financial advisor

J.P. Morgan fined for prohibiting harmed customers from contacting the SEC

Published on: February 23, 2024 | by Greco & Greco, P.C.

The Securities and Exchange Commission of the U.S. (the SEC) recently fined J.P. Morgan Securities $18,000,000 for taking various steps to prevent securities whistleblowers from contacting the SEC or other securities regulators. J.P. Morgan agreed to the Order which can be found here.

The alleged wrongdoing centered on the language included by J.P. Morgan in its settlement agreements with its advisory and brokerage firm customers to which it paid over $1,000.00. Virtually all FINRA securities firms and Registered Investment Advisors require a confidentiality clause to be included in any settlement agreement with a customer. These settlement agreements are often the result of various misconduct by the firms or their advisors, such as securities fraud, breach of fiduciary duty, unauthorized trading, broker theft, recommended unsuitable investments, and churning. The reason why securities firms always require their settlements to be confidential is clear – they wish to hide their misconduct and the misconduct of their advisors from the public. FINRA’s Brokercheck report does require firms to disclose settlements with advisors/firms, but the details are often extremely general, and one has to look up the broker directly to find the disclosures.

According to the SEC Order, from 2020 to 2023 J.P. Morgan included language in 362 release agreements that prohibited customers not only from disclosing the amount of the settlement to the SEC, but also prohibited disclosing the facts related to the account (i.e. the misconduct). Although the releases did allow disclosure to the SEC in response to an inquiry, it did not allow the customers to initiate contact with the SEC.

Maryland/DC Area Transamerica Agent Barred by FINRA

Published on: October 17, 2023 | by Greco & Greco, P.C.

Lickhai Quach, a Silver Spring, Maryland broker/agent of Transamerica Financial Advisors, Inc., was recently barred by FINRA from association with any FINRA firm. The FINRA Letter of Acceptance, Waiver, and Consent states that Mr. Quach refused to produce documents or information to investigators as required by FINRA Rule 8210.

Mr. Quach was allegedly under investigation by FINRA as a result of being permitted to resign “while under review by the firm for violating firm’s policy related to borrowing funds from a client.” Mr. Quach’s FINRA Brokercheck report states that he was registered with Transamerica since 2012. The report further states that he had one recent customer complaint relating to borrowed funds that settled, and that he was permitted to resign in March, 2023.

Registered financial advisors are generally prohibited from borrowing money from customers under FINRA Rule 3240 except in limited circumstances such as from a family member or other personal relationship. The loan must also be disclosed and approved by the advisor’s firm.

Tennessee Financial Advisor Barred By FINRA

Published on: September 3, 2023 | by Greco & Greco, P.C.

FINRA has announced on its website that it has barred Tennessee financial advisor D. Wray Rodgers of Collierville. According to FINRA’s Letter of Acceptance, Waiver, and Consent, Mr. Rodgers was registered with the firm Vining-Sparks IBG, LLC, and FINRA had begun an investigation regarding “whether Rodgers engaged in an outside business activity without providing prior written notice to his member firm and whether he misused customer funds.”

Vining-Sparks had filed a U-5 filing for Mr. Rodgers stating that he had voluntarily resigned from the firm in May 2022. According to the AWC, Mr. Rodgers failed to appear for related on the record testimony, and he and FINRA agreed to a sanction of a bar from registering with FINRA securities Broker-Dealers.

Mr. Rodgers’ FINRA Brokercheck report shows one customer complaint relating to an alleged failure to disclose risk from 2011, with a $105,000.00 settlement.

California Edward Jones Advisor Suspended for Customer Loans

Published on: March 28, 2023 | by Greco & Greco, P.C.

FINRA recently suspended an Edward Jones financial advisor from Sunset Beach, California for borrowing money from a customer without firm authorization. The FINRA Letter of Acceptance, Waiver and Consent against Scott P. Smith can be found here.

According to the AWC, Mr. Smith borrowed money in five different loans from a single customer without advising his firm about the loans. Loans from customers to stock brokers are generally prohibited unless they fall into several limited exceptions such as when the customer is a family member. The loans were allegedly discovered when the customer died and the estate raised questions about the loans. Mr. Smith subsequently resigned from Edward Jones while under investigation.

The FINRA AWC imposed a year suspension on the financial advisor, and a $10,000 fine.