Articles Posted in Disciplinary Actions

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Aldo Comuzzi of Boca Raton, FL, and formerly associated with Dawson James Securities submitted a letter of acceptance, waiver and consent in which he was barred from association with any FINRA member in any capacity.

Without admitting or denying the findings, Aldo Comuzzi consented to the sanction and to the entry of findings that he refused to provide a response to a FINRA request for documents and information during an investigation into whether he had engaged in excessive trading and whether he had improperly utilized discretion without written approval in certain of his broker dealer’s customer accounts.

Aldo Comuzzi’s registration and disciplinary history

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Ryan Bowers of San Diego, California submitted a letter of acceptance, waiver and consent in which he was assessed a deferred fine of $25,000 and suspended from association with any FINRA member in any capacity for five months.

Without admitting or denying the findings, Ryan Bowers consented to the sanctions and to the entry of findings that he was aware of, but failed to provide updated valuation information regarding private equity funds to the firm that was the custodian of investors’ holdings. The findings stated that as a result, the custodian produced account statements falsely representing that investors’ positions were unchanged, when in fact their positions had declined.

Ryan Bowers was the chief executive officer (CEO) of a registered investment adviser that served as the investment advisor for the private equity funds, and was responsible for management of these funds. The funds raised approximately $22 million in cash and securities from investors. The investment adviser reported periodic account values to investors in the funds through quarterly reports generated by a third-party company that served as the custodian of the funds’ investments, and through monthly reports generated by a third-party company that served as the custodian of the investors’ investments.

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Jim Belenis of Davis, California submitted a letter of acceptance, waiver and consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 20 business days.

Without admitting or denying the findings, Jim Belenis consented to the sanctions and to the entry of findings that he engaged in a private securities transaction by investing in a limited liability company that held a gold mining operation, without prior written notice to his member firm. The findings stated that Belenis assisted in raising capital for the limited liability company, yet inaccurately answered “no” on a firm questionnaire asking whether he had assisted in raising capital.

The suspension was in effect from October 5, 2015, through October 30, 2015..

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Wiley Bros. Aintree Capital, LLC of Nashville Tennessee submitted a letter of acceptance, waiver and consent in which the firm was censured and fined $35,000. Without admitting or denying the findings, Wiley Bros. Aintree Capital consented to the sanctions and to the entry of findings that it failed to establish, maintain, and enforce a supervisory system and adequate written supervisory control procedures reasonably designed to review and monitor the movement of funds from customer accounts to firm employees.

The findings stated that a registered sales assistant converted approximately $147,400 from a customer by using blank, pre-signed letters of authorization to request and obtain checks payable to herself. The sales assistant also requested checks payable to the customer, claiming that she would hand-deliver the checks to him, but thereafter forged the endorsements on the checks to herself and converted the funds.

The findings also stated that the firm’s supervisory control system in this area failed to include a policy or procedure requiring a review to detect or prevent transmittals of funds from customers to firm employees. The firm failed to enforce its own written supervisory procedures related to hand-delivery of checks. As a result of the firm’s failure to establish, maintain, and enforce a supervisory system and adequate written supervisory control procedures, the registered sales assistant was able to convert the funds.

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Sterne Agee Financial Services, Inc. of Birmingham, Alabama) submitted a letter of Acceptance, Waiver and Consent in which the firm was censured and fined $25,000.

Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that Sterne Agee failed to enforce its written supervisory procedures prohibiting solicitation of inverse or leveraged exchange-traded funds (ETFs). The findings stated that the firm maintained written supervisory procedures that prohibited its registered representatives from soliciting transactions in inverse or leveraged ETFs. A registered representative solicited transactions in leveraged and inverse ETFs in contravention of the firm’s WSPs and mismarked all of the order tickets as “unsolicited” when, in fact, he had solicited each order.

Despite the occurrence of almost one thousand transactions in a concentrated number of inverse and leveraged exchange traded funds, Sterne Agee failed to investigate whether the transactions were, in fact, unsolicited. As a result of the incorrectly marked order tickets, the firm’s books and records were inaccurate.

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that registered representative Jeff Mohlman of Dayton, Ohio and formerly associated with Questar Capital submitted a letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Jeff Mohlman consented to the sanction and to the entry of findings that he refused to provide on-the-record testimony FINRA requested during the course of an investigation into allegations that he engaged in unapproved and undisclosed private securities transactions.

Jeff Mohlman’s registration and disciplinary history

In order to lawfully sell investments to the public, one must either be registered or exempt from registration.

In November, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that registered representative Todd Shanholtzer of Las Vegas, Nevada and formerly associated with Park Avenue Securities submitted a letter of Acceptance, Waiver and Consent in which he was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in any capacity for six months.

Without admitting or denying the findings, Todd Shanholtzer consented to the sanctions and to the entry of findings that he mishandled funds from a brokerage customer by mistakenly directing $58,622 of the customer’s funds into the wrong account, which caused the customer to incur a significant tax liability. The findings stated that Shanholtzer failed to deposit the funds into a qualified tax-deferred account, as the customer and the customer’s wife instructed him, and instead the funds were mistakenly deposited into the customer’s and his wife’s joint brokerage account. As a result, the $58,622 was deemed a taxable distribution and an early withdrawal subject to state and federal tax. When the customer complained to Shanholtzer about this error and other prior transactions, Shanholtzer settled the complaint away from his member firm by making a total of $50,000 in payments directly to the customer.

Todd Shanholtzer asked the customer and his wife not to mention their complaints to anyone, including the firm, and to not use the word “mistake” in any written communications to him. Shanholtzer did not inform his firm of the customer’s complaints or of the payments to the customer.

Daniel Pancake, a registered representative formerly affiliated with several Reno, Nevada based broker dealers was suspended from FINRA membership for violations of Rule 9552

FINRA Rule 9552. Failure to Provide Information or Keep Information Current

provides if a member, person associated with a member or person subject to FINRA’s jurisdiction fails to provide any information, report, material, data, or testimony requested or required to be filed pursuant to the FINRA By-Laws or FINRA rules, or fails to keep its membership application or supporting documents current, FINRA staff may provide written notice to such member or person specifying the nature of the failure and stating that the failure to take corrective action within 21 days after service of the notice will result in suspension of membership or of association of the person with any member. In September, 2015 Daniel Pancake was suspended from FINRA membership for violating Rule 9552.

In a complaint filed by FINRA, and reported in September, 2015 Red River Securities of Plano, Texas and Brian Keith Hardwick were named respondents in a FINRA complaint alleging that they willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 by making material misrepresentations and omissions related to joint venture offerings that were organized as general partnerships for the purpose of engaging in oil and gas drilling.

The complaint concerns five offerings by Regal Energy, LLC; Boonsville #2, Waggoner #1, Waggoner #2, Cosper #1 and Pierce #1.

The complaint alleges that Red River Securities and Hardwick misrepresented to investors that prior wells drilled were producing and profitable, when they were not; and omitted from offerings the authorizations for expenditures (AFEs)—the expected costs to complete the proposed projects—although Hardwick had prepared and relied upon the AFEs in pricing the offerings. In addition, Red River Securities and Hardwick misrepresented to investors the amount of income investors in prior wells had received by wildly inflating those prior income distributions and failed to disclose conflicts of interest to investors in offerings. The firm and Hardwick also failed to disclose to investors that they were investing in a “wildcat” well that was subject to additional specific development risks than those disclosed in the offerings for well drilling in general, and failed to disclose to the investors that Hardwick himself had written the purportedly independent geologist report in the offering documents.

In a complaint filed by FINRA, and reported in September, 2015 Equinox Securities, Inc. of Redlands, California, Stephen Oliveira of Phelan, California and Chris Palkowitsh of Cumming, Georgia were named respondents in a FINRA complaint alleging that Equinox Securities and Palkowitsh engaged in a manipulative, deceptive and fraudulent scheme by churning customer accounts. The complaint alleges that the firm and Palkowitsh acted with intent to defraud and/or reckless disregard of their customers’ interests by seeking to maximize their own remuneration.

The trading in the customers’ accounts had high annualized cost-to-equity ratios and the number of transactions were excessive in light of the customers’ investment objectives and financial situations. None of the customers agreed to the high level of trading in the accounts.

Six of the eight accounts were IRAs that constituted the bulk of the customers’ retirement savings. After the customers suffered substantial losses, Palkowitsh placed their remaining equity at risk by concentrating each account in a low-priced security. As a result of the excessive trading and churning in the accounts, each of the customers suffered extensive losses and paid exorbitant fees and commissions to Equinox Securities and Palkowitsh.