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.
John Leisen Kreuz (Principal) AWC/2010021630301/September 2010
Kreuz signed customers’ signatures on various forms to transfer their accounts from his previous member firm to another member firm, and submitted them to his firm without the customers’ approval or knowledge. Many of his customers agreed to transfer their accounts to his new member firm, but when Kreuz learned that he needed to submit the forms by a certain date, or his previous firm would be entitled to keep the trailing fees for mutual funds he had previously purchased for his customers, he completed and signed the forms.
John Leisen Kreuz (Principal): Fined $5,000; Suspended 1 year
Stephen N. Richards AWC/2009016955001/September 2010
Richards made a series of changes to the account of a deceased customer, including changing the account address to that of his member firm, the name on the account, and an instruction on the account in order to allow redemptions to be wired to his personal account. Richards effected mutual fund redemptions from the account and made corresponding wire transactions to his personal account totaling $38,194.38. Richards used his own login ID and those of his colleagues, without their knowledge or permission, to process these transactions.
Steven Craig Vanderhoof (Principal) AWC/2007011152601/September 2010
Vanderhoof established a corporation and a website to market an “equity repositioning strategy” to investors, with the strategy calling for investors to obtain a loan for equity in a home, through mortgage refinancing or a home equity line of credit, and invest the loan proceeds with the goal of earning more through the investments than the cost of the loan, but a prime purpose in marketing this strategy was to sell mutual funds to investors through a firm he founded.
Vanderhoof authored television advertisements that were false and misleading, and failed to provide a balanced discussion and disclose the name of the broker-dealer; and Vanderhoof failed to file the advertisements with FINRA’s Advertising Regulation department in violation of NASD Rule 2210(c)(2)(a) which required that advertisements concerning mutual funds be filed within 10 days of first use.
Vanderhoof designed and authored a website and made the publicly available website, which misleadingly failed to provide a balanced discussion of the risks associated with borrowing money through home equity loans to invest in securities, included false and misleading statements and claims and projected investment results, and was not filed with FINRA’s Advertising Regulation department.
Vanderhoof authored an information brochure, which the firm’s registered representatives sent to potential customers, that contained the same advertising content violations and was not filed with FINRA’s Advertising Regulation department. Vanderhoof approved the equity repositioning analysis for use with potential customers and caused it to be distributed to potential customers when the analysis failed to disclose the risks assumed when investors borrow money from their home to buy securities, contained statements and claims that were unwarranted or exaggerated, and made predictions or projections of investment performance.Vanderhoof failed to ensure adequate review of the equity repositioning sales materials and failed to ensure that the firm established written supervisory procedures regarding the suitability of equity repositioning recommendations.
Steven Craig Vanderhoof (Principal): Fined $10,000; Suspended 30 business days
Bentley-Lawrence Securities, Inc. and Richard Lawrence Coskey (Principal) OS/2007011333401/April 2010
Bentley-Lawrence and an unnamed registered representative settled a claim in connection with the representative’s mutual fund switching in a customer’s account. Acting through Coskey, the Firm failed to
report that settlement to FINRA;
adequately and properly supervise the registered representative who engaged in mutual fund switching activities in customers’ account, which generated in excess of $178,000 in gross commissions, representing more than 50 percent of the firm’s mutual fund commission revenue for all registered representatives; and
adequately supervise to ensure the timely reporting of the settlement with the customer.
Bentley-Lawrence Securities, Inc.: Fined $50,000; Ordered to pay $117,623.68 restitution to customers, jointly and severally with Coskey.
Richard Lawrence Coskey: Fined $20,000; Ordered to pay $117,623.68 restitution to customers, jointly and severally with Bentley-Lawrence Securities; Suspended in Principal capacity only for 9 months.
Jeannette J. Martens AWC/2008015946101/February 2010
Martens contacted a mutual fund company and misrepresented herself as an assistant to the customer’s former registered representative at another member firm in an attempt to obtain confidential information about the customer’s account, which the customer had authorized Martens in writing and orally to obtain. At the time of the misrepresentation, Martens had been authorized to act as the customer’s broker of record at her firm, but the mutual fund company had not yet processed the change of broker form received from the firm. The mutual fund company would not have provided this information to Martens had she correctly identified herself and her broker-dealer affiliation.
Jeannette J. Martens : Fined $5,000; Suspended 30 business days
You work directly for a subsidiary but enter into an Employment/Non-Solicit Agreement with the parent. Things are fine until they're not. You leave. There is an allegation that you violated the non-solicit agreement. You get sued by the parent with whom you executed the agreement. What happens if the subsidiary lacks diversity jurisdiction in order to o... Read On