Disciplinary Actions

New Jersey broker Craffy barred by FINRA

Published on: March 10, 2023 | by Greco & Greco, P.C.

New Jersey securities broker Carz Levinski Craffey (aka Caz Craffy) was recently barred from the securities industry by securities regulator FINRA. Mr. Craffy had been registered with Monmouth Capital Management and previously was registered with Newbridge Securities Corp.

Mr. Craffy’s Brokercheck report from FINRA discloses that he was discharged by Monmouth for failing to “disclose Outside Business Activity.” It also states that he has one customer complaint pending with allegations of negligence, fraud, breach of contract and breach of fiduciary duty.

The FINRA Letter of Acceptance, Waiver and Consent states that Mr. Craffy failed to appear to testify regarding his “potential conversion of customer money, loans or gifts from customers, active trading in customer accounts, and failure to fully disclose certain outside business activities.” He was barred from associating with any FINRA member in all capacities.

Western International Censured and Fined for non-traded REIT sales

Published on: February 10, 2023 | by Greco & Greco, P.C.

After being charged by the SEC with Regulation Best Interest violations relating to GWG, Western International Securities has now been censured and fined by FINRA for a different alternative investment product – non traded REITs.

REITs – Real Estate Investment Trusts – are investment companies that invest in a portfolio of various real estate properties. A non traded REIT is not traded on any exchange, and often is illiquid with no short term method of selling the investment.

FINRA charged Western with failing to implement and follow a reasonable supervisory system to ensure that REIT sales were suitable for the customers to whom they were recommended. Although Western had a REIT suitability form, they system did not require supervisors approving sales to review important suitability information from new account forms such as age, objectives, risk tolerance, income, etc.

Janney Montgomery Scott fined by FINRA for Oil and Gas MLP Concentration

Published on: January 12, 2023 | by Greco & Greco, P.C.

FINRA censured, fined, and ordered restitution payments from Philadelphia, Pennsylvania based Janney Montgomery Scott last month. The Letter of Acceptance Waiver and Consent (AWC) discussed how two of Janney’s advisors “recommended that 11 customers unsuitably concentrate their accounts in certain energy-sector securities, including master limited partnerships focused on the exploration or development of natural resources” in violation of the FINRA Suitability Rule, 2111. This subjected the customers to a high risk of loss if oil and gas prices declined.

The AWC discussed the fact that Janney’s supervisory system red flagged these concentrations, but Janney “failed to take reasonable steps to understand the potential risks and rewards.”

In addition to being censured by FINRA, Janney was fined $100,000 and ordered to pay restitution to the customers that had not yet received restitution in the total amount of $145,019.

J.P. Morgan Broker Edward Turley Barred from Industry by FINRA

Published on: November 21, 2022 | by Greco & Greco, P.C.

FINRA recently issued a Letter of Acceptance, Waiver, and Consent relating to J.P. Morgan broker Edward Turley from San Francisco, California that resulted in Mr. Turley being barred from the securities industry by FINRA.

The letter alleges that Mr. Turley has been registered with J.P. Morgan Securities LLC since 2009, and that he was terminated by J.P. Morgan in 2021 for “[l]oss of confidence concerning adherence to firm policies and brokerage order handling requirements.” According to FINRA, Mr. Turley has had five FINRA multi-million dollar arbitrations filed in 2020 – 2021 relating to allegations regarding sales practice violations and unsuitable trading. One of these resulted in an arbitration award.

Mr. Turley apparently refused to provide on the record testimony to FINRA in response to a Rule 8210 Request.

Anthony (Tony) Liddle of Oshkosh Wisconsin Barred by FINRA for Loans from Customers

Published on: August 25, 2022 | by Greco & Greco, P.C.

FINRA recently barred Oshkosh, Wisconsin broker Anthony (Tony) Liddle who was registered with Landolt Securities. The FINRA AWC states that it allegedly learned that Mr. Liddle had borrowed $1.8 million dollars from 13 customers, and that Mr. Liddle agreed to the FINRA bar. FINRA Rules and most state securities regulations generally ban securities advisors from borrowing from customers. Prior to Landolt Securities, Mr. Liddle was registered with Western International Securities in Wausau, Wisconsin.

Mr. Liddle’s FINRA Brokercheck states that Mr. Liddle was permitted to resign after allegations that he took GWG investment monies and deposited them in a Prosper Wealth Management Account. The Brokercheck further lists five customer complaints alleging the stealing of assets and issuance of promissory notes.

Greco & Greco has extensive experience representing customers of financial advisors across the country who steal funds and assets and/or borrow monies from customers. Please contact W. Scott Greco for a free attorney consultation if you believe you may be a victim of Mr. Liddle or other advisors who engaged in wrongful conduct.

North Carolina Morgan Stanley Broker Accused by SEC of Operating Ponzi Scheme

Published on: June 24, 2022 | by Greco & Greco, P.C.

Shawn Edward Good, who was a registered broker with Morgan Stanley it its Wilmington, North Carolina office, was recently barred by FINRA by consent agreement. Mr. Good also has a pending SEC Complaint against him alleging the following involvement in a ponzi scheme:

From 2012 until 2022 Mr. Good solicited customers to transfer funds to his personal bank account, allegedly for investments in real estate and government bonds.
In ponzi scheme fashion, the transferred monies were used to repay earlier customers who had also invested, in addition to payment of Mr. Good’s personal expenses.

SEC charges Western International with violations of Regulation Best Interest (BI)

Published on: June 17, 2022 | by Greco & Greco, P.C.

The United States Securities and Exchange Commission (SEC) has filed a Complaint charging a Broker-Dealer for the first time with a violation of the recently enacted Regulation Best Interest (Reg BI). The subject of the Complaint was Western International Securities, and five of its registered brokers, Nancy Cole, Patrick Egan, Andy Gitipityapon, Steven Graham, and Thomas Swan.

The Complaint alleges that Western and its brokers sold high risk and potentially illiquid L bonds issued by GWG Holdings, Inc., with many of the sales to customers on fixed incomes and with moderate risk tolerances. The SEC’s press release alleged that the Defendants “failed to comply with Reg BI’s “Care Obligation” both because they did not exercise reasonable diligence, care, and skill to understand the risks, rewards, and costs associated with L Bonds, and also because they recommended L Bonds to at least seven particular customers without a reasonable basis to believe the bonds were in their customers’ best interests.”

The SEC also claimed that the activities and sales violated the compliance component of Reg BI which requires firms to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI.

Virginia Securities Broker Barred by FINRA After Loan Investigation

Published on: June 2, 2022 | by Greco & Greco, P.C.

Former Richmond, Virginia Oppenheimer & Co. Inc. financial advisor Warren E. Rowe Jr. was barred from the securities industry by FINRA recently after an investigation related to alleged loans taken from customers.

According the the FINRA Letter of Acceptance Waiver and Consent found here, Mr. Rowe refused to provide documents in response to a request of FINRA investigators. The AWC, signed by Mr. Rowe, imposed a bar on Mr. Rowe’s association with any FINRA member in all capacities.

Mr. Rowe’s FINRA Brokercheck report reveals that he voluntarily resigned from Oppenheimer in May 2020 after an allegation that he took a loan from a client without disclosing it to the firm. The report also references multiple customer complaints related to alleged loans, as well as complaints related to unauthorized trading, and inappropriate margin use. Interestingly, a customer complaint regarding a loan made after his separation from Oppenheimer is still listed as “denied” by the firm.

FINRA Fines Suntrust for Leveraged and Inverse ETF Sales

Published on: August 14, 2020 | by Greco & Greco, P.C.

FINRA issued a Letter of Acceptance, Waiver and Consent against Suntrust Investment Services, Inc. in May of 2020 related to the recommendation and failure to supervise non-traditional ETFs to customers.

Non Traditional ETFs include ETFs designed to, on a daily basis, return a multiple of an underlying index or benchmark, or the inverse of the return of an underlying index or benchmark. Because these products are often meant as a day trading vehicle, and are reset daily, their performance over longer lengths of time may differ significantly from the performance of the index or benchmark.

These risks were set out by FINRA a decade ago in Regulatory Notice 09-31 which discussed the fact that “inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.” FINRA further has required member Broker-Dealers to have supervisory systems in place to ensure compliance with industry Rules, and importantly customer specific suitability under Rule 2111.

Prudential Fined for Failure to Supervise Fraudulent Withdrawals From Variable Annuity

Published on: July 22, 2016 | by Greco & Greco, P.C.

FINRA fined Prudential Annuities Distributors $950,000 this month for its failure to detect and prevent the theft by its agent, Travis Wetzel, of almost $1,300,000 from a customer’s variable annuity. The FINRA Letter of Acceptance, Waiver, and Consent may be found here.

Mr. Wetzel, who was a former registered representative of LPL Financial, allegedly submitted multiple forged wire transfer requests from the variable annuity, to be paid to a third party account in Mr. Wetzel’s wife’s maiden name.

FINRA alleged that Prudential failed to investigate red flags and audits associated with the repeated payments to third parties. FINRA stated, “PAD failed to establish and maintain reasonable supervisory procedures and controls to supervise third-party distributions and prevent fraudulent withdrawals from VA accounts.”