Securities Industry Commentator by Bill Singer Esq

March 1, 2019
February 27, 2019
Watch the video interview by Chip Jones, FINRA's Senior Vice President of Member Relations and Education, of Susan Schroeder, FINRA's Executive Vice President of Enforcement. Jones and Schroeder discuss the 529 Plan Share Class Initiative, which provides for self reporting to FINRA Enforcement by April 1, 2019, of supervisory violations related to 529 plan share-class recommendations and the provision of a plan to remediate the issue. In response to such self reporting, FINRA Enforcement will recommend that FINRA accept a settlement exclusive of a fine but inclusive of a Censure and restitution for the impact on affected customers. 
Also Read:
Regulatory Notice 19-04 (529 Plans)
News Release: FINRA Launches New Initiative for Member Firms to Self-Report 529 Savings Plan Violations
BONUS FOOTAGE: The Blog obtained exclusive behind-the-scenes footage of the filming of the Jones/Schroeder interview. Jones asks Schroeder if she's happy in this modern world of self regulation. Schroeder's stunning answer is that in all the good times, she still finds herself longing for change on Wall Street. On a personal note, Jones does appear somewhat stunned by Schroeder's Alexander McQueen black gown and a Tiffany & Co. diamond.
In an Indictment filed in the United States District Court for the Northern District of Georgia, Kevin Perry was charged with wire fraud for allegedly defrauding investors into believing that his investment company, Lucrative Pips, was successfully earning substantial profits by investing in the foreign currency market. Lucrative Pips was never registered as a "commodity pool operator" with the Commodity Futures Trading Commission; and  Perry had never generated the historical returns represented to investors.  After the Commodity Futures Trading Commission filed a civil Complaint against Perry, he allegedly to make fraudulent investment pitches to potential investors. Unfortunately for Perry, on such pitch was made in December 2018, to an undercover FBI agent posing as a potential investor.  Allegedly, Perry told the undercover FBI agent that a $10,000 investment return a profit of $19,000 to $25,000 per month and was subject to a "100% money-back guarantee.
A stockbroker left his brokerage firm and started up his own registered investment advisor. In an excess of woefully misguided customer service, the broker telephoned his former firm's service center pretending to be some of his former customers (who were opening accounts at his new shop). To be fair to the stockbroker, he may have been thinking that he was doing the right thing for his customers, but, you know, maybe he should have given it a bit more thought. Perhaps he thought it was just one call. Perhaps he figured that one call would save each customer a lot of aggravation. To paraphrase the popular tune:

I'm only one call away
I'll be there to save the day
FINRA got nothing on me
I'm only one call away
In an Indictment filed in the United States District Court for the Southern District of Florida, Thomas Michael White, John Kevin Reech, and Joseph Mario Genzone were each charged with conspiracy to commit mail fraud and wire fraud, as well as substantive mail fraud charges; and White was additionally charged with wire fraud. The indictment charged the Defendants with conspiring to sell stock and debt equity in First Call Ventures, LLC and its subsidiaries, which included, First Call Auto Transport, Frist Call Freight and First Call List., all of which were owned and operated by White. The Defendants allegedly made materially false statements which included, but were not limited to, that First Call Ventures would provide a "safe and profitable investment" where "you won't lose your money," that investors would receive a guaranteed return on investments, that no fees would be charged to investors unless First Call Ventures turned a profit, that the value of the investment would increase significantly, that First Call Ventures was successful and profitable, and that investor funds would be used for sales and marketing, working capital and general corporate purposes.

White was President and CEO of First Call Ventures, LLC, the parent company of First Call Movers & Transport of Florida, LLC, a moving company that also brokered customer moves for other companies. From November 2011 through mid-2014, he ran the call center that booked moves throughout the Southeast; and also  oversaw a "phone room" used to raise money from investors.  White and his co-conspirators used false statements, manipulation, and high-pressure tactics to target elderly investors and their retirement money.  White tricked some victims into converting their Individual Retirement Account ("IRA") money and transferring the funds to his corporate bank account. Also,  White promised his investors that their money was safe and secure, would be returned after a year, and yield high-value interest payments to be paid on a monthly basis.  White and his co-conspirators obtained over  $2 million from over a dozen senior citizens, and converted those funds for themselves, and eventually declared a $1.8 million "loss," and shuttered the business.  As a result of the fraudulent scheme, some of the senior citizens are now living on food stamps, lost their homes, or were forced to take on odd jobs for income.

After a two-week jury trial,  White was found guilty of one count of conspiracy to commit mail and wire fraud and four counts of mail fraud and was sentenced to 168 months in prison plus three years of supervised release, and ordered to pay $1,936,400 in restitution to his victims. White's co-defendants, John Kevin Reech and Joseph Mario Genzone, previously pled guilty, and were also  charged by Information for operating a separate offering fraud Reech was sentenced to a concurrent term of 51 months' imprisonment; and  Genzone was sentenced him in both cases to a concurrent term of 41 months' imprisonment.