Securities Industry Commentator by Bill Singer Esq

FINRA Suspends Unregistered Female for Following Registered Male Rep's Orders (BrokeAndBroker.com Blog)

How the first disabled and woman-owned NYSE floor broker is changing Wall Street (CNBC.com)

Leader Of Fake Cryptocurrency Investment Scheme Pleads Guilty To Fraud (DOJ Release)

Ukrainian Cyber Criminal Extradited For Decrypting The Credentials Of Thousands Of Computers Across The World And Selling Them On A Dark Web Website (DOJ Release)

Septuagenarian Broker Accuses Wells of Reneging on Promise of Debt-Free Retirement (September 7, 2021 by Miriam Rozen)

In re: Chapter 7 / Anthony Fusco a/k/a Anthony John Fusco, Debtor (United States Bankruptcy Court for the Eastern District of New York, No. 18-42451) 

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Fred Blake a/k/a Frederick Blake, Plaintiff, v. Anthony Fusco a/k/a Anthony John Fusco, Defendant  (United States Bankruptcy Court for the Eastern District of New York, Adv. Pro. No. 19-01149)

MEMORANDUM DECISION ON THE PLAINTIFF'S MOTION TO CONFIRM THE ARBITRATION AWARD

SEC Obtains Final Judgments Against Four Former Renewable Energy Industry Executives (SEC Release)

Cantor Fitzgerald Sort of Wins FINRA Promissory Note Arbitration

In the Matter of the Arbitration Between Cantor Fitzgerald & Co.,, Claimant, v. Michael Brennan, Respondent (FINRA Arbitration Award)

FINRA Censures and Fines Santander Investment Securities for Research Reports

In the Matter of Santander Investment Securities Inc., Respondent (FINRA AWC)

FINRA Fines and Suspends Rep for Outside Business Activity

In the Matter of Athanasios Tomaras, Respondent (FINRA AWC)

FINRA Fines and Suspends Rep for Impersonating Customers

In the Matter of Kevin John DeAngelis, Respondent (FINRA AWC)

In or about 2017, MICHAEL ACKERMAN and others started a purported cryptocurrency "investment" fund (the "Fund") and recruited hundreds of individual investors into the Fund.  The Fund was an investment club that allowed its members to contribute U.S. dollars, which the investors were told would then be used to invest and trade in Bitcoin and other cryptocurrencies.  ACKERMAN was held out as the Fund's chief trading officer and personally controlled the Fund's primary trading account on an online cryptocurrency exchange.  Based on figures provided by ACKERMAN, the Fund claimed that its proprietary trading algorithm was earning approximately 15 percent in profit for investors each month.

By December 2019, ACKERMAN claimed that the Fund investment pool - which consisted of approximately $37 million in original investor contributions - had grown in value to approximately $315 million.  ACKERMAN's claims about the performance of the Fund were communicated to existing Fund investors as well as prospective investors, some of whom were induced to invest in the Fund in the hopes of enjoying high rates of return.

The rates of return that ACKERMAN reported on the Fund investments, and its overall Fund balance, were false.  In reality, the primary trading account used by ACKERMAN had an account balance that never exceeded approximately $5 million.  To support his false claim that the Fund's investments were earning 15 percent in monthly profits and had grown to approximately $315 million, ACKERMAN doctored numerous account screenshots that he knew were being used to communicate with Fund investors.

Instead of investing and trading on behalf of the Fund, ACKERMAN stole at least $9 million in investor contributions and used them to bankroll a lavish lifestyle that included his purchase of multiple pieces of real estate, hundreds of thousands of dollars of Tiffany jewelry, vehicles, travel, and personal security services.

[I]vanov-Tolpintsev controlled a "botnet," which is a network of computers infected with malware and controlled as a group without the owners' knowledge. He used the botnet to conduct brute-force attacks designed to decrypt numerous computer login credentials simultaneously. During the course of the conspiracy, Ivanov-Tolpintsev stated that his botnet was capable of decrypting the login credentials of at least 2,000 computers every week. Ivanov-Tolpintsev then sold these login credentials on a dark web website that specialized in the purchase and sale of access to compromised computers. Once sold on this website, credentials were used to facilitate a wide range of illegal activity, including tax fraud and ransomware attacks.

Before the Court is the motion for summary judgment of plaintiff Fred Blake, aka Frederick Blake. In his summary judgment motion, Mr. Blake seeks two forms of relief -- an order to confirm an arbitration award issued by the Financial Industry Regulatory Authority Office of Dispute Resolution, and separately, a determination that the debt arising from the arbitration award is non-dischargeable pursuant to Bankruptcy Code Section 523(a)(19). In this decision, the Court addresses the first of these matters - that is, whether the arbitration award should be confirmed. The defendant Anthony Fusco responds that the motion to confirm the arbitration award should be denied because, among other reasons, the arbitration award exhibits a manifest disregard of the law and was tainted by the malfeasance of the arbitration panel.

[M]r. Blake's request to confirm the Award is timely, and that Mr. Blake has shown that the Award should be confirmed. The Court also finds and concludes that under the circumstances present here, it is appropriate to consider Mr. Fusco's arguments in opposition to the confirmation of the Award. And finally, the Court finds and concludes that Mr. Fusco has not shown that the Award should not be confirmed. In particular, the Court finds that Mr. Blake has not shown that the Award was procured by corruption, fraud, or undue means, or that there was evident partiality or corruption in the Arbitrators, or that the Arbitrators were guilty of misconduct, or that the Arbitrators exceeded their powers or manifestly disregarded the law in reaching their decision.

On August 19, 2021, the Securities and Exchange Commission obtained final judgments against four former executives of Blue Earth Inc., a former alternative and renewable energy services company, for their alleged roles in defrauding investors by materially misrepresenting the company's relationship with a key customer, the scope of its business operations, and financial condition.

The SEC's complaint, filed in the United States District Court for the District of Nevada on June 28, 2019, alleged that Blue Earth's former executives - Johnny R. Thomas, John C. Francis, Jonathan Brett Woodward, and Robert C. Potts - materially misrepresented Blue Earth's ability to develop, build, own, and operate at least seven combined heat-and-power plants from at least March 2014 through at least March 2015. The defendants allegedly created the false impression that Blue Earth had secured contracts for these plants, which would purportedly transform its business from an unprofitable venture to a profitable one. Blue Earth allegedly bolstered this illusion by materially inflating by more than 400% the value of a "Construction in Progress" asset. As alleged in the complaint, Blue Earth ultimately secured contracts for only two power plants, and its ability to perform the second contract and to secure additional contracts diminished significantly by late 2014. Blue Earth filed for bankruptcy in March 2016.

Between January 2016 and August 2019, all equity and debt research reports published by SIS omitted required disclosures or included inaccurate disclosures. Specifically, SIS published 411 equity research reports with a total of 656 disclosure omissions or inaccuracies in violation of FINRA Rules 2241(c) and 2010. Similarly, between July 16, 2016 and August 2019, SIS published 60 debt research reports with a total of 333 disclosure omissions in violation of FINRA Rules 2242(c) and 2010. SIS's omissions were the result of the firm's failure to establish and maintain a supervisory system  reasonably designed to achieve compliance with the disclosure requirements of FINRA Rules 2241(c) and 2242(c), as well as its failure to enforce its relevant written supervisory procedures. As a result, SIS also violated FINRA Rules 3110(a)-(b) and 2010.  

On August 3, 2009, the State of Florida entered a consent order that suspended Tomaras for ten business days and fined him $10,000 for failing to observe high standards of commercial honor and just and equitable principles of trade in connection with receiving referrals from insurance agents and opening new accounts for transferring customers. 

During the relevant time period, R.F. Lafferty had a written policy that required employees to disclose to the firm the details of any proposed outside business activity and receive approval from the firm prior to engaging in the activity. The policy made clear that it extended to all outside activities, even if an activity was outside the securities industry. The policy stated that outside business activities included a wide range of activities such as employment with an outside entity, serving as a director, officer, or partner, or receiving compensation or having the reasonable expectation of compensation from any other person as a result of a business activity outside the scope of an individual's employment with the Firm. 

In June 2017, Tomaras filed Articles of Organization with the Florida Secretary of State for TESA LLC, doing business as Clean Cut Professional Lawn and Landscape, a commercial and residential landscaping company. He identified himself as the sole owner of the LLC. Tomaras was also the joint account holder of the TESA LLC bank account and credit card. Tomaras oversaw the manager of the business, signed paychecks for staff, and paid the company expenses. TESA LLC had revenues of approximately $260,000 in 2017; $329,600 in 2018; $451,600 in 2019; and $410,600 in 2020. 

On his annual compliance questionnaires in 2017, 2018, and 2019, Tomaras falsely stated that he did not engage in any undisclosed outside business activities. Tomaras did not disclose his outside business activities in TESA LLC to R.F. Lafferty until April 2020, after it was discovered by FINRA and brought to the firm's attention. 

By engaging in an outside business activity involving TESA LLC without providing prior written notice to R.F. Lafferty, Tomaras violated FINRA Rules 3270 and 2010.

In July and August 2020, Respondent impersonated two firm customers during three telephone calls with the Carrier. Respondent posed as the customers on calls to the Carrier's customer service department in order to obtain information about the customers' existing variable annuity contracts. Respondent obtained information for one of the two customers. Neither of the customers authorized DeAngelis to impersonate them. 

Therefore, by impersonating two customers on telephone calls to the Carrier, DeAngelis violated FINRA Rule 2010.

• Securities Industry Commentator
• Bill Singer