Securities Industry Commentator by Bill Singer Esq

September 8, 2021

Take a woman. Put her in a relatively low-level Wall Street job. Put her in a position where she's more likely to fail than succeed. Put her in situations where she either follows orders or else. Then enlist an industry regulator to pretend that everything this vulnerable woman did was on her own volition. After you've blindfolded justice and stuffed her ears, impose sanctions on this same woman in the guise of Wall Street regulation. Despicable. Shameful. Then again, it's how things work on the Street. Certainly, it's part of FINRA's tawdry record of failing to confront sexism,  racism, and discrimination/harassment in the industry.
The amazing story of Cynthia DiBartolo, Esq., founder of Tigress Financial Partners.
Ackerman pled guilty in the United States District Court for the Southern District of New York to one count of wire fraud. Pursuant to the Plea Agreement, Ackerman will undertake $30,667,738.79 in restitution and $36,268,515 in restitution. As alleged in part in the DOJ Release:

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.
Glib Oleksandr Ivanov-Tolpintsev was extradited from Poland to the United States in connection with an Indictment filed in the United States District Court for the Middle District of Florida alleging conspiracy, trafficking in unauthorized access devices, and trafficking in computer passwords. As alleged in part in the DOJ Release:

[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.
Veteran industry reporter Miriam Rozen unveils the troubling predicament of 21-year industry veteran Avery Wilkins, who is 74 years old and has sued Wells Fargo Advisors. Wilkins alleges that Wells promised to forgive his six-figure recruiting loan upon retirement provided he stayed in the saddle until 2018, which he says he did. He said. They said. And we're off to the litigation races!

As set forth under the "Introduction":

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.

at Page 2 of the Decision

In granting the Motion to Confirm the Arbitration Award, the Court found in part that:

[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.

at Page 50 of the Decision
Without admitting or denying the allegations in a Complaint filed in the United States District Court for the District of Nevada, Johnny R. Thomas, Robert C. Potts, Jonathan Brett Woodard, and John C. Francis consented to the entry of final judgments which imposed officer-and-director and penny stock bars against each of them. Further, the Court ordered 
  • Thomas to pay a civil penalty of $240,000, 
  • Potts to pay a civil penalty of $125,000, and 
  • Francis and Woodard each to pay a civil penalty of $120,000
Additionally, the Court permanently enjoined the defendants from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(b) thereunder and Section 17(a)(2) of the Securities Act of 1933, and from aiding and abetting violations of the reporting provisions of Exchange Act Section 13(a) and Rules 12b-20 (all), 13a-1 (all), 13a-11 (Thomas and Francis), and 13a-13 (Thomas, Woodard, and Francis). Finally, Thomas and Woodard were enjoined from violating the provision requiring officer certification of filings with the Commission, Exchange Act Rule 13a-14; Woodard from violating the books-and-records provisions of Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder, and aiding and abetting violations of the books-and-records provision of Exchange Act Section 13(b)(2)(A); and Thomas from violating the corporate insider disclosure obligations under Section 16(a) of the Exchange Act and Rule 16a-3 thereunder. Separately, without admitting or denying the SEC's findings, Woodard consented to an SEC's Order which suspends him from appearing or practicing as an accountant before the Commission pursuant to Rule 102(e)(3) of the Commission's Rules of Practice. As alleged in part in the SEC Release:

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.

In the Matter of the Arbitration Between Cantor Fitzgerald & Co.,, Claimant, v. Michael Brennan, Respondent (FINRA Arbitration Award 20-00630)
In a FINRA Arbitration Statement of Claim filed in February 2020, FINRA member firm Cantor Fitzgerald asserted breach of Promissory Note Agreements for which it sought $1,689,695 in principal repayment plus interest, costs, fees, and expenses. Former Cantor Fitzgerald associate person Respondent Brennan generally denied the allegations, asserted affirmative defenses, and filed a Counterclaim asserting in part breaches of contract, the covenant of good faith and fair dealing, and securities industry rules; failure to pay compensation; violations of NY Labor Law, wrongful discharge; constructive discharge; unjust enrichment; fraudulent inducement; and quantum meruit. The FINRA Panel of Arbitrators found Respondent Brennan liable to and ordered him to pay to Claimant Cantor Fitzgerald $1,252,600,90 in compensatory damages; $974,722.42 in interest; and $277,878.57 in interest. The Panel also found Claimant Cantor Fitzgerald liable to and ordered the firm to pay Respondent Brennan $303,239.73 in compensatory damages. Imposing an offset to its awards, the Panel awarded Claimant the net amount of $949,361.17.
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, Santander Investment Securities Inc. submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Santander Investment Securities Inc. became a FINRA member in 1994 and employs 165 registered persons in one branch; and that the member firm is owned by Banco Santander, S.A. under the "Grupo Santander" umbrella. In accordance with the terms of the AWC, FINRA imposed upon CODA a Censure and $175,000 fine.  As alleged under the "Overview" of the AWC:

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.
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, Athanasios Tomaras submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Tomaras was first registered in 1996 and by October 2015, he was registered with R. F. Lafferty & Co. In part, the AWC asserts that [Ed: footnote omiteed]:

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. 

In accordance with the terms of the AWC, FINRA imposed upon Tomaras a $5,000 fine and a 45-calendar-day suspension from associating with any FINRA member in all capacities.  As alleged in part in the AWC:

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.
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, Kevin John DeAngelis submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that DeAngelis entered the industry in 1992, and between February 2011 and September 2020, he was registered with Commonwealth Financial Network. In accordance with the terms of the AWC, FINRA imposed upon DeAngelis a $5,000 fine and a 15-business-day suspension from associating with any FINRA member in all capacities.  As alleged in part in the AWC

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.