. Taking action based on mistaken assumptions, without verification, will result in significant sanctions even if there was no intent to defraud.

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According to FINRA, Matthew T. Mierzycki was fined $10,000 and suspended from association with any FINRA member in all capacities for four months for exercising discretionary trading authority without prior written authorization from customers or firm approval. Mierzycki executed trades in numerous ...

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According to FINRA, Matthew T. Mierzycki was fined $10,000 and suspended from association with any FINRA member in all capacities for four months for exercising discretionary trading authority without prior written authorization from customers or firm approval. Mierzycki executed trades in numerous customer accounts without speaking to or communicating with the customers on the days of the trades.

Discretionary authority allows a representative to make trading decisions without consulting the customer for each transaction. However, this authority requires written authorization from the customer and firm approval because of the significant control it grants. Trading without these authorizations exposes customers to unauthorized transactions and potential abuse.

Additionally, Mierzycki failed to timely disclose three compromises with creditors on his Form U4 despite his knowledge of them. He had entered into agreements with two banks to settle debts for thousands of dollars less than the full amounts owing. These compromises are material information that must be disclosed as they may indicate financial distress that could create incentives for misconduct.

Financial disclosure failures are taken seriously because representatives in financial distress may be tempted to engage in misconduct to resolve their problems. The four-month suspension and $10,000 fine reflect both the discretionary trading violations and the disclosure failures. Investors should always review their trade confirmations to ensure they authorized all transactions and should check BrokerCheck for any financial disclosure issues that might indicate a representative is under financial pressure.

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According to FINRA, Arthur Bruce McQuaide was suspended from association with any FINRA member in all capacities for six months for engaging in excessive and quantitatively unsuitable trading in the accounts of two senior customers. The customers relied on McQuaide's advice and routinely followed hi...

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According to FINRA, Arthur Bruce McQuaide was suspended from association with any FINRA member in all capacities for six months for engaging in excessive and quantitatively unsuitable trading in the accounts of two senior customers. The customers relied on McQuaide's advice and routinely followed his recommendations, giving him de facto control over their accounts.

McQuaide's trading caused the customers to suffer collective realized losses of $190,839 while paying total trading costs of $201,684, including commissions of $160,360. This means the customers paid more in trading costs than their total investment losses—a clear indication of excessive trading designed to generate commissions rather than serve the customers' investment objectives.

Excessive trading, also known as churning, is one of the most harmful practices in the securities industry. It occurs when a representative exercises control over an account and trades excessively to generate commissions, without regard to the customer's investment objectives. Senior customers are particularly vulnerable to this abuse because they may be more trusting and less likely to question their advisor's recommendations.

In light of McQuaide's financial status, no monetary sanction was imposed, but the six-month suspension removes him from the industry temporarily. The fact that trading costs exceeded investment losses demonstrates how destructive churning can be. Senior investors and their families should carefully monitor account activity for excessive trading, especially when commissions seem disproportionate to account size or the customer's investment goals.

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According to FINRA, Joseph Neil Savasta was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for six months for willfully failing to timely amend his Form U4 to disclose felony charges and guilty pleas. Savasta was arrested and charged with Ag...

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According to FINRA, Joseph Neil Savasta was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for six months for willfully failing to timely amend his Form U4 to disclose felony charges and guilty pleas. Savasta was arrested and charged with Aggravated Vehicular Assault, Assault in the Second Degree, Vehicular Assault in the Second Degree, and two counts of Driving While Intoxicated.

Despite being aware of these felony charges, Savasta did not amend his Form U4 until approximately 16 months after his arrest. He ultimately pled guilty to three of the felonies and the remaining charges were dismissed. However, even after pleading guilty, he did not disclose the guilty pleas in the amended Form U4 that disclosed the charges. It took another amended Form U4, filed more than 30 days after the guilty pleas, to finally disclose this critical information.

Felony charges and convictions are among the most important disclosures on Form U4 because they speak directly to a representative's character and fitness to handle customer funds and provide investment advice. Drunk driving causing serious injuries demonstrates dangerous judgment that investors have a right to know about when deciding whether to trust someone with their financial future.

The 16-month delay and multiple incomplete disclosures demonstrate a pattern of concealment rather than inadvertent oversight. The six-month suspension and deferred fine emphasize the seriousness of willful disclosure failures. Investors should regularly check BrokerCheck to see if their representatives have any criminal charges or convictions, as these may not be immediately disclosed.

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According to FINRA, John A. Ordonez was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 13 months for backdating documents produced to FINRA in response to a request for information. When gathering documents, Ordonez saw that relevant co...

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According to FINRA, John A. Ordonez was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 13 months for backdating documents produced to FINRA in response to a request for information. When gathering documents, Ordonez saw that relevant cover sheets he was responsible for were blank. He signed and backdated the cover sheets to give the appearance of contemporaneous reviews, knowing his firm would submit the backdated documents to FINRA.

After FINRA informed the firm it intended to interview Ordonez, he disclosed his misconduct to his firm. The firm immediately placed him on administrative leave and notified FINRA. During his on-the-record interview, Ordonez acknowledged that he had backdated the cover sheets provided to FINRA.

Backdating supervisory documents is a serious form of obstruction that undermines regulatory oversight. Supervisory review cover sheets exist to document that required reviews actually occurred at the proper times. Backdating these documents creates a false record suggesting supervision took place when it did not, preventing FINRA from identifying supervisory failures.

The fact that Ordonez knew the backdated documents would be submitted to FINRA makes this particularly serious. It represents an attempt to deceive regulators about the firm's supervisory practices. While Ordonez eventually acknowledged his misconduct, the 13-month suspension reflects the gravity of creating false records for submission to regulators. This case serves as a warning that any attempt to deceive FINRA through false documentation will result in severe sanctions.

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According to FINRA, Darren N. Ting was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for four months for exercising discretionary authority without written authorization and causing his firm to maintain inaccurate books and records. Ting p...

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According to FINRA, Darren N. Ting was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for four months for exercising discretionary authority without written authorization and causing his firm to maintain inaccurate books and records. Ting placed trades in customer accounts without obtaining prior written authorization from customers to exercise discretion and without his firm having accepted the accounts as discretionary.

Although the customers understood that Ting was placing trades in their accounts, they had not provided the required prior written authorization for discretionary trading. This violates fundamental investor protection rules designed to ensure customers explicitly authorize representatives to make trading decisions without consultation.

Additionally, Ting caused his firm to maintain inaccurate books and records by mismarking solicited trades as unsolicited. Solicited trades are those recommended by the representative, while unsolicited trades are initiated by the customer. This distinction is critical because solicited trades trigger suitability obligations and supervisory reviews that don't apply to unsolicited trades.

By mismarking trades as unsolicited, Ting circumvented his firm's supervisory systems designed to review his recommendations for suitability. This prevented the firm from identifying potentially inappropriate recommendations and protecting customers from unsuitable trades. The four-month suspension and $10,000 deferred fine emphasize that both unauthorized discretionary trading and falsification of trade records are serious violations that undermine investor protection.

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According to FINRA, Anna Schendra was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 18 months for having access to unauthorized materials while taking the Series 7 General Securities Representative Qualification examination. Prior to be...

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According to FINRA, Anna Schendra was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 18 months for having access to unauthorized materials while taking the Series 7 General Securities Representative Qualification examination. Prior to beginning the exam, Schendra attested that she had reviewed and would abide by FINRA's Rules of Conduct, which prohibit access to personal items including notes and study materials during the exam.

During three unscheduled breaks, Schendra had access to her personal notes and study materials that she had placed in the test center restroom. This deliberate placement of study materials in a location she knew she would access during breaks demonstrates premeditation and intent to cheat on the exam.

The Series 7 exam exists to ensure that representatives possess the knowledge necessary to properly advise clients and handle their accounts. When someone cheats on this exam, they may lack fundamental knowledge needed to serve investors competently, putting customers at risk of receiving inappropriate advice or having their accounts mishandled.

The 18-month suspension is significantly longer than typical suspensions, reflecting the seriousness of exam cheating and the premeditated nature of Schendra's conduct. The repeated access to materials during three separate breaks shows this was not a momentary lapse in judgment but a sustained effort to gain an unfair advantage. This case demonstrates FINRA's commitment to maintaining the integrity of qualification exams and ensuring only qualified individuals serve investors.

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According to FINRA, Kevin R. Barry was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 18 months for possessing and accessing unauthorized materials while taking the Series 7 exam. Barry took the exam from home using a remote testing plat...

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According to FINRA, Kevin R. Barry was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 18 months for possessing and accessing unauthorized materials while taking the Series 7 exam. Barry took the exam from home using a remote testing platform and attested that he had reviewed and would abide by FINRA's Rules of Conduct prohibiting access to personal items during the exam.

Barry informed exam staff twice prior to beginning that his cell phone was not on his person and was out of reach. However, during the exam, Barry possessed and accessed a cell phone. This demonstrates deliberate deception—he specifically told exam staff his phone was inaccessible, then accessed it during the exam.

Remote testing created new opportunities for exam cheating, and FINRA has responded with strict enforcement to maintain exam integrity. The fact that Barry explicitly represented his phone was out of reach before accessing it during the exam shows intentional dishonesty rather than inadvertent error.

The 18-month suspension reflects both the exam violation and the deliberate false statements made to exam staff. Cell phones provide access to vast amounts of information and potential assistance that could allow someone to pass an exam they otherwise would fail. When representatives cheat to obtain their licenses, it raises serious questions about their character and whether they possess the knowledge necessary to serve investors competently. This case emphasizes that exam integrity violations will result in lengthy suspensions that protect investors from potentially unqualified representatives.

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