Securities Industry Commentator by Bill Singer Esq

October 5, 2020

Despite dissenting Fed vote, Charles Schwab Corp. cleared to close TD merger Tuesday, and 'Schwabitrade' looks less fearsome than anticipated (RIABiz / October 1, 2020 by Oisin Breen)

Federal Jury Hands Down Guilty Verdict Against Charlotte Woman For Stealing $300,000 From An Elderly, Dementia-Afflicted Victim / Two Other Co-Conspirators Previously Pleaded Guilty for Their Role in the Theft (DOJ Release)
Some litigants jump the gun in an effort to improve the so-called "optics" of litigation. In situations where two parties each have claims against the other, there's a sense that it's better to be cast in the role of the Claimant than of the Respondent. The theory is that it's better to frame the lawsuit in the language of the aggrieved rather than as the alleged malefactor. In a 2019 FINRA arbitration, a public customer representing himself pro se sought to recover hundreds of thousands of dollars in put-sales losses. In response to his claims, the respondent brokerage firm counterclaimed for a couple of hundred thousand in its own claimed damages. And after the arbitrators issued their decision, the litigants moved on to battle it out in federal court.

Despite dissenting Fed vote, Charles Schwab Corp. cleared to close TD merger Tuesday, and 'Schwabitrade' looks less fearsome than anticipated (RIABiz / October 1, 2020 by Oisin Breen)

RIABiz's Oisin Breen remains among my favorite journalists on the Street -- indeed, he is one of a dying breed: a professional reporter who knows his beat and consistently tells it like it is. Among Oisin's hallmarks is unbiased coverage that gives voices to all sides of an issue. What's the real deal when it comes to the merger of Schwab and TD? Read Oisin's article.
Donna Graves, 58, was convicted by a jury in the United States District Court for the Western District of North Carolina of conspiracy to commit wire fraud and money laundering conspiracy. As alleged in part in the DOJ Release:

[F]rom January 2015 through September 2019, Graves and her two co-conspirators, Gerald Maxwell Harrison and Elizabeth Robin Williams, engaged in a scheme to defraud a victim identified in court documents as "K.T." The victim was an elderly widow who lived alone and suffered from dementia and other physical and mental challenges.

Trial evidence established that, beginning in February 2014, Graves and Williams provided housekeeping services for the victim through a business owned and operated by Graves. Court records show that, over the course of the scheme, the co-conspirators isolated the victim from her friends and family, induced the victim to give them power and control over her personal affairs, and fabricated a power of attorney purporting to give Graves and Williams control over the victim's financial affairs.  According to trial evidence and witness testimony, once they gained access and control, Graves, Williams, and Harrison moved the victim out of her residence in Indian Land, South Carolina, first to an apartment in Charlotte, and later to a rental home in Mint Hill, refusing to let the victim's friends and family know where she was living. 

Trial evidence also established that Graves, Williams, and Harrison engaged in numerous illegal and unauthorized financial transactions that substantially depleted the victim's money and property.  Specifically, the co-conspirators emptied the victim's bank accounts and used the money to pay for personal expenses, and they fraudulently "maxed out" at least one credit card in the victim's name.  The co-conspirators also fraudulently transferred or attempted to transfer the victim's Indian Land residence to themselves by creating a quit claim deed purporting to gift the residence to Harrison, they pawned the victim's jewelry, and they stole the victim's federal benefits.  Additionally, Williams unlawfully used the victim's money to set up other businesses in her name, including a business selling handbags online and a business selling weight loss-related services. As a result of the fraudulent scheme, the co-conspirators defrauded the victim of more than $300,000. 

In May 2020, Williams and Harrison pleaded guilty to wire fraud conspiracy, interstate transportation of stolen property, and money laundering conspiracy. The wire fraud conspiracy charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The statutory maximum penalty for the money laundering conspiracy charge is 20 years in prison and a $500,000 fine. The interstate transportation of stolen property charge carries a maximum prison term of 10 years and a $250,000 fine.

FINRA Fines and Suspends Rep Over OBA, Personal Emails, and Income Projections
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, Walter Osvaldo Vazquez submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Walter Osvaldo Vazquez entered the industry in 2001 and was registered in 2002 with Pruco Securities, LLC. After leaving Pruco and being registered between January 2002 and 2012 with other firms, Vazquez was registered between December 2012 and May 1, 2017, with Summit Brokerage Services, Inc. until April 28, 2017, when he returned to Pruco. The AWC alleges that Vazquez "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Vazquez had violated FINRA Rules 4511, 3270, 2210(d)(1)(A), 2210(d)(1)(B), 2210(d)(1)(F), 2210(d)(3), and 2010; and the self regulator imposed upon him an $15,000 fine and a six-month suspension in all capacities. As alleged in part in  "Overview" of the AWC:

Between May 2017 and December 2019, Vazquez engaged in an undisclosed outside business activity (OBA) by working for a tax and accounting company for compensation. As a result, Vazquez violated FINRA Rules 3270 and 2010. 

Between May 2017 and June 2018, Vazquez used two personal email accounts to send and receive emails without providing copies to his employing firm, thereby preventing the firm from capturing the securities-related communications. As a result, Vazquez violated FINRA Rules 4511 and 2010. 

In addition, between August 2015 and March 2018, while associated with two member firms, Vazquez created and provided sixteen consolidated account statements to one customer. The consolidated statements did not identify the firm with which Vazquez was associated at the time and did not differentiate between the assets held at the member firm and those held away. Thirteen of the consolidated statements included impermissible income projections. In addition, seven of the sixteen consolidated statements included inaccurate asset lists and valuations. As a result of the foregoing, Vazquez violated FINRA Rules 2210(d)(1)(A), 2210(d)(1)(B), 2210(d)(1)(F), 2210(d)(3), and 2010.