Bad Brokers

According to FINRA, Mercer Hicks III was barred from association with any FINRA member in all capacities and ordered to pay disgorgement of $38,812.60 on January 11, 2022, after an Office of Hearing Officers decision became final.

Hicks was found in violation of customer-specific suitability obli...

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According to FINRA, Mercer Hicks III was barred from association with any FINRA member in all capacities and ordered to pay disgorgement of $38,812.60 on January 11, 2022, after an Office of Hearing Officers decision became final.

Hicks was found in violation of customer-specific suitability obligations by recommending purchases of high-risk, illiquid, non-traded securities offered by several real estate investment trusts and a business development corporation to senior customers without satisfying suitability requirements. The recommendations were specifically unsuitable for each customer considering their ages, financial situations, and investment profiles.

The prospectuses of these investments contained unequivocal warnings that investing involved a high degree of risk, including complete loss of investment, and that the investments were suitable only for persons who would not need liquidity. None of the customers had tolerance for high-risk investments. For some customers, Hicks' recommendations excessively concentrated their liquid assets in high-risk, illiquid securities. Hicks received $38,812.60 in commissions from these recommendations.

Additionally, Hicks violated reasonable-basis suitability obligations by failing to conduct reasonably diligent investigation of the investments he recommended. He was ignorant of significant features of the securities, including their numerous inherent risks. Hicks did not understand what the business development corporation invested in or the risks involved. Similarly, he did not understand the risks of the non-traded REITs, did not know they were high-risk investments, and was unaware that prospectuses warned investors should be able to afford complete loss of their investments.

Suitability obligations exist to protect investors from recommendations that do not align with their financial profiles and investment objectives. This is especially critical for senior investors who often have limited time horizons and cannot afford significant losses.

This case illustrates the importance of working with advisors who thoroughly understand the investments they recommend and carefully consider whether those investments match your specific needs and circumstances.

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According to FINRA, Michael Rene Pena was barred from association with any FINRA member in all capacities on January 11, 2022, for refusing to appear for on-the-record testimony.

FINRA initiated an investigation into whether Pena failed to timely amend his Form U4 to disclose a potentially report...

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According to FINRA, Michael Rene Pena was barred from association with any FINRA member in all capacities on January 11, 2022, for refusing to appear for on-the-record testimony.

FINRA initiated an investigation into whether Pena failed to timely amend his Form U4 to disclose a potentially reportable event and whether he submitted false continuing education course completion documents. Form U4 is the uniform application for securities industry registration that must be kept current with accurate information about the registered person's background, including disciplinary events, customer complaints, and other matters that could affect their fitness to work in the securities industry.

Pena initially cooperated with FINRA's investigation but subsequently ceased doing so and refused to appear for requested on-the-record testimony. This refusal to cooperate represents a serious violation of the obligations that come with securities industry registration.

FINRA rules require registered persons to cooperate fully with regulatory investigations. This duty to cooperate is essential to FINRA's ability to regulate the securities industry effectively and protect investors. Without cooperation from subjects of investigations, FINRA cannot adequately investigate potential misconduct and take appropriate action to protect investors.

When individuals refuse to provide testimony or information to FINRA, they face severe sanctions, typically including bars from the industry. These strong sanctions reflect the fundamental importance of cooperation with regulatory authorities.

For investors, this case serves as a reminder to check your financial advisor's background through FINRA BrokerCheck before working with them. BrokerCheck displays registration information, employment history, and any regulatory actions or customer complaints. Individuals who are barred from the industry are prohibited from working as registered representatives, and investors should avoid doing business with them.

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According to FINRA, Devin Lamarr Wicker was barred from association with any FINRA member in all capacities and ordered to pay $50,000 plus interest in restitution following a NAC decision that was appealed to the SEC on January 13, 2022. The bar remains in effect pending review.

Wicker was found...

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According to FINRA, Devin Lamarr Wicker was barred from association with any FINRA member in all capacities and ordered to pay $50,000 plus interest in restitution following a NAC decision that was appealed to the SEC on January 13, 2022. The bar remains in effect pending review.

Wicker was found in violation of securities rules after converting customer funds. A customer retained Wicker's member firm to serve as underwriter for its planned Initial Public Offering (IPO). Under their agreement, the customer would reimburse the firm for reasonable out-of-pocket expenses, including legal fees, in connection with the IPO.

The customer wired $50,000 to the firm with the sole purpose of paying a retainer to a law firm on the customer's behalf. Wicker knew about this wire and its sole purpose, and also knew the customer never authorized use of the funds for any other purpose. However, the firm neither paid the retainer to the law firm nor returned the funds to the customer.

Wicker controlled the firm's bank account where the retainer was deposited and authorized withdrawals and payments for other purposes, including substantial payments to himself. The record shows numerous attempts over more than six months to get Wicker to either pay the law firm with the customer's funds or return the funds. Wicker ignored these requests and obfuscated his knowledge that the customer's funds had not been used as intended. To date, Wicker has not repaid the customer.

Conversion of customer funds is one of the most serious violations in the securities industry. It represents a fundamental breach of the trust that customers place in their financial professionals and can cause significant financial harm.

This case serves as a stark reminder for investors to monitor their accounts carefully and report any suspicious activity immediately. Investors should verify that funds intended for specific purposes are actually used as directed and should take prompt action if funds disappear or are misused.

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According to FINRA, the SEC remanded a decision back to FINRA on January 21, 2022, regarding Bradley Carl Reifler, who had been barred from association with any FINRA member in all capacities. The bar remains in effect pending review.

The SEC affirmed FINRA's findings that Reifler repeatedly refu...

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According to FINRA, the SEC remanded a decision back to FINRA on January 21, 2022, regarding Bradley Carl Reifler, who had been barred from association with any FINRA member in all capacities. The bar remains in effect pending review.

The SEC affirmed FINRA's findings that Reifler repeatedly refused to answer questions during two on-the-record interviews concerning the sale of a closed-end mutual fund he managed and controlled. The refusal to answer questions during regulatory investigations represents a serious violation of the duty to cooperate with regulatory authorities - a fundamental obligation for anyone associated with the securities industry.

However, the SEC determined that FINRA misapplied the sanction guidelines when it barred Reifler based on his complete failure to respond to information requests. As a result, the SEC remanded the proceeding back to the NAC for redetermination of the appropriate sanctions.

This case illustrates several important principles. First, the duty to cooperate with regulatory investigations is absolute and non-negotiable. Registered persons and associated persons must provide truthful and complete responses to regulatory inquiries. Second, while FINRA has broad authority to sanction violators, it must follow its own sanction guidelines when determining appropriate penalties.

The involvement of a closed-end mutual fund that Reifler managed and controlled adds another dimension to this case, as mutual funds involve pooled investor assets and carry significant responsibilities to shareholders.

For investors, this case underscores the importance of regulatory oversight in protecting investor interests. When individuals refuse to cooperate with investigations, it raises serious questions about what they may be trying to hide. Investors should review their advisor's regulatory history through FINRA BrokerCheck and be cautious about working with individuals who have failed to cooperate with regulatory authorities.

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According to FINRA, Joshua David Nicholas was barred from association with any FINRA member in all capacities on January 24, 2022, for converting customer funds, providing a fictitious brokerage statement, and engaging in undisclosed outside business activities.

Nicholas engaged in futures tradin...

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According to FINRA, Joshua David Nicholas was barred from association with any FINRA member in all capacities on January 24, 2022, for converting customer funds, providing a fictitious brokerage statement, and engaging in undisclosed outside business activities.

Nicholas engaged in futures trading through his corporate entity, which was an outside business activity (OBA). His futures trading for two customers, a married couple, resulted in losses exceeding $1 million. In a purported effort to recoup their losses, Nicholas convinced the customers to invest $300,000 in a promissory note with his entity so it could invest the funds in securities on their behalf.

However, Nicholas transferred $280,000 from his entity's bank account to his personal account and spent approximately $58,000 on personal expenses. This constituted conversion - the unauthorized taking of customer funds for personal use.

When the customers repeatedly asked Nicholas for account statements showing how their investment was being managed, Nicholas prepared and emailed a completely fabricated brokerage statement. This false document purported to show that his entity had opened an account at a FINRA member firm holding various equity securities and earning dividend income. In reality, neither Nicholas nor his entity had any account at that firm or owned any assets there.

Additionally, Nicholas failed to provide prior written notice to his member firm about his OBA involving the entity and falsely attested in a firm compliance certification that he had no OBAs. Nicholas also participated in a private securities transaction (the promissory note) without providing required notice or receiving permission from his firm.

Conversion of customer funds is among the most egregious violations in the securities industry. Creating false account statements compounds this misconduct by deceiving customers about the status of their investments and preventing them from taking timely action to protect their interests.

This case demonstrates the critical importance of investors receiving account statements directly from custodian firms rather than relying solely on statements provided by their advisor. Investors should independently verify their account holdings and be extremely cautious about investing in promissory notes or other securities issued by their advisor's entities.

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According to FINRA, Mark Smith was barred from association with any FINRA member in all capacities on January 26, 2022, for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation originated from an amended Form U5 filing submitted by Smith's former member firm. F...

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According to FINRA, Mark Smith was barred from association with any FINRA member in all capacities on January 26, 2022, for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation originated from an amended Form U5 filing submitted by Smith's former member firm. Form U5 is the uniform termination notice used when a registered person's association with a firm ends. The firm's Form U5 disclosed that it received information about Smith's possible involvement in an unauthorized transaction in a client's personal checking account.

Although Smith initially cooperated with FINRA's investigation, he subsequently ceased cooperating and refused to appear for on-the-record testimony. This refusal to cooperate with a regulatory investigation represents a fundamental violation of the obligations that come with securities industry registration.

Unauthorized transactions - particularly those involving a client's personal checking account rather than securities accounts - raise serious concerns about potential theft or fraud. When FINRA investigates such allegations, it needs the cooperation of the individuals involved to determine what actually occurred and whether customers were harmed.

The duty to cooperate with FINRA investigations is not optional. It is a core regulatory obligation that enables FINRA to fulfill its mission of protecting investors and maintaining market integrity. When individuals refuse to cooperate, FINRA typically imposes severe sanctions, including industry bars, to enforce this critical requirement.

For investors, this case serves as a reminder to monitor all financial accounts carefully for unauthorized activity. Any suspicious transactions should be reported immediately to both the financial institution and regulatory authorities. Investors should also verify their advisor's background through FINRA BrokerCheck, which displays disciplinary history including bars from the industry. Working with barred individuals is illegal and puts investments at serious risk.

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According to FINRA, Tarek Mohsen Mohamed was barred from association with any FINRA member in all capacities on January 27, 2022, for failing to provide a complete response to FINRA's requests for information and documents.

FINRA requested the information and documents to determine whether Mohame...

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According to FINRA, Tarek Mohsen Mohamed was barred from association with any FINRA member in all capacities on January 27, 2022, for failing to provide a complete response to FINRA's requests for information and documents.

FINRA requested the information and documents to determine whether Mohamed converted client funds, improperly failed to disclose outside business activities to his member firm, or engaged in other misconduct in violation of FINRA rules or federal securities laws. These are serious allegations that strike at the heart of investor protection.

Conversion of client funds - the unauthorized taking of customer money for personal use - is one of the most egregious violations in the securities industry and causes direct financial harm to investors. Outside business activities must be disclosed to firms so they can supervise their representatives' activities and identify potential conflicts of interest that could harm customers.

When FINRA investigates potential misconduct, it relies on registered persons to provide complete and truthful responses to information requests. This duty to cooperate is fundamental to FINRA's ability to regulate the securities industry effectively and protect investors. Without cooperation from subjects of investigations, FINRA cannot adequately investigate potential violations and take appropriate action.

Mohamed's failure to provide a complete response prevented FINRA from determining whether he engaged in misconduct that may have harmed investors. This obstruction of the regulatory process itself warrants severe sanctions, regardless of the underlying conduct being investigated.

For investors, this case underscores the importance of working with registered representatives who have clean regulatory records and demonstrate respect for regulatory oversight. Investors can check their advisor's background, including any disciplinary actions, through FINRA BrokerCheck. Individuals who are barred from the industry are prohibited from working as registered representatives, and investors should avoid doing business with them.

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According to FINRA, Dennis Phillip Ayre was barred from association with any FINRA member in all capacities on January 28, 2022, for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation focused on the suitability of certain investment recommendations Ayre made ...

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According to FINRA, Dennis Phillip Ayre was barred from association with any FINRA member in all capacities on January 28, 2022, for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation focused on the suitability of certain investment recommendations Ayre made to customers while he was registered with FINRA. Suitability is a fundamental obligation in the securities industry - registered representatives must have a reasonable basis to believe that recommended transactions or investment strategies are suitable for customers based on their financial situations, needs, and investment objectives.

When FINRA investigates potential suitability violations, it needs to understand the basis for the recommendations, what information the representative had about the customers, and what analysis was performed to determine suitability. On-the-record testimony is often essential to gather this information and assess whether violations occurred.

Ayre's refusal to appear for testimony prevented FINRA from fully investigating whether his recommendations were suitable for his customers. This failure to cooperate with the regulatory investigation represents a serious violation of the duties that come with securities industry registration.

The duty to cooperate with FINRA is not optional - it is a core regulatory obligation that enables FINRA to protect investors and maintain market integrity. When registered persons refuse to cooperate, they typically face severe sanctions, including industry bars, regardless of the underlying conduct being investigated.

For investors, this case highlights several important points. First, suitability matters - your financial advisor should make recommendations based on your specific circumstances, not just what generates the highest commissions. Second, regulatory oversight depends on cooperation from industry participants. Third, investors should check their advisor's background through FINRA BrokerCheck, which displays disciplinary actions including bars from the industry. Barred individuals cannot legally work as registered representatives.

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According to FINRA, Francis Cid was barred from association with any FINRA member in all capacities on January 28, 2022, for refusing to produce information or documents requested by FINRA.

FINRA's investigation focused on Cid's conduct concerning an entity that he controls. The information reque...

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According to FINRA, Francis Cid was barred from association with any FINRA member in all capacities on January 28, 2022, for refusing to produce information or documents requested by FINRA.

FINRA's investigation focused on Cid's conduct concerning an entity that he controls. The information requests sought details related to Cid's potential participation in private securities transactions, disclosures made to investors concerning the entity, and matters related to the entity's registration status.

Private securities transactions - sometimes called "selling away" - occur when registered representatives engage in securities transactions outside the regular scope of their employment with their firm. FINRA rules require representatives to provide prior written notice to their firm before participating in private securities transactions. This requirement exists so firms can supervise these activities and protect investors from unsuitable investments or fraudulent schemes.

Questions about disclosures to investors and registration status are equally important. Securities offerings generally must be registered with the SEC unless an exemption applies, and investors must receive accurate information about their investments to make informed decisions.

Cid's refusal to produce requested information and documents prevented FINRA from investigating these important issues and determining whether investors were harmed. The duty to cooperate with regulatory investigations is fundamental - it enables FINRA to fulfill its mission of protecting investors and maintaining fair markets.

When registered persons refuse to cooperate with FINRA investigations, they face severe sanctions, typically including bars from the industry. These strong sanctions reflect the critical importance of cooperation with regulatory oversight.

For investors, this case serves as an important reminder to be cautious about investing in securities offered by your financial advisor outside of their firm. Such "selling away" transactions often lack proper supervision and may involve unsuitable or fraudulent investments. Investors should also verify their advisor's regulatory history through FINRA BrokerCheck and avoid working with individuals who have been barred from the industry.

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According to FINRA, Steven Douglas Schisler was barred from association with any FINRA member in all capacities on January 31, 2022, for making unsuitable recommendations, participating in unapproved private securities transactions, willfully failing to amend his Form U4, conditioning a settlement o...

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According to FINRA, Steven Douglas Schisler was barred from association with any FINRA member in all capacities on January 31, 2022, for making unsuitable recommendations, participating in unapproved private securities transactions, willfully failing to amend his Form U4, conditioning a settlement on expungement support, lying under oath, and engaging in unethical business conduct.

Schisler recommended that two elderly, married customers invest $300,000 in a promissory note to finance a commercial property. This represented a substantial portion of their retirement savings, which they needed to pay down considerable debt. The investment was limited to accredited investors, which the customers were not. Schisler failed to perform adequate due diligence - even a basic internet search would have revealed that one partner issuing the note had been barred from the securities industry for defrauding investors.

Schisler participated in this private securities transaction without firm approval, despite repeated explicit instructions that he could not do so. He facilitated the investment by recommending it, arranging meetings in his office, and receiving a $9,500 finder's fee. When the issuer defaulted on the $300,000 note, one elderly customer died, and the surviving spouse filed civil and arbitration claims against Schisler.

Schisler willfully failed to timely amend his Form U4 to report the civil lawsuit, arbitration, their resolutions, and receipt of a Wells Notice about a FINRA investigation. He also entered a settlement requiring the elderly customer to support his expungement request - a prohibited condition. During the expungement hearing, Schisler lied under oath about his involvement, falsely claiming he did not introduce the customers to the issuer. He also lied during FINRA testimony, falsely stating his finder's fee was a personal loan.

Furthermore, Schisler engaged in unethical conduct toward another elderly, retired customer by soliciting a $50,000 loan secured by property on the verge of default. He defaulted days later, lost the property to foreclosure, failed to disclose this to the customer, and took over six years to repay the loan. Schisler also made false statements on a firm compliance questionnaire about borrowing from customers and caused his firm to fail to preserve records by using unmonitored non-firm email accounts.

This extensive pattern of misconduct demonstrates flagrant disregard for investor protection and regulatory obligations. Investors should conduct thorough due diligence on advisors and check FINRA BrokerCheck for disciplinary history before entrusting them with their financial futures.

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