Bad Brokers

According to FINRA, David A. Dodson (CRD #2363957) of Brookhaven, Georgia, was suspended for 20 months and assessed a deferred fine of $10,000 for intentionally making structured cash deposits to avoid federal Currency Transaction Report (CTR) reporting requirements. The action, effective March 22, ...

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According to FINRA, David A. Dodson (CRD #2363957) of Brookhaven, Georgia, was suspended for 20 months and assessed a deferred fine of $10,000 for intentionally making structured cash deposits to avoid federal Currency Transaction Report (CTR) reporting requirements. The action, effective March 22, 2024, found that Dodson made structured cash deposits totaling $248,460 across two bank accounts, deliberately keeping individual deposit amounts below $10,000 to circumvent the CTR reporting threshold. Notably, these deposits did not involve customer funds; rather, they were Dodson's personal transactions. The investigation established that Dodson had knowledge of CTR requirements, having received Bank Secrecy Act (BSA) training through his member firm. The structuring of financial transactions to evade CTR reporting requirements is a federal offense under 31 U.S.C. Section 5324. Financial institutions are required to file CTRs with the Financial Crimes Enforcement Network (FinCEN) for cash transactions exceeding $10,000. This reporting framework is a critical component of the nation's anti-money laundering (AML) infrastructure, designed to detect and prevent financial crimes including money laundering, tax evasion, and terrorist financing. Deliberately breaking up cash transactions into smaller amounts to avoid these reporting thresholds, known as "structuring," is illegal regardless of whether the underlying funds are derived from legitimate sources. Dodson's conduct also violated FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade. A registered representative who engages in structuring demonstrates a willingness to evade federal law, which is fundamentally incompatible with the trust that investors and regulators place in financial professionals. Dodson's suspension is effective from April 1, 2024, through November 30, 2025. This case serves as a stark reminder that financial professionals are held to high standards of legal compliance in all aspects of their financial dealings, not just their client-facing activities. Investors should be aware that structured transactions by their financial professionals may indicate broader compliance issues. FINRA Case #2022075762601 provides further details on this matter.

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According to FINRA, Brian Keith Jones (CRD #4203098) of Mt. Pleasant, Iowa, was fined $5,000 and suspended for 45 days for participating in private securities transactions without providing prior written notice to or obtaining approval from his member firm. The action, effective March 27, 2024, foun...

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According to FINRA, Brian Keith Jones (CRD #4203098) of Mt. Pleasant, Iowa, was fined $5,000 and suspended for 45 days for participating in private securities transactions without providing prior written notice to or obtaining approval from his member firm. The action, effective March 27, 2024, found that Jones participated in two private securities transactions totaling $100,000. Specifically, Jones researched the offering, recommended it to advisory customers, and facilitated the transactions. In connection with these activities, Jones earned at least $1,360 in advisory fees. Additionally, Jones falsely responded on his firm's compliance questionnaire regarding his involvement in outside securities activities. FINRA Rule 3280, commonly known as the "selling away" rule, requires registered representatives to provide prior written notice to their member firms before participating in any securities transaction outside the regular course of their employment. If the representative will receive compensation from the transaction, the firm must also approve the activity before the representative may proceed. This rule exists as a fundamental investor protection measure because it ensures that member firms can evaluate the merits and risks of the securities being offered and supervise their representatives' activities. When representatives engage in private securities transactions without firm knowledge, investors lose the protection of the firm's due diligence and supervisory framework. The transactions may involve unsuitable or fraudulent investments that the firm would have identified and prohibited had proper notice been provided. Jones's false responses on his compliance questionnaire compounded the violation by actively concealing the unapproved activity from his firm's oversight mechanisms. Jones's suspension was effective from April 15 through May 29, 2024. Investors should understand that when a financial professional recommends an investment outside of their firm's approved offerings, the investment may not have undergone the same level of scrutiny and due diligence as products offered through the firm. Investors should always verify that recommended investments are offered through the representative's firm. FINRA Case #2023078431201 provides further details on this matter.

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According to FINRA, Christopher Gerard Perillo (CRD #7589151) of Merrick, New York, was suspended for 18 months and assessed a deferred fine of $5,000 for possessing and having access to unauthorized study materials while taking the Municipal Securities Rulemaking Board (MSRB) Series 52 qualificatio...

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According to FINRA, Christopher Gerard Perillo (CRD #7589151) of Merrick, New York, was suspended for 18 months and assessed a deferred fine of $5,000 for possessing and having access to unauthorized study materials while taking the Municipal Securities Rulemaking Board (MSRB) Series 52 qualification examination. The action, effective March 28, 2024, found that during a lengthy unscheduled break from the exam, Perillo had access to study materials in the test center restroom. Prior to taking the exam, Perillo had attested to abide by MSRB Rule G-3(f) and the examination Rules of Conduct, which prohibit candidates from accessing any unauthorized materials during the examination period, including during breaks. The Series 52 examination, formally known as the Municipal Securities Representative Qualification Examination, tests the knowledge required of professionals who engage in municipal securities activities. Municipal securities, including bonds issued by state and local governments, are held by millions of individual investors, and it is essential that the professionals who sell and advise on these products demonstrate genuine competency. The examination process serves as a gatekeeper to ensure that only qualified individuals are permitted to transact in municipal securities on behalf of investors. Having unauthorized study materials accessible during an exam break undermines the integrity of this qualification process. Even if Perillo did not actively consult the materials, their mere presence and accessibility during the examination period constitutes a violation of the rules to which he attested. FINRA and the MSRB take examination integrity extremely seriously because the qualification process is the primary mechanism for ensuring baseline professional competency in the securities industry. Perillo's suspension is effective from April 1, 2024, through September 30, 2025. This case demonstrates that exam integrity rules apply not only during active testing but throughout the entire examination period, including breaks. Aspiring municipal securities professionals should take great care to ensure they have no access to any unauthorized materials at any point during the testing process. FINRA Case #2023078663802 provides further details on this matter.

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According to FINRA, Christopher Mack Watkins (CRD #2376887) of Farmington, Utah, was suspended for two months, assessed a deferred fine of $15,000, and ordered to pay $42,768.72 in restitution to harmed customers for charging unfair and excessive commissions on equity transactions. The action, effec...

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According to FINRA, Christopher Mack Watkins (CRD #2376887) of Farmington, Utah, was suspended for two months, assessed a deferred fine of $15,000, and ordered to pay $42,768.72 in restitution to harmed customers for charging unfair and excessive commissions on equity transactions. The action, effective March 28, 2024, found that Watkins charged commissions approaching and, in some proceeds transactions, exceeding 5% of the transaction value, substantially exceeding what would be considered fair arm's-length charges. The excessive commissions were not justified by prevailing market conditions, the nature of the services provided, or any other relevant factors. The concept of fair commissions is a foundational principle in securities regulation. FINRA's markup and commission policies, guided by Rule 2121 and its supplementary materials, establish that member firms and their associated persons must charge prices and commissions that are fair and reasonable in light of all relevant circumstances. While there is no absolute cap on commissions, the industry has long used the 5% guideline as a reference point for evaluating the fairness of charges on equity transactions. Commissions approaching or exceeding this threshold receive heightened scrutiny and require substantial justification. Watkins overcharged his customers a total of $42,768.72, which he has been ordered to repay as restitution. This restitution requirement reflects FINRA's commitment to ensuring that harmed investors are made whole when possible. Watkins's suspension was effective from April 1 through May 31, 2024. Investors should carefully review the commissions and fees charged on their transactions. Trade confirmations sent after each transaction disclose the commission or markup charged, and investors should compare these charges against industry norms. If commissions consistently approach or exceed 5% on equity transactions, investors should question whether the charges are justified and consider seeking a second opinion. Excessive commissions directly reduce investment returns and can significantly erode portfolio value over time. FINRA Case #2021069366201 provides further details on this matter.

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According to FINRA, Jason W. Wolter (CRD #2934037) of New Canaan, Connecticut, was fined $5,000 and suspended for 10 business days for exercising discretion in the accounts of two customers without obtaining the required written authorization or firm approval. The action, effective March 28, 2024, i...

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According to FINRA, Jason W. Wolter (CRD #2934037) of New Canaan, Connecticut, was fined $5,000 and suspended for 10 business days for exercising discretion in the accounts of two customers without obtaining the required written authorization or firm approval. The action, effective March 28, 2024, identified two distinct patterns of unauthorized discretionary trading. In the first instance, one customer had instructed Wolter to communicate with the customer's son regarding account matters. Over time, Wolter stopped seeking the customer's prior approval for transactions and instead sought approval from the customer's wife and son, neither of whom was authorized in the firm's records to provide trading instructions. In the second instance, another customer had given Wolter implied authorization to exercise discretion, but no written authorization was ever obtained or maintained in the firm's records. FINRA rules require that discretionary authority, which allows a representative to make trading decisions on behalf of a customer without obtaining the customer's prior approval for each transaction, must be documented through written authorization from the customer and approved by the member firm. This requirement, established under FINRA Rule 3260, exists to protect investors from unauthorized trading activity and to ensure that firms can properly supervise accounts where discretion is being exercised. The distinction between verbal or implied consent and formal written authorization is critical. Written authorization creates a clear, enforceable record of the customer's intent and triggers enhanced supervisory obligations at the firm level. Without written documentation, there is no verifiable record of the scope of authority granted, leaving customers vulnerable to potential abuse and creating regulatory compliance gaps. Wolter's suspension was effective from April 15 through April 26, 2024. Investors should ensure that any discretionary authority they grant to their financial professional is properly documented in writing and approved by the firm. Investors who have not provided written authorization for discretionary trading should review their account statements for any transactions they did not specifically approve. FINRA Case #2019064430601 provides further details on this matter.

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According to FINRA, Philip Gerard Ciantro (CRD #2350685) of Brooklyn, New York, was fined $5,000, suspended for one month from his capacity as a Financial and Operations Principal (FINOP), and required to complete 20 hours of continuing education. The action, effective March 29, 2024, found that Cia...

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According to FINRA, Philip Gerard Ciantro (CRD #2350685) of Brooklyn, New York, was fined $5,000, suspended for one month from his capacity as a Financial and Operations Principal (FINOP), and required to complete 20 hours of continuing education. The action, effective March 29, 2024, found that Ciantro, while serving as FINOP, permitted his member firm to conduct securities business on 43 days while the firm was operating below its minimum required net capital. The investigation revealed that Ciantro computed the firm's net capital and recorded the deficiencies in the firm's records, demonstrating that he was aware the firm was operating below the required threshold. Despite this knowledge, Ciantro failed to take the necessary step of suspending the firm's business operations until the net capital deficiency was resolved. Additionally, Ciantro failed to file timely notices of the firm's net capital deficiencies for 46 days, with notifications filed between 3 and 44 days late. The net capital rule, established under SEC Rule 15c3-1, is one of the most fundamental investor protection requirements in the securities industry. It requires broker-dealers to maintain a minimum level of liquid assets to ensure they can meet their obligations to customers and counterparties. When a firm operates below its minimum net capital, it poses a direct risk to customers because the firm may not have sufficient resources to safeguard customer assets or complete pending transactions. The FINOP role carries significant responsibility for monitoring and maintaining a firm's financial compliance. As FINOP, Ciantro was specifically charged with ensuring the firm's compliance with net capital requirements and filing timely regulatory notices when deficiencies arose. His failure to suspend business operations and to file timely notices undermined these critical financial safeguards. Ciantro's suspension from FINOP capacity was effective from April 15 through May 14, 2024. Investors should understand that net capital requirements exist to protect them and that regulators take violations of these requirements seriously. FINRA Case #2020067041002 provides further details on this matter.

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According to FINRA, Michael Ciro Colletti (CRD #4577898) of Glen Head, New York, is facing charges for unauthorized trading and excessive trading in a customer's Individual Retirement Account (IRA). A FINRA Office of Hearing Officers (OHO) decision issued on March 21, 2024, found that Colletti alleg...

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According to FINRA, Michael Ciro Colletti (CRD #4577898) of Glen Head, New York, is facing charges for unauthorized trading and excessive trading in a customer's Individual Retirement Account (IRA). A FINRA Office of Hearing Officers (OHO) decision issued on March 21, 2024, found that Colletti allegedly engaged in unauthorized transactions without obtaining proper customer authorization, and that he exercised de facto control over the account in question. The decision has been appealed to the National Adjudicatory Council (NAC), and all sanctions remain pending review.

The customer at the center of this case was a man in his 60s who was nearing retirement and had a moderate risk tolerance. Despite these conservative investment objectives, Colletti is accused of engaging in quantitatively unsuitable and excessive trading activity in the customer's IRA. The account in question never exceeded $10,000 in value, yet during the relevant period the customer lost $5,417 while Colletti received $5,081 in commissions. This pattern, where a broker earns nearly as much in commissions as the customer loses, is a hallmark of churning, which is a serious violation of securities regulations.

The OHO decision imposed a $10,000 fine, an eight-month suspension from association with any FINRA member firm, an order to pay $5,417 plus interest in restitution to the affected customer, and a requirement that Colletti requalify by examination before returning to the industry. However, because Colletti has appealed the decision to the NAC, none of these sanctions are currently in effect. The appeal process allows for a full review of the findings and the appropriateness of the sanctions imposed.

This case is instructive for investors on several levels. First, it highlights the dangers of allowing a broker to exercise effective control over your account without a formal discretionary trading agreement. When a broker makes trades without explicit authorization, it removes the investor's ability to make informed decisions about their own money. Second, the concept of quantitative unsuitability, also known as churning, is an important protection for investors. FINRA rules require that recommendations made by brokers be suitable for the customer based on factors including age, risk tolerance, financial situation, and investment objectives. An IRA for a pre-retiree with moderate risk tolerance should not be subjected to aggressive or excessive trading.

Investors should monitor their account statements carefully and question any trades they did not authorize. If commissions and fees consume a significant portion of the account's value, that is a warning sign of potential churning. This matter is tracked under FINRA Case #2019061942901.

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According to FINRA, CVEX Markets LLC (CRD #311448), a broker-dealer based in Austin, Texas, had its FINRA membership cancelled effective March 1, 2024, for failure to pay FINRA dues, fees, and other charges pursuant to FINRA Rule 9553.

FINRA Rule 9553 provides a streamlined expedited proceeding for...

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According to FINRA, CVEX Markets LLC (CRD #311448), a broker-dealer based in Austin, Texas, had its FINRA membership cancelled effective March 1, 2024, for failure to pay FINRA dues, fees, and other charges pursuant to FINRA Rule 9553.

FINRA Rule 9553 provides a streamlined expedited proceeding for certain administrative matters, including a member firm's failure to pay required financial obligations to FINRA. Under this rule, when a firm fails to pay its required dues, fees, or other charges, FINRA issues a notice informing the firm of the delinquency and providing a specified period to cure the deficiency. If the firm fails to pay within the allotted time, its membership may be suspended or cancelled. In this case, CVEX Markets LLC's membership was cancelled outright, meaning the firm is no longer authorized to conduct securities business as a FINRA member.

The cancellation of a firm's FINRA membership is a significant regulatory event. FINRA membership is required for broker-dealers that wish to operate in the United States securities markets. Without an active membership, a firm cannot legally engage in the sale of securities to the public, participate in underwriting activities, or conduct other broker-dealer functions. The requirement to pay dues and fees is a fundamental obligation of membership, and FINRA treats the failure to meet these obligations seriously because the revenue supports the regulatory infrastructure that protects investors.

For investors and the public, this action serves as an important reminder to verify that any firm they do business with maintains an active FINRA membership in good standing. Investors can check the status of any broker-dealer firm through FINRA's BrokerCheck tool, which is freely available online. A firm whose membership has been cancelled, suspended, or revoked should not be conducting securities business, and investors who encounter such a firm should exercise extreme caution and report the activity to FINRA.

This case also underscores the importance of the regulatory framework that FINRA provides. The dues and fees paid by member firms fund FINRA's examination, enforcement, and investor education programs. When a firm fails to meet these obligations, it raises questions about the firm's financial health and its commitment to operating within the regulatory framework designed to protect investors. Investors who previously did business with CVEX Markets LLC should verify the status of their accounts and ensure their assets are properly accounted for.

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According to FINRA, Kwame Adusei (CRD #6166926) of LaGrangeville, New York, was barred from association with any FINRA member firm effective March 18, 2024, for failure to provide information or keep information current pursuant to FINRA Rule 9552(h).

FINRA Rule 9552(h) is a critical enforcement me...

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According to FINRA, Kwame Adusei (CRD #6166926) of LaGrangeville, New York, was barred from association with any FINRA member firm effective March 18, 2024, for failure to provide information or keep information current pursuant to FINRA Rule 9552(h).

FINRA Rule 9552(h) is a critical enforcement mechanism that allows FINRA to bar individuals from the securities industry when they fail to respond to requests for information. When FINRA's regulatory staff initiates an investigation or examination, registered representatives and associated persons are obligated to cooperate fully and provide requested information in a timely manner. This obligation is a fundamental condition of being registered in the securities industry. Under Rule 9552(h), if a person fails to provide information requested pursuant to FINRA rules, FINRA may issue a notice directing the person to comply. If the individual still fails to provide the requested information within the time specified, they may be automatically barred from the industry.

The bar imposed on Adusei is one of the most severe sanctions available to FINRA. A barred individual is prohibited from associating with any FINRA member firm in any capacity, meaning they cannot work as a registered representative, supervisor, or in any other role at a broker-dealer. This effectively ends the individual's career in the securities industry unless the bar is later lifted through a formal application process, which requires demonstrating that the individual is fit to return to the industry and that allowing their return would not be contrary to the public interest.

For investors, this action highlights the importance of FINRA's regulatory oversight function. The ability to request and obtain information from registered persons is essential to FINRA's mission of protecting investors and maintaining market integrity. When individuals refuse to cooperate with regulatory inquiries, it raises serious concerns about what they may be trying to conceal. Investors should be aware that they can check the disciplinary history of any broker or firm through FINRA's BrokerCheck system.

This case also demonstrates that FINRA takes non-cooperation seriously and is willing to impose the ultimate sanction of a bar to enforce compliance with its information requests. Investors who have worked with Kwame Adusei should review their account records and contact FINRA if they have any concerns about transactions or activities in their accounts. This matter is tracked under FINRA Case #2023079018901.

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According to FINRA, Brittany Anderson (CRD #7581277) of Florence, South Carolina, was barred from association with any FINRA member firm effective March 18, 2024, for failure to provide information or keep information current pursuant to FINRA Rule 9552(h).

FINRA Rule 9552(h) authorizes FINRA to ba...

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According to FINRA, Brittany Anderson (CRD #7581277) of Florence, South Carolina, was barred from association with any FINRA member firm effective March 18, 2024, for failure to provide information or keep information current pursuant to FINRA Rule 9552(h).

FINRA Rule 9552(h) authorizes FINRA to bar individuals who fail to respond to regulatory requests for information. Cooperation with FINRA investigations is not optional for registered representatives and associated persons. It is a mandatory obligation that comes with the privilege of working in the securities industry. When FINRA's Department of Enforcement or other regulatory divisions request information as part of an investigation, examination, or other regulatory proceeding, the individual must comply. Failure to do so triggers a process under Rule 9552(h) in which the individual is given notice and an opportunity to comply before a bar is imposed.

The fact that Anderson was barred rather than merely suspended indicates that she did not respond to the information request even after receiving notice from FINRA. This escalation from a suspension to a permanent bar is significant. Under the Rule 9552 framework, individuals who fail to provide requested information are first subject to a suspension. If they continue to withhold the information, the suspension converts to a bar. A bar is a permanent prohibition on working in any capacity with a FINRA member firm, effectively ending the individual's career in the regulated securities industry.

For investors, this action underscores the protections that the regulatory system provides. FINRA's ability to investigate potential misconduct depends on the cooperation of the individuals and firms it regulates. When a registered person refuses to provide information, it undermines the investigative process and may allow potential harm to investors to go undetected or unremedied. The imposition of a bar ensures that individuals who refuse to cooperate are removed from the industry, thereby protecting the investing public.

Investors who previously worked with Brittany Anderson should review their accounts and transaction history for any irregularities. Any concerns can be reported to FINRA through its investor complaint process. FINRA's BrokerCheck tool provides free access to the disciplinary history of registered brokers and firms, and investors are encouraged to use it regularly. This matter is tracked under FINRA Case #2023078125202.

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