Bad Brokers

According to FINRA, Armando Alejandro Barron has been fined $50,000 (deferred) and suspended from association with any FINRA member for 24 months for engaging in private securities transactions without proper disclosure.

Barron participated in private securities transactions by soliciting investo...

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According to FINRA, Armando Alejandro Barron has been fined $50,000 (deferred) and suspended from association with any FINRA member for 24 months for engaging in private securities transactions without proper disclosure.

Barron participated in private securities transactions by soliciting investors to enter into promissory notes with a limited liability company he owned and controlled. He personally solicited each noteholder and signed each note on behalf of the LLC, ultimately soliciting 14 investors into 30 promissory note transactions totaling $979,500.

While Barron partially disclosed this activity to his firm as an outside business activity, his disclosure was incomplete and inaccurate. He stated that promissory note funds were invested in a specific investment fund, but he actually used the money for other purposes including non-income generating activities.

Additionally, Barron's communications soliciting investors failed to comply with FINRA's content standards. His communications did not provide fair and balanced treatment of risks and benefits, failed to provide a sound basis for evaluating the notes, and contained unwarranted, promissory, or misleading statements.

Promissory notes sold by individuals can be high-risk investments. Investors should be cautious about promissory note investments offered outside normal brokerage channels and ensure they understand all risks before investing.

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According to FINRA, Simon T. Hagos has been fined $2,500 (deferred) and suspended from association with any FINRA member for two months for failing to disclose an outside securities account.

Hagos failed to obtain written consent from his member firm to maintain an outside securities account at a...

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According to FINRA, Simon T. Hagos has been fined $2,500 (deferred) and suspended from association with any FINRA member for two months for failing to disclose an outside securities account.

Hagos failed to obtain written consent from his member firm to maintain an outside securities account at another member firm within 30 days of his association or at any other time. Firms require this disclosure so they can monitor for potential conflicts of interest, insider trading, or other problematic trading activity.

Compounding this violation, Hagos submitted annual compliance questionnaires in which he falsely attested that he had disclosed all outside brokerage accounts to his firm. These false attestations prevented the firm from knowing about the account and fulfilling its supervisory obligations.

Rules requiring disclosure of outside accounts exist to protect investors by enabling firm oversight of their representatives' trading. When representatives hide accounts and make false attestations, it undermines the supervisory framework designed to detect misconduct.

While this case involved relatively straightforward non-disclosure and false statements rather than trading violations, the requirements exist because undisclosed accounts can facilitate more serious misconduct. Investors should know that their advisors are required to disclose their own accounts and trading.

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According to FINRA, Christopher Delbert Martin has been fined $15,000 and suspended from association with any FINRA member for two years for participating in undisclosed private securities transactions.

Martin co-founded a licensed cannabis-related company and served as an executive officer and b...

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According to FINRA, Christopher Delbert Martin has been fined $15,000 and suspended from association with any FINRA member for two years for participating in undisclosed private securities transactions.

Martin co-founded a licensed cannabis-related company and served as an executive officer and board member, which he disclosed to his firm as an outside business activity. However, he did not disclose his participation in the company's capital raising efforts or receive approval for such participation.

Martin participated in selling $4,436,381 of company stock through a private offering. He introduced investors to the opportunity, including 19 of his own customers at the firm. He presented information to prospective investors, answered questions about the offering and business, and facilitated transactions by accepting subscription agreements.

Although Martin provided written disclosures to investors stating he was acting as a company officer rather than a financial advisor, and that his firm was not involved, he still failed to obtain firm approval as required. He also falsely attested on annual compliance questionnaires that he had not engaged in private securities transactions.

When securities professionals participate in offerings outside their firm's oversight, investors lose important protections. This case illustrates why proper disclosure and approval are required even when the representative has a legitimate business role with the issuer.

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According to FINRA, Benjamin J. Rosamond has been fined $7,500 (deferred) and suspended from association with any FINRA member for four months for participating in an undisclosed outside business activity and private securities transactions.

Rosamond acted as an officer of an investment club for ...

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According to FINRA, Benjamin J. Rosamond has been fined $7,500 (deferred) and suspended from association with any FINRA member for four months for participating in an undisclosed outside business activity and private securities transactions.

Rosamond acted as an officer of an investment club for accredited investors organized as an LLC without providing prior written notice to his member firm. He executed securities transactions in the company's brokerage accounts held at other member firms.

Rosamond also participated in private securities transactions without providing prior written notice to his firm. In total, he executed over 400 trades totaling approximately $500,000 in principal value. Although Rosamond did not receive compensation for the transactions, the disclosure requirements apply regardless of whether compensation is involved.

Outside business activities and private securities transactions must be disclosed so firms can evaluate potential conflicts of interest and ensure appropriate supervision. Investment clubs can involve securities activities that require oversight, particularly when a registered representative serves in an officer capacity.

Investors should understand that their financial professionals have disclosure obligations about their activities outside the firm. These requirements exist to ensure proper oversight and protect investors from potential conflicts or unsupervised activities.

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According to FINRA, Matthew Ian Turner has been suspended from association with any FINRA member for five months and ordered to pay $27,415.75 plus interest in restitution for willfully violating Regulation Best Interest.

Turner recommended trading in customer accounts, including those of seniors...

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According to FINRA, Matthew Ian Turner has been suspended from association with any FINRA member for five months and ordered to pay $27,415.75 plus interest in restitution for willfully violating Regulation Best Interest.

Turner recommended trading in customer accounts, including those of seniors, that was excessive, unsuitable, and not in their best interest. The customers relied on Turner's advice and routinely followed his recommendations, giving Turner de facto control over their accounts.

The excessive trading generated $34,269.69 in commissions while resulting in realized losses of $160,822 for the customers. When brokers churn accounts to generate commissions, they profit at their customers' expense.

Turner also exercised discretionary authority to place 148 trades in four customer accounts without obtaining written authorization from the customers and without his firm having accepted the accounts as discretionary. Discretionary trading requires explicit written customer consent and firm approval.

Excessive trading, also known as churning, is particularly harmful to seniors who may rely on their investments for retirement income. Investors should monitor their accounts for excessive trading activity and question any patterns that generate significant commissions while producing losses. No monetary fine was imposed due to Turner's financial status.

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According to FINRA, Christopher Michael Chiampas has been fined $10,000 (deferred) and suspended from association with any FINRA member for six months for willfully failing to disclose a customer complaint on his Form U4.

Chiampas and an immediate family member, a senior for whom he held power of...

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According to FINRA, Christopher Michael Chiampas has been fined $10,000 (deferred) and suspended from association with any FINRA member for six months for willfully failing to disclose a customer complaint on his Form U4.

Chiampas and an immediate family member, a senior for whom he held power of attorney, opened a joint brokerage account at his firm. Three months later, Chiampas wired $328,000 from the account in connection with a real estate purchase. The family member subsequently complained in writing that the transaction was unauthorized and demanded repayment.

Chiampas did not forward the complaint to his firm as required by its policies. He also failed to amend his Form U4 to disclose the complaint. When customer complaints are not disclosed, regulators and future employers cannot properly evaluate a representative's history.

Chiampas then settled the complaint away from his firm by signing a settlement agreement to repay the withdrawn funds minus certain expenses. The firm did not know of the complaint or approve this settlement, which violated firm policies prohibiting independent settlements.

Settling complaints outside firm channels and failing to disclose them deprives regulators and investors of information about a representative's conduct. Investors can check complaint history through FINRA's BrokerCheck before working with a financial professional.

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According to FINRA, Fabio Peter La Rosa has been fined $5,000 and suspended from association with any FINRA member for one month for making unauthorized transactions totaling $90,700.

La Rosa processed transfers of funds from trust accounts established for customers, a retired married couple, to ...

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According to FINRA, Fabio Peter La Rosa has been fined $5,000 and suspended from association with any FINRA member for one month for making unauthorized transactions totaling $90,700.

La Rosa processed transfers of funds from trust accounts established for customers, a retired married couple, to their joint brokerage account. However, the transfer instructions came from one of the customers who was not authorized to direct transactions in the trust accounts.

On the firm's verbal authorization forms completed for the transfers, La Rosa inaccurately represented that he had spoken with the trustee - the authorized individual for the trust accounts - when he had actually communicated with the unauthorized customer. This misrepresentation enabled the unauthorized transfers.

Trust accounts have specific authorization requirements to protect beneficiaries. When representatives process transactions based on instructions from unauthorized individuals, it can facilitate misappropriation of trust assets.

After the trustee complained, the firm compensated the trusts for certain costs and expenses. La Rosa did not earn compensation from the transfers, but the violation lies in processing transactions without proper authorization regardless of intent.

This case highlights the importance of proper authorization for trust accounts. Trustees and beneficiaries should monitor trust account activity and verify that only authorized individuals are directing transactions.

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According to FINRA, Justin William Pagel has been suspended from association with any FINRA member for 10 months for making unsuitable recommendations and willfully violating Regulation Best Interest.

When opening their accounts, three customers instructed Pagel to invest conservatively and infor...

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According to FINRA, Justin William Pagel has been suspended from association with any FINRA member for 10 months for making unsuitable recommendations and willfully violating Regulation Best Interest.

When opening their accounts, three customers instructed Pagel to invest conservatively and informed him they planned to use the money for upcoming expenses such as home down payments or college tuition. Despite these explicit instructions, Pagel recommended they invest all or significant portions of their assets in low-priced stocks or other speculative securities.

The trading was inconsistent with customers' investment profiles and resulted in losses and customer complaints. Pagel and his firm made payments totaling $26,000 in connection with two complaints.

A fourth customer informed Pagel he wanted only safe investments, but Pagel recommended purchases of low-priced stocks and speculative securities inconsistent with the customer's profile, willfully violating Reg BI which requires recommendations to be in the customer's best interest.

Pagel also exercised discretion in customer accounts without written authorization, including in accounts he excessively traded. He further mismarked solicited trades as unsolicited, hiding his role in recommending the inappropriate transactions.

Investors should clearly communicate their investment objectives and risk tolerance, then monitor whether their portfolio reflects those goals. No monetary fine was imposed due to Pagel's financial status.

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According to FINRA, Alfred Sietze Vanderlaan has been fined $10,000 (deferred), suspended from association with any FINRA member for three months, and ordered to pay $6,508 plus interest in restitution for willfully violating Regulation Best Interest.

Vanderlaan recommended that two retail custom...

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According to FINRA, Alfred Sietze Vanderlaan has been fined $10,000 (deferred), suspended from association with any FINRA member for three months, and ordered to pay $6,508 plus interest in restitution for willfully violating Regulation Best Interest.

Vanderlaan recommended that two retail customers invest in speculative, unrated corporate bonds that were not in their best interests based on their investment profiles. One of the customers was a senior.

Both customers had stated investment objectives of growth and income, not speculation, and had moderate risk tolerances. However, Vanderlaan recommended speculative unrated bonds despite the high degree of risk associated with such investments being inconsistent with the customers' profiles.

Vanderlaan received $6,508 in commissions from these unsuitable recommendations, which he is ordered to disgorge as restitution to the affected customers.

Unrated corporate bonds carry significant risks including credit risk, as the lack of a rating means no independent agency has assessed the issuer's ability to repay. These investments are generally not appropriate for customers with moderate risk tolerances seeking growth and income.

Senior investors in particular should be cautious about recommendations for speculative investments. If your stated investment objectives are conservative or moderate, question any recommendations for high-risk products.

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According to FINRA, Kate Yumi Lam has been fined $10,000 (deferred) and suspended from association with any FINRA member for 12 months for improperly using member firm funds through false expense submissions.

Lam submitted $5,897.42 for car service trips and meals that did not comply with the fir...

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According to FINRA, Kate Yumi Lam has been fined $10,000 (deferred) and suspended from association with any FINRA member for 12 months for improperly using member firm funds through false expense submissions.

Lam submitted $5,897.42 for car service trips and meals that did not comply with the firm's travel and expense policy. She improperly charged trips to the firm's car service account for ordinary commuting to and from the office before 8:00 pm and for other trips outside the firm's policy.

Lam also improperly charged meals to the firm's account for dinners when she was not working past 8:00 pm, and for breakfasts and lunches ordered on weekends when she was not in the office.

While this case involves misuse of firm rather than customer funds, it demonstrates a breach of trust that reflects on an individual's integrity. Financial professionals are held to high ethical standards, and violations involving dishonesty - even when customers are not directly harmed - are treated seriously.

The securities industry relies on trust at every level. When professionals engage in deceptive conduct regarding expenses, it raises questions about their trustworthiness in other areas including their dealings with customers. This suspension serves as a reminder that integrity is fundamental to working in the financial services industry.

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