April 2019 FINRA Disciplinary Actions
Firms Suspended
CSSC Brokerage Services, Inc
The Firm was fined $120,000, suspended for one year from participating in private securities offerings and required to pay $130,000 in restitution to customers. It was found that the Firm violated SEA Rule 10b-5 and FINRA Rule 2020 due to defrauding investors by selling securities through a bridge loan which was created to keep the failing parent company afloat. The CEO of the failing parent company knew of the financial situation but continued to misrepresent the company and did not inform investors of the bridge loan offering.
Misrepresentations included: failing to inform investors that the parent company could not make interest payments to investors, misrepresenting what the company had earned and misrepresenting a relationship with the city of Jacksonville, Florida. It was also found that the Firm unethically raised money from the public on several different occasions by misrepresenting the investments. Lastly, the CEO engaging in the activity was not properly registered for a period of five years but continued to solicit customers in private placement offerings, hiring representatives and managing Firm subsidiaries’ finances. FINRA Case #2015043646501
Firm Fined
Kestra Investment Services, LLC fka NFP Advisor Services, LLC
The Firm was fined $225,000 and ordered to create a plan to correct the eligibility of customers who should have received a mutual funds sales-charge waiver or were put in an incorrect share class. The Firm was also ordered to pay restitution to customers in the amount of $1,947,704. It was found that the Firm incorrectly charged Class A shareholder’s front-end sales charge when it should have been waived. It was also found that Class B and Class C shareholders were charged higher fees. Policies and procedures also failed to assist financial advisors in determining eligibility of sales charge waivers and share class determination. The Firm also failed to properly train its representatives on sales charge waiver eligibility and failed to implement policies to ensure eligible customers were not being charged a sale fee. The Firm earned $1,648,984 in overcharges. FINRA #2016048404601
Individuals Barred
Michael Alejandro Castillero
The individual was barred from association with any FINRA member for unauthorized trading in a customer’s account. After the customer made a complaint, the representative made payments to the customer in an attempt to settle the complaint due to the unauthorized trades. It was also found that Castillero did not accurately disclose the conduct to FINRA and failed to appear for on-the-record testimony. FINRA Case #2018058649501
Floyd Earl Powell
The individual was barred from association with any member Firm due to engaging in private securities transactions without providing prior notice or obtaining prior approval from his member Firm. Powell solicited his Firm’s customers to purchase promissory notes related to a real estate investment fund and ultimately sold $3,491,707 in promissory notes to customers. The individual also received commission totaling $103,598 related to these notes. FINRA #2018058504901
Individuals Suspended
Christopher Duke Bennet
The individual was fined $5,000 and suspended for 15 days for unauthorized trading. It was found that Bennet executed discretionary trades in many customer accounts, including senior investors, even though he did not have approval to conduct discretionary trading from both the customer and his member Firm. FINRA Case #2017054060301
Jefferey Evan Meyerson
The individual was fined $5,000 and suspended for 20 days for conducting business through a personal email. Meyerson caused the Firm to maintain inaccurate books and records through the use of his personal email address to conduct business. It was found that the individual used his personal email to communicate about prospectuses, stock purchase agreements and conducted negotiation of sales terms and fees. FINRA Case #2016048223001
Click here to read the Disciplinary Brief in its entirety.
Please contact an ARG Analyst with any questions regarding the matters discussed.
