FINRA's March 2021 Disciplinary Actions
Firm Fined
Wealthforge Securities, LLC
Wealthforge Securities, LLC (“Wealthforge”) was censured, fined $100,000 and required to provide training to all personnel related to FINRA Rule 2210 for providing misleading statements to retail customers. The Firm was found to have distributed communications to retail customers that violated content standards of FINRA Rule 2210. Wealthforge provided customers exaggerated, false and misleading claims and statements that failed to appropriately address both risks and benefits concerning private placement offerings. It was also found that Wealthforge distributed communications related to private placement offerings that failed to disclose all material differences between the Firm and the Issuer, including the relationship between the Firm and the Issuer. Additionally, the firm violated Exchange Act Rule 10b-9 while acting as an underwriter of a contingency offering by failing to inform investors that the Issuer intended to extend the closing date, thus investors did not confirm in writing the decision to continue the investment. (FINRA Case #2016047664201)
Louis Capital Markets, LLC
Louis Capital Markets, LLC (“Louis Capital”) was censured, fined $40,000 and required to amend its risk management controls and supervisory procedures for failing to register certain principals and amend the Form BD to identify these principals. Louis Capital had a non-registered individual submit its month-end financial statements and also failed to register its Chief Compliance Officer (“CCO”) as a general securities principal. It was also found that two other individuals of an affiliate who had responsibility to prepare, approve and ensure accuracy of the financial reports were not registered with the firm as limited principals. Also, the CCO, Chief Financial Officer (“CFO”) and Financial and Operations Principal (“FINOP”) were not identified on the Form BD. Louis Capital failed to establish, document and maintain risk management controls and a system to supervise and manage financial, regulatory and other risks to the business. The Firm also failed to conduct an annual review of market access and failed to complete the Chief Executive Officer annual certification. (FINRA Case #2017052473701)
Individuals Barred
Steven Robert Luftschein
Steven Luftschein was barred from association of any FINRA member for violating Section 10(b) of the Exchange Act and Rule 10b-5 and FINRA Rule 2020 by churning customer accounts. Mr. Luftschein controlled the trading, volume and frequency of trading in the accounts, deliberately incurring unreasonably high trading costs in the customers’ accounts, making it impossible for customer accounts to be profitable. Mr. Luftschein masked the trading costs by placing a high percentage of the trades as riskless principal trades. The trading was found to be excessive and quantitatively unsuitable for each of the customers’ investment objectives. The trading was conducted without discussing with the customers and without obtaining proper authorization for the trades. (FINRA Case #2016051704303)
Charles Acheson Laverty
Charles Laverty was barred from association of any FINRA member for borrowing from customers, providing false statements to his member firms on an annual compliance questionnaire and a heightened supervision attestation and for providing false testimony to FINRA. After investigation, it was affirmed that Mr. Laverty borrowed a total of $1.35 million in a series of loans from customers, including an elderly couple, without approval from his member firms even though the firms’ policies and procedures clearly stated that employees were prohibited from borrowing from any customers, except under limited circumstances. The customer filed a claim against Mr. Laverty seeking compensatory damages of $1.5 million, which Laverty agreed to. However, Laverty failed to pay in accordance with the settlement agreement. Also, Mr. Laverty falsely completed a compliance questionnaire and heightened supervision attestation to his member firms stating that he had not borrowed from customers when in fact he had. Mr. Laverty also failed to disclose a civil judgement and federal tax lien. (FINRA Case #2016050205901)
Individuals Suspended
Christian Frank Lucchetto
Christian Lucchetto was fined $5,000 and suspended from association with any FINRA member for three months for excessively and unsuitably trading in a 61-year-old customer accounts. Mr. Lucchetto recommended trades to the customer who in turn followed Mr. Lucchetto’s recommendations causing him to have de facto control over the account. Mr. Lucchetto’s constant recommendations resulted in the customer paying $30,454.86 in commission fees and caused an overall realized loss in the customer’s account of $64,402.09. (FINRA Case #2020065035201)
Christopher Ryan McMorrow
Christopher McMorrow was fined $10,000 and suspended from association with any FINRA member for six months for failing to disclose to his member firm his involvement in an Outside Business Activities (“OBA”). Mr. McMorrow was involved with an insurance and financial planning company outside his member firm activity where he would consult customers about financial products. Mr. McMorrow was compensated through the OBAs in the amount $222,672 across the span of three years. Mr. McMorrow submitted compliance questionnaires to the firm in which he falsely stated that he disclosed all OBAs. (FINRA Case #2018059035702)