Bad Brokers

According to FINRA, Bryan James Moskowitz was fined $5,000, suspended from association with any FINRA member firm for three months, and ordered to pay $13,145 plus interest in restitution to a customer for excessively and unsuitably trading the customer's account.

Moskowitz recommended high-frequ...

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According to FINRA, Bryan James Moskowitz was fined $5,000, suspended from association with any FINRA member firm for three months, and ordered to pay $13,145 plus interest in restitution to a customer for excessively and unsuitably trading the customer's account.

Moskowitz recommended high-frequency in-and-out trading to a customer, a veterinarian in his mid-60s, even when the prices of recommended securities did not materially change. The customer relied on Moskowitz's advice and routinely followed his recommendations, giving Moskowitz de facto control over the account.

This pattern of trading generated total trading costs of $16,902, including $13,145 in commissions, and caused $81,614 in total realized losses for the customer.

Excessive trading, also called churning, occurs when a broker trades a customer's account primarily to generate commissions rather than to benefit the customer. When a customer follows a broker's recommendations without meaningful independent evaluation, the broker effectively controls the account and has a heightened obligation to ensure trading is suitable.

The metrics in this case, particularly the substantial commissions relative to the trading pattern and the significant losses, are hallmarks of excessive trading. The three-month suspension and restitution order aim to both punish the misconduct and compensate the affected customer.

Investors should regularly review their account statements and question frequent trading, particularly if their account is generating losses while their representative continues to recommend additional transactions.

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According to FINRA, Leo Richard Vassallo was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm for two months for falsifying customer signatures on account documents.

Vassallo electronically signed the names of customers, with their permission, on accoun...

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According to FINRA, Leo Richard Vassallo was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm for two months for falsifying customer signatures on account documents.

Vassallo electronically signed the names of customers, with their permission, on account documents including account applications and account transfer forms. These documents were required books and records of the firm. While none of the customers complained and the transactions were authorized, Vassallo's actions caused the firm to maintain inaccurate books and records.

Vassallo also falsely attested to his firm in a compliance questionnaire that he had not signed or affixed another person's signature on a document, adding a false statement violation to the signature falsification.

This case is similar to several others in the January 2025 actions involving representatives who signed customer names with permission. While the practice may seem harmless when customers consent and transactions are legitimate, it undermines the documentation system that protects both investors and firms.

Properly executed signatures serve multiple purposes: they verify customer identity, confirm the customer reviewed the document, and create an audit trail. When representatives sign on behalf of customers, these protections are compromised, even if the customer verbally consented.

The two-month suspension is a meaningful sanction that should deter representatives from this convenience-driven but prohibited practice.

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According to FINRA, James Craig Etter was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for four months for participating in undisclosed private securities transactions and an undisclosed outside business activity.

Etter raised $110,000 from investo...

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According to FINRA, James Craig Etter was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for four months for participating in undisclosed private securities transactions and an undisclosed outside business activity.

Etter raised $110,000 from investors through private securities transactions without prior disclosure to his firm. He solicited investments in an entity he founded and controlled, answered questions about the investments, and collected investment paperwork and funds. The investors were not customers of his firm and later received their funds back.

Despite the transactions, Etter inaccurately attested on a firm compliance questionnaire that he had not been engaged in private securities transactions in the prior 12 months.

Additionally, Etter participated in an undisclosed outside business activity by providing business development and due diligence services to a solar equipment company, for which he received approximately $66,000 in compensation.

This case illustrates the importance of complete disclosure of outside activities. Representatives must notify their firms of both private securities transactions and compensated outside business activities. The false compliance questionnaire response compounds these violations by actively concealing the activities from the firm.

While no investors lost money in the private securities transactions, the lack of disclosure prevented the firm from evaluating potential conflicts of interest and ensuring appropriate oversight. The four-month suspension reflects the multiple violations and the false attestation.

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According to FINRA, Ryan Emerson Bennett was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for three months for engaging in an outside business activity beyond the scope of his disclosure and maintaining undisclosed outside brokerage accounts.

Upon ...

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According to FINRA, Ryan Emerson Bennett was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for three months for engaging in an outside business activity beyond the scope of his disclosure and maintaining undisclosed outside brokerage accounts.

Upon joining his firm, Bennett disclosed engaging in an outside business activity with a company providing online estate planning services, making referrals in exchange for commissions. The firm approved continued engagement but prohibited Bennett from accepting compensation for referrals. Bennett stated in writing he would not engage in the activity at all.

Despite this representation, Bennett executed a partnership agreement on behalf of a marketing entity he co-founded, referred eleven individuals, including nine firm customers, to the estate planning company for services, and received $2,750 in commissions through his marketing entity.

Bennett also held beneficial interests in six outside brokerage accounts without prior written consent from his firm and failed to take steps to provide duplicate statements to the firm as required.

This case demonstrates that disclosure obligations are ongoing. When a firm places conditions on approval or a representative states they will not engage in an activity, violating those terms constitutes a separate violation. The referral of firm customers to outside services without firm approval is particularly concerning as it could create conflicts of interest affecting customer relationships.

The three-month suspension reflects both the OBA violations and the undisclosed brokerage accounts.

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According to FINRA, John P. Franzino was fined $5,000 and suspended from association with any FINRA member firm for one month for falsely certifying completion of continuing education requirements.

Franzino certified to the State of New York that he had personally completed 18 hours of continuing...

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According to FINRA, John P. Franzino was fined $5,000 and suspended from association with any FINRA member firm for one month for falsely certifying completion of continuing education requirements.

Franzino certified to the State of New York that he had personally completed 18 hours of continuing education required to renew his state insurance license. However, another person actually completed that continuing education on his behalf.

This is the fourth case in the January 2025 enforcement actions involving representatives who falsely certified completion of insurance continuing education in New York. The pattern suggests this may be a more widespread problem in the industry.

Continuing education requirements serve an important purpose: ensuring that licensed professionals maintain current knowledge of products, regulations, and ethical standards. When professionals have others complete their training, they may lack knowledge important for properly serving their customers.

The false certification also represents a violation of honesty standards. Financial professionals must be truthful in their dealings with regulators and the public. Making false statements to state regulators undermines the integrity of the licensing system.

The one-month suspension is consistent with similar cases in this enforcement period. While the sanction may seem modest, it appears on Franzino's permanent regulatory record and is visible to investors through BrokerCheck.

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According to FINRA, Vandalia Pizarro was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm for two months for willfully failing to timely amend her Form U4 to disclose a criminal charge and plea.

Pizarro was charged with one count of misdemeanor petit th...

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According to FINRA, Vandalia Pizarro was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm for two months for willfully failing to timely amend her Form U4 to disclose a criminal charge and plea.

Pizarro was charged with one count of misdemeanor petit theft. Although she was aware of the charge, she did not amend her Form U4 to disclose it within the required 30-day period. She ultimately pled nolo contendere (no contest) to the charge but did not disclose either the initial charge or the plea until almost eight months after the initial charge.

Form U4 is the uniform registration form that securities professionals must complete and keep current. It requires disclosure of criminal charges, not just convictions. This disclosure requirement exists so that firms and regulators can evaluate whether a person is fit to work in the securities industry and so that investors can make informed decisions about their financial professionals.

The willful failure to make timely disclosures is a serious matter because it deprives both the firm and the investing public of material information. A nolo contendere plea, while not an admission of guilt, still resolves a criminal charge in a manner that must be disclosed.

The two-month suspension reflects both the failure to disclose and the extended delay in making the required amendments.

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According to FINRA, Linda Jill Wimsatt was assessed a deferred fine of $10,000, suspended from association with any FINRA member firm for four months, and ordered to pay $20,974.75 plus interest in deferred partial restitution to customers.

Wimsatt recommended that her retail customers, some of w...

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According to FINRA, Linda Jill Wimsatt was assessed a deferred fine of $10,000, suspended from association with any FINRA member firm for four months, and ordered to pay $20,974.75 plus interest in deferred partial restitution to customers.

Wimsatt recommended that her retail customers, some of whom were seniors and retired, invest in speculative, unrated corporate bonds. These bonds were not suitable for the customers based on their investment profiles, which included moderate risk tolerance. The high degree of risk associated with unrated speculative bonds was inconsistent with these profiles.

Wimsatt earned $10,668.50 in commissions from these unsuitable recommendations.

FINRA also found that Wimsatt willfully violated Regulation Best Interest (Reg BI) by making recommendations that were not in her customers' best interests. The senior customers had stated investment objectives of income and growth, which did not include speculation. Wimsatt earned an additional $10,306.25 in commissions from these Reg BI-violating recommendations.

This case illustrates the heightened concern regulators have for recommendations made to senior and retired investors. These investors often have limited ability to recover from investment losses and may rely on their savings for retirement income. Recommending speculative investments to customers seeking income and growth, particularly seniors, violates the fundamental principles of suitability and best interest.

The restitution order ensures that affected customers receive compensation for the unsuitable recommendations.

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According to FINRA, Pedro Ostia-Vega was fined $5,000 and suspended from association with any FINRA member firm for two months for reusing customer signatures on more than 100 separate forms.

Ostia-Vega reused the signatures of 14 customers on documents including distribution requests, new accoun...

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According to FINRA, Pedro Ostia-Vega was fined $5,000 and suspended from association with any FINRA member firm for two months for reusing customer signatures on more than 100 separate forms.

Ostia-Vega reused the signatures of 14 customers on documents including distribution requests, new account agreements, account transfer forms, and other required firm books and records. The transactions effectuated through these forms were all authorized by the customers.

Despite customer authorization for the underlying transactions, the reuse of signatures caused the firm to maintain inaccurate books and records. Each signed document is supposed to represent that the customer reviewed and signed that specific document at that specific time. When signatures are copied from one document to another, this verification is lost.

This case is one of several in January 2025 involving representatives who signed customer names or reused signatures, often with customer permission. While the practice may seem like a harmless shortcut, it creates documentation that does not accurately reflect customer actions.

Proper signature procedures protect both customers and firms. They ensure customers have an opportunity to review each document before signing and create a reliable record of customer authorization. When these procedures are bypassed, even for authorized transactions, it undermines the integrity of the documentation system that regulators and firms rely on.

The two-month suspension reflects the scope of the violation, involving 14 customers and over 100 documents.

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According to FINRA, Brenton Charles Schmidt was fined $5,000 and suspended from association with any FINRA member firm for two months for permitting his business partner to falsify customer signatures on account documents.

Schmidt's business partner falsified the signatures of 9 customers on 53 a...

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According to FINRA, Brenton Charles Schmidt was fined $5,000 and suspended from association with any FINRA member firm for two months for permitting his business partner to falsify customer signatures on account documents.

Schmidt's business partner falsified the signatures of 9 customers on 53 account documents. In each instance, Schmidt signed his own name on the documents after his partner signed for the customer. The documents, which included new account applications and money transfer forms, were required books and records of his member firm.

While none of the customers complained and the underlying transactions were authorized, Schmidt caused the firm to maintain inaccurate books and records by participating in this signature falsification process.

This case is notable because Schmidt was sanctioned not for falsifying signatures himself, but for knowingly participating in a process where his partner did so. By signing his own name on documents that he knew contained falsified customer signatures, Schmidt facilitated and ratified the misconduct.

Representatives have an obligation to ensure that documents they process contain genuine customer signatures. Knowing participation in signature falsification, even when done by a partner or colleague, violates FINRA rules and causes the firm to maintain false records.

The two-month suspension underscores that representatives cannot avoid responsibility by having someone else perform the actual falsification. Investors should expect that all signatures on their account documents are genuine.

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According to FINRA, Peter Joseph Glowacki was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for two months for exercising unauthorized discretionary authority and using unapproved communication channels.

Glowacki placed 105 trades in customer accoun...

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According to FINRA, Peter Joseph Glowacki was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm for two months for exercising unauthorized discretionary authority and using unapproved communication channels.

Glowacki placed 105 trades in customer accounts without first obtaining prior written authorization from the customers and without having the accounts accepted as discretionary by his member firms. Although Glowacki discussed trading with customers generally, he did not speak with them about specific trades on the dates of the transactions.

Discretionary trading authority allows a broker to make trades without obtaining specific customer approval for each transaction. Because of the potential for abuse, FINRA rules require written authorization from customers and acceptance of discretionary accounts by the firm. Without these safeguards, customers may be subjected to trading they did not specifically approve.

Additionally, Glowacki communicated about securities business via text message from his personal cell phone with firm customers. These communications included confirming executed trades, discussing investment ideas and recommendations, accepting orders, and transferring funds. By not providing these text messages to his firm for review or retention, Glowacki caused the firm to maintain incomplete books and records.

Off-channel communications prevent firms from supervising representatives' interactions with customers and can hide misconduct. The combination of unauthorized discretionary trading and off-channel communications is particularly concerning because it removes multiple layers of customer protection.

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