promissory notes

Broker Robert Acri Barred Over Failure to Respond to FINRA Investigation

May 30, 2014 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently barred broker Robert Acri (Acri) concerning allegations that in December 2013, and January 2014, Acri failed to fully respond to a Rule 8210 request for documents and information concerning Acri’s sale of alternative investments and promissory notes.

Acri first entered the securities industry in 1988. From December 2007 through April 2009, Acri was associated with Chicago Investment Group, LLC. After that, he was representative with Spyglass Securities, LLC from June 2010 through June 2011. Acri was last associated with World Equity Group, Inc. from June 25, 2012 through June 6, 2013. World Equity Group terminated Acri by a Form U5 filed on June 10, 2013.

According to Acri’s BrokerCheck Acri listed his outside business activities as being involved in The Synergy Fund, Synergy Private Capital Fund, Kam Private Fund all of which is listed as investment related. In addition, the disclosures state that Acri is the president of IRCA Coporation.

FINRA Fines Triad Advisors and Securities America for Failure to Supervise Issuance of Consolidated Reports

April 24, 2014 | by Staff Attorney

On March 12, 2014, the Financial Industry Regulatory Authority (FINRA) announced that it sanctioned and fined Triad Advisors and Securities America, $650,000 and $625,000, respectively, for failing to supervise the use of consolidated reporting systems, after brokers from the firms inaccurately represented the value of some customer holdings, often inflating their overall worth.

Triad Advisors and Securities America, both registered broker dealers, had internal systems designed to generate consolidated reports—documents intended to combine most, if not all, of a customer’s financial holdings, regardless of where those assets or accounts are held. These reports do not replace account statements, but rather supplement the more traditional document. These two broker dealers, however, maintained consolidated report systems that allowed their respective brokers and representatives to manually create, rather than automatically generate, consolidated reports. In doing so, representatives from Triad and Securities America were able to customize the reports by manually inputting the data, entering asset values for accounts held away from the firm before providing the reports to customers.

According to FINRA, over the last few years, both firms regularly permitted their advisors to use these highly customizable reporting software systems, but in doing so, failed to maintain the proper supervisions. The lack of supervision, says FINRA, led to clients inadvertently, or in some cases intentionally, receiving inaccurate and misleading account information.

Three Rockwell Global Capital Brokers Accused of Securities Misconduct by Customers

April 3, 2014 | by Staff Attorney

Rockwell Global Capital LLC (Rockwell) brokers Robert E. Lee Jr. (Robert Lee), Douglas Guarino (Guarino), and Lawrence Lee (Lee) have been the subject of at least 29 combined customer complaints. All three brokers have been accused by clients of churning their accounts and making unsuitable investment recommendations.

Robert Lee first became registered in 1988. From March 2005, through November 2009, Robert Lee was registered through former FINRA member firm GunnAllen. Since November 2009, Robert Lee has been registered through Rockwell.

In August 2013, Robert Lee accepted a settlement with FINRA barring the broker from associating with any broker dealer. FINRA found that between September 25, 2008, and October 31, 2008, while Robert Lee was registered with GunnAllen, Robert Lee failed to follow a customer’s instructions regarding the purchase of three securities. FINRA also found that between September 2008, and at least December 2009, while Robert Lee was registered with two member firms, Robert Lee made material misrepresentations and omissions to a customer regarding the status of their investments. Specifically, FINRA found that Robert Lee misrepresented to the client that certain investments had earned $49,591 in dividends when in fact the investments did not exist and no dividends had been earned.

Broker William Hogue Suspended Over Science Fitness Promissory Note Sales

January 31, 2014 | by Staff Attorney

Broker William Larry Hogue, Jr. (Hogue) has been suspended and fined by the Financial Industry Regulatory Authority (FINRA) concerning allegations that Hogue participated in an outside business activity without providing written notice to Cambridge Investment Research (Cambridge) his employing brokerage firm in violation of FINRA rules. Additionally, FINRA alleged that Hogue participated in private securities transactions by selling promissory notes totaling over $1 million to at least nine investors.

Hogue entered the securities industry in March 2001. In March 2005, Hogue became associated with Cambridge and with Investors Asset Management of Georgia, Inc. (Investors) as a registered investment advisor. In February 2012, Hogue was permitted to resign from Cambridge for receiving debt financing for outside business activities through the sale of promissory notes without firm approval.

FINRA alleged that Hogue and two other partners formed SFL, presumably SFL stands for Science Fitness LLC, on August 20, 2010, for the purpose of operating a health club. FINRA found that Hogue served as co-chief executive manager of SFL and was directly involved in the management of the health club. FINRA alleged that Hogue did not initially disclose this outside business activity to Cambridge but that Cambridge discovered Hogue’s involvement with SFL through a routine review of Hogue’s emails. Subsequently, Hogue disclosed the SFL to Cambridge on August 10, 2011. As a result of Houge’s failure to timely disclose his involvement in SFL FINRA found that Hogue violated FINRA Rules 3270 and 2010.

New Jersey Files Complaint Against George Bussanich Over Fraudulent Note Scheme

January 28, 2014 | by Staff Attorney

The Division of Law of the New Jersey Bureau of Securities has filed suit and taken administrative action against George J. Bussanich, 55, of Park Ridge and his son, George Bussanich, 34, of Upper Saddle River alleging they engaged in securities fraud in connection with sales to 26 New Jersey of $3.5 million of unregistered notes. The Bussanichs allegedly used the investor funds for their own personal enrichment. New Jersey also alleged that George J. Bussanich also provided funds to various members of his family as well. New Jersey alleged that investor funds were used to purchase three homes and exotic vehicles including two Maseratis and a Ferrari.

According to New Jersey, investors were told that their money would be used for Metropolitan Ambulatory Surgical Center, LLC (Metro Ambulatory) and George J. Bussanich’s other companies. Contrary to its name, Metro Ambulatory is not a surgical center but rather a holding company controlled by George J. Bussanich. New Jersey stated that the notes sold to investors purchased carried a 6% to 8% annual rate of return.

Acting New Jersey Attorney General John J. Hoffman said “This was not a legitimate investment gone bad but a scam by the defendants to line their pockets and live the high life.” New Jersey filed an Order to Show Cause with the Court asking the Court to freeze the assets of the defendants, appoint a receiver to take title to and possession of defendants’ property, and review all financial books and records.

Howard Allen, Joseph McGowan, and Peter Pak Settle FINRA Charges Concerning Allen Partners Promissory Notes

January 24, 2014 | by Staff Attorney

Brokers Howard Allen (Allen), Joseph McGowan (McGowan), and Peter Pak (Pak) have settled charges brought by the Financial Industry Regulatory Authority (FINRA) concerning allegations that the brokers, while employed by J.P. Turner & Company, L.L.C. (JP Turner) and Portfolio Advisors Alliance, Inc. (PAA), participated in 12 private securities transactions without providing prior written notice to their firms in violation of NASD Conduct Rules 3040 and 2110 and FINRA Rule 2010.

The brokers were associated with the same firms at approximately the same times. The brokers were associated with JP Turner from 2002 until 2008. Thereafter, the brokers were associated with Allen Partners from May 2008 until June 2009. Finally, since 2009 the brokers have been associated with PAA. Pak has not been registered since 2011. Both Allen and McGowan are currently registered with PAA.

According to FINRA the three brokers owned and controlled two companies – Allen Partners Capital, LLC (APC) and Allen Partners, LLC (AP). Allen was a managing member of both companies. While at JP Turner and PAA, Allen conducted his branch office operations through AP. FINRA found that while the brokers were associated with JP Turner and PAA they raised money for both APC and AP.

Securities Broker Christopher Orlando Suspended Over Sale of Diversified Lending Group Promissory Notes

January 8, 2014 | by Staff Attorney

Broker Christopher Orlando (Orlando) was suspended and fined by The Financial Industry Regulatory Authority (FINRA) over allegations that Orlando participated in the sale of approximately $7,000,000 in private securities transactions of promissory notes linked to Diversified Lending Group (DLG) that were not made through his member firm PlanMember Securities Corporation (PlanMember).

FINRA alleged that between March 2007, and July 2008 Orlando marketed Secured Investment Notes in DLG (DLG Notes). According to Orlando’s public disclosures, the DLG notes were supposed to invest funds in distressed real estate and mortgage lending. Investors who filed complaints against Orlando and the brokerage firms that employed him have alleged that in reality the DLG Notes were Ponzi scheme type fraud.

Orlando marketed the DLG Notes to insurance agents and financial advisors who in tum sold the DLG Notes to investors. FINRA alleged that Orlando met with his marketing agents and provided them with information and materials about DLG Notes. In addition, Orlando referred at least eight insurance agents to DLG for training so that they would sell DLG Notes to investors. According to FINRA, Orlando was also directly involved in marketing the DLG Notes to potential investors by speaking at seminars about them.

Former Ryan Beck and Oppenheimer Financial Advisor William Bucci Barred From the Financial Industry

December 5, 2013 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently barred financial advisor William D. Bucci (Bucci) for allegedly accepting 19 personal loans totaling $635,000 from nine customers in violation of FINRA rules. Bucci also allegedly willfully failed to amend his Form U4 to disclose material facts relating to two judgments that were entered against him. In addition, customers have filed complaints alleging that Bucci sold illegal promissory notes.

Bucci has been licensed as registered securities representative since 1983. From April 27, 2002, until April 2007, Bucci was a registered representative with Ryan Beck & Co. (Ryan Beck). Thereafter, and until August 2011, Bucci was registered with Oppenheimer & Co. (Oppenheimer). Finally, from August 2011, until May 2012, Bucci was registered with Financial Network Investment Corp. (Financial Network). Bucci’s public disclosures list that he is involved in a number of companies and other business activities including Delaware Valley Financial Group, LLC, DVFG Advisors, LLC, Chestnut Hill College Board of Trustees, Gennaro Vuono & William Bucci, 3010 Ocean Ave, LLC, 510 Seacliff LLC, 210 Sea Spay LLC, and 216 Sea Spay LLC.

FINRA alleged that between May 2004 and December 2010, Bucci accepted 19 personal loans from nine brokerage customers totaling $635,000. FINRA found that all of the personal loans paid annual interest of at least 10 percent and had terms of up to five years. In one instance, Bucci was accused of borrowing $425,000 in ten loan transactions from an elderly retired couple who were customers of Bucci at Ryan Beck and Oppenheimer. FINRA alleged that none of the elderly couple’s loans have been repaid. Further, according to FINRA, the elderly couple loaned Bucci a portion of the $425,000 by withdrawing money from their brokerage accounts and securing a second mortgage on their home. FINRA found that Bucci’s conduct violated NASD Rules 2370 and 2110 and FINRA Rules 3240 and 2010.

FINRA Arbitration Panel Awards Investors $3.1 Million Against Citigroup Due to Failure to Supervise Selling Away Activities

September 18, 2013 | by Staff Attorney

A Financial Industry Regulatory Authority (FINRA) arbitration panel ruled that Citigroup Inc. (Citigroup) must pay $3.1 million to a Florida couple who alleged that their financial advisor, Scott King (King), solicited them to invest in real estate developments. The case was filed by Dr. Nasirdin Madhany and his wife, Zeenat Madhany, alleging negligent supervision, breach of fiduciary duty, fraud, and breach of contract. The panel’s decision represents an important win for consumers and refutation of common arguments employed by the industry to avoid responsibility for their employee’s wrongful conduct.

The case involved a typical, and all too common, “selling away” scenario. Selling away occurs where a broker sells securities to customers that are not approved by the brokerage firm. Selling away investments represent a substantial risk to the investing public because brokerage firms do not record the transactions on their books and records and do not supervise the activity to ensure that the investment is appropriate for the customer.

Brokerage firms usually defend selling away cases by arguing that they were not aware of the securities transactions and therefore cannot be found liable. Firms also argue that they do not know the broker’s customer because in many cases the investor does not have a brokerage account with the firm. Therefore, the firm argues that it cannot be responsible for investment losses occurring to investors they do not know and away from the firm.

David Mura Accused of Selling Unregistered Securities and Churning

September 9, 2013 | by Staff Attorney

David Mura was recently barred by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) over allegations concerning the sale of unregistered securities away from his associated brokerage firm.

From September 2002 through April 2011, Mura was a registered representative and branch office manager with J.P. Turner & Co., LLC (J.P. Turner), a broker-dealer headquartered in Atlanta, Georgia. Thereafter, Mura was associated with Aegis Capital Corp. from April 2011 until October 2012. According to the SEC, from mid-2007 through 2012, Mura led a team of individuals that managed several limited liability companies (LLCs) including Charge-On Demand LLC (COD), Innovations Group Enterprises LLC (IGE), and Stucco LLC and directed and participated an effort to solicit investors in the sale of unregistered promissory notes issued by the LLCs (LLC Promissory Notes).

According to the SEC’s order, Rising Storm Technologies LLC (“Rising Storm”) was created 2006 to pursue various business ideas. Mura invested in Rising Storm in 2008 and caused the LLCs to take over Rising Storm’s business. Edward Tackaberry (Tackaberry), a resident of Fairport, New York was allegedly employed by Mura as a product salesman. Tackaberry had been previously barred from associating with any broker or dealer based on a September 2007 case brought by the SEC accusing Tackaberry of securities fraud.