Bad Brokers

According to FINRA, John Mark Selleh was assessed a deferred fine of $5,000 and suspended for six months in all capacities for assisting a registered representative he previously supervised to provide false information to the representative's new firm during an internal investigation.

Selleh help...

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According to FINRA, John Mark Selleh was assessed a deferred fine of $5,000 and suspended for six months in all capacities for assisting a registered representative he previously supervised to provide false information to the representative's new firm during an internal investigation.

Selleh helped the representative draft a written response falsely representing that the representative had invested a customer's assets in a loan. He also helped draft a promissory note to document the purported loan and compose purported meeting notes with the customer. While Selleh did not actually know about the representative's misconduct (which involved stealing the customer's assets), he acted recklessly in assisting given various red flags.

Red flags included the representative's desire to recreate and backdate a purportedly six-year-old promissory note, and material inconsistencies between what the representative told Selleh and information in the purported customer meeting notes. These circumstances should have alerted Selleh that something was seriously wrong.

When the representative was terminated and warned Selleh that he had told his firm Selleh had a copy of the purported promissory note, Selleh initially falsely told his own firm's personnel that he did not have the note and did not help draft it. At a subsequent meeting, Selleh told the truth and produced the document.

This case illustrates that registered persons must not assist others in providing false information to firms, even if they do not have actual knowledge of underlying misconduct. When presented with red flags suggesting misconduct, individuals must refuse to participate in creating false documentation.

The six-month suspension holds Selleh accountable for recklessly assisting in the creation of false documentation and initially lying to his own firm about his involvement.

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According to FINRA, Joan Ella Burgio was assessed a deferred fine of $3,500 and suspended for 60 days in all capacities for engaging in undisclosed outside business activities.

Burgio engaged in outside business activities involving a company she incorporated that provided administrative services...

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According to FINRA, Joan Ella Burgio was assessed a deferred fine of $3,500 and suspended for 60 days in all capacities for engaging in undisclosed outside business activities.

Burgio engaged in outside business activities involving a company she incorporated that provided administrative services to a private investment firm. She received approximately $292,000 in compensation from these activities. Burgio did not provide prior written notice to or receive written approval from her two member firms before engaging in these activities.

Several months after joining one of the firms, Burgio finally disclosed and requested approval to engage in her outside business activities, but the firm denied the request. Despite this denial, Burgio continued the activities.

Additionally, Burgio falsely attested on compliance questionnaires that she had accurately and fully disclosed her outside business activities, when she had not done so initially and continued activities after one firm explicitly denied approval.

Outside business activities must be disclosed to firms because they can create conflicts of interest, time commitment issues that interfere with registered duties, or reputational risks. Firms cannot properly supervise registered persons or assess conflicts without knowing about all outside activities. The requirement to disclose applies even to activities that seem unrelated to securities, because firms need complete information to make informed supervision decisions.

The 60-day suspension holds Burgio accountable for conducting substantial outside business activities generating nearly $300,000 without firm notice or approval, continuing activities after denial of approval, and falsely certifying that she had properly disclosed her activities.

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According to FINRA, Blake Adam Ridenour was fined $5,000 and suspended for three months in all capacities for causing his firm to maintain inaccurate books and records by falsifying representative codes for trades.

Ridenour entered into an agreement to service certain customer accounts under a jo...

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According to FINRA, Blake Adam Ridenour was fined $5,000 and suspended for three months in all capacities for causing his firm to maintain inaccurate books and records by falsifying representative codes for trades.

Ridenour entered into an agreement to service certain customer accounts under a joint representative code he shared with a retired representative, with specified commission split percentages. Although the firm's system correctly prepopulated trades with the joint representative code, Ridenour entered transactions under different representative codes through which he received higher commission percentages than what he was entitled to under the agreement.

Ridenour negligently failed to verify whether certain transactions were subject to the agreement. He mistakenly assumed other transactions were not subject to the agreement because they pertained to accounts opened after executing the agreement, but did not confirm his understanding by speaking with the retired representative or the firm.

As a result, the firm's trade confirmations inaccurately reflected Ridenour's personal representative code or another code instead of the joint code, causing him to receive higher commissions than entitled under the agreement. The firm has paid restitution to the retired representative, and Ridenour reimbursed the firm approximately $33,714 representing the additional commissions he improperly received.

Accurate books and records are fundamental to securities regulation. Representative codes on trade confirmations must accurately reflect who serviced the account and is entitled to compensation. Falsifying these codes, even negligently, creates inaccurate firm records and can result in improper commission payments.

The three-month suspension holds Ridenour accountable for negligently falsifying representative codes, while recognizing that he has made full restitution.

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According to FINRA, Lee Ray Diedrich was assessed a deferred fine of $5,000 and suspended for three months in all capacities for forging customer signatures on account opening documents and variable annuity applications.

Diedrich electronically signed customer names on account opening documents a...

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According to FINRA, Lee Ray Diedrich was assessed a deferred fine of $5,000 and suspended for three months in all capacities for forging customer signatures on account opening documents and variable annuity applications.

Diedrich electronically signed customer names on account opening documents and variable annuity applications without prior permission or authority from any of the customers. On some account opening documents, he listed his own email address as the customer email address. Diedrich caused his firm to maintain inaccurate books and records by submitting these documents to be processed.

Forging customer signatures is one of the most serious violations a registered person can commit. It completely undermines the integrity of account documentation and customer authorization. Customers have the right to review documents before signing them and to decide whether to authorize account opening or transactions. Forging signatures deprives customers of these fundamental rights.

When representatives forge signatures on account opening documents, it raises serious questions about whether customers actually wanted accounts opened, whether they understood account terms and risks, and whether subsequent activity in the accounts was truly authorized. Using the representative's own email address instead of the customer's email further suggests an attempt to prevent customers from receiving account-related communications.

Variable annuities are complex products with significant fees, surrender charges, and tax implications. Forging signatures on variable annuity applications is particularly concerning because customers may not have understood or agreed to these products.

The three-month suspension holds Diedrich accountable for forging customer signatures on multiple documents and causing the firm to maintain inaccurate records.

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According to FINRA, Charles Paul Edward Jumet Jr. was assessed a deferred fine of $5,000 and suspended for 30 days in all capacities for engaging in an outside business activity without his firm's knowledge or approval.

Jumet requested firm approval to become a part owner and operator of a compan...

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According to FINRA, Charles Paul Edward Jumet Jr. was assessed a deferred fine of $5,000 and suspended for 30 days in all capacities for engaging in an outside business activity without his firm's knowledge or approval.

Jumet requested firm approval to become a part owner and operator of a company that conducted land surveys for commercial projects, including in the oil and gas industry. He expected compensation from sharing in profits and from proceeds of any future sale. However, the firm did not approve the request and instead requested additional information, which Jumet did not provide.

Despite the lack of approval, Jumet became a partial owner of the company without providing the requested information or obtaining firm approval. He engaged in this outside business activity by developing business strategies for the company and making employment decisions.

The firm subsequently discovered Jumet was engaging in this unapproved activity and permitted him to resign. No firm customers or customer funds were involved in the outside business activity.

Outside business activities must be disclosed to and approved by firms because they can create conflicts of interest, time commitment issues, or reputational risks. When firms request additional information before making approval decisions, registered persons must provide that information or accept that approval will not be granted. Proceeding with the activity without approval violates the disclosure requirement and deprives the firm of the ability to assess appropriateness and supervise potential conflicts.

The 30-day suspension holds Jumet accountable for becoming a business owner and operator without firm approval after his approval request was not granted pending receipt of additional information.

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According to FINRA, David Lau was assessed a deferred fine of $6,000 and suspended for 20 days in all capacities for exercising discretionary trading authority to effect trades in customer accounts without first obtaining written authorization from customers and his firm to treat the accounts as dis...

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According to FINRA, David Lau was assessed a deferred fine of $6,000 and suspended for 20 days in all capacities for exercising discretionary trading authority to effect trades in customer accounts without first obtaining written authorization from customers and his firm to treat the accounts as discretionary.

Discretionary authority allows a representative to decide which securities to buy or sell, the amount of securities, and whether to buy or sell, without obtaining the customer's prior approval for each transaction. This significant authority requires written customer authorization and firm acceptance because it gives the representative substantial control over customer assets.

Trading accounts on a discretionary basis without proper written authorization violates customers' rights to approve transactions in their accounts and deprives firms of the ability to properly supervise discretionary trading. Firms typically have heightened supervisory procedures for discretionary accounts because of the increased risk of unsuitable or excessive trading.

Even when customers verbally authorize a representative to make decisions or the representative acts in good faith believing they have authority, written authorization from the customer and firm acceptance are required before exercising discretion. The writing requirement protects both customers and representatives by clearly documenting the scope and limitations of authority granted.

Investors should understand that granting discretionary authority is a significant decision that should only be made after careful consideration. Any discretionary authority should be clearly documented in writing, with specific limitations if desired. Customers should regularly review discretionary account activity to ensure it aligns with their investment objectives.

The 20-day suspension holds Lau accountable for exercising discretion without proper written authorization.

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According to FINRA, Hugh Ordway Barndollar III was assessed a deferred fine of $10,000 and suspended for two years in all capacities for participating in unapproved private securities transactions totaling $1,418,108.

Barndollar served as both a registered representative of his member firm and an...

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According to FINRA, Hugh Ordway Barndollar III was assessed a deferred fine of $10,000 and suspended for two years in all capacities for participating in unapproved private securities transactions totaling $1,418,108.

Barndollar served as both a registered representative of his member firm and an investment advisor representative. His firm placed him on heightened supervision due to customer arbitrations involving alleged sales practice violations. The heightened supervision plan prohibited him from selling alternative investments through the firm.

Despite this prohibition, Barndollar participated in sales of $742,058 in alternative investments after the heightened supervision began, through a registered investment advisory firm. Most investors were firm customers. Barndollar recommended and/or facilitated the investments, including meeting with investors to discuss them and assisting with documentation. His advisory clients paid advisory fees on assets in their advisory accounts, including the alternative investments.

While Barndollar disclosed his advisory firm as an outside business activity, stating he managed accounts on a fee-based platform with third-party money managers, he did not provide prior written notice of his participation in selling alternative investments through the advisory firm or obtain the firm's written approval. Furthermore, he falsely certified on annual compliance questionnaires that he had not engaged in undisclosed private securities transactions.

This conduct is particularly egregious because Barndollar was under heightened supervision specifically due to sales practice concerns, yet deliberately circumvented the supervision plan's prohibition on alternative investment sales. His false certifications compounded the violation by actively misleading the firm.

The two-year suspension holds Barndollar accountable for substantial private securities transactions in violation of heightened supervision restrictions and false compliance certifications.

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According to FINRA, Jesus Manuel Bravo was suspended for three months in all capacities and ordered to pay $10,234.71 in restitution to customers for recommending unsuitable and excessive trades. No monetary fine was imposed due to Bravo's financial status, and restitution is payable on a schedule.
...

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According to FINRA, Jesus Manuel Bravo was suspended for three months in all capacities and ordered to pay $10,234.71 in restitution to customers for recommending unsuitable and excessive trades. No monetary fine was imposed due to Bravo's financial status, and restitution is payable on a schedule.

Bravo caused a senior customer to place trades with total principal value over $224,000 while the customer's average monthly equity was less than $9,500. The trades caused the customer to pay more than $5,000 in commissions and other costs, resulting in an annualized cost-to-equity ratio of 35 percent, meaning the account would need to grow by over 35 percent annually just to break even.

Bravo also caused another customer, a carpenter with limited investment experience, to place trades in an account with average monthly equity of approximately $10,500. The recommended trades caused this customer to pay nearly $5,000 in commissions and costs, resulting in an annualized cost-to-equity ratio of approximately 31 percent. Both customers relied on Bravo's advice and accepted his recommendations.

These excessive trading patterns demonstrate classic churning, where a representative generates commissions through frequent trading that is unsuitable for the customers' profiles and account sizes. Senior customers and those with limited investment experience are particularly vulnerable to such practices because they may trust their representative's recommendations without questioning whether the activity serves their interests.

Cost-to-equity ratios above 20 percent are generally considered excessive because they make it extremely difficult for customers to achieve positive returns. Ratios of 31 to 35 percent are clearly excessive and unsuitable regardless of customer profile.

The three-month suspension and restitution order hold Bravo accountable for engaging in excessive trading that harmed vulnerable customers.

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According to FINRA, Todd Michael Seymour was assessed a deferred fine of $5,000 and suspended for two months in all capacities for failing to notify his firms about the full nature of his participation in an outside business activity.

Before becoming associated with any FINRA member, Seymour prov...

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According to FINRA, Todd Michael Seymour was assessed a deferred fine of $5,000 and suspended for two months in all capacities for failing to notify his firms about the full nature of his participation in an outside business activity.

Before becoming associated with any FINRA member, Seymour provided tax preparation and trust administration services through his wife's tax and estate business. He also served as co-trustee of a trust. The trust and its beneficiaries later became his customers.

When Seymour associated with his first firm and requested approval to continue working for his wife's business, the firm approved the outside business activity but prohibited him from continuing to serve as co-trustee. When he later joined a second firm, he again requested approval to work for his wife's business but did not disclose that he provided trust administration services, including performing co-trustee duties. His written request described his responsibilities merely as tax preparation. The firm approved the outside business activity but prohibited him from serving as a trustee or maintaining bill-paying authority over any third-party bank account.

Seymour exceeded the scope of his approved outside business activity at both firms. At the direction of the remaining co-successor trustee, he continued performing co-trustee duties despite both firms prohibiting him from serving as a trustee. He also violated the second firm's prohibition against bill-paying authority by using his check-writing authority for the trust's bank account to issue checks, including to compensate himself for services.

Seymour submitted compliance questionnaires to one firm falsely attesting he had not participated in undisclosed outside business activities.

The two-month suspension holds Seymour accountable for deliberately concealing the full scope of his outside business activity and exceeding approved limitations.

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According to FINRA, Barry Lee Garapedian was assessed a deferred fine of $5,000 and suspended for three months in all capacities for causing his firm to maintain inaccurate books and records by falsifying representative codes for trades.

Garapedian and other representatives working from the same ...

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According to FINRA, Barry Lee Garapedian was assessed a deferred fine of $5,000 and suspended for three months in all capacities for causing his firm to maintain inaccurate books and records by falsifying representative codes for trades.

Garapedian and other representatives working from the same branch office entered into an agreement to service certain customer accounts under a joint representative code shared with the estate of a retired representative. The agreement specified commission split percentages. Although the firm's system correctly prepopulated trades with the joint representative code, Garapedian directed a junior registered representative to enter transactions under different joint representative codes.

Some transactions were entered under codes through which Garapedian received higher commission percentages than entitled under the agreement. Other transactions were entered under codes giving him lower percentages than entitled. Garapedian mistakenly assumed he had permission to change representative codes to equalize commissions across accounts serviced by the branch office, including those covered by the joint production agreement. However, he had not verified that the estate of the retired representative agreed to these changes.

As a result, the firm's trade confirmations inaccurately reflected different joint representative codes instead of the correct code Garapedian shared with the estate. His actions caused him to receive higher commissions and the retired representative's estate to receive less than entitled under the agreement. The firm subsequently paid approximately $8,000 in restitution to the estate.

Accurate books and records are essential to securities regulation. Representative codes must accurately reflect servicing arrangements and commission entitlements. Changing codes without authorization from all parties, even if intended to equalize commissions, creates inaccurate records and improper commission payments.

The three-month suspension holds Garapedian accountable for directing falsification of representative codes.

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