Bad Brokers

According to FINRA, William Henry Weisbrod was barred from association with any FINRA member in all capacities on August 2, 2023.

FINRA found that Weisbrod breached fiduciary duties owed to a community bank for which he served as an advisory director and consultant. The bank was a customer of Wei...

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According to FINRA, William Henry Weisbrod was barred from association with any FINRA member in all capacities on August 2, 2023.

FINRA found that Weisbrod breached fiduciary duties owed to a community bank for which he served as an advisory director and consultant. The bank was a customer of Weisbrod's member firm and relied upon his investment knowledge and experience to determine its investment strategy. Weisbrod breached his fiduciary duties to the bank by directing it to engage in an investment strategy that generated revenue for Weisbrod but exposed the bank to excessive risk and unnecessary trading costs.

At Weisbrod's recommendation, the bank opened brokerage accounts at the firm with a registered representative who worked in the same office as Weisbrod. Although Weisbrod represented to the firm that he would not be involved with the bank's investments through it, Weisbrod directed the trading in the bank's accounts. Weisbrod recommended that the bank engage in a risky trading strategy involving fixed-income securities purchased through the firm.

Weisbrod's trading generated over $1 million in commissions for the registered representative assigned to the bank's accounts, who directed more than $370,000 of these commissions to Weisbrod through a series of payments that Weisbrod did not disclose to the bank. Weisbrod recommended that the bank trade through the firm even though it lacked a fixed-income trading desk. Because the firm lacked a fixed-income trading desk, it had to use a third-party "broker's broker" to acquire fixed-income securities for the bank, which caused the bank to pay approximately $1.25 million in additional markups to the broker's broker. Weisbrod did not disclose these markups to the bank.

As a result of Weisbrod's trading strategy, the bank spent more than $600,000 to remediate the risk of its investment portfolio. FINRA also found that Weisbrod falsely represented to the firm that he was not involved with the bank's investments through it in connection with the firm's inquiry into his outside business activity involving the bank.

This case demonstrates the serious harm that can result when financial professionals breach their fiduciary duties to customers. Weisbrod put his own financial interests ahead of his customer's interests by directing a trading strategy that generated substantial commissions for himself while exposing the bank to excessive risk and unnecessary costs. His failure to disclose the payments he received and the additional markups the bank was paying compounded the breach of trust.

Investors, including institutional investors like banks, should be wary of financial professionals who have conflicts of interest or who recommend strategies that generate unusually high fees or commissions. They should ask questions about how their advisor is compensated and whether there are less expensive alternatives available. Transparency about compensation and costs is essential to ensuring that financial professionals are acting in their customers' best interests.

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According to FINRA, Timothy James Breslin was barred from association with any FINRA member in all capacities on August 3, 2023.

FINRA found that Breslin provided falsified bank account statements and checks to FINRA in response to a request for documents, made false statements to FINRA in respon...

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According to FINRA, Timothy James Breslin was barred from association with any FINRA member in all capacities on August 3, 2023.

FINRA found that Breslin provided falsified bank account statements and checks to FINRA in response to a request for documents, made false statements to FINRA in response to a request for information, and made false statements to FINRA during on-the-record testimony. The requested information concerned allegations in a Form U5 filed by Breslin's member firm that reported he had been discharged for initiating unfunded automated clearing house (ACH) transfers to his personal account and initially lacked candor regarding the same.

In response to a request for information from FINRA, Breslin stated that he had traveled with his brother and a friend and each of these individuals wrote him a check for $5,000 to reimburse him for expenses on the trip. Breslin claimed he deposited both checks into his bank account, but the checks bounced when he deposited them. However, Breslin's statements were false because he did not receive or deposit a $5,000 check from his brother or friend during the relevant period of the request.

FINRA further requested that Breslin provide copies of the checks and identify the corresponding check deposits on his bank account statements. Breslin responded with three falsified checks: the check from his brother, a check from his friend, and another $5,000 check from his friend, which purportedly replaced the prior check from his friend that bounced. On the check from Breslin's brother, Breslin altered the date and amount of the check and removed any identifiable information related to the check's deposit. For the checks from Breslin's friend, Breslin altered the amount and date of both checks and altered the deposit number of one of the checks.

Breslin also provided a falsified copy of his bank account statement, listing deposits of the falsified checks. Specifically, Breslin inserted three deposits into the account statements, but the balance in his account did not change. The morning of Breslin's testimony, he produced another falsified version of his bank account statements. This time Breslin inflated the running balances listed on the statements to falsely reflect deposits of the checks he purportedly received from his brother and friend.

Breslin also provided false testimony by claiming he had received and deposited checks from his brother and friend and that he had submitted genuine bank account statements and checks to FINRA.

Providing false information and falsified documents to securities regulators is among the most serious violations a registered person can commit. It undermines the entire regulatory process and makes it impossible for regulators to protect investors effectively. The bar imposed on Breslin ensures that someone who engaged in such extensive fraud and deception cannot work in the securities industry and harm investors.

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According to FINRA, Lickhai Quach was barred from association with any FINRA member in all capacities on August 7, 2023.

FINRA found that Quach refused to provide documents and information requested by FINRA in connection with its investigation of the circumstances surrounding his termination fro...

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According to FINRA, Lickhai Quach was barred from association with any FINRA member in all capacities on August 7, 2023.

FINRA found that Quach refused to provide documents and information requested by FINRA in connection with its investigation of the circumstances surrounding his termination from his member firm. The firm filed a Form U5 stating that Quach was permitted to resign while under review by the firm for violating firm policy related to borrowing funds from a client.

Borrowing funds from clients is a serious compliance violation that raises significant investor protection concerns. When registered representatives borrow money from clients, it creates conflicts of interest and potential for abuse of the trust relationship. FINRA rules generally prohibit borrowing from customers unless specific conditions are met, such as when the customer is a family member or financial institution in the business of lending.

When a firm reports on a Form U5 that a registered representative was permitted to resign while under review for alleged misconduct, FINRA typically conducts an investigation to determine whether securities rules were violated and whether the individual poses a risk to investors. For these investigations to be effective, registered persons must cooperate by providing requested information and documents.

Quach's refusal to provide information prevented FINRA from fully investigating the alleged borrowing from a client and determining whether violations occurred. This refusal to cooperate is itself a serious violation because it obstructs FINRA's ability to protect investors and maintain the integrity of the securities markets.

When a registered person refuses to cooperate with a FINRA investigation, the typical sanction is a bar from the securities industry. This sanction is appropriate because someone who refuses to cooperate with regulatory oversight poses an unacceptable risk to investors and demonstrates a lack of respect for regulatory authority.

A bar prohibits an individual from working for any FINRA member firm in any capacity. This means Quach cannot work as a registered representative, principal, or in any other role at a broker-dealer. The bar protects investors by ensuring that individuals who obstruct regulatory investigations cannot continue to work in the industry.

Investors should be cautious about lending money to their financial advisors or entering into financial arrangements beyond the normal broker-customer relationship. Such arrangements create conflicts of interest and put investors at risk. Investors can check the background of their financial professionals, including any disciplinary actions, through FINRA's BrokerCheck system.

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According to FINRA, Raymond William Clark was barred from association with any FINRA member in all capacities on August 9, 2023.

FINRA found that Clark refused to appear for on-the-record testimony requested by FINRA while it sought to investigate, among other issues, his role in potential churni...

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According to FINRA, Raymond William Clark was barred from association with any FINRA member in all capacities on August 9, 2023.

FINRA found that Clark refused to appear for on-the-record testimony requested by FINRA while it sought to investigate, among other issues, his role in potential churning, excessive trading, unauthorized trading of customer accounts, supervision of other registered representatives for potential excessive trading and churning of customer accounts, potential violations of rules intended to safeguard non-public personal customer information, and potential violations of recordkeeping rules.

The matters under investigation involved serious allegations that could have caused significant harm to investors. Churning and excessive trading occur when a broker places trades in a customer's account primarily to generate commissions rather than to benefit the customer's investment objectives. This practice can deplete customer accounts through unnecessary trading costs and commissions.

Unauthorized trading occurs when a broker executes trades in a customer's account without the customer's permission or authorization. This is a fundamental breach of trust and can result in customers being placed in unsuitable investments or incurring unwanted losses.

The investigation also concerned supervisory responsibilities, suggesting that Clark may have had oversight responsibilities for other registered representatives and may have failed to adequately supervise their trading activities to prevent excessive trading or churning in customer accounts.

Additionally, the investigation involved potential violations of customer information protection rules and recordkeeping rules. Safeguarding customer information and maintaining accurate books and records are fundamental obligations of broker-dealers and their representatives.

Clark's refusal to provide testimony prevented FINRA from fully investigating these serious allegations. When registered persons refuse to cooperate with FINRA investigations, they obstruct the regulatory process and prevent FINRA from protecting investors and maintaining market integrity.

The obligation to cooperate with FINRA investigations is a fundamental requirement for registered persons. This obligation continues even after an individual is no longer associated with a member firm. Refusal to provide testimony is considered such a serious violation that FINRA typically imposes a bar.

A bar prohibits an individual from working for any FINRA member firm in any capacity and ensures that someone who refuses to cooperate with regulatory oversight cannot continue to work in the securities industry where they could harm investors.

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According to FINRA, Vincent Pucciarelli Jr. was barred from association with any FINRA member in all capacities on August 9, 2023.

FINRA found that Pucciarelli refused to provide on-the-record testimony requested by FINRA in connection with an investigation into sales of pre-initial public offer ...

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According to FINRA, Vincent Pucciarelli Jr. was barred from association with any FINRA member in all capacities on August 9, 2023.

FINRA found that Pucciarelli refused to provide on-the-record testimony requested by FINRA in connection with an investigation into sales of pre-initial public offer (IPO) private placement offerings.

Pre-IPO private placements are securities offerings that occur before a company goes public through an initial public offering. These offerings are typically available only to accredited investors and are subject to significant regulatory requirements under securities laws. Because these investments are often high-risk and lack the liquidity of publicly traded securities, they require careful due diligence and suitability analysis by broker-dealers.

FINRA's investigation likely sought to determine whether the sales of these pre-IPO private placements were conducted in accordance with securities laws and FINRA rules, including whether customers were accredited investors, whether adequate due diligence was conducted on the offerings, whether the offerings were suitable for the customers who purchased them, and whether all required disclosures were made to customers.

When FINRA requests on-the-record testimony, it is seeking sworn statements from individuals with knowledge of the matters under investigation. This testimony is essential for FINRA to gather facts, understand what occurred, and determine whether violations of securities laws or regulations took place.

Pucciarelli's refusal to provide testimony prevented FINRA from completing its investigation into the private placement sales. This refusal to cooperate is a serious violation because it obstructs FINRA's ability to investigate potential misconduct and protect investors.

Registered persons have an obligation to cooperate with FINRA investigations, including appearing for on-the-record testimony when requested. This obligation is fundamental to FINRA's regulatory mission and continues even after an individual is no longer associated with a member firm. When registered persons refuse to provide testimony, they undermine the regulatory process and demonstrate a disregard for their regulatory obligations.

Because refusal to cooperate with FINRA investigations is such a serious violation, FINRA typically imposes a bar, which prohibits the individual from working for any FINRA member firm in any capacity. This sanction protects investors by ensuring that individuals who obstruct regulatory investigations cannot continue to work in the securities industry.

Investors should be particularly cautious when investing in private placements and should ensure that their broker conducts adequate due diligence and suitability analysis before recommending such investments.

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According to FINRA, Lucy Yi Lin was barred from association with any FINRA member in all capacities on August 10, 2023.

FINRA found that Lin refused to produce information or documents requested by FINRA as part of its investigation into allegations made in a Form 4530 filing by her member firm. ...

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According to FINRA, Lucy Yi Lin was barred from association with any FINRA member in all capacities on August 10, 2023.

FINRA found that Lin refused to produce information or documents requested by FINRA as part of its investigation into allegations made in a Form 4530 filing by her member firm. The Form 4530 stated that the firm terminated Lin due to concerns that she violated firm policy regarding expense reimbursement.

Form 4530 is used by member firms to report to FINRA certain significant events, including the termination of registered persons for cause. When a firm files a Form 4530 reporting a termination related to alleged policy violations, FINRA typically conducts an investigation to determine whether the conduct also violated FINRA rules or securities laws.

Violations of firm policies regarding expense reimbursement can involve various types of misconduct, including submitting false or inflated expense reports, seeking reimbursement for personal expenses, or otherwise misusing firm funds. Such conduct raises concerns about a registered person's honesty and integrity, which are essential qualities for individuals working in the securities industry.

When FINRA conducts investigations into alleged misconduct, it has the authority to request information and documents from registered persons. These requests are critical to FINRA's ability to gather facts, determine whether violations occurred, and assess whether the individual poses a risk to investors.

Registered persons have an obligation to cooperate with FINRA investigations by providing requested information and documents. This obligation is fundamental to FINRA's regulatory mission and continues even after an individual is no longer associated with a member firm. When registered persons refuse to provide information, they prevent FINRA from investigating potential misconduct and obstruct the regulatory process.

Lin's refusal to provide information prevented FINRA from fully investigating the allegations regarding expense reimbursement violations. Because refusal to cooperate with FINRA is such a serious violation, FINRA typically imposes a bar from the securities industry.

A bar prohibits an individual from associating with any FINRA member firm in any capacity. This means Lin cannot work for any broker-dealer as a registered representative, principal, or in any other role. The bar protects investors by ensuring that individuals who refuse to cooperate with regulatory oversight cannot continue to work in the industry.

Investors can research the background of their financial professionals through FINRA's BrokerCheck system, which includes information about employment history, qualifications, and disciplinary actions including bars.

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According to FINRA, Robert Juan Escobio was barred from association with any FINRA member in all capacities on August 11, 2023, when a Securities and Exchange Commission (SEC) decision became final.

The SEC decision affirmed the findings of violations and the sanction imposed by FINRA's National ...

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According to FINRA, Robert Juan Escobio was barred from association with any FINRA member in all capacities on August 11, 2023, when a Securities and Exchange Commission (SEC) decision became final.

The SEC decision affirmed the findings of violations and the sanction imposed by FINRA's National Adjudicatory Counsel (NAC). The SEC sustained FINRA's finding that Escobio violated FINRA rules by failing to comply with requests for on-the-record testimony and requests for information and documents.

The SEC agreed that the bars FINRA imposed for both violations were necessary to protect the investing public from an individual who would impede a regulatory investigation, and to deter others tempted to do the same. The SEC also determined that FINRA properly granted summary disposition as to both liability and sanctions.

With respect to liability, the SEC observed that Escobio's receipt and failure to comply with FINRA's requests were undisputed, and his arguments that his failure to comply was excusable lacked support. With respect to sanctions, the SEC observed that there was no genuine issue of material fact sufficient to require a hearing on mitigation.

This case is significant because it demonstrates the SEC's support for FINRA's authority to investigate potential misconduct and to sanction individuals who refuse to cooperate with those investigations. The SEC's decision affirms that refusal to cooperate with FINRA is a serious violation that warrants a bar from the securities industry.

The fact that Escobio's case proceeded through multiple levels of review—from FINRA enforcement, to the NAC, to the SEC—demonstrates that he had ample opportunity to present arguments and evidence regarding his refusal to cooperate. The SEC's conclusion that there were no meritorious defenses or mitigation factors reinforces the principle that registered persons must cooperate with regulatory investigations.

When registered persons refuse to provide information, documents, or testimony to FINRA, they prevent regulators from investigating potential misconduct and protecting investors. This obstruction of the regulatory process is itself a serious violation because it undermines FINRA's ability to fulfill its investor protection mission.

A bar prohibits an individual from working for any FINRA member firm in any capacity. The SEC agreed with FINRA that a bar was necessary in this case to protect investors from someone who refused to cooperate with regulatory oversight and to deter others from similar conduct.

Investors should understand that cooperation with regulatory investigations is a fundamental obligation of securities professionals. When individuals refuse to cooperate, it raises serious questions about what they may be trying to hide and demonstrates a lack of respect for regulatory authority.

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According to FINRA, Wesley Howard Triani was barred from association with any FINRA member in all capacities on August 23, 2023.

FINRA found that Triani refused to provide documents and information requested by FINRA as part of its investigation into the circumstances giving rise to a Form 4530 f...

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According to FINRA, Wesley Howard Triani was barred from association with any FINRA member in all capacities on August 23, 2023.

FINRA found that Triani refused to provide documents and information requested by FINRA as part of its investigation into the circumstances giving rise to a Form 4530 filing. Form 4530 is used by member firms to report to FINRA certain significant events, including events that may indicate violations of securities laws or regulations or that may harm investors.

When a firm files a Form 4530, it typically signals that something significant has occurred that warrants regulatory attention. FINRA reviews these filings and may open investigations to determine whether securities rules were violated, whether investors were harmed, and whether the individuals involved pose ongoing risks to investors.

As part of these investigations, FINRA has the authority to request information and documents from registered persons and others with knowledge of the matters under investigation. These requests are essential for FINRA to gather facts and determine what occurred.

Registered persons have an obligation to cooperate with FINRA investigations by providing requested information and documents. This obligation is fundamental to FINRA's regulatory mission and exists to ensure that FINRA can effectively investigate potential misconduct and protect investors. The obligation to cooperate continues even after an individual is no longer associated with a member firm.

Triani's refusal to provide information prevented FINRA from fully investigating the circumstances that led to the Form 4530 filing. This refusal to cooperate is a serious violation because it obstructs the regulatory process and prevents FINRA from determining whether violations occurred and whether investors were harmed.

When registered persons refuse to cooperate with FINRA investigations, they demonstrate a disregard for their regulatory obligations and for the investor protection mission that underlies securities regulation. Because this is such a serious violation, FINRA typically imposes a bar from the securities industry.

A bar prohibits an individual from associating with any FINRA member firm in any capacity. This means Triani cannot work for any broker-dealer as a registered representative, principal, or in any other role. The bar protects investors by ensuring that individuals who refuse to cooperate with regulatory oversight cannot continue to work in the securities industry where they could potentially harm investors.

Investors can check the background of their financial professionals through FINRA's BrokerCheck system, which provides information about employment history, qualifications, and disciplinary actions including bars. This free resource helps investors make informed decisions about who they work with.

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According to FINRA, J. Richard Matheis was barred from association with any FINRA member in all capacities on August 24, 2023.

FINRA found that Matheis refused to appear for on-the-record testimony requested by FINRA as part of its investigation into whether he engaged in any sales practice viola...

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According to FINRA, J. Richard Matheis was barred from association with any FINRA member in all capacities on August 24, 2023.

FINRA found that Matheis refused to appear for on-the-record testimony requested by FINRA as part of its investigation into whether he engaged in any sales practice violations.

Sales practice violations encompass a wide range of potential misconduct in how securities are sold to customers. These violations can include making misrepresentations or omitting material facts, recommending unsuitable investments, excessive trading or churning, unauthorized trading, charging excessive markups or commissions, and failing to provide required disclosures, among others. Sales practice violations can cause significant financial harm to investors and undermine trust in the securities markets.

When FINRA investigates potential sales practice violations, it seeks to determine whether registered persons have complied with their obligations under FINRA rules and securities laws. These investigations are critical to FINRA's mission of protecting investors and maintaining market integrity.

On-the-record testimony is a key investigative tool that allows FINRA to gather sworn statements from individuals with knowledge of the matters under investigation. This testimony helps FINRA understand what occurred, evaluate witness credibility, and determine whether violations took place.

Matheis's refusal to provide testimony prevented FINRA from fully investigating whether he engaged in sales practice violations. This refusal to cooperate is a serious violation because it obstructs FINRA's ability to investigate potential misconduct and protect investors.

Registered persons have a fundamental obligation to cooperate with FINRA investigations, including appearing for on-the-record testimony when requested. This obligation continues even after an individual is no longer associated with a member firm. When registered persons refuse to provide testimony, they undermine the regulatory process and demonstrate a disregard for their regulatory responsibilities.

Because refusal to cooperate with FINRA investigations is such a serious violation, FINRA typically imposes a bar from the securities industry. This sanction is appropriate because someone who refuses to cooperate with regulatory oversight poses an unacceptable risk to investors.

A bar prohibits an individual from working for any FINRA member firm in any capacity. This means Matheis cannot work as a registered representative, principal, or in any other role at a broker-dealer. The bar protects investors by ensuring that individuals who obstruct regulatory investigations cannot continue to work in the securities industry.

Investors can research the background and disciplinary history of their financial professionals through FINRA's BrokerCheck system, a free online resource that provides important information to help investors make informed decisions.

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According to FINRA, Lilia Nia (formerly Lilia Niyazova) was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for one year, and ordered to pay deferred disgorgement of $150,000 on August 2, 2023. The suspension was in effect from August 7, 2023, t...

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According to FINRA, Lilia Nia (formerly Lilia Niyazova) was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for one year, and ordered to pay deferred disgorgement of $150,000 on August 2, 2023. The suspension was in effect from August 7, 2023, through August 6, 2024.

FINRA found that Nia effected unauthorized transactions in a community bank's account, which was a customer of her member firm, without obtaining instructions from any person authorized to conduct trading for the bank. Nia accepted orders for the bank's trading from a firm registered representative who was an advisory board member for the bank but not authorized to place orders for the bank. Nia also permitted the representative to place orders for the bank.

The trading effected by Nia, based upon instructions from the other representative, caused the bank to take excessive risk. The trading for the bank generated approximately $1 million in commissions for Nia, more than $370,000 of which she transmitted to the other representative through a series of separate business and financial transactions.

Because the firm lacked its own fixed-income trading desk, it was frequently required to use a "broker's broker" to acquire fixed income securities for the bank. This resulted in the bank paying approximately $1.25 million in markups to the broker's broker, in addition to commissions to the firm. As a result of this trading, the bank also spent more than $600,000 to remediate the risk of its investment portfolio.

This case demonstrates the serious harm that can result when brokers accept trading instructions from unauthorized individuals. Nia's acceptance of orders from someone who was not authorized to trade for the bank violated fundamental principles of customer protection. Customers, including institutional customers like banks, establish trading authorization to control who can make investment decisions for their accounts. When brokers ignore these authorizations, they expose customers to unauthorized and potentially harmful trading.

The trading conducted by Nia exposed the bank to excessive risk and generated substantial commissions for herself and the other representative. The fact that Nia transmitted more than $370,000 of her commissions to the other representative raises questions about the nature of their arrangement and whether financial incentives influenced the trading recommendations.

The additional markups paid to the broker's broker, totaling approximately $1.25 million, compounded the bank's losses. These markups could have been avoided or reduced if the bank had traded with a firm that maintained its own fixed-income trading desk.

Investors should ensure that their brokers only accept trading instructions from authorized individuals. They should also ask questions about how their broker is compensated and whether there are less expensive alternatives for executing transactions. Unauthorized trading is a serious violation that can result in unsuitable investments and excessive costs.

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