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National Securities Corporation: Frequent Customer Disputes with FINRA on silverlaw.comHow the company has violated or been accused of violating FINRA regulations

It is always important for investors to have a good understanding of the financial professionals they work with. Before handing over money to anyone, brokers should be vetted properly. This is why the Financial Industry Regulatory Authority (FINRA) created its BrokerCheck reports.

Not only do these provide good information on where brokers are licensed and their work histories, but they also reveal customer disputes, discharges, and alleged improper activity. But these reports don’t just cover brokers – they also include their member firms.

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Learn about the steps involved for victims, loved ones, and financial professionals

Elder financial fraud is an epidemic in this country that not a lot of people know about and even fewer talk about. And “epidemic” isn’t an exaggeration; every year, billions of dollars are scammed and stolen from seniors by trusted individuals, including financial advisors, caregivers, and even their own family members. And what’s worse is that a large percentage of these cases aren’t reported.

Why are older people more susceptible to financial abuse?

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Why this may just be a marketing ploy

It is quite possible that your broker or financial advisor has an impressive-sounding title that indicates expertise managing the accounts of older investors – something like Senior Specialist. This, in fact, could be one of the reasons why you chose him or her to manage your investments. But what you may not know is that the title might not really mean anything.

When a securities professional has a special designation, he or she may have earned it through training or by passing certain tests. However, it is important to understand that there may not have been any requirement to get it. And when it comes to designations involving seniors, the SEC, FINRA, and state regulators don’t endorse them.

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Professionals in the securities industry are obligated to follow the rules created by the Financial Industry Regulatory Authority (FINRA), and it is important that they stay abreast of any changes or updates to them. One regulation that was recently amended is Rule 4512, which concerns customer account information.

Previously, for each account opened, a FINRA member had to get and maintain certain information, including the name and address of the customer and the names of anyone else associated with the account, plus the scope of their responsibilities. Now, members also need to make an effort to get the information of a trusted contact of the client, to assist in discovering or preventing possible financial exploitation.

What constitutes a trusted contact?

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In another attempt to help older investors get the protection they need, the Financial Industry Regulatory Authority (FINRA) recently established Rule 2165 (Financial Exploitation of Specified Adults). This regulation allows member financial professionals to place holds on accounts in the event that exploitation is suspected.

How Rule 2165 works

Rule 2165 concerns “specified adults,” which are defined by FINRA as people 65 and older or someone 18 or older who a “member reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests.”

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In February 2017, after approval by the SEC, the Financial Industry Regulatory Authority (FINRA) put into effective two initiatives: a new rule and an amendment to an old one.

Rule 2165 (Financial Exploitation of Specified Adults) allows member financial professionals or firms to place temporary holds on securities or the disbursements of funds for customers who are believed to be victims of financial exploitation.

Amendments to Rule 4512 (Customer Account Information) now require members to make efforts to get the name and contact information for a trusted contact person pertaining to a customer’s account.

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The former broker reportedly never disclosed a real estate venture that was worth $1 million

James Randall Clay was notified by the Financial Industry Regulatory Authority (FINRA) in October of last year that he was the respondent in a complaint. The allegations against him involve an elderly client, a large real estate deal, and a possible misappropriation of funds.

The events that led to the complaint began when Clay allegedly decided to buy 49 rental properties for $1 million from a client of his firm, who at the time was 86 years old. The client reportedly also agreed to finance Clay’s purchase and give him a loan for $500,000 to make repairs and upgrades to the properties.

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Allegations include the misappropriation of more than $2.6 million, much of it through a penny stock scheme

Elder financial fraud continues to be a serious problem in the U.S., but the Securities and Exchange Commission (SEC) is making attempts to protect senior investors. One way the agency is doing this is by increasing penalties for repeat offenders.

Recently, the SEC charged Joseph A. Rubbo and Angela Beckcom Rubbo Monaco of Coral Springs, FL, with defrauding 11 investors, most of whom were elderly. Their penny stock scheme involved getting people to invest in Rubbo and Monaco’s entertainment company called “VIP,” as well as the Spongebuddy, a sponge/glove cleaning product.

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The former Michigan broker’s career was filled with suspensions, investigations, and firings

In April of 2017, Ernest Julius Romer III received a permanent bar from the securities industry by the Financial Industry Regulatory Authority (FINRA). He was originally suspended by the agency, but because he didn’t request termination of the suspension, this automatically turned into a ban.

Romer began his career in 1993, and almost from the start, he found himself in trouble. In 1995 and 1998, he was permitted to resign from two brokerage firms. The first resignation was related to allegations of borrowing money from a client. The second had to do with unauthorized trading.

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The former NYLife Securities broker had been involved in several customer disputes

Until he was barred by the Financial Industry Regulatory Authority (FINRA) in June of 2017, Daniel Mullan had been in the securities industry for 18 years. In that time, he worked for 14 different firms. The last and most recent – NYLife Securities LLC in Melville, NY – discharged him in early 2016.

Mullan was fired for allegations related to unsuitable sales. This was far from the only time he faced accusations of illicit practices. During his career, Mullan was involved in eight separate customer disputes. Other charges include breach of fiduciary duty, unauthorized purchases, and misrepresentation. In total, clients received damages of around $800,000.

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