FINRA Disciplinary Actions


As members of Financial Industry Regulatory Authority (FINRA), brokerage firms and its financial advisors are required to submit themselves to binding arbitration as a way of resolving disputes with customers. The FINRA arbitration dispute resolution process is designed to protect investors from financial advisor misconduct which results in investment losses. Failure to comply with FINRA rules and regulations concerning sales practice rules and regulations can result in a securities arbitration claim for damages to recover investment losses.

FINRA awards, fines and sanctions are disciplinary actions taken against brokerage firms and its financial advisors for violating FINRA sales practice rules and regulations. Failure of member brokerage firms to supervise the activities of its financial advisors in compliance with the FINRA sales practice rules and regulations can result in awards, fines and sanctions.

FINRA awards, fines and sanctions are reported as a public record to help inform the investing public against similar sales practices in customer accounts. Customer complaints, arbitration awards, regulatory fines and sanctions against brokerage firms and financial advisor are included in FINRA records. You can learn more information about FINRA Broker Check.

August 2016

Source: FINRA, Financial Industry Regulatory Authority, Inc. 2016
Full Disciplinary Reports Available to the public at: www.finra.org

Financial Advisors

Edward Joseph Bosch Sr., Florence, Kentucky
Armando Fernandez, Miami Shores, Florida
Brandon Daryl Gioffre, South Salem, New York
Francisco Gabriel Hervella, Miami, Florida
Lawrence Michael LaBine, Fountain Hills, Arizona
Roshan A. Loungani, Fairfax, Virginia
Dennis Mark Adam Merritt, Palm Harbor, Florida
Andres Francisco Talero, Miami, Florida
James David Williams Jr., Saint Petersburg, Florida
Glenn Robert King, Marlboro, New Jersey

Brokerage Firms

Centaurus Financial, Inc., Anaheim, California
Newbridge Securities Corporation, Boca Raton, Florida
WFG Investments, Inc., Dallas, Texas
E*Trade Securities LLC, Menlo Park, California
Oppenheimer & Co. Inc., New York, New York


Edward Joseph Bosch Sr. (CRD #1127469, Florence, Kentucky)

Submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Bosch consented to the sanction and to the entry of findings that during the course of a FINRA investigation into allegations that he converted customer funds and generated false account statements to conceal his misconduct, he refused to respond to FINRA’s request for documents and information. The findings stated that Bosch acknowledged that he received FINRA’s request and would not produce the information requested at any time.
FINRA Case #2016049364301


Armando Fernandez (CRD #3079602, Miami Shores, Florida)

Submitted an AWC in which he was fined $7,500 and suspended from association with any FINRA member in any capacity for 20 business days. Without admitting or denying the findings, Fernandez consented to the sanctions and to the entry of findings that he exercised discretion in a customer’s account and executed related trades without the customer’s written authorization and without obtaining his member firm’s prior written acceptance of the account as discretionary. The findings stated that Fernandez mismarked order tickets as unsolicited when, in fact, the trades were solicited, thereby causing the firm to maintain inaccurate books and records. The suspension is in effect from August 1, 2016, through August 26, 2016.
FINRA Case #2012034556901


Brandon Daryl Gioffre (CRD #2854741, South Salem, New York)

Submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Gioffre consented to the sanction and to the entry of findings that he participated in private securities transactions without providing prior notice to his member firm. The findings stated that Gioffre received commissions totaling $100,000 for the sale of approximately $2 million of securities to purchasers, who lost their entire investments. Gioffre recommended to several people, including a customer of his firm, an investment in a private placement that was not offered through the firm. Gioffre created the false impression that the firm sanctioned the private placement by meeting with the issuer and potential investors at the firm’s offices and using his firm-issued email address to communicate with the issuer and potential investors.
FINRA Case #2015046448701


Francisco Gabriel Hervella (CRD #2521560, Miami, Florida)

Submitted an AWC in which he was assessed a deferred fine of $50,000 and suspended from association with any FINRA member in any capacity for two years. Without admitting or denying the findings, Hervella consented to the sanctions and to the entry of findings that he engaged in undisclosed and unapproved outside business activities as the 50 percent owner of a British Virgin Islands (BVI) entity without providing written notice or otherwise disclosing his ownership interest to his member firm. The findings stated that Hervella acted on behalf of the BVI entity as the director of a limited partnership domiciled in New Zealand, in which his role was that of a signatory, without providing written notice or otherwise disclosing to the firm his actions, which were outside the scope of his employment at the firm. Hervella’s firm did not approve his involvement with the entities. The findings also stated that Hervella participated in an advisory capacity in undisclosed private securities transactions with institutional customers totaling more than $250 million without providing prior written notice or receiving his firm’s approval for the transactions. Hervella structured and implemented transactions in two South American counties in which foreign institutional customers used their currency holdings to purchase debt securities. Hervella was compensated more than $2 million for his participation. The suspension is in effect from June 20, 2016, through June 19, 2018.
FINRA Case #2015044201103


Lawrence Michael LaBine (CRD #1279935, Fountain Hills, Arizona)

Submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, LaBine consented to the sanction and to the entry of findings that he made fraudulent misrepresentations and omissions of material facts to customers in connection with the sale of senior debentures (Series D) issued by a company that developed software for real estate management companies. The findings stated that LaBine was receiving regular updates about the company’s poor financial condition from senior management at the company and the company’s lead investment banker, and had arranged to receive compensation and other valuable consideration from the company such as a seat on its board of directors, for meeting Series D fundraising targets. The information about the company’s perilous financial condition and LaBine’s personal incentive to sell Series D was material to the investors, yet LaBine failed to disclose this information to these customers when he made his recommendations. The company ultimately filed for bankruptcy. LaBine also made fraudulent misrepresentations and omissions of material fact to customers in connection with the sale of securities of an entity he had formed with others in an effort to acquire the assets of the bankrupt company. As a result of his conduct, LaBine willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and FINRA Rules 2010 and 2020, and failed to comply with Section 17(a)(1) of the Securities Act.

The findings also stated that LaBine made unsuitable sales of non-traded real estate investment trusts (REITs) and other alternative investments, including Series D and his entity’s securities, to customers who were elderly and/or inexperienced investors. LaBine’s recommendations of Series D, his entity’s securities, REITs and other alternative investments to the customers were unsuitable, given that the investments were illiquid, hard to value, complex and high risk. LaBine did not have a reasonable basis to believe the securities he recommended were suitable in light of the customers’ investment objectives and their overall financial circumstances, including net worth, income, risk tolerance and investment experience. Three of the customers had limited financial means and two did not meet suitability standards specified in the prospectuses for the non-traded REITs that LaBine recommended and sold to them. LaBine earned high commissions from the sales of these securities to his customers. No findings were made regarding the alternative charge of allegations of making negligent misrepresentations and omissions of material facts to customers and failing to comply with Sections 17(a)(2) and (a)(3) of the Securities Act.
FINRA Case #2009019605401


Roshan A. Loungani (CRD #4256993, Fairfax, Virginia)

Submitted an AWC in which he was suspended from association with any FINRA member in any capacity for two months and ordered to pay $69,901, plus interest, in restitution to a customer. In light of Loungani’s financial status, no fine has been imposed. Without admitting or denying the findings, Loungani consented to the sanctions and to the entry of findings that he recommended and effected unsuitable investments for customers totaling approximately $658,000 involving the purchase of limited partnership interests in hedge funds that he created and managed, which employed a high-risk trading strategy and use of aggressive options trading. The findings stated that these investments were not suitable for the customers based on their investment objectives and risk tolerances, and resulted in an unsuitable concentration of the customers’ net worth. The suspension is in effect from June 20, 2016, through August 19, 2016.
FINRA Case #2013037488701


Dennis Mark Adam Merritt (CRD #1748115, Palm Harbor, Florida)

Submitted an Offer of Settlement in which he was suspended from association with any FINRA member in any capacity for four months. In light of Merritt’s financial status, no monetary sanction has been imposed. Without admitting or denying the allegations, Merritt consented to the sanctions and to the entry of findings that he participated in private securities transactions without providing prior written notice to his member firm. The findings stated that at the time Merritt recommended that customers purchase units of the company, he had not conducted an adequate investigation upon which to make a determination that the company was a suitable investment for any investor, and did not have a reasonable basis to recommend the company to any customer. Merritt never reviewed the company’s financial projections covering an unspecified 24-month period, did not conduct any research on its product, did not obtain information on its executives, did not adequately review the company’s investment summary in order to determine what a customer would own after purchasing a unit as defined by the Articles of Incorporation, and never requested, obtained or reviewed other documents referenced in the investment summary that related to a business plan, product development specifications, technology and industry research, and marketing and sales strategies, all of which could be made available on request. The findings also stated that Merritt completed a firm annual attestation in which he falsely affirmed that he was complying with the firm’s private securities transactions policy. The suspension is in effect from July 5, 2016, through November 4, 2016.
FINRA Case #2013036962201


Andres Francisco Talero (CRD #4281352, Miami, Florida)

Submitted an AWC in which he was assessed a deferred fine of $50,000 and suspended from association with any FINRA member in any capacity for two years. Without admitting or denying the findings, Talero consented to the sanctions and to the entry of findings that he engaged in undisclosed and unapproved outside business activities as the 50 percent owner of a BVI entity without providing written notice or otherwise disclosing his ownership interest to his member firm. The findings stated that Talero acted on the BVI entity’s behalf as the director of a limited partnership domiciled in New Zealand, in which his role was that of a signatory, without providing written notice or otherwise disclosing to the firm his actions, which were outside the scope of his employment at the firm. Talero’s firm did not approve his involvement with the entities. The findings also stated that Talero participated in an advisory capacity in undisclosed private securities transactions with institutional customers totaling more than $250 million without providing prior written notice or receiving approval from his firm for the transactions. Talero structured and implemented transactions in two South American countries in which foreign institutional customers used their currency holdings to purchase debt securities. Talero was compensated more than $2 million for his participation. The suspension is in effect from June 20, 2016, through June 19, 2018.
FINRA Case #2015044201102


James David Williams Jr. (CRD #2987409, Saint Petersburg, Florida)

Submitted an AWC in which he was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in any capacity for three months. Without admitting or denying the findings, Williams consented to the sanctions and to the entry of findings that he opened accounts for customers by direct application-way basis with an investment company and purchased mutual funds without providing written notice to his member firm of his participation in the transactions. The findings stated that Williams failed to obtain the firm’s approval for these transactions and failed to ensure that the firm supervised the transactions. Williams received compensation in connection with the transactions. The suspension is in effect from June 20, 2016, through September 19, 2016.
FINRA Case #2014040409901


Glenn Robert King (CRD #2191091, Marlboro, New Jersey)

Was barred from association with any FINRA member in any capacity. The sanction was based on findings that King fraudulently misrepresented and omitted material facts to customers, recommended and executed unsuitable transactions in customer accounts, and exercised discretion in customer accounts without authority and his member firm’s approval. The findings stated that King used telephone and email to knowingly and willfully make numerous false statements to customers, and omitted material information in connection with his sales of UITs to the customers. King sold UITs to elderly and retired customers of the firm by misrepresenting to them that he was offering safe, high-yield, tax-free bonds and CDs, and omitting material information about the products that he actually sold to the customers. King also omitted many of the features and risks of UITs from his sales pitches to firm customers. Additionally, King failed to disclose to firm customers the sales charges and costs associated with the UITs that they purchased or affirmatively misrepresented to them that he would not charge commission. King recommended bonds to his customers, but instead purchased UITs that possessed features that he failed to disclose. King received $38,000 in commission from these sales. As a result of this conduct, King violated Section 10(b) of the Exchange Act and Rule 10b-5, FINRA Rule 2020 and NASD Rule 2120.

The findings also stated that King engaged in excessive and unsuitable short-term trading of long-term investments, such as UITs and CEFs, in the accounts of firm customers. King’s trading was quantitatively and qualitatively unsuitable. King’s frenetic trading was inconsistent with their objectives and financial circumstances, and resulted in customer losses of approximately $163,000. King’s misconduct was intentional and resulted in his monetary gain of approximately $210,000 in commissions. King did not have reasonable grounds to believe that the number of CEF and UIT transactions that he executed in the customers’ accounts were not excessive. The findings also included that King exercised discretion in customer accounts by effecting trades in their accounts, including transactions involving UITs and CEFs, without obtaining prior written authorization from those customers. King also failed to obtain the firm’s written acceptance of the accounts as discretionary. In fact, the firm prohibited the use of discretion by its representatives. The decision has been appealed to the NAC and the sanction is not in effect pending the appeal.
FINRA Case #2015044444801


Centaurus Financial, Inc. (CRD #30833, Anaheim, California)

Submitted an AWC in which the firm was censured, fined $100,000 and required to pay $85,281.62 in restitution to customers. The firm has paid restitution to all affected customers. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findingsthat it failed to identify and apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (UITs), resulting in customers paying excessive sales charges of approximately $85,281.62. The findings stated that the firm failed to establish, maintain, and enforce a supervisory system and WSPs reasonably designed to ensure customers received sales charge discounts on all eligible UIT purchases. The firm relied primarily on its registered resentatives to apply appropriate UIT sales charge discounts to customer purchases, but did not ensure that the sales charge discounts were identified and calculated accurately.
FINRA Case #2014041676601


Newbridge Securities Corporation (CRD #104065, Boca Raton, Florida)

Submitted an AWC in which the firm was censured, fined $115,000 and required to pay $188,803.99 in restitution to customers. The firm has paid full restitution, plus statutorily calculated interest, and provided proof of payment to FINRA. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs, resulting in customers paying excessive sales charges of approximately $172,835.29. The findings stated that the firm failed to establish, maintain, and enforce a supervisory system and adequate WSPs reasonably designed to ensure customers received sales charge discounts on all eligible UIT purchases. The firm adopted a new UIT trade process that representatives must adhere to which is now reflected in the firm’s WSPs. Prior to that, the firm had no WSPs in place specific to UIT discounts.
FINRA Case #2014042542501


WFG Investments, Inc. (CRD #22704, Dallas, Texas)

Submitted an AWC in which the firm was censured, fined $65,000 and required to pay $75,563.62 in restitution to customers. The firm has paid restitution to all affected customers. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs, resulting in customers paying excessive sales charges of approximately $68,975. The findings stated that the firm failed to establish, maintain, and enforce a supervisory system and WSPs reasonably designed to ensure customers received sales charge discounts on all eligible UIT purchases. The firm failed to ensure that purchases were properly coded in its clearing firm’s system, and relied primarily on its clearing firm to aggregate same day purchases for applicable volume discounts.
FINRA Case #2014041680101


E*Trade Securities LLC (CRD #29106, Menlo Park, California)

FINRA Fines E*Trade Securities LLC $900,000 for Supervisory Violations Related to Best Execution and Protection of Customer Order Information

FINRA censured and fined E*Trade Securities LLC $900,000 for failing to conduct an adequate review of the quality of execution of its customers’ orders and for supervisory deficiencies concerning the protection of customer order information.

E*Trade provides online securities investing and trading services for retail customers, and routes its customers’ orders to various exchanges and non-exchange market centers. Firms routing customer orders are required to assess the quality of competing markets to which it directs order flow. Accordingly, the firms are required to periodically conduct “regular and rigorous reviews” of the quality of the executions of its customers’ orders to determine whether any material differences in execution quality exist among the markets trading the security. In an effort to satisfy this obligation, E*Trade established a Best Execution Committee to review execution quality it received on its customers’ orders.

FINRA found that, E*Trade’s Best Execution Committee lacked sufficiently accurate information to reasonably assess the execution quality it provided its customers. E*Trade’s Best Execution Committee also failed to take into account internalized order flow sent to its affiliated broker-dealer market maker G1 Execution Services (G1X) and failed to adequately consider the actual execution quality provided by the market centers to which it routed orders. In addition, E*Trade regularly accepted requests from G1X to change prioritization in E*Trade’s order routing system and to redirect certain order flow, without determining whether these changes would improve the quality of execution received by its customers.

FINRA also found that E*Trade did not have adequate systems and controls in place to ensure that there was no misuse of confidential customer order information by individuals dually registered with E*Trade and G1X.

Thomas Gira, FINRA Executive Vice President, and Head of Market Regulation, said, “This action serves to remind firms that they must remain diligent in ascertaining the best market for their customers, and must conduct regular and rigorous reviews of their routing decisions to ensure their best execution obligations are met. This needs to be a substance over form review, not a form over substance review. This matter further underscores that firms must have real systems and processes in place to ensure that confidential customer information is protected.”

In concluding this settlement, E*Trade neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.

FINRA’s investigation was conducted by the Department of Market Regulation.
FINRA Case #2013036881501


Oppenheimer & Co. Inc. (CRD #249, New York, New York)

FINRA Sanctions Oppenheimer & Co. $2.9 Million for Unsuitable Sales of Non-Traditional ETFs and Related Supervisory Failures

FINRA fined Oppenheimer & Co. Inc. $2.25 million and ordered the firm to pay restitution of more than $716,000 to affected customers for selling leveraged, inverse and inverse-leveraged ETFs (non-traditional ETFs) to retail customers “>without reasonable supervision, and for recommending non-traditional ETFs that were not suitable.

In August 2009, in response to FINRA Regulatory Notice 09-31, which advised brokerdealers of the risks and inherent complexities of certain non-traditional ETFs, Oppenheimer instituted policies prohibiting its representatives from soliciting retail customers to purchase non-traditional ETFs, and also prohibited them from executing unsolicited nontraditional ETF purchases for retail customers unless the customers met certain criteria, e.g., the customer had liquid assets in excess of $500,000. Oppenheimer, however, failed to reasonably enforce these policies; thus, representatives continued to solicit retail customers to purchase non-traditional ETFs and continued to execute unsolicited non-traditional ETF transactions even though the customers did not meet Oppenheimer’s stated criteria. From August 2009 through September 30, 2013, more than 760 Oppenheimer representatives executed more than 30,000 non-traditional ETF transactions totaling approximately $1.7 billion for customers.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, “Written procedures are worthless unless accompanied by a program to enforce them. While Oppenheimer’s procedures prohibited solicitation of non-traditional ETFs, the absence of any meaningful compliance effort resulted in its representatives continuing to solicit unsuitable non-traditional ETF purchases, including a number involving elderly investors.”

In addition, FINRA found that Oppenheimer did not establish an adequate supervisory system to monitor the holding periods for non-traditional ETFs. The firm failed to employ any surveillance or exception reports to effectively monitor the holding periods for nontraditional ETFs, so certain retail customers held non-traditional ETFs in their accounts for weeks, months and sometimes years, resulting in substantial losses.

FINRA also found that Oppenheimer failed to conduct adequate due diligence regarding the risks and features of non-traditional ETFs and, as a result, did not have a reasonable basis to recommend these ETFs to retail customers. Similarly, Oppenheimer representatives solicited and effected non-traditional ETF purchases that were unsuitable for specific customers. For example:

An 89-year conservative customer with annual income of $50,000 held 96 solicited nontraditional ETF positions for an average of 32 days (and for up to 470 days), resulting in a net loss of $51,847.

A 91-year conservative customer with an annual income of $30,000 held 56 solicited nontraditional ETF positions for an average of 48 days (and for up to 706 days), resulting in a net loss of $11,161.

A 67-year conservative customer with an annual income of $40,000 held two solicited nontraditional ETF positions in her account for 729 days, resulting in a net loss of $2,746.

In concluding this settlement, Oppenheimer & Co. Inc. neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
FINRA Case #2013038180801

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