Securities Fraud Lawyer Blog

FINRA fines Fenix Securities

In December, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Fenix Securities of New York, NY submitted an acceptance, waiver and consent letter regarding its failure to register foreign associates prior to their placing orders on behalf of customers.  As a result the firm was censured and fined $30,000.

FINRA’s allegations against Fenix Securities concerned the firm’s practice of permitting unregistered foreign associates to conduct firm business by opening accounts and making transactions on behalf of off shore investors.  FINRA found that several of these individuals were not registered in any capacity, while some were registered in their home jurisdiction but not with FINRA.

FINRA fines Houlihan Capital.

In December, 2016, the Financial Industry Regulatory Authority (“FINRA”) announced that Houlihan Capital of Chicago, IL submitted an acceptance, waiver and consent letter regarding its participation in a five million dollar private placement of securities.  The firm was censured and fined $25,000.

FINRA’s allegations against Houlihan Capital concerned the firm’s creation and dissemination of marketing materials for the convertible promissory notes offered by the firm.  The AWC stated that the firm disseminated written materials that did not present a balanced view of the offering and later, when certain information in the offering materials became untrue, the firm did not provide a written update.  The AWC found that the offering materials omitted material information, contained out of date information and contained false, exaggerated and misleading information.

Neil Pecker, a registered representative from Longwood, Florida, formerly with Vision Financial Partners, Coastal Equities and Westpark Capital was barred from FINRA membership as a result of refusing to cooperate with a FINRA investigation.  Previously, Pecker had been charged by the CFTC with making false and materially misleading statements to clients in connection with an options trading strategy.  Pecker consented to the entry of an order and an injunction and agreed to pay restitution of $2.7 million and a $3.75 million penalty.

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

This FINRA rule provides if a FINRA member fails to provide information or testimony requested or required by FINRA’s By-Laws or FINRA rules, or fails to keep his or her membership and supporting documents current, FINRA, after providing  21 days’ notice may suspend the FINRA membership of the person.

Thomas Andrews, a registered representative from California, formerly from Nephi, Utah, and previously registered with LPL Financial was barred from FINRA as a result of allegations he defrauded over twenty clients in a scam he called “the Lincoln” and “the Jackson Trust.”  Accroding to a complaint filed by the SEC, Andrews with the help of his personal assistant Scott Christensen allegedly told investors that these investments were guaranteed and would pay them between five and eight percent.  In fact, according to the SEC, the investment companies were fake and Andrews use the funds to support his lifestyle and pay Christensen over $1,000,000 to help him by mailing out bogus account statements.  When LPL discovered that Andrews had misappropriated client funds in 2015, the terminated him.  In 2016 he plead guilty to felony securities fraud and mail fraud.

Thomas Andrews’s registration and disciplinary history

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

Abida Khan, aka Sheik Firdosh Kahn a registered representative from Pasadena, California, formerly with Ameritas Investment Corporation and Pruco Securities was barred from FINRA membership as a result of SEC proceedings into her role in brokering transactions in VGTL.  According to the SEC, Khan received bribes from the seller of VGTL shares in order to persuade her clients to participate in the transactions.  On March 22, 2017 a jury found Khan guilty of engaging in manipulative and deceptive conduct pertaining to the VGTL transactions. As a result, Khan was barred from the securities industry.

Abida Khan’s registration and disciplinary history

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

FINRA barred Nick Shermeta over his role in penny stock transactions.  Criminal charges for aiding and abetting wire fraud are pending as of March, 2017.

Nick Shermeta, a registered representative from Minnetonka, Minnesota,  formerly with Northland Securities and Feltl & Company was barred from FINRA membership as a result of SEC proceedings into his role in brokering transactions in Dakota Plains, a company raising money via a private placement of securities.  Shermeta engaged in outside business activities aka “selling away”, and arranged for Dakota Plains to pay him commissions for the transactions through a company set up by Shermeta.

According to the SEC, Shermeta acted as an unregistered broker dealer in 2011 by soliciting investors to purchase shares of Dakota Plains.  Some of Shermeta’s clients were also clients of his broker dealer at the time.