The Hidden FINRA Arbitration Costs for Not Repaying a Promissory Note (BrokeAndBroker.com Blog)
https://www.brokeandbroker.com/7153/finra-promissory-note-arbitration/
When you took your last industry job, you got a nice employee forgivable loan in the form of a promissory note. You thought you'd be there for the term of the loan. It didn't work out that way. Now your former firm wants a few hundred thousand dollars in principal repaid. You don't want to repay. Or you'd like to repay but can't. Or you're not repaying a damn cent and for good reason. So, you didn't repay what was demanded and just received a FINRA Arbitration Statement of Claim. What's it all gonna cost ya if you lose? Probably a lot more than you think.

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FINRA Sued for Alleged Defamation in Arbitration Award
Susan Seltzer, Plaintiff, v. Financial Industry Regulatory Authority, Defendant (Opinion, United States District Court for the District of Columbia ("DDC"), 22-CV-00330)
https://brokeandbroker.com/PDF/SeltzerDC230805.pdf
As asserted in the preamble to the DDC Opinion [Ed: footnote omitted]:

Plaintiff Susan Seltzer participated in an arbitration proceeding before the Financial Industry Regulatory Authority (FINRA). The arbitration concluded with a written award that was published online. Seltzer alleges that the award defamed her by incorrectly describing her actions in the arbitration proceeding. She also contends that FINRA took actions to “tag” the award to her name in a Google search. Seeking to recover for the harms she allegedly suffered from the publication of those statements, Seltzer sued FINRA.

FINRA has moved to dismiss Seltzer’s Complaint. The Court agrees with FINRA that there are many issues with Seltzer’s suit, but the Court grants FINRA’s Motion on the grounds most obvious to the Court: First, she filed her Complaint too late, after the statute of limitations expired for her claim. And second, even if her claim was timely, FINRA is entitled to arbitral immunity.

The Court also denies Seltzer’s various motions to amend her Complaint (ECF 19, 20, 29) because the proposed amendments do not cure the deficiencies of her suit or otherwise state viable  claims. This case is closed.

Russian Businessman Sentenced to Nine Years in Prison in $93 Million Hack-to-Trade Conspiracy (DOJ Release)
https://www.justice.gov/usao-ma/pr/russian-businessman-sentenced-nine-years-prison-93-million-hack-trade-conspiracy
After a jury trial in the United States District Court for the District of Massachusetts convicted Vladislav Klyushin, a/k/a “Vladislav Kliushin,” 42, on charges of securities fraud, wire fraud, gaining unauthorized access to computers, and conspiracy to commit those crimes, he was sentenced to nine years in prison and ordered to forfeit $34,065,419 and pay restitution. As alleged in part in the DOJ Release:

Klyushin was charged along with two Russian co-conspirators: Ivan Ermakov and Nikolai Rumiantcev. Two others, Mikhail Vladimirovich Irzak and Igor Sergeevich Sladkov, were charged in a separate indictment. All four co-conspirators remain at large. In July 2018, a federal grand jury in Washington, D.C. indicted Ermakov in connection with his alleged role in a scheme to interfere with the 2016 United States elections by way of computer hacking. In October 2018, Ermakov was also charged by a  federal grand jury in Pittsburgh in connection with his alleged role in hacking and related disinformation operations targeting international anti-doping agencies, sporting federations and anti-doping officials.

. . .

Klyushin, Ermakov and Rumiantcev worked at M-13, a Moscow-based information technology company that Klyushin owned. M-13 offered penetration testing and “Advanced Persistent Threat (APT) emulation,” – both services that seek exploitable vulnerabilities in a computer system via hacking techniques, purportedly for defensive purposes. M-13’s website indicated that the company’s “IT solutions” were used by “the Administration of the President of the Russian Federation, the Government of the Russian Federation, federal ministries and departments, regional state executive bodies, commercial companies and public organizations.” In addition to these services, Klyushin invested the money of several investors in his hack-to-trade scheme, and took a cut of up to 60 percent of their profits.

Trial evidence showed that, between at least in or about January 2018 and September 2020, Klyushin, and allegedly Ermakov, Irzak, Sladkov and Rumiantcev, conspired to use stolen earnings information to trade in the securities of companies that are publicly traded on U.S. national securities exchanges, including the NASDAQ and the NYSE, in advance of public earnings announcements. Using the same malicious hacking techniques M-13 advertised to customers, Klyushin and, allegedly his co-conspirators, obtained inside information by hacking into the computer networks of two U.S.-based filing agents that publicly-traded companies used to make quarterly and annual filings through the U.S. Securities and Exchange Commission (SEC). Specifically, Klyushin, and allegedly his co-conspirators, deployed malicious infrastructure capable of harvesting and stealing employees’ login information and used proxy (or intermediary) computer networks outside of Russia to conceal the origins of their activities. With this access, Klyushin, and allegedly his co-conspirators, viewed and downloaded material non-public information, such as quarterly and annual earnings reports that had not yet been filed with the SEC or disclosed to the general public, for hundreds of companies – including Capstead Mortgage Corp., Tesla, Inc., SS&C Technologies, Roku and Snap, Inc. Many of the illegally obtained earnings reports were downloaded through a computer server located in downtown Boston.

Armed with this information before it was disclosed to the public, Klyushin, and allegedly his co-conspirators, knew ahead of time, among other things, whether a company’s financial performance would meet, exceed or fall short of market expectations – and thus whether its share price would likely rise or fall following the public earnings announcement. Klyushin then traded based on that stolen information in brokerage accounts held in his own name and in the names of others. Klyushin, and allegedly his co-conspirators, also distributed their trading across accounts they opened at banks and brokerages in several countries, including Cyprus, Denmark, Portugal, Russia and the United States, and misled brokerage firms about the nature of their trading activities. 

Evidence presented at trial demonstrated that the times in which the filing agents were hacked corresponded with the times in which Klyushin, and allegedly his co-conspirators, made profitable trades. Additionally, of the more than 2,000 earnings events around which Klyushin and allegedly his co-conspirators traded between January 2018 and September 2020, more than 97 percent were filed with the SEC by the victim filing agents. Testimony at trial indicated that the odds of this trading pattern occurring in the absence of a relationship between the trading and the identity of the filing agent was less than one in a trillion.  

In total, Klyushin and allegedly his co-conspirators earned close to $100 million in earnings trading from roughly $9 million in investments using inside information, even as they lost close to $10 million in non-earnings trading – representing a return of more than 900 percent during a period in which the broader stock market returned just over 25 percent. 

Of that amount, Klyushin individually netted more than $34 million, including nearly $22.5 million on his personal trading and trading for his company, in addition to more than $11.5 million on the money he invested for others. Further, Klyushin’s sophisticated cyber attack cost its two victims more than $8 million dollars. 

Bridgewater Man Pleads Guilty to Defrauding Investors (DOJ Release)
https://www.justice.gov/usao-ma/pr/bridgewater-man-pleads-guilty-defrauding-investors
In the United States District Court for the District of Massachusetts, Jose Rocha pled guilty to one count of securities fraud. As alleged in part in the DOJ Release:

Between 2020 and 2022, Rocha solicited investments from individuals in Massachusetts, falsely portraying himself as a successful investor in securities and promising that he would invest their money in stocks and stock options in exchange for a share of the returns. In total, Rocha obtained over $1 million from his victims, the majority of which he used to pay purported investment returns to other investors or for himself, including to pay for vacations and gambling at casinos. 

The Securities and Exchange Commission filed a civil complaint against Rocha in August 2023 alleging violations of the securities laws.

Utah Businesswoman Sentenced to 18 Months Imprisonment Following $5M Securities Fraud Conviction (DOJ Release)
https://www.justice.gov/usao-ut/pr/utah-businesswoman-sentenced-18-months-imprisonment-following-5m-securities-fraud
In the United States District Court for the District of Utah, Crystal A. Huang, 41, pled guilty to securities fraud, and she was sentenced to 18 months in prison plus two years of supervised release. As alleged in part in the DOJ Release:  

[F]rom February 2015 through February 2020, Crystal A. Huang, 41, of Lehi, Utah, offered investments in her company, ProSky Inc., by providing false promises and information to potential investors. In June, Ms. Huang admitted that she devised a scheme intended to defraud investors and obtain money and property, under false pretenses to benefit her company, ProSky Inc. According to court documents, Huang would lull investor victims into a false sense of security about their investments by claiming her company, ProSky Inc., had millions in recurring revenue, when in fact it did not. She further supported her false claims by providing investors with falsified balance sheets, profit and loss statements, bank account statements and customer lists. During her scheme to defraud, Huang obtained over $5 million from approximately 13 investors and communicated via email, telephone and through an online database. On the day of her sentencing, Huang provided a check to the clerk of court for $300,000 and was ordered by the court to pay $1,200 per month in restitution.  

SEC Obtains Preliminary Injunction and Asset Freeze Against Florida Resident in Connection with Ponzi Scheme Targeting Religious Community (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25823
In the United States District Court for the Eastern District of New York, the SEC filed a Complaint that charges Mina Tadrus and Tadrus Capital LLC with violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Court granted a preliminary injunction against Mina Tadrus and Tadrus Capital LLC that prohibits the defendants from violating the charged antifraud provisions of the federal securities laws and imposes an asset freeze pending a final resolution of the matter. As alleged in part in the SEC Release:

[S]ince at least September 2020, Tadrus and Tadrus Capital solicited and sold investments in Tadrus Capital Fund LP, a purported pooled investment vehicle that targeted members of the Egyptian Coptic Christian community. The defendants allegedly raised more than $5 million from at least 31 investors and falsely told them that their funds would be pooled and invested using algorithmic trading that would guarantee a steady monthly return on investment (ROI). However, the complaint alleges, the defendants did not actually invest the investors’ funds as promised. In reality, according to the complaint, the defendants used at least $1.4 million to make purported ROI payments to other investors in Ponzi fashion and otherwise misappropriated at least $380,000.

SEC Charges Privately Held Monolith Resources for Using Separation Agreements that Violated Whistleblower Protection Rules (SEC Release)
https://www.sec.gov/news/press-release/2023-172
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/files/litigation/admin/2023/34-98322.pdf  that it had violated Securities Exchange Act Rule 21F-17., Monolith Resources LLC consented to cease and desist from committing or causing violations of the SEC’s whistleblower protection rules; and, further to pay a civil penalty of $225,000, which takes into account its remedial actions, including notifying former employees who had signed the improper separation agreements that the agreements do not in any way limit their ability to obtain financial awards in connection with providing information to government agencies. As alleged in part in the SEC Release:

[F]rom February 2020 until early March 2023, Monolith used separation agreements that required certain departing employees to waive their rights to monetary whistleblower awards in connection with filing claims with or participating in investigations by government agencies. The SEC’s order finds that Monolith’s separation agreements raised impediments to participation in the SEC’s whistleblower program by having employees forego important financial incentives that are intended to encourage people to communicate directly with SEC staff about possible securities law violations.

Linus Financial Agrees to Settle SEC Charges of Unregistered Offer and Sale of Securities / SEC declines to impose civil penalties because of firm’s cooperation and prompt remediation (SEC Release)
https://www.sec.gov/news/press-release/2023-171
Without admitting or denying the findings in an SEC Order that it had failed to registe the offers and sales of its retail crypto lending product, Linus Financial Inc. agreed to a cease-and-desist order prohibiting it from violating the registration provisions of the Securities Act; however,  the SEC declined to impose civil penalties because of the company’s cooperation and prompt remedial actions. As alleged in part in the SEC Release:

[I]n or around March 2020, Linus Financial began to offer and sell Linus Interest Accounts in the United States. These accounts allowed U.S. investors to tender U.S. dollars to Linus Financial in exchange for Linus Financial’s promise to pay interest. Linus Financial converted investors’ cash into crypto assets, pooled the crypto assets, and controlled how the pooled assets were used to generate income for Linus Financial itself and for investors’ interest payments. The order finds that the Linus Interest Accounts were offered and sold as securities, and that the offers and sales did not qualify for an exemption from SEC registration. Therefore, Linus Financial was required to register its offers and sales of the Linus Interest Accounts.

According to the SEC’s order, on March 25, 2022, shortly after the SEC announced charges against a similar crypto asset investment product, Linus Financial voluntarily ceased offering the Linus Interest Accounts to new investors and asked existing investors to withdraw their funds by late April 2022. All investor funds have since been withdrawn.  

SEC Obtains Judgments Totaling More Than $20 Million Against Microcap Company and Related Entity in Fraud Action (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25821
The United States District Court for the District of Connecticut entered Default Judgments against Ameritrust Corporation and Beespoke Capital, Inc. that prohibits Ameritrust from violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act  and Rule 10(b)-5 thereunder, and orders it to pay disgorgement of $11,967,705, plus prejudgment interest of $1,602,391, and a civil penalty of $2,232,280. Relief Defendant Beespoke Capital was ordered to disgorge $4,871,097, plus prejudgment interest of $325,421. The court previously entered a temporary order freezing assets of Ameritrust Chief Executive Officer Seong Yeol Lee, which remains in effect as the case against him and his three children remain pending.As alleged in part in the SEC Release:

The SEC's action alleges that Ameritrust and its CEO, Seong Yeol Lee, misled and stole funds from investors in the United States and the Republic of Korea between at least 2019 and 2023. The SEC's complaint alleges that, through a network of recruiters acting at his direction, Lee solicited more than $20 million from investors primarily in the Republic of Korea, who sent money to corporate and personal bank accounts that Lee controlled in the United States to buy shares of Ameritrust, a publicly traded company in the United States. Lee, either directly or through his recruiters, allegedly told investors that their money would be used to buy shares in a U.S.-based company that would be listed on a national stock exchange, guaranteeing profits for anyone holding the shares. In reality, the SEC's complaint alleges, Ameritrust has no real operations and did not apply for any exchange listing. According to the SEC's complaint, Lee misappropriated investor funds by transferring money from corporate bank accounts to his personal bank accounts and to three of his adult children. Lee also allegedly received or held investor funds in accounts of Beespoke Capital, an entity affiliated with Lee and Ameritrust.

SEC Charges Fluor Corp. for Accounting Improprieties / Five former and current employees charged with causing company’s violations (SEC Release)
https://www.sec.gov/news/press-release/2023-170
Without admitting or denying the findings in an SEC Order, Fluor Corporation consented to cease and desist from committing or causing future violations and to pay a civil money penalty of $14.5 million; also, Bradley R. Scott (current Fluor business-line Chief Financial Officer), Robin K. Chopra, (former Chief Accounting Officer and Controller), James F. Brittain (former Fluor business-line president), Jon Eric Best (former Fluor business-line Chief Financial Officer), and Kent N. Smith (former Fluor business-line senior vice president) consented cease and desist from committing or causing the relevant violations and to pay penalties ranging from $15,000 to $25,000.

• SEC Order - Fluor Corporation
• SEC Order - Jon Eric Best
• SEC Order - James F. Brittain
• SEC Order - Robin K. Chopra
• SEC Order - Bradley R. Scott
• SEC Order - Kent N. Smith

As alleged in part in the SEC Release:

The SEC’s order found that Fluor, a global engineering, procurement, and construction company, bid on the two projects relying on overly optimistic cost and timing estimates and subsequently experienced cost overruns that worsened over time. Fluor then failed to sufficiently maintain internal controls to account for the projects in accordance with the percentage of completion accounting method under U.S. generally accepted accounting principles (GAAP). According to the SEC’s order, Fluor failed to include all anticipated costs that were known or should have been known in each project’s respective forecasts—thereby delaying loss recognition on each. Additionally, Fluor improperly incorporated revenue from unapproved change orders in the forecasts of one of the projects, including change orders that had not yet been submitted to, or had already been rejected by, the customer.

According to the SEC’s order, the accounting errors on one project caused Fluor to materially overstate its net earnings by as much as 37 percent from the company's fiscal year 2016 through the first quarter of its fiscal year 2019. In addition, the delayed loss recognition on the second project caused Fluor to overstate its net earnings by 22 percent in the second quarter of 2018. As a result, Fluor materially misstated the financial statements included in its periodic filings with the Commission for the corresponding reporting periods.

. . .

In 2020, Fluor restated its financial statements for fiscal years 2016 through 2018 and the quarters ending March 31, 2018, through Sept. 30, 2019, correcting the materially overstated net earnings as a result of the accounting errors on the two projects. Fluor also disclosed that it had identified material weaknesses in its internal control over financial reporting and material errors in its financial statements related to the projects.

SEC Charges Five Advisory Firms for Custody Rule Violations (SEC Release)
https://www.sec.gov/news/press-release/2023-168
Without admitting or denying the findings in an SEC Order,

• Lloyd George Management (HK) Limited;
• Bluestone Capital Management LLC;
• The Eideard Group, LLC;
• Disruptive Technology Advisers LLC; and
• Apex Financial Advisors Inc.

agreed to be censured, to cease and desist from violating the respective charged provisions, and to pay civil penalties ranging from $50,000 to $225,000. As alleged in part in the SEC Release:

[T]he five firms failed to do one or more of the following: have audits performed; deliver audited financials to investors in a timely manner; and/or ensure a qualified custodian maintained client assets. In addition, according to the SEC’s orders, two of the firms failed to promptly file amended Forms ADV to reflect they had received audited financial statements, and one of the firms did not properly describe the status of its financial statement audits for multiple years when filing its Form ADV.

• • SEC Order - Disruptive Technology Advisers LLC
  • SEC Order - Bluestone Capital Management LLC
  • SEC Order - The Eideard Group LLC
  • SEC Order - Lloyd George Management (HK) Limited
  • SEC Order - Apex Financial Advisors Inc

SEC Charges Private Equity Firm Prime Group for Inadequate Disclosure of Fees Paid to Affiliate / NY-based company to pay $20.5 million to settle charges (SEC Release)
https://www.sec.gov/news/press-release/2023-167
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/litigation/admin/2023/33-11228_0.pdf that it had violated Section 17(a)(2) of the Securities Act, Prime Group Holdings LLC agreed to cease and desist from violating the charged provision and to pay $6.5 million civil penalty and more than $14 million in disgorgement and prejudgment interest to settle the charges. As alleged in part in the SEC Release:

[P]rime Group, based in Saratoga Springs, New York, launched an investment fund in 2017 to purchase self-storage real estate properties. The order found that the fund mostly relied on deal teams comprised of Prime Group’s employees and independent contractors to find and acquire “off-market” properties. The deal teams’ costs and compensation, as well as other expenses of Prime Group’s operations, were paid, in part, from a three percent brokerage fee the fund paid on the deal teams’ acquisitions. The order found that the fund paid these brokerage fees to a real estate brokerage firm that was wholly owned by Prime Group’s CEO, making the brokerage firm an affiliate of Prime Group. As a result, according to the order, Prime Group made misleading statements in the fund’s offering materials, including its limited partnership agreement, private placement memorandum, and due diligence questionnaires, concerning fees and conflicts of interest, because Prime Group failed to adequately disclose that an affiliate would be receiving these real estate brokerage fees. Between 2017 and 2021, the affiliated real estate brokerage firm received nearly $18 million in brokerage fees at the closing of the fund’s property acquisitions. 

SEC Approves Funding Amendment to National Market System Plan Governing the Consolidated Audit Trail (SEC Release)
https://www.sec.gov/news/press-release/2023-169
The SEC approved an amendment to the National Market System Plan ("NMS") governing the Consolidated Audit Trail ("CAT") (the “CAT NMS Plan”) to adopt a revised funding model, called the “Executed Share Model,” for the CAT and establish a fee schedule for CAT fees for the self-regulatory organizations that are participants to the CAT NMS Plan in accordance with the Executed Share Model.

CFTC

CFTC Orders Utah Man to Pay More Than $2.5 Million for Leveraged Bitcoin Fraud and Failure to Register (CFTC Release)
https://www.cftc.gov/PressRoom/PressReleases/8775-23
A CFTC Order https://www.cftc.gov/media/9241/enfjacoborvidasorder090823/download settled charges against Jacob Orvidas and found that he had fraudulently solicited at least four people to trade leveraged bitcoin in a commodity pool, lost almost all funds trading, and then lied to pool participants about the losses and the availability of their money. The order also finds Orvidas failed to register as a commodity pool operator. The Order requires Orvidas to pay over $2 million in restitution and a $500,000 civil monetary penalty and to cease and desist from further violating the Commodity Exchange Act, as charged. In addition, the order imposes 10-year registration and trading bans against Orvidas. As alleged in part in the CFTC Release:

From approximately October 2017 through at least July 2020, Orvidas fraudulently solicited at least four pool participants to trade leveraged bitcoin on their behalves in a commodity pool. Orvidas misrepresented his own trading prowess and falsely promised pool participants outlandish profits and that their money would be protected. For example, Orvidas told one pool participant that another client contributed $100,000 worth of bitcoin and cashed out at $2.7 million, and that “[c]rypto trading is a joke . . . [i]t’s like printing money . . . .,” all of which were false. Based on these and similar claims, pool participants contributed over $2 million to Orvidas’ commodity pool, after which Orvidas lost nearly all funds trading. To cover up those losses, Orvidas provided pool participants fictitious spreadsheets purporting to reflect trading profits and high account balances and lied about why he could not pay those profits out and return principal. As a result, pool participants lost over $2 million.

CFTC Charges Texas Firm and Head Trader with Spoofing and Engaging in a Manipulative and Deceptive Scheme and Violating a Prior CFTC Order (CFTC Release)
https://www.cftc.gov/PressRoom/PressReleases/8773-23
In the United States District Court for the Northern District of Illinois, the CFTC filed a Complaint against Logista Advisors LLC and Andrew Serotta,
https://www.cftc.gov/media/9206/enflogistaadvisorscomplaint090723/download charging them with spoofing, engaging in a manipulative and deceptive scheme, failing to supervise, and for violating a prior CFTC order. As alleged in part in the CFTC Release:

The complaint alleges Serotta was spoofing (bidding or offering with the intent to cancel the bid or offer before execution) from approximately January 2020 through April 2020. According to the complaint, he would place hundreds of large orders for crude oil and natural gas futures–specifically, calendar spreads–he intended to cancel before execution (spoof orders), while placing orders on the opposite side of the same futures markets (genuine orders) that would benefit from market participants’ reactions to his spoof orders.

By placing the spoof orders, Serotta allegedly deceived other traders about supply and demand, misleading market participants about the likely direction of the commodity’s price, which made Serotta’s genuine orders appear more attractive to market participants and allowed Serotta to execute his genuine orders in larger quantities and at better prices than he would have without the spoof orders. The complaint further alleges that, by this conduct, Serotta and Logista failed to diligently supervise the fund’s trading and violated a 2017 CFTC order that found a supervision failure stemming from prior instances of spoofing at Logista. [See CFTC Press Release No. 7623-17] 

Federal Court Orders South African Company to Pay Over $1.7 Billion in Restitution for Forex Fraud / This Action Resolves the CFTC’s Largest Fraud Scheme Case Involving Bitcoin (CFTC Release)
cftc.gov/PressRoom/PressReleases/8772-23
The United States District Court for the Western District of Texas entered a Consent Order against Mirror Trading International Proprietary Limited ("MTI") (currently in liquidation in the Republic of South Africa) finding it liable for fraud in connection with retail foreign currency (forex) transactions, fraud by a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations. MTI was ordered to pay over  $1.7 billion in restitution and is permanently enjoined from further violations of the Commodity Exchange Act (CEA), as charged, and subject to permanent trading bans in any CFTC-regulated markets as well as a registration ban against MTI. As alleged in part in the CFTC Release:

[F]om approximately May 2018 through approximately March 2021, Steynberg, individually and as the controlling person of MTI, engaged in an international fraudulent multilevel marketing scheme to solicit Bitcoin from people for participation in an unregistered commodity pool operated by MTI. The commodity pool was controlled by defendants MTI and Steynberg and purportedly traded off-exchange, retail forex through what the defendants falsely claimed was a proprietary “bot” or software program. During this period, Steynberg, individually and as the principal and agent of MTI, accepted at least 29,421 Bitcoin—valued over $1,733,838,372 at the end of the relevant period—from at least 23,000 individuals in the U.S., and thousands more worldwide, to participate in the commodity pool. The defendants misappropriated, either directly or indirectly, all the Bitcoin they accepted from the pool participants. 

FINRA

FINRA Announces Results of Governor Elections / Firms Elect Scott A. Curtis as a Large-Firm Governor, Re-Elect Wendy Lanton as a Small-Firm Governor (FINRA Release)
https://www.finra.org/media-center/newsreleases/2023/finra-announces-results-governor-elections
Not much of a shocker here given that both candidates were unopposed. More troubling is the lack of transparency as to the number of votes cast and how many of those votes were "abstentions." See, 2023 FINRA Election Boycott: Awaiting the Tally (BrokeAndBroker.com Blog)

FINRA Fines and Suspends Rep For Borrowing From Customers and Exercising Discretion
In the Matter of Kevin J. Carroll, Respondents (FINRA AWC  2021072363201)
https://www.finra.org/sites/default/files/fda_documents/2021072363201
%20Kevin%20J.%20Carroll%2C%20CRD%20No.%203124942%20AWC%20gg.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Kevin J. Carroll submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts Kevin J. Carroll was first registered in 1999, and by 2019, he was registered with LPL Financial LLC. In accordance with the terms of the AWC, FINRA imposed upon Carroll a $10,000 fine and a four-month-suspension from associating with any FINRA member in all capacities. As alleged in part in the AWC's "Overview":

In July 2021, Carroll borrowed $31,170 from one of his LPL customers without obtaining approval from his member firm. Therefore, Carroll violated FINRA Rules 3240 and 2010.

Additionally, from March 2021 to July 2021, Carroll exercised discretion without written authorization in two senior customers’ accounts when executing at least seven transactions. Therefore, Carroll violated FINRA Rules 3260(b) and 2010. 

FINRA Bars Rep For Conversion of Customer Funds and Failure to Cooperate in an Investigation
In the Matter of Ethan Christopher Martin, Respondents (FINRA AWC  020067046901)
https://www.finra.org/sites/default/files/fda_documents/2022076503701
20Ethan%20Christopher%20Martin%20CRD%207376480%20AWC%20lp.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Ethan Christopher Martin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts Ethan Christopher Martin was first registered in 2021 with Charles Schwab. In accordance with the terms of the AWC, FINRA imposed upon Martin a Bar from associating with any FINRA member in all capacities. As alleged in part in the AWC's "Overview":

Between June and September 2022, while associated with Charles Schwab, Martin converted and improperly used funds from a married couple who held a joint brokerage account at the firm, one of whom was a senior customer. Specifically, when the customers asked Martin for their account information for purposes of initiating direct deposits, Martin provided the customers with the account number for his personal Charles Schwab account rather than the customers’ account number. Martin then received three electronic deposits of the customers’ social security payments, totaling $6,981, which he retained and used for personal investments and expenditures. As a result, Martin violated FINRA Rules 2150(a) and 2010.

FINRA Fines and Suspends Rep For Discretionary Trading
In the Matter of Anthony L. Cross, Respondents (FINRA AWC  020067046901)
https://www.finra.org/sites/default/files/fda_documents/2020067046901
%20Anthony%20L.%20Cross%20CRD%203155726%20AWC%20lp.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Anthony L. Cross submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts Anthony L. Cross was first registered in 1998, and by 2001, he was registered with O.N. Equity Sales Company ("ONESCO"). In accordance with the terms of the AWC, FINRA imposed upon Cross a $5,000 fine and a 20-calendar-day suspension from associating with any FINRA member in all capacities (FINRA considered a 2021 Consent Order involving a "subset of the discretionary trading at issue" with the Oklahoma Department of Securities that imposed a $5,000 fine and 10-calendar-day suspension). As alleged in part in the AWC:

Between March 2020 and June 2020, Cross exercised discretionary authority when placing 633 trades in 126 customer accounts. Although the customers understood that Cross was placing trades in their accounts, none had given him prior written authorization to exercise discretion, and Cross did not speak with the customers on the dates of the trades. ln addition, ONES CO did not accept any of the customer accounts as discretionary accounts.

Therefore, Cross violated FINRA Rules 3260(b) and 2010. 

FINRA Sanctions Firm and Rep For Supervisory System Involving OBA
In the Matter of Traderfield Securities Inc. and Mario Divita, Respondents (FINRA AWC 2019062264901)
https://www.finra.org/sites/default/files/fda_documents/2019062264901
%20Traderfield%20Securities%20Inc.%2C%20CRD%2020130
%20and%20Mario%20Divita%20CRD%201504199%20AWC%20lp.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Traderfield Securities Inc. and Mario Divita submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Traderfield Securities Inc. has been a FINRA member firm since 1987 with six registered representatives at one branch; and that Mario Divita was first registered in 1988 and by 2016, he was registered with Traderfield and in 2017 acquired an ownership interest and served as the firm's Chief Executive Officer and Chief Compliance Officer from January 2017 to December 2021. In accordance with the terms of the AWC, FINRA imposed upon:

• Traderfield Securities Inc.a Censure and joint and several fine with Divita of $75,000, and an undertaking to comply with the issues cited
  
  
• Mario Divita a joint and several fine with Traderfield Securities of $75,000, a six-month suspension from associating with any FINRA member in Principal-only capacities, and an undertaking to complete 50 hours of continuing education concerning supervisory responsibility.

As alleged in part in the "Overview" of the AWC:

From January 2019 to at least September 2020, Traderfield and Divita failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures,reasonably designed to achieve compliance with rules governing registered persons’ proposed outside business activities. During this period, Traderfield and Divita knew that two of the firm’s registered representatives were engaged in outside activities that involved investment funds and private placement offerings, but neither the firm nor Divita evaluated the activities as required by FINRA Rule 3270.01, including failing to determine whether they constituted outside securities activities. As a result, Traderfield