Bad Brokers

According to FINRA, Colin Jeremiah Healy was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for one year for improperly using his member firm's funds by submitting personal expenses for reimbursement as business expenses.

Part of Healy's...

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According to FINRA, Colin Jeremiah Healy was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for one year for improperly using his member firm's funds by submitting personal expenses for reimbursement as business expenses.

Part of Healy's work involved meeting business contacts at private clubs, and these clubs charged Healy's corporate credit card for all charges incurred during his time there. Healy incurred personal expenses at these clubs totaling $6,139.28, which were charged to his corporate credit card along with legitimate business expenses. These personal expenses included items such as $277.31 for "pool lessons" and $360 for "tennis clinics."

Healy then submitted the charges from the clubs, which included both personal and business expenses, to the firm for reimbursement as business expenses. The firm reimbursed Healy for the personal expenses, effectively allowing Healy to convert company funds to his personal use through misrepresentation.

This conduct constitutes misuse of firm funds through false expense reporting. While the dollar amount may not be enormous, the conduct demonstrates dishonesty and a willingness to take firm money under false pretenses. The inclusion of clearly personal items like pool lessons and tennis clinics in business expense reports suggests either brazen disregard for the distinction between personal and business expenses, or hope that the charges would not be scrutinized.

The one-year suspension reflects the dishonest nature of the conduct. False expense reporting demonstrates a lack of integrity that is fundamentally incompatible with the trust required in the securities industry. While the dollar amount was approximately $6,139, the conduct shows a willingness to deceive one's employer for personal gain.

For investors, this case illustrates that integrity matters in the securities industry. Representatives who will deceive their own firms about expenses may be willing to deceive customers about investments. Investors should research the backgrounds of financial professionals through FINRA's BrokerCheck before entrusting them with investment decisions. The suspension is in effect from June 20, 2023, through June 19, 2024.

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According to FINRA, Richard F. Spettell was fined $2,500 and suspended from association with any FINRA member in all capacities for one month for causing his member firm to maintain inaccurate books and records by changing representative codes for trades.

Spettell had entered into an agreement to...

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According to FINRA, Richard F. Spettell was fined $2,500 and suspended from association with any FINRA member in all capacities for one month for causing his member firm to maintain inaccurate books and records by changing representative codes for trades.

Spettell had entered into an agreement to service certain customer accounts under a joint representative code that he shared with the estate of a former representative. The agreement specified what percentages of commissions the estate and Spettell would earn on trades placed using the joint representative code. However, when Spettell placed trades in accounts covered by the agreement, he changed the representative code from the joint code to his personal representative code.

Although the firm's system correctly prepopulated the trades with the applicable joint representative code, Spettell manually changed the code to his personal representative code. He mistakenly assumed he had permission to do this based on his understanding of a prior informal arrangement with the former representative, but he did not confirm with the estate that his understanding was correct or that he could change the representative code for these transactions.

As a result, the firm's trade confirmations inaccurately reflected Spettell's personal representative code instead of the joint representative code, and Spettell received higher commissions than he was entitled to receive under the agreement. The firm subsequently reimbursed the estate of the representative for the commission shortfall.

The one-month suspension and $2,500 fine reflect that while Spettell's actions caused inaccurate records and resulted in his receiving excess commissions, he appears to have been mistaken rather than intentionally defrauding the estate. Nevertheless, recordkeeping accuracy is fundamental to securities regulation, and Spettell should have confirmed his understanding and obtained proper authorization before changing representative codes.

For investors, this case illustrates the importance of accurate recordkeeping in the securities industry and the need for representatives to follow firm systems rather than making unauthorized changes. The suspension was in effect from July 17, 2023, through August 16, 2023.

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According to FINRA, Thomas Alvin Vernor III was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for five months for willfully failing to amend his Form U4 to disclose a felony charge.

Vernor knew he was required to disclose the felony char...

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According to FINRA, Thomas Alvin Vernor III was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for five months for willfully failing to amend his Form U4 to disclose a felony charge.

Vernor knew he was required to disclose the felony charge on his Form U4 but voluntarily chose never to disclose it. This was not an oversight or mistake—Vernor made a conscious decision not to disclose the criminal charge despite knowing his disclosure obligation. The term "willfully" indicates that Vernor acted with knowledge that his conduct was wrongful.

Form U4 is the uniform registration form that must be kept current with accurate information about criminal charges, customer complaints, regulatory actions, and other disclosure events. This information is essential for firms to evaluate whether individuals remain eligible for registration and for investors to access accurate background information through FINRA's BrokerCheck system.

By never disclosing the felony charge, Vernor prevented both his firm and investors from having access to material information about his background. Felony charges are among the most serious disclosure events because they raise fundamental questions about an individual's character and fitness to handle investor funds and provide financial advice.

The five-month suspension reflects the seriousness of willfully failing to disclose a felony charge. The willful nature of the violation—knowing about the disclosure requirement but choosing not to comply—is particularly concerning because it demonstrates a deliberate decision to conceal material information from regulators, the firm, and investors.

For investors, this case underscores the critical importance of checking FINRA's BrokerCheck before working with financial professionals. BrokerCheck relies on accurate Form U4 information, but as this case demonstrates, not all registered persons comply with disclosure requirements. Investors should be particularly cautious about representatives who have disclosure violations, as these violations indicate a willingness to conceal important information. The suspension is in effect from June 20, 2023, through November 19, 2023.

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According to FINRA, Michelle Liao Wu was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 20 business days for placing discretionary trades in customers' brokerage accounts without written authority to do so.

Wu exercised discretion in ...

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According to FINRA, Michelle Liao Wu was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 20 business days for placing discretionary trades in customers' brokerage accounts without written authority to do so.

Wu exercised discretion in customer accounts, meaning she decided which securities to buy or sell, the quantity, and the timing without obtaining customer authorization for each specific trade. However, the customers had not provided prior written authorization for Wu to exercise discretion in their accounts. Additionally, Wu's member firm prohibited registered representatives from exercising discretion in customer accounts except under very limited circumstances that did not apply in this situation.

Discretionary trading allows representatives to make investment decisions without obtaining specific customer approval for each trade. Because this grants representatives significant control over customer accounts, securities regulations require written authorization from customers before representatives can exercise discretion. This protects customers by ensuring they consciously consent to granting such authority and creates a clear record of the authorization.

By exercising discretion without written authorization, Wu violated both customer agreement requirements and firm policies. The violation is serious because it involves making investment decisions that legally required customer authorization without obtaining that authorization. Customers whose accounts are traded on a discretionary basis without proper authorization may not understand that their representative has this level of control over their accounts.

The 20-business-day suspension reflects that while Wu violated discretionary trading requirements, there is no indication that she made unsuitable trades or that customers suffered losses. Nevertheless, the procedural requirement of written authorization exists for important investor protection reasons and must be followed.

For investors, this case highlights the importance of understanding whether your account is discretionary or non-discretionary. If you did not sign a written discretionary agreement, your representative must obtain your approval before each trade. Investors should carefully review account agreements and should ask questions if they are unsure about whether they have granted discretionary authority. The suspension was in effect from June 20, 2023, through July 18, 2023.

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According to FINRA, Jason K. Adams was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for engaging in an outside business activity without providing prior written notice to his member firms.

Adams formed and began operati...

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According to FINRA, Jason K. Adams was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for engaging in an outside business activity without providing prior written notice to his member firms.

Adams formed and began operating a company that provided subscription-based investment content for a fee, conducting the activities under a pseudonym. He was the sole owner of the company and was responsible for its day-to-day operations. Adams obtained a federal employer identification number and business bank account for the company, managed payments to and relationships with vendors, and recruited two individuals to prepare content for dissemination to the company's subscribers. The company generated $77,500 in compensation for Adams.

Representatives must provide prior written notice to their firms about outside business activities so firms can evaluate potential conflicts of interest, determine whether the activities involve securities transactions requiring firm approval, and ensure proper supervision. The requirement applies regardless of whether activities are conducted under the representative's own name or a pseudonym.

By conducting this substantial business under a pseudonym without notifying his firms, Adams deprived his firms of the opportunity to evaluate the activity and determine whether it was appropriate or required supervision as "selling away." The use of a pseudonym suggests Adams understood that the activity might be problematic and deliberately concealed it from his firms.

The three-month suspension reflects the seriousness of operating a substantial outside business without firm notice. The fact that Adams established formal business structures (EIN, bank account), recruited content creators, and generated $77,500 in revenue demonstrates this was not an inadvertent or minor oversight—it was a deliberate business venture conducted in violation of notice requirements.

For investors, this case illustrates the risks of investment advice provided through subscription services that may lack proper supervision. The use of pseudonyms should be a red flag, as legitimate financial professionals should be willing to provide investment advice under their real names. Investors should verify whether individuals providing investment content are properly registered and supervised. The suspension is in effect from June 20, 2023, through September 19, 2023.

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According to FINRA, Blake Adam Levy was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for four months for recommending investments without reasonable basis and making negligent material omissions.

Levy recommended that customers purchase...

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According to FINRA, Blake Adam Levy was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for four months for recommending investments without reasonable basis and making negligent material omissions.

Levy recommended that customers purchase membership interests in two funds totaling $2,260,299 through private placement offerings without having a reasonable basis to make those recommendations. He failed to perform reasonable diligence on the funds before recommending them and did not understand the risks related to the investments. His review of offering materials was cursory and only aimed at giving himself a high-level understanding of the offering terms, which was inadequate for recommending such substantial investments.

The violations became more serious due to material omissions. When Levy sold membership interests in the funds to customers, he negligently failed to inform them about his role in the management company that managed the funds and the sources of his potential compensation. Levy was one of two equal owners in the management company and was entitled to compensation from three sources: management fees, placement agent fees, and performance fees.

Neither the offering materials nor Levy disclosed that fees would be divided among the placement agent, the management company, and the selling broker. By virtue of his dual role in the management company and as a selling broker, Levy was entitled to receive portions of multiple fee streams. Because Levy never fully reviewed the offering materials, he was incapable of correcting the omissions therein.

These undisclosed conflicts of interest were material—they meant Levy had significant financial incentives beyond normal selling compensation to recommend these funds regardless of suitability for customers. Customers had a right to know that their advisor was not only earning selling commissions but also stood to receive ongoing management and performance fees through his ownership interest in the management company.

The four-month suspension reflects serious suitability and disclosure failures involving over $2.2 million in customer investments. For investors, this case illustrates the critical importance of understanding all sources of compensation and potential conflicts of interest when financial professionals recommend private placements. The suspension is in effect from June 20, 2023, through October 19, 2023.

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According to FINRA, Abbe Jan Wollins was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for three months, and ordered to pay deferred disgorgement of $2,448.60 in commissions, plus interest.

Wollins recommended that two customer accounts inv...

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According to FINRA, Abbe Jan Wollins was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for three months, and ordered to pay deferred disgorgement of $2,448.60 in commissions, plus interest.

Wollins recommended that two customer accounts invest in limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe these speculative, illiquid, and long-term investments were suitable for the customers. The recommendations were particularly unsuitable given the customers' ages and financial circumstances.

One account was held by a retired married couple, both approximately 82 years old, who relied on pension and social security benefits and savings. The other account belonged to a 93-year-old customer receiving social security benefits and taking required withdrawals from an Individual Retirement Account. For elderly retirees dependent on fixed incomes and retirement savings, speculative oil and gas partnerships represent extremely inappropriate investments.

Oil and gas limited partnerships are typically illiquid, long-term, and high-risk investments appropriate only for investors who can afford to lose their entire investment and who do not need access to their capital for many years. For customers in their 80s and 90s relying on retirement income, such investments are fundamentally unsuitable because these customers need liquidity, income, and preservation of capital—not long-term speculation in energy development.

Wollins received $2,448.30 in commissions from these unsuitable recommendations, which he must now disgorge. The commission disgorgement ensures he does not profit from unsuitable recommendations that put elderly customers' financial security at risk.

The three-month suspension and commission disgorgement reflect the particularly vulnerable nature of the customers—elderly retirees dependent on their savings—and the clear unsuitability of recommending speculative energy partnerships to such investors. For investors, especially seniors, this case highlights the importance of understanding investment risks and time horizons. Retirees should be extremely cautious about illiquid, speculative investments and should seek second opinions before investing retirement funds in limited partnerships. The suspension is in effect from June 20, 2023, through September 19, 2023.

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According to FINRA, Rogerio T. Almeida was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for conducting outside business activities without providing prior written notice to his member firm.

Almeida worked as a mortgage lo...

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According to FINRA, Rogerio T. Almeida was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for conducting outside business activities without providing prior written notice to his member firm.

Almeida worked as a mortgage loan officer without providing prior written notice to his firm, earning $35,026 in commissions from those activities. Registered representatives must notify their firms about outside business activities so firms can evaluate potential conflicts of interest and ensure compliance with securities laws and firm policies.

The violations became more serious because of Almeida's conduct after submitting an outside business activity disclosure form. He ultimately submitted a form to the firm disclosing that he had a mortgage license with a mortgage company but inaccurately stated he was not working as a loan officer. Although the firm rejected the outside business activity, Almeida continued to work as a loan officer despite the firm's rejection.

This progression demonstrates multiple levels of misconduct: initially working as a loan officer without any notice to the firm; then submitting an inaccurate disclosure claiming he was not working as a loan officer when in fact he was; and finally continuing the activity after the firm rejected the outside business activity. Each step showed increasing disregard for firm policies and regulatory requirements.

The two-month suspension reflects that while Almeida engaged in undisclosed outside business activities and continued them after firm rejection, the activity as a mortgage loan officer may have had less direct potential for harm to securities customers than some other types of undisclosed activities. Nevertheless, the firm had the right to evaluate the activity and determine whether it was appropriate, and Almeida's continuation after rejection demonstrates clear disregard for firm authority.

For investors, this case illustrates that registered representatives may engage in various business activities beyond their securities employment, and these activities can create conflicts or distractions from serving securities customers. Investors should understand what other business activities their financial professionals are involved in and whether those activities might affect the advice they receive. The suspension is in effect from July 3, 2023, through September 2, 2023.

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According to FINRA, Ricky Alan Mantei appealed a National Adjudicatory Council (NAC) decision to the SEC. The NAC affirmed findings and modified sanctions, imposing a $15,000 fine, six-month suspension, and requirement to requalify by examination.

The findings state that Mantei violated his membe...

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According to FINRA, Ricky Alan Mantei appealed a National Adjudicatory Council (NAC) decision to the SEC. The NAC affirmed findings and modified sanctions, imposing a $15,000 fine, six-month suspension, and requirement to requalify by examination.

The findings state that Mantei violated his member firm's prearranged trading prohibition and circumvented its cross-trade procedures by directing prearranged trading with intermediaries to facilitate and disguise cross trades. A cross trade involves selling securities directly from one customer to another customer at the same firm, which requires specific procedures to ensure fairness.

Mantei sold positions for three customers: two customers held structured certificates of deposit and another held a municipal bond. Rather than selling these instruments directly to other customers in compliance with the firm's cross-trade procedures or selling them to the market in bona fide transactions, Mantei engineered a scheme to disguise the cross trades.

Under his plan, Mantei arranged for external third parties to buy each selling customer's investment with the understanding that he would have the firm repurchase them shortly thereafter. After the firm repurchased the investments, Mantei then sold them to other firm customers. Each set of transactions was, in substance, a cross trade between firm customers, which was prohibited by the firm's written supervisory procedures.

Mantei's conduct violated FINRA Rule 2010 and breached his duty of fair dealing relating to the municipal bond trades in willful violation of MSRB Rule G-17. By using intermediaries to disguise what were essentially cross trades, Mantei circumvented procedures designed to ensure fair pricing and proper supervision of customer-to-customer transactions.

The sanctions—$15,000 fine, six-month suspension, and requirement to requalify by examination—are not in effect pending SEC review. The requirement to requalify reflects the serious nature of deliberately circumventing firm procedures. For investors, this case illustrates that firms have procedures governing how securities are bought and sold between customers to ensure fairness, and representatives who circumvent these procedures may disadvantage customers through improper pricing or execution.

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According to FINRA, Maurice Lawrence Naylon III was fined $5,000 and suspended from association with any FINRA member in all capacities for 45 business days for engaging in an outside business activity without firm approval.

Naylon engaged in an outside business activity as owner of a company tha...

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According to FINRA, Maurice Lawrence Naylon III was fined $5,000 and suspended from association with any FINRA member in all capacities for 45 business days for engaging in an outside business activity without firm approval.

Naylon engaged in an outside business activity as owner of a company that offered structured settlements even though his member firm did not approve his request to participate in the activity. Despite the firm's denial of approval, Naylon continued to own and operate the company, sat on its Board of Directors, and served as its Vice President, Secretary, and Treasurer.

During this time, Naylon also appeared on the company's marketing materials and engaged with its clients regarding potential business. His involvement was substantial and ongoing, not a passive or minimal participation. Additionally, Naylon falsely certified on annual compliance questionnaires that he had not engaged in any outside business activities that were not approved by the firm.

The requirement to obtain firm approval for outside business activities exists so firms can evaluate potential conflicts of interest, determine whether activities may involve securities transactions requiring firm approval, and ensure activities do not interfere with the representative's duties to securities customers. When firms deny approval, they have determined that the activity is inappropriate or incompatible with the representative's securities employment.

Naylon's conduct was particularly serious because he not only engaged in the activity without approval, but continued after his firm specifically denied approval and then falsely certified on compliance questionnaires that he had no unapproved activities. This pattern shows deliberate disregard for firm policies and regulatory requirements, compounded by false attestations.

The 45-business-day suspension reflects multiple violations: engaging in the activity without approval, continuing after denial, holding multiple leadership positions, and providing false information on compliance questionnaires. For investors, this case illustrates that firms have the authority to deny outside business activities they deem inappropriate, and representatives who disregard these denials demonstrate poor judgment and disrespect for supervisory authority. The suspension is in effect from July 17, 2023, through September 18, 2023.

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