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.
Brandon Michael Kappes AWC/2010022662401/December 2010
Associated Person Kappes created fictitious homeowners-, automobile- and renters-insurance policies in order to meet production goals with his member firmís affiliated insurance company. Kappes did so by forging customer signatures or otherwise falsifying insurance application forms and related documents. The firmís affiliated insurance company paid Kappes approximately $18,000 in commissions as a result of the fictitious policies.
Mark William Beggs AWC/2009018374401/December 2010
Beggs engaged in outside business activities, in that he acted on behalf of an insurance company not affiliated with his firm and engaged in sales to customers of indexed deferred annuities involving a total principal investment of $112,000, for which he was compensated approximately $10,080 in commissions. Beggs accepted compensation from the insurance company for the sales without giving his firm prompt written notice.
Mark William Beggs : Fined $5,000; Suspended 20 business days
William Hanson Hauser AWC/2010022661001/December 2010
Associated Person Hauser created fictitious homeowners insurance policies in order to meet production goals with his member firmís affiliated insurance company. Hauser did so by forging customer signatures or otherwise falsifying insurance application forms and related documents. The firmís affiliated insurance company paid Hauser approximately $4,000 in commissions as a result of the fictitious policies.
Gazmen recommended that his member firmís customer use part of her available funds to purchase a variable universal life insurance (VUL) policy through him, and recommended that the customer open an account at another firm. Gazmen assisted the customer in opening a margin account with the other firm and was given trading authority over the account for which he made all of the investment decisions and entered the trades directly, but was not compensated in any way for managing the account. Gazmen was not licensed to recommend the sale of individual securities to a customer or to engage in the purchase or sale of individual securities on a customerís behalf, he did so in handling the customerís account at the other firm. Gazmen failed to give notice to his firm of his proposed role in handling the customerís account, as the firm and FINRA rules required.
Ethelbert Pacis Gazmen : Fined $10,000; Suspended 30 days
Darryl Wayne Golter AWC/2008015003201/October 2010
Golter failed to forward insurance premium payments of $102,635 made by customers to insurance companies as he was required to do, but instead deposited the funds into his personal account and used the money for his personal activities without the customersí or the insurance companiesí permission or authority. When a hurricane struck Texas, Golterís customers filed insurance claims and discovered they were not entitled to coverage; however, the insurance companies provided assistance with property losses and paid out approximately $713,000 in damage claims and refunded premiums. Golter failed to appear for a FINRA on-the-record interview.
While registered with a member firm, Kossak directed his assistant to sign a customerís name to a document related to a fixed insurance contract without the customerís knowledge or authorization. Kossak had sold the fixed insurance contract to the customer while at a previous member firm and the customer was not a customer of his present firm. The assistant, acting at Kossakís direction, forged and notarized required signatures on the document, which Kossak subsequently submitted as authentic. The customer complained of fraud and forgery to the insurance company, which notified Kossak of the complaint, but he failed to update his Form U4 within 30 days of learning of the complaint.
David Alan Kossak : Fined $15,000; Suspended 1 year
Michael Aaron Brady AWC/2010022037401/September 2010
Brady converted a total of $194,424.81 from customers who entrusted him with money to invest and, instead, misappropriated the funds for his own personal use. One customer gave Brady over $90,000 to invest in an Individual Retirement Account (IRA) and in a Section 529 college tuition plan account but Brady used the money for personal purposes. In one instance, Brady created a fictitious account statement that falsely showed that the customerís account increased from about $37,000 to over $48,000 in one year; but, in fact, Brady never invested the customerís money and had converted over $56,000 of the customerís money to his personal use. In another instance, a customer surrendered a variable annuity and paid the proceeds to Brady to re-invest in another variable annuity; Brady did not do so and misappropriated the funds, which exceeded $41,000.
Nathan Joel Brenowitz (Principal) AWC/2008013450201/September 2010
falsified a clientís insurance policy application and related documents without the clientís knowledge, submitted the documents to his member firmís insurance company affiliate and subsequently denied to his firm that he had falsified signatures or submitted falsely signed documents;
falsified clientsí insurance policy-related supplement documents without the clientsí knowledge, submitted the documents to his firmís insurance affiliate and, although the clients later stated that they approved of his actions, the firmís insurance affiliate policy prohibited its insurance agents from signing another personís name, even if the clientsí authorized them;
falsely endorsed and deposited a check for $1,000 made payable to an insurance agent contracted to him into his personal bank account, and falsely claimed to his firm that the insurance agent authorized him to use the check to repay expenses;
took an online computer examination on his office managerís behalf that his firmís insurance company affiliate required, and Brenowitz falsely denied to his firm that he did so;
denied in writing to FINRA that he took any test posing as his office manager; and
denied in sworn testimony to FINRA that he took any test posing as his office manager and claimed that the insurance agent contracted to him had authorized him to endorse and deposit the check and use the proceeds for expense reimbursement.
Faulks misappropriated customer insurance premium payments totaling over $9,600 from an insurance company by comingling her personal cash with cash premium payments and using the funds for her own purposes.Faulks paid earlier cash premiums with premium payments received at later dates, which was something the insurance company had cautioned her about in the past. The insurance company credited Faulksí customers for the insurance premium payments that Faulks failed to deposit on their behalf.
Faulks failed to respond to FINRA requests for information and to appear for testimony.
An affiliated insurance company of Baldridge's member firm began an audit of her insurance files after receiving a customer complaint. The customer gave Baldridge a check as a payment for a premium for a new fire insurance policy and Baldridge admitted to auditors that she deposited the check into her personal checking account and used the money for her mortgage payment. As such, Baldridge converted the customer check for $1,340. Baldridge repaid the insurance company $1,340 on the day of the audit.
Rogers made an unsuitable recommendation to customers to each purchase $1,000,000 variable life insurance policies, using $30,000 that they had intended to use as a down payment for a home. Rogersí recommendation to the customers was unsuitable in light of their young age and lack of a need for $1,000,000 in life insurance coverage. Rogers received commissions totaling $6,841.22.
Ronald Douglas Rogers : Fined $15,000 (includes commissions disgorgement); Suspended 1 month
Jeffrey Paul Dungan AWC/2008015824001/January 2010
Dungan created and disseminated a false proof of insurance document and inserted a false policy number on the document in order to assist a customer, whose commercial insurance application was never filed or submitted due to an administrative error at Dunganís member firm. Dungan should have known that the customer and its bank would rely on the representations in the document.
Jeffrey Paul Dungan: Fined $5,000; Suspended 1 month
The SEC charged 15 broker-dealers with violating certain recordkeeping provisions of the Securities Exchange Act and with failing reasonably to supervise with a view to preventing and detecting those violations. Additionally, the SEC charged affiliated advisor DWS Investment Management Americas, Inc. with violating certain recordkeeping provisions... Read On