Bad Brokers

According to FINRA, Imani L. Bailey was barred from association with any FINRA member in all capacities for converting funds from a customer of her member firm's affiliate bank.

Bailey successfully transferred a total of $1,384.25 from the customer's bank account to a third-party to pay an instal...

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According to FINRA, Imani L. Bailey was barred from association with any FINRA member in all capacities for converting funds from a customer of her member firm's affiliate bank.

Bailey successfully transferred a total of $1,384.25 from the customer's bank account to a third-party to pay an installment on her personal automobile loan. Bailey obtained unauthorized access to the customer's checking account by bypassing the bank's account authentication process. The customer neither knew about nor authorized these transfers. The funds were eventually returned by the bank to the banking customer.

Conversion of customer funds is one of the most serious violations a securities professional can commit. Even though the amount involved in this case was relatively small compared to some other conversion cases, the conduct demonstrates a fundamental breach of trust that goes to the heart of the relationship between financial professionals and their customers.

What makes this case particularly troubling is that Bailey bypassed the bank's authentication process to gain unauthorized access to the customer's account. This shows premeditation and a deliberate intent to access funds without authorization. The fact that she used the funds to pay her personal automobile loan reveals that this was for her own benefit, not the customer's.

While the bank eventually returned the funds to the customer, this does not excuse the underlying conduct. Customers must be able to trust that financial professionals with access to their account information will not abuse that access for personal gain. The securities industry maintains a zero tolerance policy for conversion of customer funds because such conduct directly undermines investor confidence in the financial system.

The bar sanction is appropriate given the intentional nature of the misconduct and the breach of trust involved. This case serves as a reminder that anyone with access to customer accounts must respect the sacred trust that comes with that access and never use it for personal benefit.

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According to FINRA, Sean Morgan Storm Boswick was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA in connection with an investigation into the circumstances giving rise to his termination from his member firm.

Bo...

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According to FINRA, Sean Morgan Storm Boswick was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA in connection with an investigation into the circumstances giving rise to his termination from his member firm.

Boswick's firm submitted a Form U5 disclosing that he was discharged and was under internal investigation for violation of FINRA Rule 3280. In response, FINRA sent a request to Boswick for production of documents and information, including a request that he produce his personal bank account information and statements. Although Boswick provided a partial response to FINRA's request, he did not produce his bank account information and statements at any time.

FINRA Rule 3280 prohibits registered persons from borrowing from or lending to customers except in very limited circumstances. When firms investigate potential violations of this rule, bank account information is often critical evidence to determine whether prohibited lending or borrowing occurred.

By providing only a partial response and refusing to produce his bank account information and statements, Boswick prevented FINRA from fully investigating the allegations against him. Bank records would have been essential evidence to determine whether any prohibited lending or borrowing transactions occurred between Boswick and customers.

The obligation to provide documents requested by FINRA during an investigation is absolute. Registered persons cannot pick and choose which documents to provide; they must produce all requested materials. Even if bank records might contain information that could be embarrassing or damaging, the obligation to produce them remains.

The bar sanction reflects the seriousness of failing to cooperate with a regulatory investigation. When individuals refuse to provide critical evidence, they impede FINRA's ability to protect investors and maintain market integrity. This case serves as a reminder that all registered persons must fully comply with FINRA's requests for information, including personal financial records when they are relevant to an investigation.

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According to FINRA, Daniel Liam Kiely was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

The decision provides no additional details about the subject matter of FINRA's investigation or what prompted the reque...

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According to FINRA, Daniel Liam Kiely was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

The decision provides no additional details about the subject matter of FINRA's investigation or what prompted the request for testimony. However, the bar sanction reflects the absolute nature of the obligation to cooperate with FINRA investigations.

Every registered securities professional has a continuing obligation to cooperate with FINRA investigations, which includes appearing for on-the-record testimony when requested. This obligation exists regardless of whether the individual is currently registered with a firm or has left the industry. It also applies regardless of the subject matter of the investigation or whether the individual believes they have done anything wrong.

On-the-record testimony is a critical tool that FINRA uses to investigate potential violations and protect investors. When individuals refuse to appear for testimony, they prevent FINRA from gathering essential information about potential misconduct. This obstruction of the regulatory process is itself a serious violation that undermines FINRA's ability to fulfill its investor protection mission.

The bar sanction in cases involving refusal to testify is standard and automatic. FINRA has consistently held that refusing to appear for testimony warrants a bar from the industry because cooperation with investigations is a fundamental obligation of all registered persons. There are no acceptable excuses for refusing to testify.

This case serves as a clear message to all securities professionals: if FINRA requests your appearance for on-the-record testimony, you must appear. Refusing to do so will result in a bar from the industry, effectively ending your career in the securities business. Investors should be reassured that the industry maintains strict rules requiring cooperation with regulatory inquiries and imposes severe consequences on those who refuse to cooperate.

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According to FINRA, Robert Earl Turner Jr. was barred from association with any FINRA member in all capacities for participating in private securities transactions without providing prior written notice to his member firm and for selling fraudulent investment products that caused customers to lose m...

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According to FINRA, Robert Earl Turner Jr. was barred from association with any FINRA member in all capacities for participating in private securities transactions without providing prior written notice to his member firm and for selling fraudulent investment products that caused customers to lose most or all of their investments.

Turner marketed, recommended, and sold what were purported to be fixed annuities offered by an entity formed by his college friend and business acquaintance to customers of Turner's firm, who collectively invested over $7.2 million in the entity. The entity's products were not, in fact, fixed annuities, but rather securities. The entity was not a licensed insurance company, nor was it licensed or authorized to sell fixed annuities at any time during the period when Turner sold the products.

Based on Turner's representations and quarterly annuity statements that the entity sent to Turner's customers, they believed they would be earning a fixed, guaranteed rate of return of between four percent and eight percent, compounded on a quarterly basis. Turner did not disclose his affiliation with his friend to any of his customers who invested in these products.

Turner actively concealed from the firm his involvement in selling these products, which he knew were not approved firm products, by directing his friend to send copies of the entity's quarterly annuity statements to his personal P.O. Box instead of his firm office. Turner falsely attested on several firm compliance certifications that he understood and agreed to comply with the firm's prohibition on selling away.

When one of Turner's former firm customers sought to withdraw her entire investment from the entity, which the most recent annuity statement had led her to believe was valued at over $450,000, Turner's friend died before the customer received any money from her investment. Following the friend's death, those of Turner's customers who invested in the entity lost most, if not the entirety, of their investments.

This case represents a particularly egregious example of selling away and fraud. Turner sold fraudulent investment products that were not legitimate annuities, concealed this activity from his firm, and caused customers to lose over $7 million. The bar sanction is appropriate given the severity of the misconduct and the substantial harm to investors.

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According to FINRA, Patrick Stanton Matlock was barred from association with any FINRA member in all capacities for misrepresenting material facts on a loan application to obtain an Economic Injury Disaster Loan (EIDL), engaging in an undisclosed outside business activity, and failing to produce doc...

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According to FINRA, Patrick Stanton Matlock was barred from association with any FINRA member in all capacities for misrepresenting material facts on a loan application to obtain an Economic Injury Disaster Loan (EIDL), engaging in an undisclosed outside business activity, and failing to produce documents requested by FINRA. This decision became final through an Office of Hearing Officers decision.

Matlock falsely represented that he sought a loan for a sole proprietorship in New Jersey he had established in 2013, that the proprietorship had generated gross revenue of $120,000 in a 12-month period ending January 31, 2020, and that it had one employee. However, the proprietorship did not exist at the time of the loan application. Matlock reaffirmed the truth and accuracy of his representations when he executed the loan agreement necessary for a $59,000 EIDL loan.

Additionally, Matlock falsely stated in the loan agreement that he would use the proceeds exclusively to alleviate economic injury caused by the COVID-19 pandemic. But Matlock did not use the loan proceeds for his purported business. Instead, he used the proceeds to purchase shares of common stock in an energy company.

Matlock also engaged in an outside business activity without providing prior written notice to his member firm. After applying for the EIDL loan, Matlock formed a limited liability company in the State of New Jersey to perform remodeling services for profit. Matlock was the sole member and manager of the company and its registered agent.

Furthermore, Matlock failed to produce information and documents requested by FINRA in connection with its investigation into whether the company he had referred to in his EIDL loan application had any revenue in the year specified in his application and whether he had received compensation in connection with his undisclosed outside business activity. Matlock made a partial but incomplete production of requested bank statements that were material to FINRA's investigation.

This case involves multiple serious violations, including fraud in obtaining government funds intended to help businesses affected by the pandemic, misusing those funds for personal investments, and failing to cooperate with FINRA's investigation. The bar sanction is appropriate given the intentional nature of the misconduct and the abuse of a government relief program.

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According to FINRA, Kenneth John Byrne was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA in connection with its investigation into the suitability of certain trades recommended by him.

Suitability of investmen...

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According to FINRA, Kenneth John Byrne was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA in connection with its investigation into the suitability of certain trades recommended by him.

Suitability of investment recommendations is a fundamental obligation of all registered representatives. FINRA's investigation into trade suitability suggests concerns that Byrne may have recommended trades that were not appropriate for his customers' investment objectives, risk tolerance, financial situation, or other customer-specific factors.

By refusing to appear for testimony about the suitability of his trade recommendations, Byrne prevented FINRA from investigating whether customers were harmed by unsuitable investment advice. On-the-record testimony would have allowed FINRA to question Byrne about his understanding of his customers' financial situations, his rationale for recommending specific trades, and whether he conducted adequate due diligence before making recommendations.

The obligation to appear for on-the-record testimony is absolute and applies to all registered persons, regardless of the subject matter of the investigation. When FINRA is investigating potential violations that could have harmed customers, cooperation with the investigation is especially important. Refusing to testify prevents FINRA from fulfilling its mission to protect investors and hold those who violate securities laws accountable.

The bar sanction is automatic in cases where individuals refuse to appear for requested testimony. This reflects the industry's position that cooperation with regulatory investigations is a fundamental requirement of being a securities professional. There are no acceptable excuses for refusing to testify.

This case serves as a reminder that all registered persons must cooperate with FINRA investigations, including appearing for testimony when requested. Investors should be reassured that the industry maintains strict requirements for cooperation with regulatory inquiries and imposes severe sanctions on those who refuse to cooperate.

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According to FINRA, Kevin Dominic Klickna was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for forging a customer's electronic signature on an annuity account application without the customer's consent and affixing the cus...

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According to FINRA, Kevin Dominic Klickna was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for forging a customer's electronic signature on an annuity account application without the customer's consent and affixing the customer's signature on a rollover form.

The customer eventually noticed the forgery on the rollover form and complained to Klickna's member firm. As a result of the documents being firm records, Klickna caused the firm to maintain inaccurate books and records.

The suspension was in effect from January 17, 2023, through April 16, 2023.

Forgery of customer signatures is a serious violation that strikes at the heart of trust between financial professionals and their customers. Even when a broker believes they are acting in the customer's interest or that the customer would have consented if asked, forging signatures is never acceptable. Customers have the right to review and sign documents themselves before they become legally binding.

In this case, Klickna forged the customer's signature on important documents related to an annuity account and rollover. These documents create legal obligations and affect the customer's financial position. By forging the signature, Klickna deprived the customer of the opportunity to review the documents and make an informed decision about whether to proceed with the transactions.

The fact that the customer noticed the forgery and complained to the firm demonstrates the importance of customers reviewing their account documents carefully. Customers should always be alert for any documents they did not personally sign or any transactions they did not authorize.

Additionally, by submitting forged documents to the firm, Klickna caused the firm to maintain inaccurate books and records, which violates recordkeeping requirements designed to ensure the integrity of firm records. While the suspension is relatively short, it reflects that forgery is a serious violation that can result in significant sanctions.

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According to FINRA, Scott Paul Smith was fined $10,000 and suspended from association with any FINRA member in all capacities for 12 months for borrowing a total of $78,000 from an elderly customer without providing prior written notice to or obtaining written approval from his member firm, and for ...

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According to FINRA, Scott Paul Smith was fined $10,000 and suspended from association with any FINRA member in all capacities for 12 months for borrowing a total of $78,000 from an elderly customer without providing prior written notice to or obtaining written approval from his member firm, and for settling a customer complaint without his firm's knowledge or approval.

Smith borrowed the funds from one of his retail customers at the firm, who was not Smith's immediate family member nor was she in the business of lending money. Smith used the funds to pay for personal expenses. No payment terms were discussed or memorialized for any of these loans, nor did Smith provide any promissory notes. After receiving a complaint from the customer's estate, Smith repaid each of the loans.

Smith concealed the loans from the firm by instructing the customer to wire the proceeds for certain loans from one of her firm accounts to her personal checking account held outside of the firm, and then to write a check payable to a member of Smith's immediate family. On one occasion Smith instructed the customer to wire money directly from her firm account to Smith's mother-in-law to evade detection by the firm. Moreover, on compliance attestations, Smith falsely attested that he had not received a loan from any firm client.

Smith also settled a customer complaint without his firm's knowledge or approval. Following the death of the customer, her daughter discovered that the customer had made loans to Smith, and her estate demanded that Smith provide a full accounting of all loans outstanding. In response, Smith sent an attorney representing the estate a check for $40,000, which the estate accepted. Smith did not notify the firm about the complaint or that he had paid money to settle it. After Smith had left the firm and while registered with another firm, Smith offered the customer's estate a second check for $25,000, which the estate accepted. Before making the second payment, Smith did not notify either firm of the complaint or seek authorization to resolve it.

The suspension is in effect from February 6, 2023, through February 5, 2024.

This case involves multiple serious violations centered around borrowing from an elderly customer. The fact that Smith took deliberate steps to conceal the loans from his firm and falsely attested on compliance certifications is particularly troubling.

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According to FINRA, Clinton F. Byrd was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for nine months for participating in a private securities transaction without providing prior written notice to his member firm. Restitution was not order...

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According to FINRA, Clinton F. Byrd was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for nine months for participating in a private securities transaction without providing prior written notice to his member firm. Restitution was not ordered because Byrd has compensated the beneficiaries of the customer's estate through the settlement of an arbitration claim.

Byrd caused a musical production company that he owned to issue a promissory note to the daughter of a firm customer, who signed the note on behalf of the customer's family. Through the promissory note, the company borrowed $550,000 from the customer's family. Funding for the principal amount of the note came from the customer's firm brokerage account. Pursuant to the terms of the promissory note, Byrd's company used the note to finance its acquisition of a collection of historical memorabilia.

Acting outside the scope of his employment with the firm, Byrd drafted the promissory note, which was a security, transmitted it to the customer's daughter, and both Byrd and the customer's daughter signed the note. Although the note required Byrd's company to make quarterly interest payments and repay the principal within one year, the company made no such payments.

Byrd did not provide written notice to the firm before causing his company to issue the promissory note, nor did he obtain written approval from the firm. When subsequently asked on annual firm attestation forms whether he had referred anyone to any investment opportunities outside of the firm, Byrd falsely responded that he had not.

The suspension was in effect from January 17, 2023, through October 16, 2023.

This case involves the common violation known as "selling away," where a broker engages in securities transactions outside of their firm without proper disclosure. The promissory note that Byrd's company issued was a security, and by facilitating the transaction without notifying his firm, Byrd violated important investor protection rules. When brokers engage in private securities transactions without firm knowledge, customers lose the protections that come with firm supervision and oversight.

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According to FINRA, Delmar Owen Moore was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for willfully failing to timely amend his Form U4 to disclose a regulatory action taken against him by the Michigan State Department of...

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According to FINRA, Delmar Owen Moore was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for willfully failing to timely amend his Form U4 to disclose a regulatory action taken against him by the Michigan State Department of Insurance and Financial Services.

Moore entered into a final order of settlement with the Michigan State Department of Insurance and Financial Services that found he had engaged in deceptive practices and made false statements on life insurance applications.

The suspension was in effect from February 6, 2023, through May 5, 2023.

Form U4 is the Uniform Application for Securities Industry Registration or Transfer that all registered persons must file and keep current. One of the key purposes of the Form U4 is to disclose disciplinary history, including regulatory actions taken by state insurance departments and other regulators. This information is critical for firms conducting due diligence on potential employees and for investors researching the background of financial professionals.

When Moore failed to disclose the regulatory action taken by the Michigan insurance regulator, he deprived his firm and potential customers of important information about his disciplinary history. The fact that the underlying regulatory action involved findings that Moore engaged in deceptive practices and made false statements on insurance applications makes the failure to disclose even more serious.

The willful nature of the failure to disclose means that Moore either knew he was required to disclose the regulatory action and chose not to, or was reckless in disregarding his obligation to disclose. This is more serious than a negligent failure to update the Form U4.

Investors should regularly check BrokerCheck (www.brokercheck.finra.org) to review the disciplinary history and background of financial professionals they work with. The accuracy of information on BrokerCheck depends on registered persons keeping their Form U4 current, which is why failures to disclose regulatory actions are taken seriously.

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