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.
Jason Pedigo AWC/2010025512501/November 2011
Pedigo submitted a fixed annuity
contract for his customer with an insurance company. The insurance company
issued the annuity contract and sent it to Pedigo in accordance with its
selling agreement. The insurance company never
received the customerís executed annuity contract confirmation (ACC); and, as a
result, mailed letters to Pedigo numerous times requesting that he have the
customer sign and return the ACC.
the insurance company that the customer was deceased and requested paperwork to
submit a death claim. According to the insurance company, it never received the
death claim paperwork. After receiving a
surrender request form that same day, the insurance company contacted Pedigo to
inform him that a full surrender could not be processed because the customer
was deceased. Amazingly, about a year after the customer had passed,
Pedigo falsely informed the insurance company that the customer was still
alive. Pedigo faxed the insurance company an ACC which the customer purportedly
signed and dated almost 20 days after the customer had died.
John Thomas Pappas AWC/2010021962101/September 2011
Pappas converted funds totaling $157,563.75 from customer accounts, without the customersí knowledge or authorization, and attempted to convert an additional $14,260 from another customer account.
Pappas misappropriated the funds by activating the online bill payment feature in the clientsí accounts and then directed payments to his personal credit cards. Pappas placed an unauthorized trade totaling $6,893.43 in a deceased firm customerís account.
Pappas refused to respond to FINRA requests for information and testimony.
Benjamin Harry Cohen AWC/2009017087301/February 2011
Cohen violated FINRAís suitability rule by failing to understand or convey to customers the cost of a rider to a variable annuity, pursuant to transactions he recommended to customers. Cohen incorrectly communicated the imposed fee. Cohen did not understand the risks and rewards inherent in the variable annuity, with the rider feature, which he recommended to the customers.
Cohen conducted a trade in a deceased customerís account with a purchase of $4,662 of an entity Class A mutual fund share. Cohen had discussed with this customer purchasing the entityís Class A shares prior to the customerís passing, and he had prepared certain paperwork for the transaction prior to the customerís death, but the purchase had not been made at the time of the customerís death. At the time of the transaction, Cohen did not consult with any representative of the deceased customerís estate and also did not notify the firm that the customer had passed away.
In addition, Cohen failed to appear for a FINRA on-the-record interview.
George Abbott Berry AWC/2009017596901/January 2011
Berry serviced a brokerage account a relative held but did not have power of attorney or discretionary authorization over the account. Berry failed to report his relativeís death to his member firm, and after leaving the firm, he removed funds from the account totaling $70,000 by requesting checks be drawn on the account, sent to her listed address, which was the same as Berryís home CRD address, and deposited the checks in a joint checking account he shared with his relative. When Berry submitted a written withdrawal request to the firm for $10,000, the firm discovered that the signature did not match the signature on file for the customer and froze the brokerage account after Berry acknowledged his relativeís death with the firmís customer relations staff.
The Firm amended Berryís Form U5 to reflect an internal review of his withdrawals and his failure to advise the firm of his relativeís death.
Everybody Knows (BrokeAndBroker.com Blog)http://www.brokeandbroker.com/5967/insecurities aegis-frumento-trading-plans/From 2006 to 2011, Aegis Frumento, Esq. headed the department at Smith Barney that administered Rule 10b5-1 plans for the firm's customers, and he still advises clients on trading plans today. On June 7, 2021, SEC Chair Gary Gensler anno... Read On