Bad Brokers

According to FINRA, Anthony Neil Wenham has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for falsifying firm records by concealing unrealized losses.

Wenham recorded or caused to be recorded inaccurate marks for fo...

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According to FINRA, Anthony Neil Wenham has been assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for falsifying firm records by concealing unrealized losses.

Wenham recorded or caused to be recorded inaccurate marks for forward start reverse repurchase positions in his member firm's electronic recordkeeping system. As a result of these inaccurate marks, the firm's books and records reflected a combined value for the positions that was overstated by millions of dollars.

The firm discovered the inaccurate marks and implemented an automated process for marking the positions. After implementing the automated marking system, the firm's marks showed a combined net present value of approximately negative $9,000,000.

This case involves the manipulation of position valuations to hide trading losses. When positions are marked inaccurately, it distorts the firm's financial picture and can affect risk management, regulatory capital calculations, and investor confidence.

For investors, this type of misconduct may seem removed from retail accounts. However, inaccurate position marking can affect the overall health of a firm and may ultimately impact customers if the firm's financial condition deteriorates due to hidden losses.

This case also demonstrates the importance of automated controls in financial systems. The firm's implementation of an automated marking system helped uncover and prevent future manipulation of position values.

Investors should understand that the integrity of financial records is fundamental to the proper functioning of securities markets. Regulators take falsification of records seriously because it can mask risks that affect multiple stakeholders.

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According to FINRA, Jason Michael Poschinger has been assessed a deferred fine of $20,000 and suspended from association with any FINRA member in all capacities for six months for downloading and misusing confidential customer information.

After accepting an employment offer from another FINRA me...

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According to FINRA, Jason Michael Poschinger has been assessed a deferred fine of $20,000 and suspended from association with any FINRA member in all capacities for six months for downloading and misusing confidential customer information.

After accepting an employment offer from another FINRA member firm, Poschinger downloaded files from his firm's databases containing customer names, Social Security numbers, phone numbers, addresses, birth dates, account numbers, and account values. He transmitted this information to his personal email addresses without informing his firm or giving customers notice and opportunity to prevent the transfer.

His firm discovered the breach and terminated him. Poschinger then signed an affidavit falsely attesting that he had not and would not share the information with third parties, had permanently deleted it, no longer possessed it, and would not use it to contact the firm's customers.

In reality, before signing the affidavit, Poschinger had already transmitted the information to his new business email, submitted it to his new firm to identify customers as his clients, and used it to contact customers and invite them to transfer their business to his new firm.

Poschinger also made false statements to his new firm by representing that the customer information was publicly available or known to him independently when it was not.

Additionally, Poschinger opened securities accounts at other firms without obtaining required consent from his employer.

This case highlights serious privacy and data security concerns. When representatives improperly take customer information, they expose customers to identity theft risks and violate their privacy rights.

If you were a customer whose information may have been compromised, you should monitor your accounts and credit reports carefully.

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According to FINRA, James Anthony Iannazzo has been fined $50,000 and suspended from association with any FINRA member in all capacities for two years for structuring cash withdrawals and deposits totaling $845,890 with knowledge of, and intent to evade, federal currency reporting requirements. This...

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According to FINRA, James Anthony Iannazzo has been fined $50,000 and suspended from association with any FINRA member in all capacities for two years for structuring cash withdrawals and deposits totaling $845,890 with knowledge of, and intent to evade, federal currency reporting requirements. This decision has been appealed to the National Adjudicatory Council.

Iannazzo repeatedly obtained more than $10,000 in cash by withdrawing between $8,000 and $9,500 from a joint checking account and, on the same day, withdrawing the daily maximum of $2,500 from a separate account at another financial institution using an ATM. This pattern avoided triggering currency transaction report (CTR) requirements for transactions exceeding $10,000.

On many occasions, Iannazzo withdrew or deposited tens of thousands of dollars in cash within days or weeks while avoiding any single transaction exceeding $10,000 at the same financial institution. He never engaged in cash transactions exceeding $10,000 at the same institution on any one day.

This pattern continued over approximately six years.

Structuring is a federal crime because currency transaction reports are essential tools for detecting money laundering, tax evasion, and other financial crimes. When individuals deliberately break up transactions to avoid reporting requirements, they undermine these protections.

For investors, a representative's involvement in structuring raises serious concerns about their integrity and judgment. While this conduct may not directly involve customer accounts, it demonstrates a willingness to evade legal requirements that is inconsistent with the obligations of a securities professional.

The case is currently on appeal, and the sanctions are not in effect pending review. The National Adjudicatory Council may modify the findings or sanctions.

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According to FINRA, Calvin Lee Gray has been named as a respondent in a FINRA complaint alleging that he failed to provide information and documents requested by FINRA. This matter involves allegations that have not yet been adjudicated.

Gray's member firm disclosed to FINRA that Gray had been in...

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According to FINRA, Calvin Lee Gray has been named as a respondent in a FINRA complaint alleging that he failed to provide information and documents requested by FINRA. This matter involves allegations that have not yet been adjudicated.

Gray's member firm disclosed to FINRA that Gray had been indicted in the United States District Court for the Eastern District of Missouri for conspiracy to commit bank fraud, fraud in connection with identification documents, aggravated identity theft, and fraud in connection with access devices.

FINRA opened an investigation into whether Gray committed fraud or engaged in identity theft with respect to any brokerage customers. FINRA sought information related to Gray's potential use of customer information, including correspondence, phone records, bank records, and other relevant information.

Gray's failure to provide the requested information impeded FINRA's investigation.

The federal indictment charges are serious and include crimes that could directly impact brokerage customers if customer information was used in fraudulent schemes. Identity theft and access device fraud can cause significant harm to victims who may face financial losses and credit damage.

Investors should understand that this is a pending complaint and Gray has not been found liable for these allegations. However, given the serious nature of the federal criminal charges, customers who worked with Gray should carefully review their accounts and credit reports for any signs of unauthorized activity.

If you were a customer of Calvin Lee Gray and notice any unauthorized transactions or identity theft, you should report it to law enforcement, your financial institutions, and credit bureaus immediately.

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According to FINRA, Nana Kwame Kwakye-Bissah has been named as a respondent in a FINRA complaint alleging that he failed to respond to FINRA's requests for documents and information. This matter involves allegations that have not yet been adjudicated.

FINRA's investigation concerns whether Kwakye...

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According to FINRA, Nana Kwame Kwakye-Bissah has been named as a respondent in a FINRA complaint alleging that he failed to respond to FINRA's requests for documents and information. This matter involves allegations that have not yet been adjudicated.

FINRA's investigation concerns whether Kwakye-Bissah falsified documents and converted customer funds. Kwakye-Bissah did not provide any of the requested documents or information or respond to FINRA's requests in any way.

The information and documents were material to FINRA's investigation because they directly related to whether Kwakye-Bissah falsified customer information and converted customer funds. His failure to provide the requested documents impeded the investigation.

Document falsification and conversion of customer funds are among the most serious forms of misconduct in the securities industry. Falsification can involve creating fake account statements, forging customer signatures, or manipulating records to conceal unauthorized activity. Conversion is the unauthorized taking of customer funds for personal use.

Investors should understand that this is a pending complaint and Kwakye-Bissah has not been found liable for these allegations. However, given the serious nature of the alleged conduct, customers who worked with Kwakye-Bissah should carefully review their account statements and compare them against actual account values.

If you were a customer of Nana Kwame Kwakye-Bissah and suspect that your account may have been affected by falsified documents or conversion of funds, you should contact your brokerage firm immediately and consider consulting with a securities attorney.

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According to FINRA, Cassandra N. Heitz has been barred from association with any FINRA member in all capacities pursuant to FINRA Rule 9552(h) for failure to provide information or keep information current.

FINRA Rule 9552 establishes procedures for suspending or barring individuals who fail to r...

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According to FINRA, Cassandra N. Heitz has been barred from association with any FINRA member in all capacities pursuant to FINRA Rule 9552(h) for failure to provide information or keep information current.

FINRA Rule 9552 establishes procedures for suspending or barring individuals who fail to respond to FINRA requests for information or fail to keep their registration information current. When individuals fail to comply with these fundamental requirements, FINRA may impose sanctions including a bar from the industry.

The requirement to provide information and keep registration records current is essential for regulatory oversight and investor protection. When individuals fail to respond to FINRA inquiries, it prevents regulators from investigating potential misconduct and protecting investors.

A bar is the most severe sanction FINRA can impose and means that Heitz cannot associate with any FINRA member firm in any capacity.

Investors should understand that FINRA's information requirements serve important protective functions. Registration information helps customers verify their representative's background, and cooperation with investigations allows FINRA to identify and address misconduct.

If you were a customer of Cassandra N. Heitz and have concerns about your account or investments, you should review your account statements and consider consulting with a financial professional to ensure your investments are appropriate.

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According to FINRA, Robinhood Financial has been ordered to pay $3.75 million in restitution to customers, and both Robinhood Financial and Robinhood Securities have been fined $26 million for violating numerous FINRA rules, including failing to respond to red flags of potential misconduct.

The i...

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According to FINRA, Robinhood Financial has been ordered to pay $3.75 million in restitution to customers, and both Robinhood Financial and Robinhood Securities have been fined $26 million for violating numerous FINRA rules, including failing to respond to red flags of potential misconduct.

The investigation found multiple serious violations. Robinhood Financial provided inaccurate or incomplete disclosures regarding its practice of collaring market orders by converting them to limit orders. Customers whose orders were collared and canceled, then re-entered and received inferior executions, will receive restitution.

Both firms failed to establish reasonable AML programs, causing failures to detect, investigate, or report suspicious activity including manipulative trading, suspicious money movements, and account takeovers by hackers. Robinhood Financial also failed to establish a reasonable Customer Identification Program, resulting in thousands of accounts being opened without proper identity verification.

Robinhood Securities failed to reasonably supervise its clearing technology system. The firm failed to respond to red flags of processing delays, and the system experienced severe latency in January 2021 during a surge in trading volume, impacting clearing operations and regulatory obligations.

Robinhood Financial failed to reasonably supervise social media communications from paid influencers promoting the firm. Some communications were promissory or not fair and balanced, misleading investors.

Robinhood Securities also failed to comply with blue sheets, trade reporting, and Consolidated Audit Trail obligations.

This case demonstrates that firms serving retail investors through innovative platforms must still maintain robust compliance systems. The volume of new customers and trading activity requires proportionate investment in compliance infrastructure.

Investors should understand that even popular, technology-forward platforms can have significant compliance deficiencies.

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According to FINRA, Madison Avenue Securities, LLC was censured and fined $125,000 for distributing consolidated reports containing inaccurate or misleading information about customer assets held away from the firm.

The San Diego-based firm allowed its registered representatives to generate conso...

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According to FINRA, Madison Avenue Securities, LLC was censured and fined $125,000 for distributing consolidated reports containing inaccurate or misleading information about customer assets held away from the firm.

The San Diego-based firm allowed its registered representatives to generate consolidated reports through an electronic platform for distribution to customers. However, significant problems emerged with how these reports were created and maintained. Personnel in the firm's home office who handled manual data entries were not reasonably trained, resulting in thousands of manually entered held-away assets being incorrectly designated. Additionally, the firm failed to update automated data feeds from seven product sponsors when it expanded offerings of those sponsors' products.

The inaccuracies had meaningful implications for investors. Many consolidated reports that included held-away assets failed to disclose that these assets may not be covered by the Securities Investor Protection Corporation (SIPC). This omission is significant because SIPC protection is a key safeguard that investors rely upon when evaluating where to hold their investments. Communications that omitted information about held-away assets and SIPC coverage did not provide customers with a sound basis to evaluate the facts concerning their assets.

FINRA also found that the firm failed to maintain records of which consolidated reports were distributed to customers and failed to design and implement a reasonable supervisory system to review and retain these reports. While the firm eventually implemented procedures to supervise manual data entry, it did not establish new procedures related to supervisory review and retention of consolidated reports.

This case highlights the importance of accurate customer communications in the securities industry. Investors rely on consolidated reports to understand their complete financial picture, and inaccuracies can lead to poor decision-making. Firms must ensure their systems and training are adequate to produce accurate reports, and must have proper supervisory procedures in place to catch errors before they reach customers.

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According to FINRA, Woodside Capital Securities LLC was censured and fined $30,000 for failing to maintain required principal oversight and for deficiencies in its anti-money laundering program.

The Palo Alto, California firm, which became a FINRA member in 2010, operated with only one general se...

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According to FINRA, Woodside Capital Securities LLC was censured and fined $30,000 for failing to maintain required principal oversight and for deficiencies in its anti-money laundering program.

The Palo Alto, California firm, which became a FINRA member in 2010, operated with only one general securities principal from September 2021 to May 2024. FINRA Rule 1210.01 requires firms to have at least two principals, and firms that cannot meet this requirement must obtain a waiver. Woodside Capital did not seek or obtain such a waiver during this nearly three-year period.

Additionally, the firm did not conduct independent testing of its anti-money laundering (AML) program until 2023. The Bank Secrecy Act and FINRA rules require broker-dealers to establish and maintain AML programs that include independent testing. This testing is crucial for identifying weaknesses in a firm's AML compliance efforts and ensuring that suspicious activity is properly detected and reported.

This case illustrates two fundamental compliance requirements that all broker-dealers must maintain. The two-principal requirement exists to ensure adequate oversight of firm activities and to prevent any single individual from having unchecked authority over operations. When one principal is unavailable or compromised, having a second principal ensures continuity of supervision.

The AML testing requirement serves as a critical safeguard against money laundering and terrorist financing. Independent testing helps firms identify gaps in their procedures before those gaps can be exploited by bad actors. Firms that delay or neglect this testing put themselves and the broader financial system at risk.

Investors should understand that these regulatory requirements exist to protect them. Proper principal oversight helps ensure that customer complaints and issues are addressed appropriately, while robust AML programs help prevent the financial system from being used for illicit purposes.

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According to FINRA, Jefferies LLC was censured and fined $1,000,000 for inaccurately calculating its customer and proprietary accounts of broker-dealers (PAB) reserve formula computations.

The New York-based firm failed to properly identify certain non-cash borrows collateralized by non-qualified...

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According to FINRA, Jefferies LLC was censured and fined $1,000,000 for inaccurately calculating its customer and proprietary accounts of broker-dealers (PAB) reserve formula computations.

The New York-based firm failed to properly identify certain non-cash borrows collateralized by non-qualified securities related to short sales by institutional customers. This error caused the firm to overstate the debits in its customer and PAB reserve formulas, resulting in underfunding of its customer and PAB reserve accounts.

The magnitude of these errors was substantial. The firm incurred customer reserve hindsight deficiencies ranging from $9,697,733 to $532,610,055, and PAB reserve hindsight deficiencies ranging from $3.4 million to $42,552,620. The computerized system that the firm used to perform its reserve formula calculations did not distinguish whether a borrowed security was collateralized by securities that met the definition of qualified securities.

As a result of these calculation errors, the firm's records of its reserve account requirement and its FOCUS (Financial and Operational Combined Uniform Single) reports filed with regulators were inaccurate. The firm had no specific process or procedures to verify that borrowed securities collateralized by non-qualified securities were accurately incorporated into its reserve formula calculations.

FINRA found that Jefferies failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with the Securities Exchange Act of 1934's customer reserve and PAB reserve requirements.

The firm has since amended its written supervisory procedures and implemented a process to verify that borrowed securities collateralized by non-qualified securities are accurately incorporated into its customer and PAB reserve formula calculations.

This case underscores the critical importance of accurate reserve calculations in protecting customer assets. The customer reserve requirement ensures that broker-dealers maintain sufficient funds to cover customer obligations, serving as a fundamental protection for investors.

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