Bad Brokers

According to FINRA, Frank E. Lumpuy of Miami, Florida was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for engaging in outside business activities without complete and accurate disclosure to his member firm.

Lumpuy disclo...

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According to FINRA, Frank E. Lumpuy of Miami, Florida was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for engaging in outside business activities without complete and accurate disclosure to his member firm.

Lumpuy disclosed to his firm that he was a passive investor in two real estate investment companies. However, without providing notice or receiving approval, he actually worked as an owner-manager for these companies—a much more active role than disclosed.

As owner-manager, Lumpuy managed rental properties, negotiated leases, signed annual corporate filings, and facilitated communications between company members, counsel, and investors. These activities went far beyond passive investment.

Lumpuy inaccurately affirmed on multiple annual compliance questionnaires that he was fully in compliance with firm policies. When the firm specifically asked whether any firm customers were investors in the companies, Lumpuy failed to disclose that one of his customers had been an investor for approximately two years.

The involvement of a firm customer in Lumpuy's outside business creates a conflict of interest that the firm should have been aware of. When brokers have financial relationships with customers outside the brokerage relationship, it can influence their recommendations and advice.

The distinction between passive investor and active manager is significant. Passive investment generally requires less scrutiny, while active management roles require fuller disclosure so firms can evaluate potential conflicts and time commitments.

The suspension was in effect from May 5 through July 4, 2025.

For investors, always ask your broker about their outside business activities and consider how those activities might affect the advice you receive.

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According to FINRA, Joseph Jemel Steward of Richmond Hill, New York was suspended from association with any FINRA member in all capacities for five months and ordered to pay $6,000 in partial restitution to a customer.

Steward willfully violated Regulation Best Interest by recommending trades to ...

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According to FINRA, Joseph Jemel Steward of Richmond Hill, New York was suspended from association with any FINRA member in all capacities for five months and ordered to pay $6,000 in partial restitution to a customer.

Steward willfully violated Regulation Best Interest by recommending trades to a retail customer that were excessive, unsuitable, and not in the customer's best interest. The customer relied on Steward's advice and routinely followed his recommendations, giving Steward de facto control over the account.

Steward's trading resulted in a high turnover rate and a cost-to-equity ratio above traditional guideposts. His trading generated $25,939 in commissions while causing $24,568 in realized losses.

No monetary fine was imposed due to Steward's financial status.

De facto control exists when a customer routinely follows a broker's recommendations without independent judgment. When brokers have such control, they bear greater responsibility to ensure trading is appropriate because the customer is essentially delegating investment decisions to them.

Turnover rate measures how often the portfolio is replaced through trading. Cost-to-equity ratio measures what percentage return an account must achieve just to cover trading costs. When these metrics exceed traditional guideposts, it suggests the trading level may be excessive relative to what could reasonably benefit the customer.

In this case, the customer paid more in commissions ($25,939) than they lost in the market ($24,568), illustrating how excessive trading can cause harm primarily through transaction costs rather than just poor investment selection.

The suspension is in effect from June 2 through November 1, 2025.

Investors should monitor their accounts for high trading activity and understand the relationship between commissions paid and investment results.

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According to FINRA, Eduardo Leon Jr. of Houston, Texas was fined $7,500 and suspended from association with any FINRA member in all capacities for four months for recommending investments without adequate understanding and in violation of Regulation Best Interest.

Leon recommended that retail and...

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According to FINRA, Eduardo Leon Jr. of Houston, Texas was fined $7,500 and suspended from association with any FINRA member in all capacities for four months for recommending investments without adequate understanding and in violation of Regulation Best Interest.

Leon recommended that retail and non-retail customers purchase and hold a volatility-linked exchange-traded note without having sufficient understanding of its risks and features. These products are complex instruments that can behave very differently from traditional investments.

Leon willfully violated Reg BI by making recommendations that were not in his retail customers' best interests. He also recommended purchases of a foreign currency denominated corporate bond that was unsuitable for both retail and non-retail customers.

The bond purchases resulted in concentration levels inconsistent with customers' investment profiles. Concentration in a single bond, particularly one denominated in foreign currency, exposes investors to significant issuer-specific and currency risks.

Volatility-linked products are designed to track market volatility and are generally intended for short-term trading by sophisticated investors who understand their mechanics. When brokers recommend these products without fully understanding them, customers can suffer unexpected losses.

Foreign currency denominated bonds add exchange rate risk to traditional bond risks. If the foreign currency weakens against the dollar, investors can lose money even if the bond issuer makes all payments as scheduled.

The combination of complex products and concentration violations suggests a pattern of recommendations that did not adequately consider customer needs and risk profiles.

The suspension is in effect from June 2 through October 1, 2025.

Investors should ensure they understand any complex product before investing and avoid excessive concentration in any single security.

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According to FINRA, Natalie Thai Pham of Broken Arrow, Oklahoma was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for making misrepresentations to a mortgage lender to help a friend obtain a mortgage loan.

Pham submitted t...

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According to FINRA, Natalie Thai Pham of Broken Arrow, Oklahoma was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for making misrepresentations to a mortgage lender to help a friend obtain a mortgage loan.

Pham submitted two letters to the mortgage lender stating that she was gifting $30,000 to her friend for use as part of a down payment. The lender required documentation of the gift source because it factored into the friend's debt burden and ability to repay the mortgage.

However, the funds were not genuine gifts. Pham received a portion of the funds in cash from the friend shortly before making the first "gift" and was repaid the remaining portion shortly after making the second. Additionally, Pham falsely stated in both letters that she was the friend's daughter when she had no familial relationship with the friend.

Pham used her personal checking account at her member firm's affiliate bank to transfer the funds, bringing the conduct within FINRA's jurisdiction.

Mortgage loan fraud is a serious offense that contributed to the 2008 financial crisis. When borrowers obtain loans based on false information about their finances, it increases default risk and harms lenders, investors in mortgage-backed securities, and ultimately the broader economy.

Financial professionals are held to high standards of honesty and integrity. Engaging in fraudulent conduct, even when unrelated to securities business, demonstrates a lack of the character expected of those entrusted with customer assets.

The suspension is in effect from May 19, 2025, through May 18, 2026.

For investors, this case demonstrates that FINRA holds registered persons accountable for dishonest conduct even outside their securities business.

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According to FINRA, Nicholas James Schiano of Staten Island, New York was fined $5,000, suspended from association with any FINRA member in all capacities for six months, and ordered to pay $55,770 plus interest in partial restitution to customers.

Schiano willfully violated Regulation Best Inter...

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According to FINRA, Nicholas James Schiano of Staten Island, New York was fined $5,000, suspended from association with any FINRA member in all capacities for six months, and ordered to pay $55,770 plus interest in partial restitution to customers.

Schiano willfully violated Regulation Best Interest by recommending excessive trades to retail customers. The customers were seniors who relied on Schiano's advice and routinely followed his recommendations, giving him de facto control over their accounts.

Schiano's recommendations caused the customers to pay $71,025 in commissions while suffering $62,244 in realized losses. The restitution amount reflects the commissions attributable to Schiano's recommendations (with shared commissions split with another representative).

Excessive trading in senior customers' accounts is particularly concerning because seniors often have limited ability to recover from investment losses. They may be investing retirement savings that they need for living expenses and cannot replace through future earnings.

When seniors rely on a broker's advice and follow recommendations without independent judgment, they are especially vulnerable to excessive trading. The broker's control over the account creates an obligation to trade only when genuinely beneficial to the customer, not to generate commissions.

The pattern here—high commissions combined with losses—is a hallmark of churning. The customers paid the broker to lose their money.

The suspension is in effect from June 2 through December 1, 2025.

Senior investors and their families should carefully monitor account activity. High trading frequency, substantial commission charges, and poor performance relative to relevant benchmarks may indicate excessive trading. If you observe these warning signs, consider consulting with a securities attorney.

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According to FINRA, Joseph L. Tranchina of Middletown, New Jersey was fined $5,000, suspended from association with any FINRA member in all capacities for five months, and ordered to pay $60,975 plus interest in restitution to customers.

Tranchina willfully violated Regulation Best Interest by re...

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According to FINRA, Joseph L. Tranchina of Middletown, New Jersey was fined $5,000, suspended from association with any FINRA member in all capacities for five months, and ordered to pay $60,975 plus interest in restitution to customers.

Tranchina willfully violated Regulation Best Interest by recommending excessive trades to two retail customers. Both accounts had investment objectives of speculation, but the trading far exceeded what was appropriate.

The first customer, then a 65-year-old judge, experienced an annualized turnover rate of eight and an annualized cost-to-equity ratio of 32 percent. Tranchina generated $49,645 in commissions while causing $74,331 in realized losses.

The second customer, then a 54-year-old small business owner, relied on Tranchina's advice and routinely followed his recommendations. This account experienced a turnover rate of 21 and a cost-to-equity ratio exceeding 90 percent. The trading generated $11,330 in commissions and caused $23,818 in realized losses.

A cost-to-equity ratio of 90 percent means the account would need to earn 90 percent returns just to break even after paying commissions—an extraordinary hurdle that makes profitable investing nearly impossible.

The traditional guideposts for excessive trading are a turnover rate of six and a cost-to-equity ratio of 20 percent. Both customers' accounts substantially exceeded these thresholds, demonstrating clear excessive trading.

Even when customers agree to speculative objectives, brokers must ensure trading is in customers' best interests, not just a mechanism for generating commissions.

The suspension is in effect from June 2 through November 1, 2025.

Investors should understand the cost-to-equity ratio in their accounts and compare trading metrics to industry guideposts.

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According to FINRA, Kyle Joshua Charters of Chatham, New Jersey 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 required notice or approval.

Charters partici...

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According to FINRA, Kyle Joshua Charters of Chatham, New Jersey 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 required notice or approval.

Charters participated in the sale of a limited partnership interest without notifying or receiving written approval from his member firm. The offering was sponsored by a private equity firm that Charters was hoping to join.

The purchaser was an institutional investor who was not Charters' customer at his firm, and the sale was outside the regular scope of his employment. Charters' participation included attending meetings with the investor about the limited partnership interest and editing marketing materials for the fund.

The transaction resulted in the investor committing approximately 1.4 percent of its assets in exchange for the limited partnership interest.

FINRA rules require registered persons to provide written notice before participating in private securities transactions and to receive prior approval if they will receive compensation. These requirements exist because private securities activities conducted outside firm supervision create risks—firms cannot evaluate the appropriateness of the activity or supervise the representative's conduct.

The fact that Charters was hoping to join the private equity firm sponsoring the offering raises additional concerns about his motivations. He may have been trying to demonstrate his value to a prospective employer rather than acting solely in the investor's interest.

The suspension is in effect from May 19 through November 18, 2025.

For investors, always verify that any investment offered to you has been properly approved by the representative's firm.

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According to FINRA, Judah Spinner of Las Vegas, Nevada was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for participating in private securities transactions without prior written notice to his member firm.

Spinner solicit...

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According to FINRA, Judah Spinner of Las Vegas, Nevada was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for 12 months for participating in private securities transactions without prior written notice to his member firm.

Spinner solicited individuals to invest in an investment fund without disclosing this activity to his firm. His participation included speaking with interested individuals, answering their inquiries about the fund, and providing prospective investors with a private placement memorandum.

In total, individuals invested over $1 million in the fund through Spinner's efforts.

The 12-month suspension—among the longer suspensions for private securities transaction violations—reflects the significant amount of money raised and the scope of Spinner's solicitation activities.

Private securities transactions, sometimes called "selling away," present significant risks to investors. When representatives sell investments outside their firm's supervision, customers lose important protections including due diligence reviews, suitability assessments, and firm oversight of the sales process.

The investments solicited in these situations may be legitimate, or they may be fraudulent. Without firm review, there is no independent check on the quality or appropriateness of what is being sold.

By failing to provide notice to his firm, Spinner prevented the firm from evaluating the fund, assessing whether it was appropriate for the investors who purchased it, and supervising his activities.

The suspension is in effect from May 19, 2025, through May 18, 2026.

Investors should always verify that any investment offered by a registered representative has been approved by their firm. You can ask to see documentation of firm approval.

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According to FINRA, Phillip Curtis Anderson of Roseville, California was assessed a deferred fine of $10,000, suspended from association with any FINRA member in all capacities for five months, and ordered to pay deferred disgorgement of $8,280 plus interest in commissions.

Anderson unsuitably re...

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According to FINRA, Phillip Curtis Anderson of Roseville, California was assessed a deferred fine of $10,000, suspended from association with any FINRA member in all capacities for five months, and ordered to pay deferred disgorgement of $8,280 plus interest in commissions.

Anderson unsuitably recommended that two senior retail customers invest in speculative, unrated corporate bonds. One customer ended up with at least 96 percent of their net worth invested in these bonds, while the other had 35 percent invested.

Unrated corporate bonds are speculative investments because without a credit rating from agencies like Moody's or S&P, investors lack independent assessment of the issuer's creditworthiness. Such bonds carry higher default risk and are generally unsuitable for conservative investors or those who cannot afford to lose their investment.

A concentration of 96 percent in speculative bonds for a senior investor is extraordinarily high and clearly unsuitable. Even the 35 percent concentration is concerning given the speculative nature of the bonds.

Senior investors have limited ability to recover from investment losses because they typically cannot replace lost capital through future earnings. Recommendations that put a substantial portion of their net worth at risk in speculative investments are rarely appropriate.

Anderson earned $8,280 in commissions from these recommendations, which he is required to disgorge.

One customer and a beneficiary of the other customer brought and settled arbitrations against Anderson's firm relating to these investments.

The suspension is in effect from May 19 through October 18, 2025.

Senior investors should be particularly cautious about speculative investments and ensure their portfolio is appropriately diversified.

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According to FINRA, David Richard Ravarino of Concord, California was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for six months for engaging in outside business activities without full disclosure to his member firms.

In 2016, Ravarin...

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According to FINRA, David Richard Ravarino of Concord, California was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for six months for engaging in outside business activities without full disclosure to his member firms.

In 2016, Ravarino formed a limited liability company purportedly to identify potential real estate investments. However, he actually used the LLC to provide consulting services to a third-party administrator serving retirement plans. These services included administrative tasks, strategic planning, and customer referrals.

The company paid Ravarino approximately $600,000 through the LLC for these services. Despite this substantial compensation, Ravarino did not notify his firms of the consulting arrangement until February 2024.

Although Ravarino disclosed to each firm that he owned the LLC, he falsely stated that his activities were limited to real estate and that he received only $1,500 annually—a dramatic understatement of the actual $600,000 he received.

Ravarino also falsely stated on multiple firm compliance questionnaires that he had disclosed all outside business activities.

The discrepancy between $1,500 and $600,000 in compensation is substantial and demonstrates deliberate misrepresentation rather than oversight. Firms rely on accurate OBA disclosures to evaluate conflicts of interest and ensure representatives are focused on their duties to customers.

The consulting relationship with a retirement plan administrator could create conflicts if Ravarino was referring his brokerage customers to the company or if his recommendations were influenced by this relationship.

The suspension is in effect from May 19 through November 18, 2025.

Investors should understand their broker's outside business activities and how they might affect recommendations.

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