Bad Brokers

According to FINRA, Jonathan Arthur Mayer (CRD #6878627), a broker based in Miami Beach, Florida, was sanctioned on January 12, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Mayer was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in al...

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According to FINRA, Jonathan Arthur Mayer (CRD #6878627), a broker based in Miami Beach, Florida, was sanctioned on January 12, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Mayer was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for three months.

FINRA found that Mayer violated rules governing outside business activities (OBAs) by engaging in an outside business without providing his member firm prior written notice. Additionally, Mayer continued operating the outside business even after the firm expressly rescinded its approval of the activity.

The findings stated that Mayer owned and operated a company through which he acted as a business consultant. After belatedly disclosing the activity, Mayer's firm initially approved his OBA. However, the firm later expressly rescinded its approval. Despite this clear rescission, Mayer continued to take on business consulting work, which included business plan creation, financial modeling, strategic planning, market research, and general business advice. Over this period, Mayer received approximately $90,000 in direct compensation from his consulting work. Notably, none of Mayer's outside business activities involved securities or firm customers.

FINRA rules require registered representatives to provide prior written notice to their member firms before engaging in any outside business activity. This requirement exists to ensure firms can evaluate whether the activity could create conflicts of interest, compromise the representative's responsibilities to the firm or its customers, or otherwise be viewed as part of the firm's business. When a firm rescinds its approval, the registered representative is expected to immediately cease the activity.

This case highlights an important principle for investors: the financial professionals who manage your money are subject to regulatory oversight that extends beyond their securities activities. Outside business activities can potentially create conflicts of interest or divert attention from a broker's primary responsibilities to clients. When brokers fail to comply with disclosure requirements, it undermines the transparency that regulators rely upon to protect investors. Investors should be aware that they can check their broker's disciplinary history, including suspensions and other sanctions, through FINRA's BrokerCheck tool at brokercheck.finra.org.

The suspension was in effect from January 16, 2024, through April 15, 2024 (FINRA Case #2020068717401).

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According to FINRA, Taibat Abiola Awokoya (CRD #7416322), based in Dallas, Texas, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Awokoya was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities f...

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According to FINRA, Taibat Abiola Awokoya (CRD #7416322), based in Dallas, Texas, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Awokoya was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for 18 months.

FINRA found that Awokoya violated examination integrity rules by possessing and having access to unauthorized materials while taking the Series 7 General Securities Representative Qualification Exam. The Series 7 is one of the most critical licensing examinations in the securities industry, qualifying individuals to sell a broad range of securities products.

The findings stated that prior to beginning the exam, Awokoya attested that she had read and would abide by the Rules of Conduct governing qualification examinations. These rules are designed to ensure the integrity and fairness of the testing process for all candidates. Despite this attestation, Awokoya possessed and had access to study materials while in the testing center's restroom during an unscheduled exam break.

The Rules of Conduct for representative and principal examinations exist for critical reasons. They require candidates to store all personal items in the locker provided by the test vendor and prohibit accessing, using, or attempting to use any personal items during the exam, including during breaks. These rules ensure that all candidates are evaluated on the same basis and that individuals who pass the exam have demonstrated genuine competency in securities knowledge.

The 18-month suspension reflects the seriousness with which FINRA treats examination integrity violations. When someone cheats on or attempts to gain an unfair advantage during a licensing exam, it undermines the entire framework designed to ensure that financial professionals are qualified to serve investors. Licensing exams are a foundational consumer protection measure. They verify that brokers and representatives possess the minimum knowledge necessary to recommend securities products and handle customer accounts responsibly.

For investors, this case underscores why it is important to verify that your financial professional is properly licensed and has a clean regulatory record. FINRA's BrokerCheck tool allows the public to look up the background of brokers, including any disciplinary history, suspensions, or other regulatory actions. Investors should consider reviewing their broker's record periodically to ensure they are working with someone who has demonstrated both competence and integrity.

The suspension was in effect from February 5, 2024, through August 4, 2025 (FINRA Case #2023078040101).

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According to FINRA, Brad Curtis Brooks (CRD #1584633), based in Frisco, Texas, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Brooks was assessed a deferred fine of $15,000 and suspended from association with any FINRA member firm in all capacities for ...

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According to FINRA, Brad Curtis Brooks (CRD #1584633), based in Frisco, Texas, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Brooks was assessed a deferred fine of $15,000 and suspended from association with any FINRA member firm in all capacities for three months.

FINRA found that Brooks made negligent material misrepresentations and omissions to investors who purchased limited partnership interests in two private placement securities offerings that he controlled, acting in contravention of Section 17(a)(2) of the Securities Act.

The findings stated that Brooks' partner, a former associated person of their member firm, transferred $4.325 million from the proceeds that one entity raised from its investors to the other entity to pay the other entity's expenses. Upon learning of the transfer, Brooks initiated an independent review, restricted access to the bank accounts of the entities, and caused the proceeds to be returned in full. However, Brooks negligently failed to inform investors that money had been transferred out of the project to fund the other entity. These transfers were not a permissible use of investor proceeds as set forth in the entity's private placement memorandum (PPM).

Additionally, Brooks negligently allowed the value of the transfers to be included in supplemental PPMs issued by the other entity as capital raised by the partnership, which overstated the amounts raised. Further, Brooks' partner caused the entities to use approximately $224,000 of investor proceeds to pay expenses of another unrelated entity. While these funds were later returned, Brooks negligently failed to discover and disclose this use of proceeds to investors, making the PPMs' representations about the use of proceeds inaccurate and materially misleading. Brooks did not disclose these issues to the firm's registered representatives selling the investments or to his own customers.

This case illustrates the critical importance of accurate and complete disclosure in private placement offerings. Private placements are exempt from full SEC registration and carry inherent risks, making accurate PPM disclosures essential for investor protection. When investment proceeds are used in ways not described in offering documents, investors lose the ability to make informed decisions about their capital. Even when misrepresentations are negligent rather than intentional, they can cause significant harm to investors who rely on offering documents to evaluate risk.

The suspension was in effect from January 16, 2024, through April 15, 2024 (FINRA Case #2019062479102).

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According to FINRA, Doron Kochavi (CRD #1011155), based in La Canada, California, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Kochavi was fined $10,000 and suspended from association with any FINRA member firm in all capacities for two months.

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According to FINRA, Doron Kochavi (CRD #1011155), based in La Canada, California, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Kochavi was fined $10,000 and suspended from association with any FINRA member firm in all capacities for two months.

FINRA found that Kochavi caused his member firm to make and preserve inaccurate books and records by mischaracterizing securities transactions in a customer's accounts as unsolicited when they were actually solicited by him.

The distinction between solicited and unsolicited transactions is a fundamental aspect of securities regulation. A solicited trade is one where the broker recommends or suggests the transaction to the customer, while an unsolicited trade is one initiated by the customer. This distinction matters greatly for regulatory purposes because solicited trades carry additional suitability obligations for the broker. When a broker recommends a trade, the broker must have a reasonable basis to believe that the recommendation is suitable for that particular customer based on their investment profile, financial situation, and objectives.

By marking solicited trades as unsolicited, a broker effectively circumvents these suitability requirements and creates a false record that could make it more difficult for regulators to identify patterns of unsuitable recommendations. It also makes it harder for the firm to properly supervise the broker's activities and fulfill its own compliance obligations.

Accurate books and records are a cornerstone of securities regulation. FINRA and the SEC rely on these records to monitor broker conduct, investigate complaints, and protect investors. When a broker causes a firm to maintain inaccurate records, it undermines the entire supervisory framework designed to keep markets fair and protect the investing public.

For investors, this case offers an important reminder to review trade confirmations carefully. Each confirmation should indicate whether the trade was solicited or unsolicited. If you notice that a trade you did not initiate is marked as unsolicited, or if a trade your broker recommended is marked the same way, this could be a red flag worth bringing to the attention of the firm's compliance department. Investors should always feel empowered to ask questions about their account activity and to verify that the records associated with their accounts are accurate.

The suspension was in effect from February 5, 2024, through April 4, 2024 (FINRA Case #2021071099403).

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According to FINRA, Lee Harold Rycraft (CRD #5770413), based in Watertown, South Dakota, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Rycraft was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capac...

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According to FINRA, Lee Harold Rycraft (CRD #5770413), based in Watertown, South Dakota, was sanctioned on January 16, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Rycraft was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for three months.

FINRA found that Rycraft forged or falsified the electronic signatures of customers, some of whom were seniors, on documents. The forged documents included money transfer forms and electronic prospectus delivery forms, which were required books and records of Rycraft's member firm. As a result, Rycraft caused his member firm to maintain inaccurate books and records.

The findings stated that while all of the underlying transactions were authorized and no customers complained, two customers' names were signed on documents without the customers' prior permission. In addition, Rycraft falsely attested in annual compliance questionnaires that he had not signed or affixed another person's signature on a document.

Forging customer signatures, even when the underlying transactions are authorized, is a serious violation of FINRA rules and securities regulations. Customer signatures serve as verification that the customer has reviewed and agreed to the terms of a transaction or document. When a broker signs on behalf of a customer without permission, it removes this critical safeguard and deprives the customer of the opportunity to review the document before it is submitted.

The involvement of senior customers in this case adds another layer of concern. FINRA has placed increasing emphasis on the protection of senior investors, recognizing that they may be more vulnerable to financial exploitation. Rules and regulations governing the handling of senior customer accounts exist specifically to ensure that this population receives additional protections.

False attestations on compliance questionnaires compound the seriousness of the violation. Compliance questionnaires are a key tool firms use to monitor the behavior of their registered representatives. When a broker provides false answers on these forms, it directly undermines the firm's ability to detect and address potential problems before they escalate.

For investors, especially seniors, this case serves as a reminder to always review documents carefully before they are submitted and to ensure that your signature is on any document that requires it. If you discover that someone has signed documents on your behalf without your knowledge or permission, report the matter to the firm's compliance department and consider filing a complaint with FINRA.

The suspension was in effect from January 16, 2024, through April 15, 2024 (FINRA Case #2022074091001).

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According to FINRA, Rajen Duggal (CRD #6505933), based in Modesto, California, was sanctioned on January 17, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Duggal was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for 3...

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According to FINRA, Rajen Duggal (CRD #6505933), based in Modesto, California, was sanctioned on January 17, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Duggal was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for 30 days.

FINRA found that Duggal engaged in an outside business activity (OBA) without providing prior written notice to, and receiving his member firm's approval of, the outside activity. The findings stated that Duggal began working with a startup business in an investor-relations role and had the expectation that his efforts on behalf of this startup would lead to compensation. During the time that Duggal worked for the startup and remained associated with his firm, he received approximately $80,000 in compensation from the startup.

In addition to failing to disclose the OBA, Duggal completed a firm questionnaire in which he falsely stated that he was not engaged in any outside business activities, actively concealing from the firm his work for the startup. Duggal eventually disclosed the OBA to his firm, which resulted in his termination.

FINRA Rule 3270 requires all associated persons to provide prior written notice to their member firm before engaging in any business activity outside the scope of their relationship with the firm. This rule is a critical component of the regulatory framework because it enables firms to evaluate potential conflicts of interest and to supervise activities that could affect their customers. An investor-relations role at a startup is particularly noteworthy because it could involve activities that intersect with securities regulations, such as communications with potential investors.

The false statement on the firm questionnaire is an aggravating factor in this case. Compliance questionnaires are designed as internal controls to help firms identify and manage risk. When brokers provide dishonest answers, they compromise the firm's compliance program and potentially expose customers to unmonitored risks.

For investors, this case is a reminder that financial professionals are required to disclose their outside activities to their employers. This transparency requirement exists to protect you. If your broker is engaged in undisclosed outside activities, particularly ones involving investor relations, it could create conflicts of interest that affect the advice you receive. Investors can use FINRA's BrokerCheck tool to review their broker's background and identify any history of regulatory actions.

The suspension was in effect from February 5, 2024, through March 5, 2024 (FINRA Case #2023078112801).

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According to FINRA, Lincoln Lucas Mason (CRD #7057393), based in Arnolds Park, Iowa, was sanctioned on January 17, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Mason was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities ...

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According to FINRA, Lincoln Lucas Mason (CRD #7057393), based in Arnolds Park, Iowa, was sanctioned on January 17, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Mason was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for 90 days.

FINRA found that Mason engaged in an outside business activity (OBA) without providing prior written notice to, and receiving his member firm's approval of, the outside activity. Mason created and was the sole member of an LLC for the purpose of holding a commercial property that he owned. He intended to transfer his property into the company and use it as his firm branch office, entering into a lease agreement with the firm whereby it would pay him rent through the company.

The firm became aware of the company through its compliance program and initially approved Mason's OBA. Later, Mason transferred his property into the company and contacted the firm to establish it as his branch office. The firm advised Mason that properties owned by associated persons could not be used as branch offices.

Rather than complying, Mason provided false information and fictitious documents to the firm to conceal the true nature of his outside activity and his ownership interest in the company and its property. Mason created documents purporting to show the transfer of his interest in the company to a third party, falsely represented that he had sold the office building, and provided these false transfer documents to the firm in an effort to prove he no longer owned the company or the property. As a result, the firm unknowingly entered into a lease agreement with the company and allowed Mason to use his own property as a branch office.

Even when the firm's compliance department continued to request additional information, Mason falsely claimed the only property the LLC held was a storage facility and that the commercial building had been sold, neither of which was true. The firm terminated the lease agreement and Mason's registration shortly thereafter. Mason received no rent payments under the agreement.

This case underscores the importance of honesty in dealings with member firms. Providing false documents and fictitious information to a firm is a serious violation that erodes the trust essential to the broker-dealer relationship. Investors should be aware that the regulatory framework depends on truthful reporting by financial professionals, and violations like these can be identified through FINRA's BrokerCheck.

The suspension was in effect from February 5, 2024, through May 4, 2024 (FINRA Case #2022073651801).

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According to FINRA, Lucas R. Hales (CRD #6258497), based in Austin, Texas, was sanctioned on January 18, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Hales was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm in all capacities for 12 mo...

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According to FINRA, Lucas R. Hales (CRD #6258497), based in Austin, Texas, was sanctioned on January 18, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Hales was assessed a deferred fine of $10,000 and suspended from association with any FINRA member firm in all capacities for 12 months.

FINRA found that Hales participated in private securities transactions totaling $3 million without disclosing his participation to his member firm at any time, and without seeking or receiving the firm's written approval to participate in these transactions.

The findings stated that Hales and two other individuals established an LLC to act as a vehicle for an investment in a technology company. Hales served as the entity's sole manager. He participated in the transactions by reviewing investors' subscription documents and serving as the designated point of contact for investors. Hales also participated in the entity's investment in the technology company by managing accounts and executing documents on behalf of the entity. The entity was entitled to collect carried interest as selling compensation after the investment in the technology company closed, and it paid Hales a share of this carried interest.

FINRA Rule 3280 (commonly known as the "selling away" rule) requires associated persons to provide prior written notice to their member firm before participating in any private securities transaction. If the transaction involves compensation, the associated person must receive the firm's written approval before proceeding. This rule exists because private securities transactions that occur outside the supervision of a member firm create significant risks for investors. Without firm oversight, there is no independent review of the suitability of the investment for each investor, no compliance monitoring, and limited recourse for investors if something goes wrong.

The 12-month suspension reflects the seriousness of the violations. The $3 million in total transactions and Hales' central role as sole manager of the investment vehicle, point of contact for investors, and recipient of carried interest demonstrate a sustained pattern of activity conducted entirely outside the view of his member firm.

For investors, this case is an important reminder to verify whether the investments being offered to you are authorized by the broker's member firm. Investors should be cautious about any investment opportunity presented by a financial professional that does not appear on their firm's official account statements. If you are unsure, contact the firm directly to confirm that the transaction is being conducted through proper channels.

The suspension was in effect from February 5, 2024, through February 4, 2025 (FINRA Case #2022076767001).

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According to FINRA, Tory A. Duggins (CRD #4556340), based in the Bronx, New York, was sanctioned on January 19, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Duggins was suspended from association with any FINRA member firm in all capacities for 18 months. In light of Duggins' fina...

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According to FINRA, Tory A. Duggins (CRD #4556340), based in the Bronx, New York, was sanctioned on January 19, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Duggins was suspended from association with any FINRA member firm in all capacities for 18 months. In light of Duggins' financial status, no monetary sanction was imposed.

FINRA found that Duggins willfully violated the Best Interest Obligation under Regulation BI (Rule 15l-1 of the Securities Exchange Act) by recommending a series of excessive trades to customers, some of whom were seniors. The findings stated that Duggins' customers relied on his advice and routinely followed his recommendations, giving him de facto control over their accounts.

Duggins' trading resulted in high cost-to-equity ratios and turnover rates that were well above the traditional guideposts of 20 percent and six, respectively, as well as significant losses. Specifically, Duggins' trading in the customers' accounts generated total trading costs of $444,176, including $343,416 in commissions, and caused $235,494 in total realized losses. The trading was found to be excessive, unsuitable, and not in the best interest of the customers given their investment profiles.

FINRA also found that Duggins willfully failed to report a written customer complaint alleging a sales practice violation on his Form U4. One of the customers sent Duggins an email complaining that he excessively traded the customer's account and seeking $17,500 in compensatory damages. Duggins received and read the email but did not forward the customer complaint to his member firm's compliance department as required by the firm's policies.

Excessive trading, sometimes called "churning," is one of the most harmful forms of broker misconduct. It occurs when a broker executes trades in a customer's account primarily to generate commissions rather than to benefit the customer. Regulation BI, which took effect in June 2020, strengthened the obligations brokers owe to their customers by requiring that recommendations be in the customer's best interest.

The failure to disclose a customer complaint is separately troubling. Form U4 disclosures are a critical tool for investor protection because they provide transparency about a broker's history. When brokers conceal complaints, they deprive future customers and regulators of important information.

Investors should monitor their accounts for signs of excessive trading, including unexpectedly high turnover, frequent buying and selling of the same securities, and trading costs that significantly erode returns. Reviewing account statements regularly is one of the best defenses against this type of misconduct.

The suspension was in effect from February 20, 2024, through August 19, 2025 (FINRA Case #2018056490309).

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According to FINRA, Kimberly Ann Carson (CRD #5576304), based in San Jose, California, was sanctioned on January 24, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Carson was fined $5,000 and suspended from association with any FINRA member firm in all capacities for three months.
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According to FINRA, Kimberly Ann Carson (CRD #5576304), based in San Jose, California, was sanctioned on January 24, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Carson was fined $5,000 and suspended from association with any FINRA member firm in all capacities for three months.

FINRA found that Carson obtained a loan of $250,000 from her customer without notifying her member firm of the lending arrangement and without obtaining prior approval for the loan. The findings stated that Carson had a personal relationship outside of their broker-client relationship with the customer.

The loan was made pursuant to a promissory note, which was signed by Carson's husband, and which required monthly interest-only payments at a fixed 10 percent annual rate for a 10-year term. The principal sum was due at the expiration of the 10-year term. The loan amount was deposited into a joint bank account owned by Carson and her husband.

Carson made monthly payments to the customer in accordance with the terms of the promissory note for nearly two years, until failing to make a timely payment. The following month, Carson resumed making timely payments. Carson eventually repaid the loan in full after the customer commenced litigation against her, her husband, and the firm.

FINRA Rule 3240 governs borrowing and lending arrangements between registered representatives and their customers. The rule generally prohibits such arrangements unless the firm has written procedures allowing them and the arrangement meets specific conditions. Even where a personal relationship exists between the broker and customer, the firm must be notified and must approve the arrangement. These requirements exist because financial relationships between brokers and their customers create inherent conflicts of interest. A broker who owes money to a customer may be motivated to prioritize their own financial interests over the customer's investment needs.

The fact that the arrangement led to litigation underscores the risks inherent in broker-customer lending. Despite the personal relationship, the financial entanglement created friction that ultimately required legal intervention to resolve.

For investors, this case highlights the importance of understanding the boundaries that should exist in a broker-client relationship. While personal relationships can and do exist alongside professional ones, borrowing and lending arrangements introduce financial conflicts that can compromise the quality of advice you receive. If a financial professional asks to borrow money from you, consider this a significant red flag and report it to the firm's compliance department.

The suspension was in effect from February 20, 2024, through May 19, 2024 (FINRA Case #2022074541501).

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