Bad Brokers

According to FINRA, Christopher James Christensen has been barred from association with any FINRA member in all capacities for failing to provide documents, information, and testimony requested by FINRA as part of its examination of his outside business activities and private securities transactions...

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According to FINRA, Christopher James Christensen has been barred from association with any FINRA member in all capacities for failing to provide documents, information, and testimony requested by FINRA as part of its examination of his outside business activities and private securities transactions.

FINRA opened the cause examination after the parent company of Christensen's member firm declared bankruptcy. Christensen was the founder and CEO of the parent company, which through various subsidiaries raised millions of dollars from thousands of investors purportedly to invest in real estate projects.

The bankruptcy of a company that raised millions from thousands of investors raises serious concerns about potential investor harm. FINRA's examination sought to understand Christensen's role and whether proper disclosures were made regarding his outside business activities and private securities transactions.

Christensen's failure to provide documents and testimony significantly impeded FINRA's examination and deprived it of material information. As a result, he was barred from the securities industry.

This case highlights the risks of investments in private offerings, particularly those involving real estate. When the parent company of a broker-dealer declares bankruptcy after raising substantial funds from investors, those investors may face significant losses.

If you invested in any offerings associated with Christopher James Christensen or his affiliated companies, you should carefully review your investment documentation and consult with a securities attorney to understand your rights and potential claims, particularly in light of the bankruptcy proceedings.

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According to FINRA, Mark Frederic Seruya has been barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation was based on circumstances giving rise to a Form U5 filed by Seruya's member firm. The Form...

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According to FINRA, Mark Frederic Seruya has been barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation was based on circumstances giving rise to a Form U5 filed by Seruya's member firm. The Form U5 indicated that Seruya and the firm mutually agreed to separate following an internal review concerning his disclosure of and participation in outside business investments involving clients, and his use of a non-firm approved messaging platform for firm business-related communications.

These allegations involve two common but serious compliance issues. Outside business investments involving clients create potential conflicts of interest and may constitute private securities transactions requiring firm approval. Using unapproved messaging platforms prevents the firm from supervising communications and maintaining required records.

Seruya's refusal to cooperate with FINRA's investigation resulted in a bar from the securities industry.

Investors should be cautious when representatives offer investment opportunities outside their firm's normal products. Always verify whether an investment is being offered through the firm or as a separate business arrangement. Additionally, be aware that communications through personal text messages, WhatsApp, or other informal channels may indicate the representative is trying to avoid firm oversight.

If you invested with Mark Frederic Seruya in any outside business ventures or communicated with him through unofficial channels about investments, you should review those investments and communications carefully and consider consulting with a securities attorney.

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According to FINRA, Dennis Matthew Lovett Jr. has been barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation was based on allegations made by Lovett's member firm on a Form U5 filing. The Form U5...

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According to FINRA, Dennis Matthew Lovett Jr. has been barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation was based on allegations made by Lovett's member firm on a Form U5 filing. The Form U5 disclosed that Lovett was terminated for violation of company policy related to his corporate credit card.

While Lovett responded to FINRA's initial request, he did not produce most of the documents sought, including bank records necessary for FINRA's investigation. Lovett then failed to respond to a second request for information and documents.

Corporate credit card violations can range from policy infractions to misappropriation of firm funds. The request for bank records suggests FINRA was investigating whether Lovett may have engaged in conduct beyond simple policy violations.

Lovett's refusal to fully cooperate with FINRA's investigation resulted in a bar from the securities industry.

Investors may wonder why a corporate credit card violation would be relevant to their interests. While the underlying conduct may not have directly involved customer accounts, a representative's honesty and compliance with firm policies is relevant to their fitness to serve in the securities industry. Representatives who engage in financial misconduct with their firms may also pose risks to customers.

If you were a customer of Dennis Matthew Lovett Jr. and have any concerns about your account, you should review your statements and consider consulting with a financial professional to ensure your investments are appropriate for your situation.

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According to FINRA, Jonathan Earl Best has been assessed a deferred fine of $12,500, suspended from association with any FINRA member in all capacities for three months, and ordered to pay deferred disgorgement of $10,760.88 plus interest for effecting unauthorized trades in the account of a senior ...

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According to FINRA, Jonathan Earl Best has been assessed a deferred fine of $12,500, suspended from association with any FINRA member in all capacities for three months, and ordered to pay deferred disgorgement of $10,760.88 plus interest for effecting unauthorized trades in the account of a senior customer with diminished capacity.

Best knew the customer was exhibiting signs of diminished capacity and informed her relative that he could not effect any transactions due to her condition. He then requested that the relative obtain a physician's letter to trigger his appointment as co-power of attorney under the customer's estate planning documents.

Best submitted an OBA request to serve as the customer's future co-power of attorney but failed to inform his supervisor that the customer was unable to care for herself, was living in a care facility, and was unable to discuss and understand investments. His supervisor rejected the OBA request and instructed Best to recuse himself, but Best never provided documentation of recusal.

Despite knowing the customer could not authorize transactions, Best effected purchases of laddered certificates of deposit in her account with a principal value totaling $14,199,847 without authorization. He earned $10,760.88 in compensation from these trades.

Best also falsely attested on compliance questionnaires that he had no senior investors for which he was concerned about their capacity to make sound decisions.

This case illustrates the importance of protecting senior investors. When representatives recognize diminished capacity, they must take appropriate steps to protect the customer, not continue trading to generate commissions.

Family members of seniors should be vigilant about monitoring accounts and ensuring proper authorization is in place before any trading occurs.

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According to FINRA, Christopher Denis has been fined $5,000 and suspended from association with any FINRA member in all capacities for 18 months for twice arranging to be present in the same room as his business partner while she took Securities Industry Essentials (SIE) examinations in order to ass...

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According to FINRA, Christopher Denis has been fined $5,000 and suspended from association with any FINRA member in all capacities for 18 months for twice arranging to be present in the same room as his business partner while she took Securities Industry Essentials (SIE) examinations in order to assist her in cheating.

Denis had previously taken the SIE examination himself and therefore knew that the SIE Rules of Conduct prohibit cheating or attempted cheating, including having other persons in the test room during testing.

The SIE examination is a fundamental competency test that all securities industry professionals must pass. It covers basic industry knowledge including products, market structure, regulations, and prohibited practices. When individuals cheat on these examinations, they may enter the industry without the foundational knowledge necessary to serve customers appropriately.

Denis's 18-month suspension reflects the seriousness of examination integrity violations. The securities industry relies on examinations to ensure that registered persons have minimum competency levels, and undermining this process harms investors who depend on their representatives having appropriate knowledge.

This case should serve as a warning that FINRA takes examination integrity seriously. Individuals who assist others in cheating face significant sanctions, even if they are not the ones taking the examination.

Investors should be reassured that FINRA actively enforces examination rules to maintain the integrity of the qualification process. However, this case also demonstrates that some individuals may enter the industry through fraudulent means, which is why ongoing due diligence about your financial representative is important.

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According to FINRA, William Worthen King has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 30 days for exercising discretion in customer accounts without proper authorization.

King placed trades in six brokerage accounts held by...

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According to FINRA, William Worthen King has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 30 days for exercising discretion in customer accounts without proper authorization.

King placed trades in six brokerage accounts held by four firm customers, three of whom were seniors, without prior written authorization from the customers and without his member firm having accepted the accounts as discretionary.

While King discussed investment strategy with the customers, he had not received authorization to exercise discretion. Discretionary trading authority requires explicit written authorization from the customer and acceptance by the firm before a representative can make trading decisions without obtaining approval for each transaction.

King also inaccurately attested in compliance questionnaires that he had not exercised discretionary trading authority in customer accounts.

This case highlights important protections for investors, particularly seniors. Without written discretionary authority, customers retain control over every transaction in their account. When representatives trade without this authorization, they bypass an important safeguard that ensures customers approve each investment decision.

The fact that three of the four affected customers were seniors is significant. Seniors are considered vulnerable investors who may be more susceptible to unauthorized trading practices.

Investors should understand that their representative generally needs their permission for each trade unless they have signed a discretionary trading agreement. If you notice trades in your account that you did not authorize, contact your firm immediately and consider filing a complaint with FINRA.

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According to FINRA, Richard Joseph Perlongo has been fined $5,000, suspended from association with any FINRA member in all capacities for three months, and ordered to pay $18,925 in restitution to a customer for excessively and unsuitably trading the customer's account.

The customer relied on Per...

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According to FINRA, Richard Joseph Perlongo has been fined $5,000, suspended from association with any FINRA member in all capacities for three months, and ordered to pay $18,925 in restitution to a customer for excessively and unsuitably trading the customer's account.

The customer relied on Perlongo's advice and routinely followed his recommendations. As a result, Perlongo exercised de facto control over the account. He recommended frequent in-and-out trading even when the price of recommended securities did not materially change.

Due to Perlongo's recommendations, the customer paid $18,925 in commissions and suffered $70,107 in realized losses.

Excessive trading, also known as churning, occurs when a broker engages in transactions primarily to generate commissions rather than to benefit the customer. The hallmarks of excessive trading include high turnover rates, significant commission costs, and in-and-out trading patterns where securities are purchased and sold in rapid succession.

This case demonstrates how de facto control can occur even without formal discretionary authority. When a customer routinely follows a representative's recommendations without question, the representative effectively controls the account and bears responsibility for ensuring trading is appropriate.

Investors should regularly review their account statements and compare their total costs (commissions, fees, and losses) against their investment returns. If your costs are consuming a significant portion of your returns or you notice frequent buying and selling of the same or similar securities, you may be a victim of excessive trading.

If you believe your account has been churned, you may have a claim for damages and should consult with a securities attorney.

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According to FINRA, Jarrett Carter Thomas has been assessed a deferred fine of $7,500 and suspended from association with any FINRA member in all capacities for 45 days for making an unauthorized transaction on behalf of an incapacitated customer.

Thomas effected a $50,000 fund transfer based on ...

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According to FINRA, Jarrett Carter Thomas has been assessed a deferred fine of $7,500 and suspended from association with any FINRA member in all capacities for 45 days for making an unauthorized transaction on behalf of an incapacitated customer.

Thomas effected a $50,000 fund transfer based on instructions from an elderly customer whom he knew no longer had the capacity or authority to give such instructions. Thomas had received written notice from a doctor at the customer's long-term care facility that she lacked the capacity to manage her personal affairs.

Despite this knowledge, Thomas did not inform anyone at his member firm about the customer's incapacitation. He accepted oral instructions from the customer to transfer funds from her firm account to her outside bank account. The firm did not discover the customer's incapacitation until after Thomas voluntarily resigned.

This case raises serious concerns about protecting incapacitated seniors. When a representative receives documentation that a customer lacks capacity, they have an obligation to take appropriate steps to protect that customer, including notifying the firm and refusing to act on instructions from the incapacitated person.

Thomas's failure to inform his firm prevented it from implementing safeguards to protect the customer. The firm would typically place a hold on the account or require authorization from a properly designated person before processing transactions.

Investors and their families should ensure that proper legal documentation, such as powers of attorney, is in place before incapacity occurs. Family members should also maintain communication with financial firms to ensure they are aware of any capacity issues.

If you have a family member who may be vulnerable to this type of conduct, consider contacting their brokerage firm to discuss protective measures.

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According to FINRA, Martin Allan Barth has been suspended from association with any FINRA member in all capacities for 16 months for making material misrepresentations and omissions in connection with private placement offerings and for fraudulently obtaining Pandemic Unemployment Assistance.

Bar...

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According to FINRA, Martin Allan Barth has been suspended from association with any FINRA member in all capacities for 16 months for making material misrepresentations and omissions in connection with private placement offerings and for fraudulently obtaining Pandemic Unemployment Assistance.

Barth marketed two private placement offerings designed to raise capital for a real estate investment trust (REIT). The offering documents disclosed that selling representatives would receive a five percent sales commission and the firm would receive a three percent dealer-manager fee. However, Barth was entitled to receive additional undisclosed compensation from an affiliate of the REIT's management company.

Barth failed to disclose that the REIT's management company had been unsuccessfully pursuing a public listing for several years and was experiencing negative cashflow. Based on his recommendations, 21 investors invested approximately $1.6 million, including $55,000 from two of his own customers.

Additionally, Barth submitted 70 Pandemic Unemployment Assistance certifications falsely claiming he did not work and did not receive compensation exceeding $504 weekly. In fact, he earned approximately $50,000 during this period, including over $23,000 in undisclosed compensation from the REIT affiliate. He fraudulently obtained approximately $37,000 in benefits.

This case demonstrates the importance of disclosure in securities offerings. When representatives receive undisclosed compensation, it creates a conflict of interest that investors cannot evaluate. The failure to disclose material negative information about the REIT prevented investors from making informed decisions.

Investors in private placements should carefully review all disclosures and specifically ask about all compensation the representative will receive in connection with the investment.

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According to FINRA, Gaelin Michaela Monkman-Kotz has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for one month for causing her member firm to maintain incomplete books and records.

Monkman-Kotz was included on more than 4,000 mess...

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According to FINRA, Gaelin Michaela Monkman-Kotz has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for one month for causing her member firm to maintain incomplete books and records.

Monkman-Kotz was included on more than 4,000 messages through a social media application, some of which she sent, with various firm personnel and customers. These communications concerned the firm's business including customer trading, trade surveillance and compliance concerns, and regulatory requests.

FINRA rules require firms to capture and retain business-related communications. When representatives use unapproved communication channels like personal social media applications, the firm cannot fulfill its recordkeeping obligations or supervise the communications for potential misconduct.

The use of off-channel communications has become a significant enforcement priority for regulators. These communications can hide a variety of misconduct including unsuitable recommendations, undisclosed conflicts, and coordination of problematic trading activity.

The fact that these communications involved trade surveillance and compliance concerns is particularly troubling, as discussions about regulatory matters should occur through proper firm channels where they can be documented and addressed appropriately.

Investors should be cautious when representatives communicate with them through personal channels like text messages, WhatsApp, or social media. While it may seem more convenient, these communications are not supervised by the firm and are not retained as required by regulation. If something goes wrong, there may be no record of what was communicated.

If your representative asks to communicate through unofficial channels, you should decline and request that all communications occur through firm-approved methods.

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