Bad Brokers

According to FINRA, Jorge Hernandez was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA in connection with its investigation into allegations that he engaged in undisclosed outside business activities (OBAs). The ba...

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According to FINRA, Jorge Hernandez was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA in connection with its investigation into allegations that he engaged in undisclosed outside business activities (OBAs). The bar was imposed without Hernandez admitting or denying the findings.

Outside business activities rules require registered representatives to provide written notice to their firms before engaging in any business activity outside the scope of their employment with the firm. These requirements exist so that firms can evaluate whether the outside activities might present conflicts of interest, interfere with the representative's duties, or involve securities activities that should be conducted through the firm. When representatives engage in undisclosed OBAs, it deprives firms of the ability to supervise these activities and protect customers from potential harm.

The nature of Hernandez's alleged outside business activities was not specified in the disciplinary action, but the fact that FINRA was investigating suggests there were concerns about whether these activities were properly disclosed and whether they might have involved securities-related conduct. By refusing to provide information and documents about these activities, Hernandez obstructed FINRA's ability to investigate the allegations and determine what actually occurred.

Registered representatives have an obligation to cooperate with FINRA investigations, and failure to do so typically results in a bar from the industry. The reasoning is straightforward: if individuals are unwilling to answer questions about their conduct, they cannot be trusted to work in a business where investor protection depends on transparency and accountability. For investors, this case underscores the importance of understanding that financial professionals are subject to extensive regulatory obligations designed to protect clients. When representatives attempt to hide their activities from their firms or from regulators, it raises serious red flags. Investors should verify the registration and disciplinary history of any financial professional through FINRA's BrokerCheck system and should be wary of doing business with individuals who have been barred for failing to cooperate with investigations.

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According to FINRA, James Michael Green was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA. The investigation originated from FINRA's review of Green's Form U5, which his member firm filed stating that he executed ...

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According to FINRA, James Michael Green was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA. The investigation originated from FINRA's review of Green's Form U5, which his member firm filed stating that he executed an order in a client account without speaking to the client.

Executing orders in customer accounts without proper authorization is a serious violation that can constitute unauthorized trading. Brokers are generally required to obtain customer authorization before executing transactions, with limited exceptions for accounts that have been specifically approved for discretionary trading with proper written authorization. When a firm terminates a representative and discloses on Form U5 that the termination related to executing unauthorized orders, it signals potential harm to customers and warrants regulatory investigation.

Green's refusal to provide documents and information to FINRA prevented the regulator from fully investigating the circumstances of the unauthorized order and determining whether other customers were similarly affected. FINRA's investigative authority is essential to its mission of protecting investors, and registered individuals have a fundamental obligation to cooperate with such investigations. By refusing to provide requested materials, Green demonstrated an unwillingness to be accountable for his actions.

The bar imposed on Green effectively ends his career in the securities industry unless and until it is lifted. This severe sanction reflects FINRA's view that cooperation with investigations is not optional—it is a prerequisite for working in the industry. For investors, this case highlights the importance of monitoring account activity carefully and immediately reporting any unauthorized transactions to both the firm and regulators. Investors should review account statements promptly and question any transactions that were not explicitly authorized. Additionally, investors can protect themselves by working only with registered professionals whose backgrounds have been verified through FINRA's BrokerCheck system. Representatives who have been barred from the industry, particularly for refusing to cooperate with investigations, should be avoided entirely.

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According to FINRA, Philip Michael Connors was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA. The investigation concerned, among other issues, his role in potential sales practice violations related to trading in...

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According to FINRA, Philip Michael Connors was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA. The investigation concerned, among other issues, his role in potential sales practice violations related to trading in some of his customers' accounts at his member firms.

Sales practice violations can encompass a wide range of misconduct, including unsuitable recommendations, excessive trading (churning), unauthorized trading, misrepresentations, and other abusive practices that harm customers. When FINRA investigates potential sales practice violations, on-the-record testimony from the broker involved is typically essential to understanding what occurred, why certain trading decisions were made, and whether customers were treated fairly. By refusing to appear for testimony, Connors prevented FINRA from gathering this critical information.

The fact that the investigation concerned trading in multiple customer accounts at multiple firms suggests that there may have been a pattern of problematic conduct rather than isolated incidents. Patterns of misconduct are particularly concerning because they indicate systemic issues with a representative's approach to serving clients rather than one-time mistakes. FINRA's ability to investigate such patterns depends on obtaining testimony from the individuals involved.

Connors' refusal to cooperate represents a fundamental breach of the obligations that come with registration in the securities industry. Registered representatives operate in a heavily regulated environment precisely because they handle other people's money and because the potential for harm is significant. Part of that regulatory framework requires cooperation with investigations into potential misconduct. The bar imposed on Connors removes him from the industry and protects investors from someone who has demonstrated unwillingness to be accountable to regulators. For investors, this case serves as a reminder to carefully monitor account activity for signs of problematic trading, such as excessive transaction frequency, unsuitable investments, or trading that does not align with stated investment objectives. Any concerns should be promptly reported to firm compliance departments and, if necessary, to FINRA. Investors can also protect themselves by checking BrokerCheck before working with financial professionals to identify any history of customer complaints or regulatory actions.

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According to FINRA, Dima Munzer Abdulnour was fined $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 FINRA Series 7 General Securities Representative examination. Prior to the examination, Abdulno...

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According to FINRA, Dima Munzer Abdulnour was fined $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 FINRA Series 7 General Securities Representative examination. Prior to the examination, Abdulnour had attested that she had read and would abide by the Rules of Conduct for representative and principal examinations. However, during an unscheduled break, she accessed study materials that she had deliberately left in the restroom prior to taking the examination.

The Series 7 examination is a critical qualification requirement for individuals who want to function as general securities representatives. The exam tests knowledge of investment products, markets, regulations, and ethical practices essential to protecting investors. The integrity of the examination process is fundamental to ensuring that only qualified individuals obtain licenses to handle customer accounts and provide investment advice. When individuals cheat on qualification exams, it undermines the entire licensing system and can result in unqualified people handling customer accounts.

Abdulnour's conduct was deliberate—she placed study materials in the restroom before the exam and then accessed them during a break. This was not a momentary lapse in judgment but a planned attempt to gain an unfair advantage. The fact that she had attested to following the rules of conduct immediately before violating them makes the misconduct more egregious. Such dishonesty raises serious questions about whether she can be trusted to deal honestly with customers and follow other rules and regulations that govern the securities industry.

The 18-month suspension reflects the seriousness of exam cheating violations. For investors, this case highlights the importance of working with properly qualified professionals. While the licensing exams are not perfect measures of competence, they represent a minimum threshold that helps ensure representatives have basic knowledge. Investors should verify that their financial professionals hold appropriate licenses and should check BrokerCheck for any disciplinary history. The presence of an exam cheating violation in someone's record would be a significant red flag suggesting lack of integrity.

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According to FINRA, Justin Thomas Maher was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for engaging in outside business activities related to crypto assets without providing prior written notice to his member firm, and for...

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According to FINRA, Justin Thomas Maher was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for engaging in outside business activities related to crypto assets without providing prior written notice to his member firm, and for participating in private securities transactions involving crypto assets without providing proper notice. The violations were extensive and involved multiple crypto-related ventures where Maher expected and received compensation.

Maher worked for a social media marketing organization that recommended crypto asset investments, where he moderated online content and proposed crypto assets for recommendation. He helped establish a crypto asset by providing capital and hiring marketing staff, and managed social media pages while arranging payments to celebrity promoters. He also worked as a consultant for another crypto asset and became a managing member of a crypto consulting firm. In certain instances, Maher was a named partner or independent contractor of these businesses, and he received compensation for these activities.

Additionally, Maher participated in private securities transactions involving crypto assets that were offered and sold as investment contract securities. He assisted in marketing these assets, personally invested approximately $40,000, and actively recruited others to invest by recommending the purchases, ensuring investors had access to forms, identifying them to asset managers, and providing instructions for depositing funds. As a result of Maher's conduct, individuals invested at least $245,000 directly with crypto asset developers.

The violations here are multifaceted. First, the outside business activities rules require representatives to notify their firms of business activities outside their employment so firms can assess potential conflicts and supervisory needs. Second, the private securities transactions rules (selling away) require representatives to provide notice before participating in securities transactions outside their firms. These requirements exist to protect both investors and firms. When representatives engage in undisclosed crypto activities, they operate outside their firms' supervision, and customers who follow their recommendations may lose important protections.

For investors, this case illustrates the risks of crypto investments promoted by financial professionals outside their firms. When brokers recommend crypto investments that aren't available through their firms, it raises red flags about whether the investments are legitimate, whether the broker has conflicts of interest, and whether investors will have recourse if something goes wrong. Investors should be extremely cautious about crypto investment opportunities, particularly those involving celebrity endorsements or social media promotions, and should verify that any securities investments are properly registered or exempt from registration.

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According to FINRA, Ravid Gold was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 30 days for circumventing his member firm's policies regarding cross trades, specifically the requirement to obtain prior written customer consent. Gold's ...

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According to FINRA, Ravid Gold was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 30 days for circumventing his member firm's policies regarding cross trades, specifically the requirement to obtain prior written customer consent. Gold's conduct was particularly concerning because he was the firm's designated principal responsible for supervising fixed income transactions, and he deliberately structured transactions to evade firm requirements he knew applied.

Cross trades occur when a broker facilitates a transaction between two of the firm's customers, with one customer selling and another buying the same security. Because the broker represents both sides of the transaction, there is potential for conflicts of interest, and rules require obtaining written customer consent. Gold inquired with firm compliance personnel about how to conduct cross trades and was explicitly informed that written customer consent would be required. He also annually certified in writing that he understood and would comply with the firm's written supervisory procedures.

To evade the consent requirement, Gold engaged in prearranged trade sets with a counterparty broker-dealer that accomplished the same purpose as cross trades but avoided the firm's oversight. Gold would identify firm customers needing to liquidate corporate bonds and other firm customers needing to purchase the same bonds. He then arranged for the bonds to be sold to the counterparty with a promise to repurchase them later. After repurchasing the bonds, Gold sold them to the firm customers who needed to purchase them. This roundabout process achieved the same result as a cross trade but was deliberately structured to avoid obtaining required written customer consent.

Gold's conduct is particularly troubling because he held a supervisory position and was specifically responsible for overseeing fixed income transactions for compliance. His willingness to deliberately circumvent firm policies raises serious questions about his integrity and fitness for a supervisory role. For investors, this case highlights the importance of the protections provided by cross trade consent requirements. When brokers facilitate transactions between their own customers, there are inherent conflicts—the broker may be motivated to complete the trade even if the terms aren't optimal for one or both customers. Written consent requirements ensure customers understand the nature of the transaction and agree to it. Investors should be cautious when transactions seem to involve other customers of the same firm and should ask questions about how prices are determined in such situations.

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According to FINRA, Elizabeth Ashley Nichols 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 having access to her cell phone while taking the Series 7 General Securities Representative examination. Nichols...

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According to FINRA, Elizabeth Ashley Nichols 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 having access to her cell phone while taking the Series 7 General Securities Representative examination. Nichols took the examination at her home using a remote testing platform, and before beginning the exam, she attested that she had reviewed and would abide by the Rules of Conduct and informed the proctor that her cell phone was stored in her car.

The integrity of securities licensing examinations is fundamental to ensuring that only qualified individuals obtain the credentials to provide investment advice and handle customer accounts. The Series 7 exam is a comprehensive test of knowledge about securities products, regulations, and ethical practices. When exam candidates violate testing rules by having access to unauthorized materials or devices, it undermines the entire licensing system and can result in unqualified people obtaining licenses.

Nichols' violation is particularly concerning because she explicitly misrepresented the location of her cell phone to the proctor. She stated it was in her car when in fact she had access to it during the examination. This was not merely a technical violation or oversight—it involved deliberate deception. The dishonesty demonstrated in falsely attesting to the proctor raises serious questions about Nichols' integrity and whether she can be trusted to deal honestly with customers.

Remote testing of qualification exams has become more common, but it depends on candidates following honor-system rules about not having access to unauthorized materials or devices. When candidates violate these rules, it not only gives them an unfair advantage but also jeopardizes the viability of remote testing options. The 18-month suspension imposed reflects the seriousness with which FINRA treats examination misconduct. For investors, this case underscores the importance of working with financial professionals who have demonstrated both competence and integrity. Licensing exams are designed to ensure minimum qualifications, and cheating on these exams raises red flags about both qualification and character. Investors should verify credentials through FINRA's BrokerCheck system and should consider any history of exam-related violations as a significant warning sign about a professional's trustworthiness.

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According to FINRA, Scott Michael Bremus was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for six months for participating in a private securities transaction without providing prior written notice to or obtaining written approval from hi...

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According to FINRA, Scott Michael Bremus was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for six months for participating in a private securities transaction without providing prior written notice to or obtaining written approval from his member firm. The transaction involved two of his firm customers, a married couple, who invested $300,000 in a promissory note with a company as a result of Bremus's facilitation.

Bremus introduced the married couple to another registered representative who was also registered with FINRA through the same firm. That representative engaged in outside business activities that he did not disclose to the firm and caused firm clients to transfer money from their firm accounts to those undisclosed businesses, including the company in which the married couple invested. With the customers' authorization, Bremus electronically signed and submitted firm money transfer forms to request a $125,000 wire and a $175,000 wire from the customers' accounts to the company. Significantly, on these forms, Bremus attested that he "did not solicit, recommend, or otherwise participate in the underlying transaction or investment for which this transfer was requested."

This attestation proved to be false, as Bremus thereafter communicated with the other representative regarding the status of the customers' investment in the company. His involvement in facilitating the investment and his subsequent communications about it demonstrated that he did participate in the transaction, contrary to his attestation. The private securities transactions rules, often called "selling away" rules, require representatives to provide written notice to their firms before participating in securities transactions outside the regular course of their employment, regardless of whether they receive compensation. These rules exist to ensure firms can supervise such activities and protect customers.

Even though Bremus did not receive selling compensation for the transaction, his facilitation of the investment and his communications about it constituted participation that required disclosure and approval. The fact that the other representative involved was engaged in undisclosed outside business activities that led to customers transferring money out of their firm accounts highlights the risks of private securities transactions. When such transactions occur outside firm supervision, customers lose important protections and may be steered toward problematic investments. For investors, this case illustrates the dangers of transferring money out of brokerage accounts to invest in opportunities brought by financial professionals, even when those professionals claim they are not directly involved. If a financial advisor facilitates an investment outside of their firm, it should raise red flags. Investors should ask detailed questions about any such investments and consider seeking independent advice before proceeding.

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According to FINRA, Arni Jay Diamond was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for four months for making unsuitable recommendations in speculative alternative investments to two customers in their sixties that were inconsistent wit...

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According to FINRA, Arni Jay Diamond was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for four months for making unsuitable recommendations in speculative alternative investments to two customers in their sixties that were inconsistent with the customers' investment profiles. Diamond recommended that the customers purchase limited partnership interests, and these recommendations were unsuitable based on multiple factors.

For the first customer, the recommendations were unsuitable based on age, income, net worth, and risk tolerance. Additionally, this customer was not an accredited investor, which was required to invest in the limited partnership interests. Accredited investor requirements exist to limit certain high-risk investments to individuals with sufficient financial sophistication and resources to bear potential losses. By recommending that a non-accredited investor purchase these investments, Diamond exposed the customer to risks that regulations specifically aim to prevent.

For the second customer, Diamond's recommendations resulted in an over-concentration of that customer's net worth in alternative investments. Concentration risk is a fundamental investment principle—having too much of one's portfolio in any single asset class, particularly speculative alternatives, can expose investors to catastrophic losses if those investments perform poorly. Alternative investments such as limited partnerships often involve higher risks, lower liquidity, and less transparency than traditional investments, making over-concentration particularly dangerous.

Both customers ultimately settled arbitration claims filed against Diamond's member firm, suggesting they suffered losses from these unsuitable investments. Suitability obligations require brokers to have a reasonable basis to believe that recommended transactions are suitable for customers based on their financial situations, investment objectives, and risk tolerance. This includes considering whether recommendations result in inappropriate concentration. For investors, this case highlights the importance of understanding alternative investments before committing capital. Limited partnerships and other alternatives can be appropriate for some investors but involve significant risks including illiquidity, complexity, lack of transparency, and potential for total loss. Investors should carefully evaluate whether they meet accredited investor standards when required, should ensure alternative investments represent only an appropriate portion of their portfolio, and should not feel pressured to invest in products they don't fully understand. If recommendations seem inconsistent with stated investment goals or risk tolerance, investors should question them and consider seeking second opinions.

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According to FINRA, James R. Dickie was suspended from association with any FINRA member in all capacities for eight months (with no monetary sanctions due to financial status) for receiving $9,000 from a customer as part of a business transaction without seeking or obtaining his member firm's writt...

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According to FINRA, James R. Dickie was suspended from association with any FINRA member in all capacities for eight months (with no monetary sanctions due to financial status) for receiving $9,000 from a customer as part of a business transaction without seeking or obtaining his member firm's written pre-approval to engage in an outside business activity or to accept money from a customer, and for willfully failing to timely amend his Form U4 to disclose that he had been charged with felonies.

Dickie received the $9,000 from a firm customer as an investment intended to finance the renovation of a car. This transaction implicated multiple rules. First, outside business activity rules require representatives to obtain written approval before engaging in business activities outside their employment, particularly when those activities involve customers and compensation. Second, accepting money from customers for personal business ventures creates conflicts of interest and risks confusing customers about whether transactions are protected by firm supervision. Dickie did not seek or obtain approval for this activity and did not inform the firm of the transaction, despite signing biannual compliance questionnaires affirming he had informed his supervisory principal of all outside business activities.

The Form U4 violations are equally serious. Dickie was charged with several felonies but failed to disclose these charges on his Form U4 at any point. Form U4 requires disclosure of felony charges because they are material to assessing an individual's fitness to work in the securities industry. When the firm later filed a Form U4 amendment on Dickie's behalf, he falsely answered the question asking whether he had ever been charged with any felony. Neither Dickie nor the firm filed subsequent amendments to correct this misstatement. Ultimately, Dickie pled guilty to misdemeanor charges and the felony charges were dismissed, but his failure to disclose the charges when they were pending constituted a material misrepresentation.

Dickie also signed biannual compliance questionnaires falsely affirming that there were no events requiring amendments to his Form U4, when in fact the undisclosed felony charges should have been reported. For investors, this case illustrates the importance of checking financial professionals' backgrounds through FINRA's BrokerCheck system. Form U4 disclosures are critical to informed decision-making about whom to trust with investment assets. Representatives who fail to disclose criminal charges or who engage in undisclosed business activities with customers demonstrate a lack of transparency that should concern any investor. The fact that Dickie ultimately pled to misdemeanors rather than felonies does not excuse his failure to disclose the charges when they were pending.

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