Bad Brokers

According to FINRA, Dale Self was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 15 business days on July 30, 2024, for improperly removing and retaining non-public customer personal information without his member firm's or the customers...

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According to FINRA, Dale Self was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for 15 business days on July 30, 2024, for improperly removing and retaining non-public customer personal information without his member firm's or the customers' consent.

In anticipation of joining an investment advisory firm, Self improperly removed and retained non-public customer personal information in contravention of the firm's procedures. The information, which included customer dates of birth, social security numbers, and financial account numbers, was disclosed to the investment advisory firm and used to populate new account forms and customer relationship software. Ultimately, Self returned the information to the brokerage firm at its request.

The protection of customer information is a critical responsibility for all securities professionals. Non-public personal information, particularly social security numbers and financial account numbers, can be used for identity theft and other fraudulent purposes if it falls into the wrong hands. Firms have policies and procedures in place to protect this information, and representatives are prohibited from removing such information without authorization.

While Self's intent may have been to facilitate his transition to a new firm and to serve customers at his new firm, the unauthorized removal of customer information violates firm policies and regulatory requirements designed to protect customer privacy and data security. Registered representatives who change firms must follow proper protocols for transitioning customer relationships, which do not include taking customer information without authorization.

The 15-business-day suspension, which was in effect from August 5, 2024, through August 23, 2024, reflects the violation while considering that Self ultimately returned the information when requested. Investors should be aware that their personal information should be protected by their brokerage firm and should not be removed or shared without proper authorization and security measures. Firms have an obligation to safeguard customer information and maintain policies to prevent unauthorized access or removal.

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According to FINRA, Cathy Vasilev was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for four months on July 30, 2024, for submitting general market commentary content to FINRA for review and approval that was unrelated to a member firm's b...

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According to FINRA, Cathy Vasilev was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for four months on July 30, 2024, for submitting general market commentary content to FINRA for review and approval that was unrelated to a member firm's business and falsely representing that the content had been approved by a principal of that firm.

While working for an outside consulting firm, Vasilev submitted content under the CRD number of one of the firms she was providing consulting services on behalf of, but the content was actually for clients of her outside consulting business. Her consulting business, among other activities, assisted certain consulting clients with obtaining confirmation that general market commentary content created by such consulting clients met FINRA advertising standards.

Some of the communications submitted stated that the securities would be offered by the firm when none of them were related to the firm's business. Vasilev's representation that a firm principal had approved the content was false because the principal had never reviewed them. This conduct deceived FINRA's advertising review process and misused a member firm's identity.

FINRA's advertising rules require that communications with the public be fair and balanced, not misleading, and that they be approved by a qualified principal before use. The review and approval process is designed to ensure that communications meet regulatory standards and protect investors from misleading or deceptive materials. When individuals falsely represent that content has been approved by a firm principal, they undermine this important investor protection mechanism.

The four-month suspension, in effect from August 19, 2024, through December 18, 2024, reflects the serious nature of making false representations to a regulator and misusing a member firm's identity. This case demonstrates the importance of honest dealing with regulators and proper supervision of communications with the public.

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According to FINRA, Cole Fleming was fined $5,000 and suspended from association with any FINRA member in all capacities for one month on July 31, 2024, after he falsely certified to the State of New York that he had personally completed 15 hours of continuing education required to renew his state i...

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According to FINRA, Cole Fleming was fined $5,000 and suspended from association with any FINRA member in all capacities for one month on July 31, 2024, after he falsely certified to the State of New York that he had personally completed 15 hours of continuing education required to renew his state insurance license when, in fact, another person had completed that continuing education on his behalf.

Continuing education requirements are designed to ensure that licensed professionals maintain current knowledge of industry regulations, products, and best practices. These requirements protect consumers by ensuring that the professionals serving them have up-to-date knowledge and skills. When individuals circumvent these requirements by having someone else complete the education on their behalf, they undermine the purpose of continuing education and may lack the knowledge necessary to properly serve their clients.

Making false certifications to state regulators is a serious matter that demonstrates dishonesty and lack of integrity. Registered representatives and insurance agents are held to high ethical standards in the securities industry, where trust and integrity are paramount. Falsely certifying completion of required education calls into question an individual's trustworthiness and adherence to professional obligations.

The one-month suspension, in effect from August 19, 2024, through September 18, 2024, along with the $5,000 fine, reflects the regulatory view that shortcuts in meeting professional licensing requirements are unacceptable and constitute serious violations. This type of misconduct demonstrates a willingness to deceive regulators, which raises concerns about what other shortcuts or deceptions the individual might be willing to engage in.

Investors and insurance customers should expect their financial professionals to personally complete all required continuing education and to maintain their licenses in full compliance with all regulatory requirements. This case serves as a reminder that professional licensing requirements exist to protect the public, and attempts to circumvent them will result in disciplinary action.

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According to FINRA, Kristopher Charles Kessler was fined $5,000 and suspended from association with any FINRA member in all capacities for one month on July 31, 2024, for engaging in an outside business activity without providing prior written notice to his member firm.

Kessler helped to create a...

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According to FINRA, Kristopher Charles Kessler was fined $5,000 and suspended from association with any FINRA member in all capacities for one month on July 31, 2024, for engaging in an outside business activity without providing prior written notice to his member firm.

Kessler helped to create and operate a financial technology company with another firm representative. Kessler served as the company's Chief Marketing Officer and was identified as a member on its operating agreement. For his role, Kessler received a five percent interest in the company. In addition, Kessler completed annual compliance questionnaires in which he falsely denied engaging in any business activities outside of the firm.

FINRA Rule 3270 requires registered representatives to provide prior written notice to their member firm before engaging in any outside business activity. This requirement exists to allow firms to evaluate potential conflicts of interest, ensure proper supervision, and assess whether the outside activity is consistent with the representative's obligations to the firm and its customers. Outside business activities can create conflicts of interest, particularly when they involve financial services or technology that may compete with or affect the firm's business.

By serving as Chief Marketing Officer and holding a five percent ownership interest in the financial technology company without disclosing this to his firm, Kessler prevented the firm from evaluating whether this activity created any conflicts of interest or required any additional supervision. The false denials on annual compliance questionnaires compound the violation by demonstrating dishonesty and a deliberate attempt to conceal the outside business activity.

The one-month suspension, in effect from August 19, 2024, through September 18, 2024, demonstrates that failing to disclose outside business activities and making false statements on compliance questionnaires are serious violations that warrant disciplinary action.

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According to FINRA, Stephen M. Polak was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for five months on July 31, 2024, for failing to provide prior written notice to his member firm of his role in an outside business activity and for par...

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According to FINRA, Stephen M. Polak was assessed a deferred fine of $15,000 and suspended from association with any FINRA member in all capacities for five months on July 31, 2024, for failing to provide prior written notice to his member firm of his role in an outside business activity and for participating in private securities transactions without disclosure or approval.

Polak served as a board member, an officer and director of a corporation that grew and sold hemp related products. Polak had signatory authority over the corporation's bank accounts, and primary responsibility for its accounting and bookkeeping, including maintaining the corporation's ledger of transactions for its unregistered offering, and receiving payments from shareholders. Despite affirming in firm annual compliance certifications that he understood his obligation to comply with regulatory requirements and the firm's written supervisory procedures about outside business activities, Polak did not provide written notice to his firm.

The firm learned about Polak's outside business activity from his state Department of Financial Regulation and questioned him about it. Polak orally acknowledged the activity but did not provide written notice to his firm until 10 months later. Additionally, Polak participated in private securities transactions by receiving 3.25 million shares of the corporation's common stock as compensation for his work as an officer and director without disclosing to, seeking or receiving his firm's written approval to participate in the transaction.

FINRA Rules 3270 and 3280 require registered representatives to provide prior written notice to their firms before engaging in outside business activities and private securities transactions. These requirements exist to allow firms to supervise such activities, evaluate conflicts of interest, and ensure compliance with securities regulations.

The five-month suspension, in effect from August 5, 2024, through January 4, 2025, reflects the serious nature of these violations, particularly given the substantial role Polak played in the corporation and the significant compensation he received.

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According to FINRA, John E. Pelletier appealed an Office of Hearing Officers decision to the National Adjudicatory Council on July 19, 2024. Pelletier was fined $10,000 and suspended from association with any FINRA member firm in all capacities for three months based on findings that he executed una...

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According to FINRA, John E. Pelletier appealed an Office of Hearing Officers decision to the National Adjudicatory Council on July 19, 2024. Pelletier was fined $10,000 and suspended from association with any FINRA member firm in all capacities for three months based on findings that he executed unauthorized transactions in a customer's retirement account.

The customer, a retiree, entrusted his employer-sponsored 401(k) retirement savings account, representing two-thirds of his financial assets, to Pelletier to roll over into an individual retirement account. The customer expected to rely on $500 monthly distributions from the account for years to supplement his Social Security income. However, after setting up the account, Pelletier executed trades to enable distributions at the direction of the customer's ex-wife who was not an authorized agent.

Subsequently, the customer's ex-wife nearly depleted the account by spending the funds without the customer's knowledge. Pelletier claims that the customer gave him oral authorization to accept the ex-wife's trade instructions. When the customer discovered his account depleted, he contacted the firm and was informed that his ex-wife was named as an agent on the account pursuant to a notarized document with the customer's signature giving her full trading authority. The customer denied signing the document and stated it was forged.

The customer filed a civil suit against Pelletier's firm, his ex-wife, and a notary who notarized a forged trading authorization. The parties settled the suit, and the firm, ex-wife, and notary paid a total of $55,115. Pelletier was not required to contribute to the settlement.

This case illustrates the critical importance of ensuring that transactions are properly authorized and that trading authorizations are genuine. The sanctions are not in effect pending review by the National Adjudicatory Council.

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According to FINRA, Cantone Research Inc. (CRD #26314), based in Eatontown, New Jersey, was expelled from FINRA membership on March 11, 2024. The firm, along with two associated individuals, was found in violation of MSRB Rule G-19 and ordered to pay $4,777,425.69 plus interest in restitution to har...

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According to FINRA, Cantone Research Inc. (CRD #26314), based in Eatontown, New Jersey, was expelled from FINRA membership on March 11, 2024. The firm, along with two associated individuals, was found in violation of MSRB Rule G-19 and ordered to pay $4,777,425.69 plus interest in restitution to harmed investors.FINRA's investigation revealed that Cantone Research willfully violated municipal securities regulations by selling municipal bonds to customers without having a reasonable basis to believe the investments were suitable. The firm conducted inadequate due diligence on two separate municipal bond offerings valued at approximately $2.2 million and more than $6 million, respectively. In a particularly troubling finding, the firm failed to investigate why a previous underwriting firm had withdrawn from one of the offerings — a significant red flag that should have prompted further scrutiny.The violations went beyond mere negligence. FINRA found that the firm overstated revenue projections and understated management fees in connection with the offerings, painting a misleading picture for investors. In one case involving an assisted-living facility, the firm made fraudulent misrepresentations about the project. Bonds were sold to customers using negligent misrepresentations and material omissions, depriving investors of the information they needed to make informed decisions.Municipal bonds are often perceived as safe, conservative investments, making these violations especially harmful. Investors who purchased these bonds relied on the firm's representations about the underlying projects and their financial viability. When firms fail to conduct proper due diligence and then compound that failure with misleading statements, the consequences for ordinary investors can be devastating.The expulsion of Cantone Research represents one of FINRA's most severe sanctions, effectively removing the firm from the securities industry. This outcome underscores the seriousness with which regulators view failures in suitability obligations and due diligence, particularly in the municipal bond market where retail investors are prevalent.Investors should take several lessons from this case. First, always ask questions about the due diligence a firm has performed on any investment it recommends. Second, be cautious of investments where revenue projections seem overly optimistic or where fees are not clearly disclosed. Third, if a previous firm withdrew from an offering, that is a significant warning sign. Investors who believe they may have been harmed by similar conduct should review their account statements carefully and consider filing a complaint with FINRA. (FINRA Case #2017055886402)

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According to FINRA, Anthony Joseph Cantone (CRD #1066139), formerly associated with Cantone Research Inc. and based in Thompson, Pennsylvania, was barred from the securities industry on March 11, 2024. Along with the firm and another individual, Cantone was found jointly and severally liable to pay ...

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According to FINRA, Anthony Joseph Cantone (CRD #1066139), formerly associated with Cantone Research Inc. and based in Thompson, Pennsylvania, was barred from the securities industry on March 11, 2024. Along with the firm and another individual, Cantone was found jointly and severally liable to pay $4,777,425.69 plus interest in restitution to harmed investors.The disciplinary action arose from Cantone's willful violations of MSRB Rule G-19, which requires that recommendations of municipal securities be suitable for the customer based on information obtained through reasonable diligence. FINRA found that Cantone sold municipal bonds without a reasonable basis to believe the investments were suitable for the customers to whom they were recommended.Cantone's misconduct was particularly egregious in its scope. He was found to have conducted inadequate due diligence on two separate municipal bond offerings — one valued at approximately $2.2 million and another exceeding $6 million. Despite clear warning signs, including the withdrawal of a previous underwriting firm from one of the offerings, Cantone failed to probe the reasons behind that withdrawal. A reasonable securities professional would have treated such a withdrawal as a serious red flag warranting thorough investigation.Beyond the due diligence failures, FINRA found that Cantone overstated revenue projections and understated management fees associated with the offerings. He also made fraudulent misrepresentations about an assisted-living facility that was the subject of one of the bond offerings. Bonds were sold to customers using negligent misrepresentations and material omissions, effectively denying investors the accurate information they needed to assess the risks of their investments.A bar from the securities industry is the most severe sanction FINRA can impose on an individual, permanently prohibiting the person from associating with any FINRA member firm in any capacity. This penalty reflects the gravity of the misconduct involved, particularly the fraudulent nature of the misrepresentations made to investors.This case serves as an important reminder for investors about the risks that can arise even with investments perceived as relatively safe, such as municipal bonds. Investors should carefully evaluate the credentials and disciplinary history of any broker recommending investments, which can be checked through FINRA's BrokerCheck tool. When a broker overpromises returns or downplays risks and fees, investors should proceed with extreme caution. The suitability of any investment depends on individual circumstances, and brokers have an obligation to ensure their recommendations are appropriate. (FINRA Case #2017055886402)

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According to FINRA, Raymond John DeRobbio (CRD #1092310), formerly associated with Cantone Research Inc. and based in Atlantic Highlands, New Jersey, was barred from the securities industry on March 11, 2024. DeRobbio was found jointly and severally liable, along with the firm and Anthony Joseph Can...

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According to FINRA, Raymond John DeRobbio (CRD #1092310), formerly associated with Cantone Research Inc. and based in Atlantic Highlands, New Jersey, was barred from the securities industry on March 11, 2024. DeRobbio was found jointly and severally liable, along with the firm and Anthony Joseph Cantone, to pay $4,777,425.69 plus interest in restitution to investors who were harmed by the misconduct.FINRA's investigation determined that DeRobbio willfully violated MSRB Rule G-19 by participating in the sale of municipal bonds without a reasonable basis to believe those investments were suitable for the customers who purchased them. The rule is a cornerstone of municipal securities regulation, designed to protect investors from being placed into investments that do not align with their financial needs, risk tolerance, or investment objectives.The violations centered on two municipal bond offerings — one worth approximately $2.2 million and another exceeding $6 million. DeRobbio failed to conduct adequate due diligence on these offerings before recommending them to customers. Critically, he failed to investigate why a previous underwriting firm had withdrawn from one of the offerings, a red flag that any diligent securities professional should have thoroughly examined.FINRA also found that DeRobbio was involved in overstating revenue projections and understating management fees connected to the bond offerings. In the case of an assisted-living facility project, fraudulent misrepresentations were made to investors. The bonds were sold using negligent misrepresentations and material omissions, meaning investors did not receive complete and accurate information about the risks and characteristics of their investments.The bar imposed on DeRobbio permanently removes him from the securities industry, preventing him from associating with any FINRA member firm. This sanction, combined with the substantial restitution order, reflects the seriousness of the violations and the harm caused to investors who trusted the recommendations they received.This case highlights several important principles for investors. Municipal bonds, while often considered lower-risk investments, are not without danger — particularly when the firms selling them cut corners on due diligence. Investors should always ask for detailed information about any investment being recommended, including the financial health of the underlying project and the track record of the parties involved. When projections seem unusually optimistic or when key details about fees are not forthcoming, those are warning signs. Checking a broker's background through FINRA BrokerCheck before investing can also help investors identify potential risks. (FINRA Case #2017055886402)

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According to FINRA, Walton RE Securities, LLC, formerly known as GRT Securities, LLC, and also doing business as Ei Capital Distributors, LLC (CRD #172024), based in Scottsdale, Arizona, was fined $10,000 on March 4, 2024, for multiple violations related to net capital requirements, notification obl...

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According to FINRA, Walton RE Securities, LLC, formerly known as GRT Securities, LLC, and also doing business as Ei Capital Distributors, LLC (CRD #172024), based in Scottsdale, Arizona, was fined $10,000 on March 4, 2024, for multiple violations related to net capital requirements, notification obligations, and recordkeeping.FINRA found that the firm conducted a securities business while operating below its required minimum net capital. The net capital rule, established under SEC Rule 15c3-1, is one of the most fundamental financial responsibility requirements for broker-dealers. It requires firms to maintain a minimum level of liquid assets to protect customers and creditors in the event the firm encounters financial difficulty. Operating below the net capital requirement poses a direct risk to customer assets and the integrity of the securities markets.The violations did not end there. FINRA also found that the firm failed to properly accrue expenses, which contributed to the inaccurate representation of its financial condition. By failing to record liabilities when they were incurred, the firm's books and records did not accurately reflect its true financial position. This is a violation of SEC Rule 17a-3, which requires broker-dealers to maintain accurate books and records.Additionally, the firm failed to file required notifications under SEC Rule 17a-11. This rule mandates that broker-dealers promptly notify regulators when they fall below minimum net capital requirements or when certain other financial conditions arise. These notifications serve as an early warning system, allowing regulators to monitor firms that may be experiencing financial distress and to take action to protect investors before losses occur. The firm's failure to file these notifications deprived regulators of timely information about its financial condition.FINRA further found that the firm failed to maintain accurate books and records, a foundational obligation for all broker-dealers. Accurate recordkeeping is essential not only for regulatory oversight but also for the firm's own ability to monitor its financial health and operations.While the $10,000 fine may appear modest, it reflects the nature and scope of the specific violations. Investors and industry participants should understand that net capital violations are taken seriously by regulators because they go to the heart of a firm's ability to meet its financial obligations. Firms that cannot maintain minimum capital levels may be unable to return customer funds or securities in the event of financial failure. This case serves as a reminder that even smaller firms must maintain rigorous financial controls and timely regulatory reporting to remain in compliance and protect the investors they serve. (FINRA Case #2021071586901)

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