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FINRA Bars Broker For Market Manipulation

FINRA barred broker George Johnson from the securities industry for operating a manipulative trading scheme to artificially inflate the market price and trading volume for the common stock of IceWEB, Inc. FINRA additionally sanctioned Christoper Wynne, Johnson's supervisor, suspending him for two years in all capacities, barring him in a principal capacity, and fining him $25,000. Joseph Mahalick, a broker who worked with both Johnson and Wynne, was suspended for six months and fined $20,000 for falsifying firm records and has been barred from the securities industry in another action. All three worked for Meyers Associates L.P. in its Chicago branch during the time of the misconduct. FINRA discovered that over eight days, Johnson manipulated the market for IWEB by recommending that certain of his customers buy at increasingly high and artificially inflated prices while also recommending his other customers sell their shares, often matching trades between his own customers. FINRA also found that Johnson's motives for manipulating the stock [...]

By |February 23rd, 2016|FINRA, Fraud, Press Releases & News|
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Broker Lies About Charging $11M In Commissions For Nontraded REITs and BDCs

FINRA charged a broker for lying to a Native American tribe about the $11 million in commissions he charged when he sold the tribe $190 million in nontraded real estate investment trusts and business development companies. Between June 2011 and January 2015, broker Gopi Krishna Vungarala “regularly lied to his customer, a Native American tribe, regarding investments he recommended,” according to the FINRA complaint. Vungarala served as the unnamed tribe's registered representative as well as its treasury investment manager, according to the complaint. He “fraudulently induced the tribe to invest hundreds of millions of dollars in nontraded REITs and BDCs, without revealing he and his firm received commissions for the sales (usually 7%) or the availability of certain volume discounts.” Also according to the complaint, the tribe bought $190.4 million of illiquid REITs and BDCs and were charged $11.4 million in commissions, which went to his broker-dealer Purshe Kaplan Sterling Investments. Mr. Vungarala was paid $9.6 million – or 84.3% - of those [...]

By |February 9th, 2016|FINRA, Fraud|
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SEC Seeks $2.5M From Texas Attorney For Securities Fraud

Last year, the SEC charged a Texas attorney with defrauding investors with regard to two securities offerings, one pertaining to an oil and gas exploration venture and the other a fracking water filtration business deal. The case was filed in the U.S. District Court for the Northern District of Texas against attorney Gregory G. Jones and Aquaphex Total Water Solutions. The SEC recently filed a motion for summary judgment, stating in its brief that Jones should be ordered to pay a maximum civil penalty of $2,530,000, disgorgement of $985,000, and an additional disgorgement of $480,000 with prejudgment interest of $17,042.39. In its original complaint, the SEC alleged that in 2009 Jones represented a group of European investors who invested about $6 million in an entity called Edwards Exploration. Jones had an agreement with Edwards in which Edwards was to pay him for performing particular services, including providing due diligence with relation to the European investors' shares. The SEC claims Jones [...]

By |January 13th, 2016|Fraud, Press Releases & News, SEC|
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Massachusetts Regulator Charges Securities Firm With Unsuitable Sale To Elderly Client

William Galvin, secretary of the commonwealth of Massachusetts, has charged a securities firm operating at Citizens Bank locations with "dishonest and unethical conduct" for selling an elderly woman funds that were riskier than her stated investment tolerance. Galvin seeks restitution from Citizens Securities for the anonymous investor, who lost roughly $7,000 when she got out of the investment portfolio. Despite indicating a low tolerance for the risk, the investor was allegedly sold aggressive investment strategies, including alternative and emerging market funds, as well as funds that buy high-yield bonds. The Citizens Bank branch where she first met the financial consultant failed to adequately disclose the location's brokerage activities and did not identify who the consultant worked for, leaving the impression that he worked for the bank. "Banks that offer non-bank financial services have an obligation to make clear the distinction between the banking services and the other financial services provided at the same location," Galvin said. "This is particularly important [...]

By |January 8th, 2016|Press Releases & News|
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