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In a FINRA arbitration statement of claim filed in April 2011, Morgan Stanley Smith Barney (“MSSB”) sought $68,239.00 in compensatory damages plus interest, costs, and fees from Respondent Richard Swetish, who had been an employee with the firm.

The FINRA arbitration panel denied with prejudice MSSB’s claims. Swetish had denied the allegations and filed a Counterclaim where he successfully maintained that MSSB’s behavior had significantly prevented his ability to build a book of business and retain clients. Swetish stated that MSSB failed to provide support and technology, and that this failure diminished commissions due to lack of clients.

In addition to denying MSSB’s claim on the note, the panel found Claimant MSSB liable, and was ordered to pay Respondent Swetish $15,446.00 in compensatory damages at 6% per annum interest from August 31, 2010 until the award is paid in full, and $3,000 in attorneys’ fees.

This particular case could cause an influx of similar cases against major firms. Swetish shows that registered reps can use the defense of a lack of reliable support and/or crucial technology and their subsequent effect on developing clients.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

FINRA has barred former Canaccord Wealth Management broker Jordan R. Steel from associating with any FINRA member in any capacity for allegedly falsifying commissions.

Steel was employed by Canaccord from August 2007 until October 2011, when his registration was terminated. Currently, Steel is a Registered Representative at Canada-Limited General Securities. Prior to these allegations, Steel had no past FINRA disciplinary record.

While at Canaccord, Steel allegedly agreed to split commission payments with another broker. According to this agreement, Steel was to receive 1.5% of the commissions that the broker received from sales involving U.S. clients. To receive his share of the commissions, Steel would first calculate the amount that he was due and then fill out an Assistant/Associate Bonus/Commission Requisition Form. After completing the form, the broker with whom Steel was splitting commissions was required to sign it before Steel submitted it to Canaccord for approval.

However, between January 2010 and August 2011 Steel allegedly changed the amount of commission that he was due after receiving the other broker’s signature, and without notifying that person of the changes made. Furthermore, between August 2010 and August 2011, Steel allegedly filled out 13 more forms through which he attempted to split commissions with another broker. When completing these forms, Steel allegedly forged the signature of this other broker, since the other person had not agreed to an individual commission splitting deal.

Therefore, between January 2010 and August 2011, Steel collected 66,000 Canadian dollars in commissions from Canaccord that were not rightfully his. In light of this, FINRA found that steel violated Rule 2010, resulting in his being barred from associating with any FINRA member in any capacity.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

A FINRA Panel has found claims made by Pinnacle Investments, LLC during an arbitration between the firm and respondents Thomas Corcoran, Richard Garber, George Koulouris, Ridgeway & Conger, Inc., Anastasia Tkatschow, John Bianchini, David Kamp, Gregg Kidd, Eric Krouse and Daniel Raite to be lacking in “credible probative or dispositive substance.” Accordingly, FINRA agreed to amend two of the Respondents’ U-5 Forms, as they contained information of a “defamatory nature.”

Pinnacle alleged that the respondents had committed “fraud, defamation, intentional interference with business relations, violation of FINRA Rule 2010, and civil conspiracy.” All of the respondents denied the claims made against them, but two, Tkatschow and Koulouris, requested not only monetary awards, but also that their Form U-5s be expunged.

Ultimately, the Panel dismissed Pinnacle’s claims in their entirety and allowed for Tkatschow and Koulouris to have their U-5s expunged. When discussing its decision to permit Tkatschow’s U-5 to be altered, the Panel stated, “The credibility of Claimant Pinnacle’s allegation against Tkatschow for violation of policies and procedures for not knowing her client was false…” and that “…the testimony of two critical Pinnacle witnesses regarding reasons for the negative comment on Tkatschow’s Form U-5 was contradictory and not deemed credible on the matter.”

Regarding Koulouris’s U-5, the Panel stated, “…the information contained on Respondent Koulouris’s Form U-5 placed there by Claimant Pinnacle is unsupported by a preponderance of the evidence and fails to meet the burden of proof to demonstrate noncompliance with policies and procedures.”

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

FINRA has sanctioned American Portfolios Financial Services representative Curtis Leonard Mazer for improperly reimbursing a customer.

Mazer has been a registered representative since 1988, and has been employed by American Portfolios since 2001. Prior to these allegations, Mazer had no past FINRA disciplinary record.

In July 2010, Mazer allegedly provided one of his clients with a personal check for $4,500, which was to serve as a refund of the client’s fees and would also cover the client’s losses. Mazer distributed the check without first informing American Portfolios of this action.

FINRA alleges that Mazer violated Rule 2150, which forbids the “Improper Use of Customers’ Securities or Funds” and issues a “Prohibition Against Guarantees and Sharing in Accounts.” Mazer also allegedly violated Rule 2010, which deals with “Standards of Commercial Honor and Principles of Trade.” Therefore, FINRA has fined Mazer $5,000 and suspended him from associating with any FINRA member in any capacity for 10 business days.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

The Hartford has announced that it is selling Woodbury Financial Services, an independent broker-dealer network, to the Advisor Group sector of American International Group (AIG).

The sale will close by the end of 2012 and will garner a modest gain for The Hartford, although it will not have any material impact on the company’s 2013 earnings. Additionally, The Hartford states that transactions regarding its Individual Life and Retirement Plans will continue normally.

Woodbury Financial Services employs nearly 1,400 independent representatives nationally and 200 at its home office. In spite of Woodbury’s sale, current president and CEO Patrick H. McEvoy will stay on and continue to base his operations out of Minnesota and will retain his senior management team, field force and home office staff. Additionally, Woodbury’s registered representatives will continue to conduct business in a normal manner, although the company will now function as one of the four independent broker-dealers that make up the Advisor Group.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

Guardian Life Insurance Company of America set a new company record by hiring 446 new financial representatives during the first half of this year. The quantity of new representatives hired is the largest number Guardian has ever employed during the first half of a year, and marks a 24% increase in hiring from the first half of the previous year. In addition, such a total amounts to more than half of 840 total representatives that the company hopes to hire during the entire year. Many of the new representatives are joining Guardian out of a desire to change careers from industries including law, sales, finance, technology and education.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

FINRA has sanctioned former Commonwealth Financial Network representative Kevin J. Nainiger for improperly reporting a loan that he obtained from a client.

Nainiger has been a registered representative since 1994 and was employed by Commonwealth from August 2006 until April 2012. Preceding the most recent sanctions, Nainiger had never been the subject of any FINRA disciplinary cases.

In July 2010, Nainiger’s wholly-owned limited liability company, N.R.E. Group, bought a building from a couple who were clients of Nainiger’s at Commonwealth. As part of an agreement between the clients and Nainiger, the building was purchased using a loan provided by the couple. The $140,000 loan was issued to Nainiger through N.R.E., with Nainiger issuing the clients a promissory note. Currently, Nainiger has made all necessary loan payments.

FINRA alleges that Nainiger did not acquire Commonwealth’s consent before obtaining the loan from his clients. Furthermore, he never reported the loan to Commonwealth, and failed to specify that he had obtained it on a compliance form dating back to November 2010.

Allegedly failing to report the loan violated Commonwealth policy, which, during Nainiger’s employment stated that representatives were not allowed to lend money to, or borrow money from, a customer unless the customer and representative had a preexisting business relationship. If this was not the case, the representative was required to acquire Commonwealth’s approval before undertaking the transaction.

As this was the case, Nainiger’s alleged violation of Commonwealth’s procedures also constituted a violation of FINRA Rules 3240. Therefore, FINRA has fined Nainiger $5,000 and suspended him from associating with any FINRA member in any capacity for 30 business days.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.

FINRA has sanctioned former Citi broker Fong I. Cheang for failing to properly update her Form U4 during her tenure at Citi after submitting pleas in response to felony charges.

Cheang has been involved in the securities business since 1996, when she became a representative at John Hancock Mutual Life Insurance Company. She began working at Citicorp Investment Services starting in May 2005, and moved with the company to Citigroup Global Markets Inc. when a mass employee transfer occurred. In January 2010, Cheang resigned from Citigroup and was later employed at Wells Fargo Investments, LLC and Primevest Financial Services, Inc. and is now a representative at HSBC Securities (USA). Prior to being sanctioned, Cheang had not been involved in any FINRA disciplinary cases.

The felony charges that Cheang allegedly failed to report during her time at Citi stem from charges brought against her during an insurance fraud case that took place between May 2007 and November 2008. In 2006, Cheang was indicted for two felonies in the Los Angeles County Superior Court of California and in February 2007, she pled not guilty to both charges. In May 2007, Cheang entered into a plea agreement in which she was charged with an additional felony and was required to pay $1,917 in restitution. Cheang then pled No Contest to the additional felony, but in November 2008, withdrew the plea. Subsequently, after withdrawing her plea, all charges against Cheang were dropped.

Cheang’s FINRA sanctions stem from the fact that, while at Citi, she failed to update her Form U4 to reflect her pleas to the felony charges brought against her. According to FINRA regulations, she should have taken this action to prevent the spread of deceptive information. Although Cheang did not properly update her form U4 while at Citi, she did divulge the information to her succeeding employers, including Wells Fargo Investments, Primevest Financial Services and HSBC, her present employer.

Although the violation was not deemed “willful” (she dodged a bullet there!),  Cheang’s failure to revise her Form U4 while at Citi has prompted FINRA to fine her $5,000 and suspend her from associating with any FINRA member in any capacity for 15 months.

Eccleston Law Offices counsel, represent and defend financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.