Securities Lawyers Blog
The investment attorneys of Gana Weinstein LLP are investigating a regulatory complaint filed (Disciplinary Proceedings No. 2014039091903) by The Financial Industry Regulatory Authority’s (FINRA) against brokerage firm Caldwell International Securities Corp. [CRD No. 104323], and its employees Greg Caldwell [CRD No. 2816295], Lennie Freiman [CRD No. 1007506], Paul Jacobs [CRD No. 4658235], Alain Florestan [CRD No. 2818942], Alex Etter [CRD No. 2981742], Lucas Lichtman [CRD No. 5542092], Richard Lim [CRD No. 4949289], and Richard Lee [CRD No. 2768039]. FINRA’s allegations are that For more than three and a half years, Respondent Caldwell International Securities Corp. (Caldwell) “put profits before customers, growth before compliance, and subterfuge before transparency.” FINRA alleged Caldwell has a “culture of non-compliance” causing there to be serious sales practice, supervisory, and reporting violations.
Our firm has written several articles on brokers associated with or previously employed by Caldwell concerning similar allegations by customers and regulators. See FINRA Bars Broker Ricardo Fancois During Investigation Into Sales Practices; FINRA Bars Broker Honetta Kao During Investigation Into Sales Practices; FINRA Bars Broker James Starks During Investigation Into Sales Practices; FINRA Bars Broker Marat (a/k/a Matt) Zeltser; FINRA Bars Richard Adams Over Churning Customer Accounts; FINRA Files Complaint Against Chris Fulco Over US Coal Corporation Transactions
FINRA alleged that from December 2010 through July 2014 Caldwell through Greg Caldwell, Lennie Freiman, and Paul Jacobs, failed to enforce a supervisory system reasonably tailored to its business model that allowed many of its brokers to recommend an unsuitable active trading investment strategy that the representatives did not understand and which caused significant financial losses to customers while generating substantial profits for the firm. FINRA also alleged that other brokers at Caldwell were allowed to engage in trading with discretion without authorization, and trading which exceeded the benchmarks for excessive trading and churning without any meaningful supervision of this activity. FINRA found that Caldwell and its principals were aware of virtually all of this misconduct but took no meaningful steps to stop the activity or supervise it because doing so would reduce the commissions and fees being generated from their customers.