NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
Tracey McInchak AWC/2010022690601/November 2011
Associated Person McInchak wrote
numerous checks, totaling $461,013.14, from her member firmís corporate
checking account made payable to herself and to her personal credit card
companies. McInchak cashed the checks and used them for
her own benefit without the firmís knowledge or permission.
Associated Person Fortney misappropriated approximately $75,864.12 from the company by withdrawing funds using checks or other debits from the company business checking account (a money market account). The checks or other debits were made payable to Fortney or to third parties. Fortney engaged in unauthorized transactions using the companyís credit card account, and then paid for those transactions using the companyís checking account.
At the request of a member firm customer, Bunshaft was directed to make direct payments from one of the customerís brokerage accounts at the firm to pay some of the customerís personal bills; instead, without the customerís knowledge or authorization, Bunshaft initiated $23,471.25 in unauthorized transfers of funds from the customerís brokerage account to pay her own personal credit card charges.
Bunshaft failed to respond to FINRA requests for information.
Spotts wrongfully misappropriated approximately $197,860 from a coworker at his member firm by taking blank personal checks belonging to the coworker and forged the coworkerís name on the checks without the coworkerís knowledge or authorization. Spotts made some of the checks payable to himself and deposited the checks into his personal account, or made the checks payable to credit card companies and other creditors to pay his personal bills.
Spotts failed to appear and testify at an onthe- record interview.
John Thomas Pappas AWC/2010021962101/September 2011
Pappas converted funds totaling $157,563.75 from customer accounts, without the customersí knowledge or authorization, and attempted to convert an additional $14,260 from another customer account.
Pappas misappropriated the funds by activating the online bill payment feature in the clientsí accounts and then directed payments to his personal credit cards. Pappas placed an unauthorized trade totaling $6,893.43 in a deceased firm customerís account.
Pappas refused to respond to FINRA requests for information and testimony.
Martin misappropriated at least $81,670 from her employer and its owner through the use of credit cards and checks for unauthorized purposes.
Without authorization, Martin used her employerís personal credit cards and business credit account to purchase personal items, totaling at least $34,516, and used her employerís business checking account, without authorization, to issue checks for personal items exceeding $1,603. The Martin issued checks from the business account to herself and made cash withdrawals for herself without authorization; these withdrawals exceeded the actual business expenses by at least $23,385. Martin issued, or caused to be issued, checks to herself for unauthorized bonus payments totaling at least $22,166.
Martin failed to appear for FINRA on-the-record testimony.
Maritza Del Carmen Cruz AWC/2009019865801/July 2011
Cruz participated in an outside business activity without providing her member firm with prior written notice.
An individual offered Cruz $3,000 in exchange for referring firm clients and others with available credit on their personal credit cards who would invest in his newly created business. The individual failed to pay those who invested in his business as promised. Cruz misrepresented to her firm her involvement in the outside business activity on a compliance her firm review conducted. Upon admitting her involvement in the outside business activity to her firm, the firm immediately suspended Cruz, conducted an internal investigation and later terminated Cruz.
Maritza Del Carmen Cruz : Fined $5,000; Suspended 3 months
Iskric misused his member firmís funds by using the firmís corporate credit card for personal purposes, including purchases of gift cards from various retailers. The amount of unauthorized charges was in excess of $10,000.
While registered with a different member firm, Iskric failed to timely update his Form U4 with material information.
Tina Marie Newman (Principal) 2008011719501/July 2011
Newman converted $10,166.34 by using her member firmís corporate credit cards to pay for a personal vacation and misappropriating her firmís credit card rewards points for her personal use.
Newman did not have the firmís permission or consent or the authority to charge her personal vacation to her firm issued credit cards or appropriate reward points for her own use.Newman did not inform anyone at her firm or memorialize or otherwise create a record of these charges. She reimbursed the firm for the charges but not for the credit card rewards points. Newman intentionally created fictitious and false entries in the firmís books to cover up her conversion of firm funds for her personal benefit.
Stern charged personal expenses on her corporate credit card totaling approximately $5,200. Stern made approximately $2,700 in payments to the bank affiliate of her member firm for the personal expense which she charged on her corporate credit card.
The bank notified Stern on several occasions about a number of aged items that were charged on the card for which no employee expense reports were submitted by Stern. Subsequently, the bank notified Stern that her card was two payments past due and it was being suspended.
Stern then admitted that she had made the personal purchases on her corporate credit card. Stern also made a $500 payment to the bank and thus reduced the outstanding amount owed due to her personal use of the corporate card to $1,984.
Sternís employment at her firm and the bank were terminated for improper use of the corporate credit card.
Malchin utilized his business credit card for personal expenses and submitted false expense reports to his member firm, pursuant to which he was reimbursed approximately $1,806 for expenses that were not business-related.
Christopher Malchin : Fined $5,000; Suspended 6 months
Nwigwe misappropriated customerís funds when he worked as a personal banker for his member firmís affiliate bank. Nwigwe requested that a credit card for a customer be delivered to his attention at the branch, used the credit card to incur approximately $1,746 in unauthorized charges for his personal use and forged the customerís signature on multiple occasions to complete purchases with the card. Nwigwe admitted to the firmís internal investigators that he used the unauthorized credit card for his personal use.
Buka Uzoma Nwigwe aka Chukwuebuka Nwigwe: Barred; The Hearing Officer did not order restitution because the customer was not required to pay for the unauthorized charges on the credit card.
Chad R. Duncan (Principal) AWC/2009017755101/January 2011
Without permission or authority, Duncan used $100,000 drawn from an elderly personís bank account to pay his personal credit card expenses, which were related to costs associated with the construction of his home. When the executor of the deceased personís estate became concerned about the withdrawals totaling $100,000, Duncan created fictitious cashierís checks totaling $100,000 and payable to charities, falsely representing that the checks represented evidence of the payments made by the deceased and the beneficiaries of the payments. The withdrawals were earlier used to purchase cashierís checks payable to an international commercial bank to pay down Duncanís credit card expenses.
A bank compensated the customer for the wrongfully taken funds, and Duncan has reimbursed the bank approximately $91,484.75 and continues to make monthly payments to cover the amounts the bank paid to the customer.
Lyndall Conway Medearis Jr. (Principal) AWC/2008014825001/January 2011
Medearis became an additional credit card holder on a customerís credit card accounts which were revolving lines of credit. Medearis made charges to the cards totaling approximately $134,000, effectively borrowing this amount through the credit card transactions, and subsequently made payments to cover the charges.
Medearisí member firmís written procedures prohibited registered representatives from borrowing money from or loaning money to customers unless the customer was a member of the registered representativeís immediate family and the registered representative had requested and received prior written permission from the firm. Medearis borrowed an additional $132,000 from the customer in separate transactions, and Medearis never informed his firm.
Medearis loaned $6,420.33 to a customer who was a member of his immediate family but failed to obtain the firmís prior written permission before entering into the loan arrangement with the customer.
Lyndall Conway Medearis Jr. (Principal): Fined $10,000; Suspended 90 days
The North American Securities Administrators Association ("NASAA") issued its biennial Investment Advisors Coordinated Examination Report, which shows a stable and somewhat improving compliance picture for state-registered Investment Advisors ("IAs") in 2015 versus the 2013 cycle. States presently oversee IAs with assets un... Read On