Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Tony Tontat (Tontat), previously associated with G-2 Trading, llc, has at least one disclosable event. These events include one tax lien, alleging that Tontat recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 03, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate that cease and-desist proceedings be, and hereby are, instituted against Tony Tontat (‘Tontat’ or ‘Respondent’). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. The commission finds that This matter involves a violation of the federal securities laws by Tony Tontat, the former Chief Financial Officer of Kiromic BioPharma, Inc. Kiromic is a Houston based biotherapeutics company that develops cell therapies to fight cancer. In anticipation of funding clinical trials for its two investigational new drug (‘IND’) candidates, Kiromic raised $40 million in a follow-on public offering in early July 2021. Two weeks before the public offering, in June 2021, the U.S. Food and Drug Administration informed Kiromic that it was placing the company’s INDs on clinical hold-an order to delay a proposed clinical investigation. Kiromic omitted the June 2021 FDA clinical-hold communications from its SEC filings, including its Form S-1 and its final prospectus related to the July 2021 public offering, investor roadshow presentations, and due diligence calls. After the public offering, in mid-July 2021, Tontat reviewed detailed letters from the FDA outlining the basis for the clinical holds. Kiromic failed to disclose the FDA clinical-hold communications in its Form 10-Q filed on August 13, 2021, which rendered the statements therein misleading. Tontat signed and certified the Form 10-Q despite its omissions.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Every recommendation’s cost and investor details are always part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, rather than depending solely on the issuer for company information, a brokerage firm should conduct its own reasonable investigation.
Another protective measure is to require broker discloses. Brokers are required to reveal important events, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, publicly on their BrokerCheck reports. FINRA has acknowledged that recent studies provide evidence of the predictability of future regulatory and customer complaint issues for brokers with a history of such events. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Tontat has been in the securities industry for more than 3 years. Tontat has been registered as a Broker with G-2 Trading, llc since 2009.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
