January 14, 2019
Misguided Unsuitability Allegations ExpungedIn the Matter of the Arbitration Between Richard M. Del Monte, Claimant, vs. Securities America, Inc., Respondent (FINRA Arbitration Decision 18-00830, January 11, 2019)
In a FINRA Arbitration Statement of Claim filed in February 2018, associated person Claimant Del Monte sought the expungement of a previously settled customer arbitration (Del Monte did not contribute to the settlement) involving investments in technology stocks and funds. Respondent Securities America did not oppose the requested relief. The customer did not respond to notice of the expungement hearing and did not participate in the hearing.. The sole FINRA Arbitrator recommended expungment of the complaint after making a FINRA Rule 2080 finding that the claim, allegation, or information is false. The Arbitrator offered this rationale:
The allegations of unsuitability were misguided because the customer directed most
of the portfolio purchases in his non-discretionary account against Claimant's advice.
No evidence was submitted that Claimant made unsuitable recommendations or
Federal Court Says Former Raymond James Employee Was On Notice of FINRA Arbitration
It's a common enough problem with all forms of lawsuits. I served you. No you didn't. Yes, I did. No, you didn't. Yes. No. Yes. No . . . and it goes on and on and on until some judge weighs in with the final "yes" or "no;" and even at that point, a round of appeals may follow. In delving into what did and didn't happen during service, we often come across the scenario where the party to be served used to live at address A but moved to address B, and service was made at A. Then there's the other variation on the theme where we have an affidavit swearing on a stack of bibles that the process server made honest-to-goodness service but, you know, turns out that the service wasn't so "honest" and there wasn't much "goodness" about it. Finally, we got the oh-so clever party who won't answer his door, won't pick up the certified mail, and does everything possible to legally avoid service. In a recent FINRA intra-industry arbitration, we got Raymond James Financial Services attempting to sue a former registered representative over repayment of a loan. The former employer says the former employee was served with the Statement of Claim. The former employee says he didn't get served with jack.
Creative Writing 101: How to Explain Mistaken IRA Deposit
In the Matter of Mark Isidore Lamendola, Respondent (AWC 2017055262601, January 11, 2019).
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Mark Isidore Lamendola submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed upon Lamendola a Bar from associating with any FINRA member firm in any capacity. Between March 2016 and June 2016, Lamendola allegedly paid $15,999.55 to customer WW to settle his verbal complaint regarding the stockbroker's allegedly mistaken deposits of customer WW's IRA contributions into the customer's variable annuity account rather than into his fixed income account. Thereafter, in October 2015 and January 2016, Lamendola allegedly fabricated two letters to WW that purported to come from an annuity company stating that the incorrect deposit was re-deposited into the correct account and the transaction was not reportable to the IRS. After the annuity company corrected the deposits, WW and his wife, BW. wrote a
complaint letter addressed to Lamendola; however, on or about September 11, 2016. Allegedly, Lamendola altered the letter to remove references to his prior settlement away from WCB in
order to conceal his conduct rom the firm. Thereafter, Lamendola sent the
altered complaint letter to WCB.s compliance department causing WCB to
maintain inaccurate books and records. As a result of the foregoing conduct. Lamendola violated FINRA Rule 2010 by falsifying documents, making misreprescntations to customers. and settling away from WCB and FINRA Rules 4511 and 2010 by altering a customer complaint that caused WCB to maintain inaccurate books and records.
Four Years of Discretionary Trading -- No one (and I mean "no one") noticed
In the Matter of Donald Logan, Respondent (AWC 2015046378601, January 11, 2019).
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Donald Logan submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed upon Logan a $25,000 fine and a n 18-month suspension from association with any member in any capacity. As set forth in the AWC's "Overview":
At various times between September 2014 and September 2018 (the "Relevant
Period"), Logan exercised discretionary trading authority approximately 365
times in approximately 42 customer accounts without obtaining prior written
authorization from his customers or prior written approval from his broker-dealer
employers, in violation of NASD Rule 2510(b) and FINRA Rule 2010. Logan
also executed 11 unauthorized transactions in three customer accounts, in
violation of FINRA Rule 2010.
During the Relevant Period, Logan caused three customers to sign nine blank or
incomplete account-related forms, intending to later use them in connection with
customer transactions, in violation of FINRA Rule 2010.
Between January 2012 and October 2018, Logan willfully failed to timely amend
his Uniform Application for Securities Industry Registration or Transfer Form
("Form U4") to disclose three civil judgments and a compromise with a creditor,
in violation of Article V, Section 2(c) of the FINRA By-Laws and FINRA Rules
1122 and 2010.
Bill Singer's Comment: A troubling aspect of this AWC is that despite including a finding that Logan had "willfully failed to timely amend" his U4, the standard admonition of the statutory disqualification consequences of such a finding is not set forth in the executed document. Although a generic admonition about the consequences of any bar or suspension is set forth in the AWC, the more specific impact statement attendant to "willful" non-disclosures is missing. Given that Respondent Logan does not appear to have been represented by legal counsel (no such signature of counsel appears on the AWC), the omission of the standard admonition below is troubling:
I understand that this settlement includes a finding that I willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this these omissions make me subject to a statutory disqualification with respect to association with a member.