The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
February 7, 2022
Federal Agencies Launch Joint Effort to Alert Online Daters and Social Media Users of Romance Scams That Have Cost Americans Millions (CFTC Releases)
https://www.cftc.gov/PressRoom/PressReleases/8491-22
The Commodity Futures Trading Commission, the Consumer Financial Protection Bureau (CFPB), the Department of Homeland Security's U.S. Immigration and Customs Enforcement (ICE), the U.S. Postal Inspection Service, and the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) have launched Dating or Defrauding?, a national awareness effort to alert the public to romance scams that target victims largely through dating apps or social media. As alleged in part in the CFTC Release:
Romance scams are not new, but with the proliferation of online dating apps, social media, and even messaging apps, new types of scams are emerging that target new audiences and have drained victims of millions of dollars. According to the Federal Trade Commission (FTC), 2020 was a record year for romance scams. Consumer reports to the FTC indicate that the number of romance scam complaints continued to increase through 2021. A year-over-year comparison through the third quarter showed a 48 percent increase in reported romance frauds.The joint federal agencies' initiative shows the public how to recognize the scams before they give any money or assets and provides steps to take if they are victimized. Over the coming weeks, the interagency Dating or Defrauding? awareness campaign will reach the public via social media, local and national media outreach, and public-private partnerships to encourage them to be vigilant when making online love connections.
Dustin B. Luckett, Claimant, v. J.P. Morgan Securities, LLC and Todd G. Fannin, Respondents (FINRA Arbitration Award 19-030375)
https://www.finra.org/sites/default/files/aao_documents/19-03075.pdf
https://www.finra.org/sites/default/files/aao_documents/19-03075.pdf
In a FINRA Arbitration Statement of Claim filed in October 2019, associated person Claimant Luckett asserted that the:
[F]orm U5 filed by JPMS, as part of registration records maintained by the Central Registration Depository ("CRD"), is defamatory and asserted the following causes of action: invasion of privacy: false light, tortious interference with prospective business expectancies, and breach of implied covenant of good faith and fair dealing. The causes of action related to events occurring after the conclusion of Claimant's employment with JPMS.
Respondents generally denied the allegations and asserted affirmative defenses. The FINRA Arbitration Award states that:
At the hearing and in Claimant's Itemization of Damages exhibit, Claimant requested damages of $5,585,353.00, exclusive of interest and costs, including compensatory damages of $3,689,015.00, punitive damages of $500,000.00, and attorneys' fees of $1,396,338.00. Alternatively, Claimant requested damages of $4,402,769.00 exclusive of interest and costs, including compensatory damages of $2,802,077.00, punitive damages of $500,000.00, and attorneys' fees of $1,100,692.00. Claimant withdrew the request for attorneys' fees on the record.
The FINRA Arbitration Panel found Respondent JPMS liable and ordered the firm to pay to Claimant Luckett $1.4 million in compensatory damages and $600 in reimbursed filing fees. In granting expungement to Claimant, the Panel recommended the expungement of:
[T]he Termination Explanation in Section 3 of Dustin Blake Luckett's (CRD Number 5126374) Form U5 filed by J.P. Morgan Securities LLC on June 29, 2017 and maintained by CRD. The Reason for Termination shall remain the same and the Termination Explanation shall be replaced with the following language: "Non-investment related. After a dispute about a clerical process, RR became disillusioned with the company's atmosphere requiring separation of his at-will employment." This directive shall apply to all references to the Termination Explanation.The Panel further recommends the expungement of all references to Occurrence Number 1940121 from the registration records maintained by the CRD for Dustin Blake Luckett. Any "Yes" answers should be changed to "No," as applicable.The Panel recommends expungement based on the defamatory nature of the information. The above recommendations are made with the understanding that the registration records are not automatically amended. Dustin Blake Luckett must forward a copy of this Award to FINRA's Credentialing, Registration, Education and Disclosure Department for review.
https://www.sec.gov/litigation/litreleases/2022/lr25325.htm
In a Complaint filed in the United States District Court for the Central District of California
https://www.sec.gov/litigation/complaints/2022/comp25325.pdf, the SEC charged Michael M. Beck a/k/a @BigMoneyMike6 with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Helen P. Robinson was named as a Relief Defendant. In part the SEC Release alleges that:
https://www.sec.gov/litigation/complaints/2022/comp25325.pdf, the SEC charged Michael M. Beck a/k/a @BigMoneyMike6 with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Helen P. Robinson was named as a Relief Defendant. In part the SEC Release alleges that:
[S]ince at least February 2017, Beck engaged in scalping of eight different penny stocks - recommending a stock without disclosing his intent to sell the stock, and then selling it at inflated prices to generate profits. According to the complaint, Beck repeatedly purchased blocks of penny stock shares and then tweeted that he would soon be issuing a new stock recommendation to his millions of followers and the public at large. As alleged, Beck's tweets encouraged readers to join "TeamBillionaire" so that they could receive the recommendation by email. The complaint further alleges that, a few days before Beck publicly tweeted a recommendation, he typically emailed it to TeamBillionaire members or had third parties post favorable commentary about the stock on investor message boards. As alleged, Beck then typically began to sell his shares, and shares owned by his mother, relief defendant Helen Robinson, before tweeting the recommendation publicly and typically sold additional shares after tweeting positively about the stock. The complaint alleges that Beck failed to disclose his plans to sell, or his ongoing selling, of shares in any of the tweets, emails, or message board posts, and that he obtained approximately $870,000 in total proceeds from his scalping activities.
FINRA Fines and Suspends Rep for Short-Term UIT Trading
https://www.finra.org/sites/default/files/fda_documents/2018060460401
%20Lynn%20Cooper%20Faust%20CRD%20729012%20AWC%20jlg.pdf
%20Lynn%20Cooper%20Faust%20CRD%20729012%20AWC%20jlg.pdf
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, Lynn Cooper Faust submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Lynn Cooper Faust entered the industry in 1980 and by March 1998, she was registered with Raymond James and Associates, Inc. As alleged in part in the AWC:
Between January 4, 2013 and December 22, 2017, in connection with approximately 300 customer accounts, Faust recommended that customers sell UITs short of maturity dates and roll the proceeds into new UITs on approximately 4,500 occasions.The majority of the UITs that Faust recommended had maturity dates of at least twentyfour months and carried net sales charges of up to 3.95%. Faust recommended that most of her customers sell and roll over their positions in UITs, on average, after 296 days.Of those rollover transactions, approximately 2,200 were "series to series" rollovers. Thus, on those occasions, Faust recommended that her customers roll over a UIT well before its maturity date in order to purchase a subsequent series of the same UIT, which generally had the same or similar investment objectives and strategies as the prior series.Faust's recommendations, which caused her customers to incur unnecessary excess sales charges, were unsuitable considering the frequency and cost of the transactions.3Therefore, Faust violated FINRA Rules 2111 and 2010= = = = =Footnote 3: Raymond James paid restitution to customers relating to the early sale of Has pursuant to a settlement with the Securities and Exchange Commission. See Raymond James Financial Services, et al., SEC Administrative Proceeding File No. 3-19464 (Sept. 2019).
In accordance with the terms of the AWC, FINRA imposed upon Faust a $5,000 fine and a three-month suspension from association with any FINRA member in all capacities.
FINRA Fines and Suspends Rep for Muni Bond Discretionary Trading
https://www.finra.org/sites/default/files/fda_documents/2022073661801
%20Michael%20G.%20Mancinelli%20CRD%205505925%20AWC%20jlg.pdf
%20Michael%20G.%20Mancinelli%20CRD%205505925%20AWC%20jlg.pdf
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, Michael G. Mancinelli submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Michael G. Mancinelli was first registered in 2013, and from February 2017 through October 17, 2018, he was registered with Dinosaur Financial Group, LLC. As alleged in part in the AWC's "Overview" [Ed: footnote omitted]:
From February 3, 2017 through August 30, 2017, Mancinelli violated MunicipalSecurities Rulemaking Board (MSRB) Rules G-8 and G-17 when he exerciseddiscretionary trading in a customer account without having first obtained writtenauthorization from the customer and written approval by his firm. In addition, betweenFebruary 3, 2017 and December 31, 2017, Mancinelli improperly marked municipalsecurities transactions in the same customer's account as unsolicited, causing the firm'sbooks and records to be inaccurate, in violation of MSRB Rule G-8.
In accordance with the terms of the AWC, FINRA imposed upon Mancinelli a $10,000 fine and a 30-business-day suspension from associating with any FINRA member firm in all capacities.
Court Finds FINRA Arbitration Process Not Fundamentally Fair (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/6265/finra-wells-fargo-arbitration/
You know those days when you just want to pull the covers over your head and not get out of bed? Well, FINRA had one of those days. As to what caused all of FINRA's anxiety, let's start with these words in a court's order about a FINRA public customer arbitration hearing: "The transcripts satisfy the Investors' burden of proving the fraud on the panel by clear and convincing evidence. The audio tapes, which were not available to the Investors until after the close of the hearing, confirm that Wells Fargo' s key witness used the delay caused by the medical emergency to materially change his testimony and offer perjured testimony in direct contravention of the earlier testimony. In addition, counsel for Wells Fargo inserted himself as a fact witness and purported to testify to the Panel himself to support the changed story."