Securities Arbitration Lawyers Blog

FINRA reported in a news release that it fined Merrill Lynch, Pierce, Fenner & Smith Inc. (CRD# 7691) $6.25 million and the firm will pay approximately $780,000 in restitution for inadequately supervising its customers’ use of leverage and  overconcentrating some of its customers in Puerto Rican bonds.

According to the Acceptance, Waiver & Consent (“AWC”) entered into between Merrill Lynch and FINRA, FINRA found that from January 2010 through July 2013, Merrill Lynch did not establish and maintain adequate supervisory systems and did not establish, maintain, and enforce adequate written procedures reasonable designed to ensure the suitability of transactions in certain Puerto Rico securities, namely, municipal bonds and closed-end funds.  Certain customers’ holdings were highly concentrated in Puerto Rican bonds and highly leveraged through margin.

This is not the first time a firm has been sanctioned for supervisory, concentration and margin issues related to Puerto Rican securities, municipal bonds and/or closed-end funds.  In September 2015, FINRA fined UBS Financial Services Inc. (CRD# 8174) of Puerto Rico a total of $18.5 million in fines and restitution for similar allegations.

FINRA fined Oppenheimer & Co. Inc. (CRD# 249) and ordered the firm to pay retribution in an amount totaling $3.4 million for failing to produce documents in discovery to customers who filed FINRA arbitrations and for not applying applicable sales charge waivers to customers.

According to the news release, FINRA found that over a span of several years, Oppenheimer failed to timely report to FINRA more than 350 required filings including securities-related regulatory findings, disciplinary actions taken by Oppenheimer against its employees, and settlements of securities-related arbitration and litigation claims.  On average, according to FINRA, Oppenheimer made these filings more than four years late.

In addition to those allegations, FINRA found that between 2010 and 2013, Oppenheimer failed to produce relevant documents during discovery to seven FINRA arbitration claimants alleging Oppenheimer failed to supervise former Oppenheimer broker Mark C. Hotton (CRD# 2346843). Oppenheimer failed to provide spreadsheets showing that Hotton had excessively traded multiple customer accounts.

Silver Law Group is investigating former Stifel, Nicolaus & Company, Incorporated (CRD# 793) broker Assan Faal (CRD#  5863258) after FINRA permanently barred him.

According to Faal’s FINRA BrokerCheck report, FINRA permanently barred Faal from acting as a broker or otherwise associating with firms that sell securities in June 2016 after he failed to respond to a FINRA request for information.

Faal currently has one other disclosure on his FINRA BrokerCheck report.  The disclosure is a FINRA arbitration filed in April 2016 alleging misappropriation and $33,000 in damages.

Silver Law Group is investigating former National Securities Corporation (CRD# 7569) broker Bingyu Hu (CRD# 5573954) after FINRA permanently barred him and for excessive trading allegations.

According to Hu’s FINRA BrokerCheck report, FINRA permanently barred Hu from acting as a broker or otherwise associating with firms that sell securities in May 2016 after he failed to respond to a FINRA request for information.

Hu has three misconduct disclosures on his FINRA BrokerCheck.  He currently has one FINRA arbitration pending that alleges excessive trading.  The FINRA arbitration was filed in July 2015.

Silver Law Group is investigating former Miami, Florida-based J.P. Morgan Securities LLC (CRD# 79) broker Yohandy Gonzalez (CRD# 6298112) after J.P. Morgan discharged him and a FINRA suspension.

According to Gonzalez’s FINRA BrokerCheck report, J.P. Morgan discharged Gonzalez on March 9, 2016.  According to the FINRA BrokerCheck report, Gonzalez, in the capacity of an affiliate bank employee, deposited a check drawn from a personal bank account at another financial institution into his personal Chase account that was returned.  Additionally, according to the FINRA BrokerCheck report, Gonzalez deposited a check into his personal Chase account from another personal Chase account that had been closed.

When FINRA followed up with Gonzalez requesting information, Gonzalez failed to respond.  Subsequently, FINRA suspended Gonzalez.

Silver Law Group is investigating former Morgan Stanley (CRD# 149777) broker Myrna M. Perez (CRD# 4389021) after a FINRA permanent bar.

According to Perez’s FINRA BrokerCheck report, FINRA permanently barred Perez from acting as a broker or otherwise associating with firms that sell securities in June 2016 after she failed to respond to a FINRA request for information.

Perez currently has one other disclosure on her FINRA BrokerCheck report.  The disclosure is a discharge from employment by Morgan Stanley.  Morgan Stanley alleges that Perez processed a fraudulent third party wire transfer request without orally confirming the request with the client.  Further, the wire request was received by electronic mail and was sent by someone fraudulently impersonating the client.