Bad Brokers

According to FINRA, Brian Richard Baine was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for signing or causing a third party to sign customers' signatures on insurance-related documents without permission.

Baine signed...

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According to FINRA, Brian Richard Baine was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for three months for signing or causing a third party to sign customers' signatures on insurance-related documents without permission.

Baine signed or caused a third party to sign non-securities customers' signatures, including senior customers, on insurance-related documents without the customers' permission. According to FINRA, he did so to expedite the insurance application process and not in furtherance of other misconduct. The underlying transactions were authorized and none of the customers complained.

While the intent may have been to expedite processing rather than to defraud, signing another person's signature without permission is a serious violation regardless of the motivation. This conduct is sometimes referred to as "surrogate signing" and it undermines the documentation process that protects both customers and firms.

Signatures on financial documents serve important purposes: they confirm that the customer has reviewed and understood the documents, they create a legal record of the customer's consent, and they provide authentication that the transaction was authorized. When someone else signs a customer's name, even with good intentions, these protections are compromised.

The fact that senior customers were among those whose signatures were forged is particularly concerning, as elderly investors may be more vulnerable to exploitation and financial firms have heightened duties to protect them.

The suspension was in effect from July 7, 2025, through October 6, 2025. This case illustrates that even well-intentioned shortcuts in paperwork processing can result in significant sanctions. Investors should always be asked to provide their own signatures on financial documents and should be wary of any representative who suggests otherwise.

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According to FINRA, Joshua Ethan Scholnick was named as a respondent in a FINRA complaint alleging that he cheated on the Securities Industry Essentials (SIE) examination.

The complaint alleges that during the examination, which Scholnick took from his home, he used his phone to access prohibited...

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According to FINRA, Joshua Ethan Scholnick was named as a respondent in a FINRA complaint alleging that he cheated on the Securities Industry Essentials (SIE) examination.

The complaint alleges that during the examination, which Scholnick took from his home, he used his phone to access prohibited study materials to help him answer the test's questions. Scholnick allegedly did so after acknowledging and agreeing to follow FINRA's SIE Rules of Conduct, which forbid possessing or using phones, notes, and study materials during the examination.

It is important to note that the issuance of a disciplinary complaint represents FINRA's initiation of a formal proceeding and does not represent a decision as to any of the allegations contained in the complaint. Scholnick has not been found to have violated any rules at this stage.

The SIE examination is a co-requisite to other FINRA qualification examinations and tests fundamental securities industry knowledge. Exam integrity is essential to ensuring that only qualified individuals enter the securities industry and serve investors.

The expansion of remote testing during and after the COVID-19 pandemic created new challenges for maintaining exam integrity. FINRA's Rules of Conduct for remote examinations are designed to maintain the same level of integrity as in-person testing at proctored testing centers.

If the allegations are proven, cheating on a qualification examination would demonstrate a serious lack of integrity that raises questions about an individual's fitness to work in an industry that requires trust and honesty.

Investors should be reassured that FINRA actively monitors examination integrity and takes action when potential cheating is identified. Those considering careers in the securities industry should understand that cheating will be investigated and prosecuted.

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According to FINRA, Sean T. Sullivan was named as a respondent in a FINRA complaint alleging that he placed unauthorized trades in four customers' accounts.

The complaint alleges that Sullivan executed stock purchases totaling $196,754, plus commissions of $2,110, and other costs in customer acco...

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According to FINRA, Sean T. Sullivan was named as a respondent in a FINRA complaint alleging that he placed unauthorized trades in four customers' accounts.

The complaint alleges that Sullivan executed stock purchases totaling $196,754, plus commissions of $2,110, and other costs in customer accounts. He also allegedly executed stock sales totaling $57,398, plus commissions of $522, and other costs. Sullivan allegedly did not communicate with any of the customers before executing the trades. The customers' accounts were not discretionary, and none of the customers authorized Sullivan to exercise discretion in their accounts.

All four customers complained to Sullivan's member firm about the trades. The firm cancelled and reversed the trades for three customers. The fourth customer closed his account, transferred his holdings to another broker-dealer, and then complained to a state regulator.

The complaint also alleges that Sullivan willfully failed to timely amend his Form U4 to disclose a material event that a reasonable employer, customer, or regulator would have viewed as relevant to his business and employment.

It is important to note that this is a complaint and not a final determination. Sullivan has not been found to have violated any rules at this stage.

Unauthorized trading is a serious allegation. FINRA rules require representatives to obtain customer authorization before executing trades in non-discretionary accounts. This requirement protects customers from having their assets used in ways they did not approve.

The failure to disclose material events on Form U4 is also a significant charge, as this form provides important information to firms and regulators about a representative's background.

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According to FINRA, Brian James Pavelko was named as a respondent in a FINRA complaint alleging that he failed to comply with FINRA requests for documents and information related to his receipt of Pandemic Unemployment Assistance (PUA).

FINRA opened an investigation into whether Pavelko had misre...

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According to FINRA, Brian James Pavelko was named as a respondent in a FINRA complaint alleging that he failed to comply with FINRA requests for documents and information related to his receipt of Pandemic Unemployment Assistance (PUA).

FINRA opened an investigation into whether Pavelko had misrepresented his employment status, income, or any other material facts on his application for PUA benefits with the New Jersey Department of Labor. In connection with this investigation, FINRA sent Pavelko two requests for a copy of his PUA application.

Pavelko initially replied that he did not possess a copy of the application. FINRA then took Pavelko's testimony, during which he stated he still had not received a copy from the state agency. The following month, Pavelko informed FINRA that he possessed a copy of the PUA application but that he would not produce it to FINRA.

FINRA also requested documents and information regarding how Pavelko came to receive the application, including when and from whom he received it. To date, Pavelko has not produced the requested documents and information.

It is important to note that this is a complaint and not a final determination. Pavelko has not been found to have violated any rules at this stage.

The complaint alleges that Pavelko's failure to cooperate prevents FINRA from investigating potential misrepresentations to the state agency and from determining whether Pavelko provided false testimony to FINRA regarding his possession of the application.

Misrepresentations to obtain government benefits, if proven, would raise serious questions about an individual's integrity and fitness to work in the securities industry.

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According to FINRA, Wood (Arthur W.) Company, Inc. was expelled from FINRA membership pursuant to FINRA Rule 9552 for failure to provide information or keep information current.

The Boston, Massachusetts firm's expulsion became effective on September 29, 2025. FINRA Rule 9552 authorizes FINRA to ...

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According to FINRA, Wood (Arthur W.) Company, Inc. was expelled from FINRA membership pursuant to FINRA Rule 9552 for failure to provide information or keep information current.

The Boston, Massachusetts firm's expulsion became effective on September 29, 2025. FINRA Rule 9552 authorizes FINRA to suspend or cancel the membership of a firm that fails to provide information or documents requested pursuant to FINRA Rule 8210, or that fails to keep its membership information current.

Expulsion is the most severe sanction that can be imposed on a member firm. When a firm is expelled, it can no longer conduct securities business through FINRA. This sanction is imposed when a firm fails to meet its fundamental obligations to cooperate with FINRA oversight.

The requirement to provide information and keep membership information current is essential to FINRA's ability to oversee its member firms and protect investors. Firms that fail to cooperate with FINRA's regulatory requests undermine the entire regulatory system.

While the specific circumstances leading to Wood (Arthur W.) Company's expulsion are not detailed in the disciplinary action notice, the firm's failure to provide required information or maintain current records prevented FINRA from effectively supervising the firm's activities.

Investors who had accounts at Wood (Arthur W.) Company should ensure their assets are properly transferred to another broker-dealer. The expulsion of a firm does not affect customer ownership of securities, but customers should verify that their accounts have been properly handled.

This case demonstrates that FINRA has effective tools to address firms that fail to cooperate with regulatory oversight, protecting investors from firms that cannot be properly supervised.

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According to FINRA, Fundit, Inc. was suspended from FINRA membership pursuant to FINRA Rule 9552 for failure to provide information or keep information current.

The Fairfield, New Jersey firm's suspension began on September 18, 2025. Fundit is a funding portal, which is a type of entity registere...

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According to FINRA, Fundit, Inc. was suspended from FINRA membership pursuant to FINRA Rule 9552 for failure to provide information or keep information current.

The Fairfield, New Jersey firm's suspension began on September 18, 2025. Fundit is a funding portal, which is a type of entity registered with the SEC and FINRA that operates under Regulation Crowdfunding to facilitate securities offerings by startups and small businesses.

FINRA Rule 9552 authorizes FINRA to suspend a firm that fails to provide information or documents requested pursuant to FINRA Rule 8210, or that fails to keep its membership information current. During a suspension, the firm cannot conduct securities business.

Funding portals play an important role in the crowdfunding ecosystem by providing platforms where companies can raise capital from both accredited and non-accredited investors. Because these platforms serve retail investors who may have limited investment experience, FINRA oversight of funding portals is particularly important.

The requirement to provide information and maintain current records allows FINRA to monitor funding portal activities and ensure compliance with Regulation Crowdfunding requirements designed to protect investors.

Investors who have used Fundit's platform should be aware that the firm's suspension means it cannot currently facilitate new offerings. However, the suspension does not affect existing investments made through the platform, though investors should monitor their investments and any communications about the suspension.

This case demonstrates that FINRA actively oversees funding portals as well as traditional broker-dealers. The suspension will remain in effect until the firm complies with FINRA's information requests.

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According to FINRA, Wilson-Davis & Co., Inc., along with principals Byron Bert Barkley and James C. Snow Jr., were sanctioned for multiple violations related to short selling and supervisory failures.

The firm was fined $490,000 for engaging in short selling that violated Rule 203(b)(1) of Regula...

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According to FINRA, Wilson-Davis & Co., Inc., along with principals Byron Bert Barkley and James C. Snow Jr., were sanctioned for multiple violations related to short selling and supervisory failures.

The firm was fined $490,000 for engaging in short selling that violated Rule 203(b)(1) of Regulation SHO. Specifically, the firm failed to obtain proper locates for 122 short sale transactions in four low-priced stocks. The firm claimed it was exempt from the locate requirement due to bona-fide market-making activities, but FINRA found this claim was not supported by the facts.

Barkley was fined $25,000 and suspended from principal capacities for six months. He must also requalify by examination as a General Securities Principal, Investment Banking Principal, and Compliance Officer before returning to those roles. Snow was fined $50,000 and similarly suspended for six months, with requirements to requalify as a General Securities Principal and Investment Banking Principal.

The supervisory failures were extensive. The firm's written supervisory procedures provided no guidance for supervisors to examine whether short sales were connected to legitimate market-making. There were no processes for locating or borrowing securities for short sales. The firm's supervisory assignment system through head count lists was described as "replete with erroneous lines of authority."

FINRA also found failures in heightened supervision oversight, instant message review, and anti-money laundering procedures. The firm's AML procedures were purchased from a vendor and never tailored to the specific risks of penny stock trading and liquidation.

For investors, this case highlights the importance of understanding how broker-dealers manage compliance with complex regulations like Regulation SHO. Firms must have robust supervisory systems, especially when dealing with higher-risk activities like penny stock trading. The sanctions underscore that claiming market-maker exemptions requires genuine market-making activity, and generic compliance procedures are insufficient.

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According to FINRA, D. Boral Capital LLC was censured and fined $125,000 for conducting securities business on 96 days while failing to maintain its minimum required net capital.

The violations stemmed from the firm's participation in 62 firm commitment underwritings where the firm attempted to u...

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According to FINRA, D. Boral Capital LLC was censured and fined $125,000 for conducting securities business on 96 days while failing to maintain its minimum required net capital.

The violations stemmed from the firm's participation in 62 firm commitment underwritings where the firm attempted to use backstop agreements to comply with net capital requirements. However, these agreements did not meet regulatory requirements. For 25 offerings, the firm used backstop providers who were not members of the underwriting syndicate, which is required under SEC interpretations. For the remaining offerings, the agreements lacked required provisions such as requiring counterparties to take net capital charges or unequivocally purchase unsold securities.

The firm also failed to maintain required net capital on 34 additional days due to capital withdrawals by a firm principal and misclassification of certain payments as income rather than deferred income. During these net capital deficient days, deficiencies ranged from approximately $222,000 to $765,000, yet the firm continued conducting investment banking activities.

FINRA found the firm's written supervisory procedures inadequate. The procedures did not specify how to perform net capital computations for firm commitment underwritings, provided no guidance on valid backstop agreements, and included no procedures related to capital withdrawals by firm owners.

The firm also failed to file or timely file required corporate offering filings with FINRA for public offerings.

Investors should understand that net capital requirements exist to ensure broker-dealers maintain sufficient financial resources to meet their obligations. When firms operate while net capital deficient, customer assets and transactions may be at heightened risk. This case demonstrates the importance of proper financial controls and supervisory procedures at broker-dealers.

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According to FINRA, Odeon Capital Group LLC was censured and fined $75,000 for failing to establish supervisory systems to detect prearranged trading and for failing to disclose required mark-up information on customer confirmations.

The firm's supervisory system was found inadequate for detectin...

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According to FINRA, Odeon Capital Group LLC was censured and fined $75,000 for failing to establish supervisory systems to detect prearranged trading and for failing to disclose required mark-up information on customer confirmations.

The firm's supervisory system was found inadequate for detecting manipulative prearranged trading. The firm relied on registered representatives and supervisors to identify potential prearranged trades using daily trade reports and summaries. However, these reports contained hundreds of rows in email format that could not be filtered or sorted to identify suspicious patterns such as offsetting transactions in the same security for the same quantity executed in close proximity.

As a result of these supervisory deficiencies, the firm failed to surveil for at least 138 instances of potentially manipulative prearranged trading.

Additionally, the firm failed to disclose required mark-up or mark-down information on 717 retail customer confirmations, violating MSRB Rule G-15 and FINRA Rule 2232. The firm's procedures did not provide a process for supervisory review of customer confirmations to ensure proper disclosure.

The firm has since updated its written supervisory procedures to require documented supervisory review of trade confirmations for disclosures.

For investors, this case highlights two important protections. First, regulators actively monitor for prearranged trading, which is a form of market manipulation that can harm market integrity. Second, customers are entitled to know the mark-ups and mark-downs applied to their fixed income transactions. These disclosures help investors understand the true cost of their trades and make informed decisions.

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According to FINRA, Goldman Sachs & Co. LLC was censured and fined $250,000 for failing to have a qualified independent underwriter participate in an IPO where the firm had a conflict of interest, and for permitting unregistered individuals to perform investment banking activities.

Goldman Sachs ...

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According to FINRA, Goldman Sachs & Co. LLC was censured and fined $250,000 for failing to have a qualified independent underwriter participate in an IPO where the firm had a conflict of interest, and for permitting unregistered individuals to perform investment banking activities.

Goldman Sachs served as lead underwriter for an IPO that raised approximately $700 million. The company used the proceeds to purchase LLC units in another entity where a Goldman Sachs affiliate served as a lender and received $96 million from the offering proceeds. This created a conflict of interest that required a qualified independent underwriter (QIU) to participate in preparing the registration statement and prospectus, but no QIU participated.

The firm also permitted four individuals to perform investment banking activities requiring registration during periods when they were not registered with FINRA. These unregistered persons worked on deal teams, advising clients on securities offerings. Notably, each had been previously registered within two years and did not need to take qualification exams, they simply needed to transfer their registrations, which was not done in a timely manner.

FINRA found the firm's supervisory system inadequate. While the firm required new hires to transfer registrations within 30 days and sent notices about registration requirements, there were no procedures to escalate issues when employees failed to comply. Weekly reports tracking registration requirements were not regularly reviewed, and individuals with overdue registrations were permitted on deal teams anyway.

The firm has since modified its procedures to require monthly registration reviews and escalate issues for employees with outstanding registrations.

Investors should understand that QIU requirements exist to protect them from conflicts of interest in underwriting. Registration requirements ensure that individuals advising on securities transactions have demonstrated competency through examination.

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