Two South Florida Brokers in the FINRA Spotlight for Making Inappropriate Loans

Patrick McGrath and Aaron Parthemer: Separate FINRA complaints for similar violations

In two separate FINRA disciplinary actions, two South Florida investment brokers were found to have made loans to, or borrowed funds from, their firm’s customers without permission. Generally, brokerage firms prohibit stockbrokers from asking clients for personal loans or otherwise soliciting direct investments from a client.

In the case of Fort Lauderdale, Florida-based Aaron Parthemer, his actions have resulted in his being permanently barred by FINRA from the securities industry in any capacity. While Parthemer did not admit to or deny the findings, he consented to the sanction and entry of the findings on several counts. Parthemer was registered with Wells Fargo Advisors, LLC in Fort Lauderdale, Florida.

First, he allegedly engaged in outside business activities without his firm’s knowledge, which was required by the firm. He allegedly loaned approximately $399,500 to customers of one of his firms without permission. Per the firm’s regulations, loans could only be made to immediate family members of the broker, and were not to be securities related. While these loans were not securities related, they were not made to immediate family members, therefore in violation of the firm’s regulations. It was also alleged that Parthemer presented an undisclosed private security to firm customers who then invested in approximately $3.08 million of preferred stock – without the firm’s approval to do so. Finally, FINRA found that Parthemer provided false information to his firm as well as to FINRA regarding his activities.

In the case of Miami, Florida-based broker Patrick McGrath III, he was fined $10,000 and suspended from association with any FINRA member in any capacity from May 18, 2015 through September 17, 2015 – a total of four months. McGrath allegedly borrowed $210,000 from his firm’s customer who was not an immediate family member of McGrath’s. The problem? The firm prohibited employees from borrowing funds from a customer unless the customer was an immediate family member. To make matters worse, although McGrath signed promissory notes to pay back the loans, he defaulted on them, resulting in a lawsuit filed by the customer. He also allegedly concealed how the loan proceeds were dispersed and repaid by having them sent to alternate accounts, and made false statements to the firm in compliance questionnaires regarding such activity.

In both of these cases, broker misconduct clearly impacted investors who entrusted their brokers with their financial well-being. McGrath was with Oppenheimer & Co, Inc. from 2009 through January 2014 when he joined the Brickell Ave, Miami office of Northeast Securities, Inc.

If you feel your broker has acted inappropriately, a knowledgeable securities attorney may be able to help you recover financial losses incurred due to such behavior. The key is to select an experienced securities attorney well versed in securities arbitration, and one with a strong track record in successfully recovering client losses.

The attorneys at Silver Law Group represent investors nationwide and are committed to helping investors recover investment losses through stockbroker misconduct. Our consultations are free and the firm is compensated only when we are successful in recovery. Contact us today to discuss your rights as an investor.