Bad Brokers

According to FINRA, Stephen Gregory Whitman was barred from association with any FINRA member in all capacities for failing to comply with FINRA's requests for information and documents during an investigation into whether he accepted a loan from a customer without disclosing it to his firm.

Whit...

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According to FINRA, Stephen Gregory Whitman was barred from association with any FINRA member in all capacities for failing to comply with FINRA's requests for information and documents during an investigation into whether he accepted a loan from a customer without disclosing it to his firm.

Whitman's firm submitted a Form U5 stating it discharged him following a customer complaint alleging he took a loan from the customer. The customer later clarified that he provided money to Whitman for a private investment away from the firm and was only paid back a small percentage. FINRA initiated an investigation to determine what actually occurred, but Whitman refused to provide requested information and documents, preventing FINRA from fully investigating the matter.

Undisclosed borrowing from customers and participation in private investments away from a firm both raise serious regulatory concerns. FINRA rules generally prohibit borrowing from customers unless certain conditions are met, as such arrangements create conflicts of interest and potential for abuse. Similarly, private securities transactions away from a member firm must be disclosed and, in some cases, approved by the firm. Whitman's refusal to cooperate prevented FINRA from determining the full scope of his conduct and whether additional customers were affected.

Cooperation with regulatory investigations is mandatory for all securities professionals. FINRA Rule 8210 requires associated persons to provide information and testimony upon request. Refusal to cooperate is treated as an independent violation warranting severe sanctions because it obstructs FINRA's ability to protect investors and maintain market integrity. When combined with allegations of undisclosed borrowing or private investments, refusal to cooperate suggests an individual has something to hide.

Investors should never loan money to their broker or financial advisor, as such arrangements create conflicts of interest and may violate firm policies and securities regulations. Any request by a broker to borrow money or participate in outside investments should be immediately reported to the firm's compliance department and FINRA. Investors can protect themselves by checking FINRA BrokerCheck before working with any broker and promptly reporting suspicious requests or conduct to regulators.

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According to FINRA, Annetta Marie Box 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 about her outside business activities.

Box provided only a partial and incomplete res...

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According to FINRA, Annetta Marie Box 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 about her outside business activities.

Box provided only a partial and incomplete response to FINRA's request for information and documents. The information and documents she failed to provide were material to FINRA's investigation into her outside business activities. By failing to fully respond to FINRA's requests, Box obstructed the investigation and prevented FINRA from determining whether she had engaged in undisclosed outside business activities that violated securities rules.

Outside business activities by registered representatives must be disclosed to and, in many cases, approved by their member firms. This requirement exists because outside activities can create conflicts of interest, consume time and attention that should be devoted to customer service, or involve securities-related activities that should be conducted through the member firm. When representatives engage in undisclosed outside businesses, it raises concerns about whether customers are being steered into investments or arrangements that benefit the representative rather than the customer.

FINRA's authority to request information and testimony under Rule 8210 is essential to its regulatory mission. Partial or incomplete responses are treated the same as outright refusal because they prevent FINRA from conducting thorough investigations. The permanent bar removes Box from the industry and protects investors from an individual who refused to fully cooperate with regulators.

Investors should be aware of their broker's outside business activities, as these can create conflicts of interest. If a broker suggests an investment or business opportunity outside their firm, investors should verify with the firm's compliance department that the activity has been properly disclosed and approved. FINRA BrokerCheck provides information about a broker's employment history and outside business activities, helping investors identify potential conflicts. Brokers who refuse to cooperate with regulatory investigations demonstrate contempt for the rules designed to protect investors and should not be trusted with customer assets.

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According to FINRA, Patrick Allen English was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA during an investigation based on allegations disclosed in a Form U5 filed by his member firm.

The Form U5 disclosed t...

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According to FINRA, Patrick Allen English was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA during an investigation based on allegations disclosed in a Form U5 filed by his member firm.

The Form U5 disclosed that English's firm had permitted him to resign because he used text messages to exchange trading directions in violation of firm policies and procedures, improperly exercised discretion in client accounts, and reported to clients that certain unplaced trades had been executed. Although English initially cooperated with FINRA's investigation by providing documents and information, he later ceased cooperating and refused to appear for testimony.

The allegations underlying FINRA's investigation are extremely serious. Using unapproved text messages to discuss trading prevents firms from supervising communications and maintaining required records. Improper exercise of discretion—trading without proper authorization—violates customer trust and regulatory requirements. Most seriously, telling clients that trades were executed when they were not constitutes fraud and can cause significant customer harm if clients make decisions based on false account information.

English's initial cooperation followed by refusal to testify prevented FINRA from fully investigating these serious allegations and determining their full scope. His refusal to appear for testimony is itself a violation of FINRA Rule 8210, which requires associated persons to cooperate with investigations. The combination of serious underlying allegations and refusal to testify warrants permanent removal from the industry.

Investors should immediately report any broker who claims trades were executed when they were not, as this constitutes fraud. Customers should carefully review confirmations and account statements to verify all trades actually occurred as represented. Communications with brokers should be conducted through firm-approved channels to ensure proper supervision and record retention. FINRA BrokerCheck allows investors to review a broker's disciplinary history, including bars for failure to cooperate. Individuals who refuse to answer questions from regulators should not be trusted with investor assets, as their refusal suggests they have something to hide.

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According to FINRA, Francis Joseph Velten Jr. was barred from association with any FINRA member in all capacities for failing to produce information and documents requested by FINRA in connection with an investigation into allegations that he churned and flipped customer accounts by encouraging elde...

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According to FINRA, Francis Joseph Velten Jr. was barred from association with any FINRA member in all capacities for failing to produce information and documents requested by FINRA in connection with an investigation into allegations that he churned and flipped customer accounts by encouraging elderly customers to surrender annuities, sell mutual funds, and invest proceeds into bonus annuities.

FINRA investigated allegations that Velten improperly traded for elderly customers away from his firm, causing them to incur significant, unnecessary surrender charges so he could generate sales commissions. Annuity flipping—encouraging customers to exchange existing annuities for new ones primarily to generate commissions—is a particularly harmful practice affecting seniors. Surrender charges can be substantial, and new annuities typically restart lengthy surrender periods, locking seniors into products that may be unsuitable for their time horizon and liquidity needs.

When FINRA requested information and documents necessary to investigate these serious allegations, Velten refused to respond. His refusal deprived FINRA of information needed to perform its regulatory function and fully investigate potential misconduct. FINRA needed this information to determine whether Velten engaged in unsuitable annuity exchanges, how many customers were affected, and what losses they incurred.

Elderly investors are particularly vulnerable to unsuitable annuity recommendations because they often have limited time horizons, need for liquidity, and may not fully understand complex annuity features. Bonus annuities, which offer upfront bonuses, often carry higher fees and longer surrender periods that may offset any bonus received. Encouraging seniors to exchange annuities primarily to generate new commissions while subjecting them to substantial surrender charges and extended surrender periods is predatory conduct.

Velten's failure to respond to regulatory requests prevented FINRA from holding him accountable and potentially providing restitution to harmed customers. The permanent bar is appropriate given both the serious underlying allegations targeting vulnerable seniors and the refusal to cooperate. Investors, especially seniors considering annuity exchanges, should obtain independent analysis before surrendering existing annuities. FINRA BrokerCheck provides information about brokers' disciplinary histories, helping investors avoid individuals with histories of unsuitable annuity sales or refusal to cooperate with regulators.

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According to FINRA, Louis Ottimo was barred from association with any FINRA member in all capacities in a decision affirmed by the SEC for fraudulently omitting material information from his biography in a private placement memorandum.

Ottimo recklessly omitted adverse information about his managem...

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According to FINRA, Louis Ottimo was barred from association with any FINRA member in all capacities in a decision affirmed by the SEC for fraudulently omitting material information from his biography in a private placement memorandum.

Ottimo recklessly omitted adverse information about his management of a private jet charter company he co-founded and served as CEO. He also willfully failed to timely and accurately disclose several unsatisfied tax liens, civil judgments, and a bankruptcy on his Form U4. The SEC sustained FINRA's findings that these omissions violated Exchange Act Section 10(b), Rule 10b-5, and FINRA Rules 2020 and 2010.

The NAC determined that barring Ottimo in all capacities remained appropriate given his serious misconduct, despite reconsideration on remand. The SEC affirmed, finding numerous aggravating factors and no mitigating ones supported the bar. The decision concluded that barring Ottimo was neither excessive nor oppressive but instead served a remedial purpose to protect investors.

Private placement memorandums must contain complete and accurate information about the offering and those involved. Biographies of key persons are material because investors rely on the experience, qualifications, and track record of management when making investment decisions. Omitting negative information about prior business failures or financial problems constitutes securities fraud when the omissions make other statements misleading.

Form U4 disclosure requirements serve critical investor protection functions by ensuring complete information about a broker's background is available through FINRA BrokerCheck. Willful failures to disclose liens, judgments, and bankruptcies prevent investors from learning about financial problems that may create incentives for misconduct. This case demonstrates that both fraudulent omissions in offering documents and failures to maintain accurate registration information warrant permanent removal from the industry. Investors should thoroughly research all individuals involved in private placements and verify their backgrounds independently using FINRA BrokerCheck and other sources.

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According to FINRA, Doug Marshall McKelvey was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA in connection with a matter that originated from a Form U5 filed by his member firm.

The Form U5 disclosed that McKelve...

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According to FINRA, Doug Marshall McKelvey was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA in connection with a matter that originated from a Form U5 filed by his member firm.

The Form U5 disclosed that McKelvey had been discharged because of concerns regarding his unauthorized activity and misappropriation of client funds from client accounts held by his relatives. When FINRA requested information and documents to investigate these extremely serious allegations, McKelvey refused to comply, preventing FINRA from determining the full scope of his alleged misconduct.

Misappropriation of client funds constitutes theft and is among the most serious violations in the securities industry. When brokers steal from their own family members' accounts, it represents an egregious breach of trust. The allegation of unauthorized activity suggests McKelvey may have been trading in his relatives' accounts without permission, compounding the severity of the misconduct.

McKelvey's refusal to provide information prevented FINRA from determining how much money was misappropriated, how many accounts were affected, whether non-family member accounts were also victimized, and whether any funds can be recovered for the victims. His refusal to cooperate is treated as an independent violation that alone warrants permanent removal from the industry.

Investors, particularly seniors, are sometimes victimized by family members who have access to their accounts or financial information. This case underscores the importance of monitoring all account activity, even when the broker is a trusted family member. Regular review of statements, confirmations, and online account access can help detect unauthorized activity quickly. Investors who discover misappropriation should immediately report it to the firm, FINRA, and law enforcement. The permanent bar protects investors from an individual accused of stealing from family members who refused to explain his conduct to regulators.

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According to FINRA, Mark Laurence Guarino III was fined $2,500 and suspended for one month for making negligent misrepresentations in a PPP loan application. He signed an application falsely stating he was self-employed with one employee, when he was not self-employed, did not operate a business, an...

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According to FINRA, Mark Laurence Guarino III was fined $2,500 and suspended for one month for making negligent misrepresentations in a PPP loan application. He signed an application falsely stating he was self-employed with one employee, when he was not self-employed, did not operate a business, and paid no payroll taxes. Based on these misrepresentations, he received a $20,833 loan which he later repaid in full. Even negligent misrepresentations in government loan applications violate securities industry standards. This case shows FINRA holds registered persons accountable for conduct beyond securities activities when it reflects on their integrity. Investors benefit from these standards ensuring brokers maintain honesty in all financial dealings.

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According to FINRA, David John Wilkie was fined $10,000 and suspended for six months for concealing his beneficiary status on a customer's life insurance policy. Wilkie agreed to pay 60% of premiums in exchange for 60% of the death benefit, but failed to disclose this to his firm and denied it on co...

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According to FINRA, David John Wilkie was fined $10,000 and suspended for six months for concealing his beneficiary status on a customer's life insurance policy. Wilkie agreed to pay 60% of premiums in exchange for 60% of the death benefit, but failed to disclose this to his firm and denied it on compliance questionnaires. He then transferred the beneficiary to his son to further conceal the arrangement. When the customer died, the $125,000 benefit went to Wilkie's son who transferred it to Wilkie. Being a beneficiary creates conflicts of interest that firms must supervise. This arrangement gave Wilkie a financial interest in the customer's death. Investors should never name brokers or their family members as life insurance beneficiaries.

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According to FINRA, Robert Charles Mehlin Jr. was fined $7,500 and suspended for three months for exercising discretion without written authorization and using unapproved text messages for securities business. Mehlin traded without same-day authorization and falsely denied exercising discretion on c...

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According to FINRA, Robert Charles Mehlin Jr. was fined $7,500 and suspended for three months for exercising discretion without written authorization and using unapproved text messages for securities business. Mehlin traded without same-day authorization and falsely denied exercising discretion on compliance forms. He also used personal text messages to discuss investments, which were not captured by the firm. Off-channel communications prevent supervision and record retention. Mehlin asked a customer to deny his discretion use if questioned. Written discretionary authorization protects customers by documenting authority scope. Using unapproved channels creates risks of unsuitable recommendations going undetected.

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According to FINRA, James Robert Pecoraro was fined $10,000, suspended for nine months, and ordered to pay $68,886 in restitution for excessively trading customer accounts. Pecoraro recommended high-cost, high-velocity trading with frequent stop loss orders that liquidated positions, followed by new...

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According to FINRA, James Robert Pecoraro was fined $10,000, suspended for nine months, and ordered to pay $68,886 in restitution for excessively trading customer accounts. Pecoraro recommended high-cost, high-velocity trading with frequent stop loss orders that liquidated positions, followed by new purchases. Customers routinely followed his recommendations, giving him de facto control. The trading was unsuitable given customer profiles. Customers suffered $166,018 in realized losses while paying $184,053 in trading costs including $165,437 in commissions. One customer filed arbitration and reached a monetary settlement. Excessive trading generates commissions for brokers while harming customers through unnecessary costs that make profits virtually impossible.

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