FINRA Disciplinary Actions December 2019

Table of Contents

Table of Contents

 

Individuals Barred

Cristina Sabengsy (CRD #6304970, Gilberts, Illinois)

October 2, 2019 – An AWC was issued in which Sabengsy was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Sabengsy consented to the sanction and to the entry of findings that she forged the signatures of her customers in order to facilitate unauthorized insurance transactions  and obtain commissions on those transactions. The findings stated that the transactions related to purchasing a variable annuity policy for one customer and to converting another customer’s term life insurance policy to a whole life insurance policy. Neither customer was aware of, authorized, or consented to these transactions. After learning of the purchase, the first customer chose to keep the variable annuity policy although she did not contemporaneously authorize the purchase. Sabengsy’s member firm reinstated the second customer’s original term life insurance policy and refunded the premiums he paid associated with the whole life insurance policy. The findings also stated that, while associated with the firm, Sabengsy forged customer signatures on other documents related to the purchase of term life insurance policies and a whole life insurance policy. Although   in these instances the underlying transactions were authorized, the customers did not authorize Sabengsy to sign their names on the documents. Sabengsy forged the customers’ signatures in order to advance the receipt of commissions. (FINRA Case #2018057717301)

 

Benjamin Benoit Lowder Jr. (CRD #3014106, Charlotte, North Carolina)

October 3, 2019 – An AWC was issued in which Lowder was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Lowder consented to the sanction and to the entry of findings that he refused to appear for on- the-record testimony requested by FINRA during the course of an investigation that began after it learned of investor-related civil lawsuits disclosed in amended Uniform Termination Notice for Securities Industry Registration (Form U5) forms submitted by his former member firm. The findings stated that the civil lawsuits alleged unfair and deceptive trade practices and state securities fraud regarding investments in fictitious entities. (FINRA Case #2017054137001)

 

Michael D’Aquila (CRD #6541088, Johnston, Rhode Island)

October 8, 2019 – An AWC was issued in which D’Aquila was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, D’Aquila consented to the sanction and to the entry of findings that he refused to appear for on- the-record testimony requested by FINRA during an investigation of him that commenced after it learned of the conduct disclosed in a Form U5 submitted by his former member firm. The findings stated that the Form U5 stated that D’Aquila was terminated for conduct inconsistent with firm standards related to personal bank accounts and failure to be forthcoming during the firm’s review of the matter. (FINRA Case #2018060959501)

 

Jaime Michael Westenbarger (CRD #4625703, Ada, Michigan)

October 8, 2019 – An AWC was issued in which Westenbarger was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Westenbarger consented to the sanction and to the entry of findings that he failed to provide documents requested by FINRA during the course of an investigation that commenced after it learned of the conduct disclosed in a Form U5 submitted by his former member firm. The findings stated that Westenbarger provided a partial response but did not substantially comply with all aspects of FINRA’s request. The form U5 submitted by the firm disclosed that his termination was for a violation of firm policies and procedures regarding borrowing funds from clients. (FINRA Case #2019063681501)

 

Aarti Hinal Patel (CRD #5614912, Lewis Center, Ohio)

October 9, 2019 – An AWC was issued in which Patel was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Patel consented to the sanction and to the entry of findings that she refused to appear for on-the-record testimony requested by FINRA. The findings stated that Patel’s member firm filed a Form U5 stating that its affiliate bank had terminated her employment for violating the affiliate bank’s policy governing personal finances by making numerous cash deposits into her personal affiliate bank account, and an affiliate bank business account of her spouse, under the currency transaction reporting threshold. (FINRA Case #2018060040901)

 

Stephen John Klinger (CRD #1294139, Asheville, North Carolina)

October 10, 2019 – An AWC was issued in which Klinger was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Klinger consented to the sanction and to the entry of findings that he refused to provide documents and information to FINRA related to the termination explanation provided in a Form U5 submitted by his former member firm. The findings stated that the Form U5 disclosed that the firm had discharged Klinger and stated that he deposited a firm client’s funds into his own account to trade options. The option trading resulted in the loss of all the client’s funds. The client sued Klinger and the firm in state court serving process on Klinger only. Klinger did not report the lawsuit to the firm and settled the lawsuit without informing the firm. Ultimately, the firm made the customer whole. (FINRA Case #2019061847901)

 

Bradley Carl Reifler (CRD #1589414, Millbrook, New York)

October 10, 2019 – Reifler appealed a National Adjudicatory Council (NAC) decision to the Securities and Exchange Commission (SEC). The NAC barred Reifler from associating with any FINRA member in any capacity because he refused to answer FINRA’s questions during on-the-record testimony concerning his involvement in a fraudulent misappropriation scheme. The bar remains in effect pending review. (FINRA Case #2016050924601)

 

Maureen Ann Scalzo (CRD #1349675, Ridgefield, Connecticut)

October 10, 2019 – An AWC was issued in which Scalzo was barred from association   with any FINRA member in all capacities. Without admitting or denying the findings, Scalzo consented to the sanction and to the entry of findings that she declined to appear for on-the-record testimony and to participate in FINRA’s investigation into possible alteration or falsification of customer forms submitted to her member firm. (FINRA Case #2018059088001)

 

Louis Mark Miller (CRD #3054955, Syosset, New York)

October 14, 2019 – An Offer of Settlement was issued in which Miller was barred from association with any FINRA member in all capacities. Without admitting or denying the allegations, Miller consented to the sanction and to the entry of findings that he failed to provide documents and information and appear for on-the-record testimony requested by FINRA in connection with its investigation into allegations that he improperly exercised discretion in customer accounts without prior written authorization. (FINRA Case #2017056829901)

 

Jason Lee Ballor (CRD #6853439, Salt Lake City, Utah)

October 15, 2019 – An AWC was issued in which Ballor was barred from association with any FINRA funding portal member in all capacities. Without admitting or denying the findings, Ballor consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony and provide documents and information requested by FINRA during an investigation of his FINRA funding portal member firm. (FINRA Case #2019064149701)
 

Daniel Gordon Maughan (CRD #2561363, Los Angeles, California)

October 15, 2019 – An Offer of Settlement was issued in which Maughan was barred  from association with any FINRA member in all capacities. Without admitting or denying the allegations, Maughan consented to the sanction and to the entry of findings that he willfully violated Section 10(b) of the Exchange Act of 1934, and Rule 10b-5 thereunder, and also violated FINRA Rules 2020 and 2010 by churning and excessively trading the trust account of two customers, a married couple. Maughan exercised de facto control over the trust account and made all investment decisions in it, including what securities to buy and sell, the quantities of the securities to buy and sell and when each transaction would occur. The level of activity in the trust account was inconsistent with the customers’ objectives and financial situation. Through Maughan’s churning of the trust account and by seeking to maximize his own financial benefit at the expense of his customers, he acted either with the intent to defraud (scienter) or with reckless disregard for the customers’ interests. The findings stated that Maughan executed trades in the trust account with a principal value of all purchases and sales in excess of $70 million. Maughan’s churning and excessive trading generated commissions and costs totaling approximately $841,000 while causing the account to incur realized and unrealized losses of approximately $812,000.

The findings also stated that the trading was excessive and quantitatively unsuitable for the customers—as evidenced by the annualized turnover rate and the annualized cost-to- equity ratio, as well as the size and frequency of the transactions. Maughan did not have reasonable grounds or a reasonable basis to believe that the number of recommended transactions and the level of activity in the account were suitable for the customers in  light of their investment objectives and financial situation. The findings also stated that Maughan recommended qualitatively unsuitable trades in the trust account because he lacked a reasonable basis to believe that his recommended transactions were suitable for the customers since the trading was inconsistent with the customers’ investment objectives. (FINRA Case #2017054755206)

 

Dawn Bennett (CRD #1567051, Chevy Chase, Maryland)

October 16, 2019 – An OHO decision became final in which Bennett was barred from association with any FINRA member in all capacities. The sanction was based on findings that Bennett failed to respond to FINRA’s requests for the production of documents and information when it began investigating her for possible rule violations including, conversion, fraud, and private securities transactions. The findings stated that Bennett also failed to appear and provide an on-the-record testimony requested by FINRA. (FINRA Case #2015047682402)

 

Elton Norman (CRD #6402086, Springfield, Missouri)

October 16, 2019 – An AWC was issued in which Norman was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Norman consented to the sanction and to the entry of findings that he refused to provide documents requested by FINRA after it began an investigation into possible irregularities contained in certain documents pertaining to his customers at his member firm. (FINRA Case #2018057815601)

 

John Michael Elias Saad (CRD #2185911, Atlanta, Georgia)

October 17, 2019 – Saad appealed an SEC decision to the Court of Appeals for the District of Columbia. The SEC affirmed Saad’s bar from association with any FINRA member in any capacity. The U.S. Court of Appeals for the District of Columbia Circuit had remanded the matter to the SEC to determine whether the U.S. Supreme Court decision in Kokesh v. SEC, 137 S. Ct. 1635 (2017) had any bearing on the matter. The SEC held that the U.S. Supreme Court decision had no bearing on the determination and FINRA’s disciplinary action should be sustained. The sanction was based on findings that Saad misappropriated his member firm’s funds, with his prolonged pattern of falsehoods and deception. The findings stated that Saad submitted false expense reports, forged receipts and lied to investigators. The bar is in effect pending the appeal. (FINRA Case #2006006705601)

 

Dennis Albert Mehringer Jr. (CRD #722569, Altadena, California)

October 18, 2019 – An AWC was issued in which Mehringer was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Mehringer consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA during the course of an examination involving possible unsuitable trading and other misconduct, in contravention of certain securities rules or regulations. (FINRA Case #2019061994701)

 

Preston Kaishen Tsao (CRD #1892935, New York, New York)

October 18, 2019 – An AWC was issued in which Tsao was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Tsao consented to the sanction and to the entry of findings that he refused to provide documents and information requested by FINRA in connection with its investigation of him that was later expanded to include allegations contained in his member firm’s Form U5 amendment. The findings stated that the firm stated in the Form U5 that Tsao resigned after allegations had been made that he obtained a $9,000 cash advance directly from one of the firm’s clients. (FINRA Case #2018057865701)

 

Donna Marie Pitts (CRD #2708516, Concord, North Carolina)

October 23, 2019 – An AWC was issued in which Pitts was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Pitts consented to the sanction and to the entry of findings that she converted $100,079 from her member firm’s transfer agent affiliate. The findings stated that in her role as mutual fund operations manager at the affiliate, Pitts had access to funds deposited into the affiliate by employers on behalf of former employees rolling over money from those employers’ retirement plans. Pitts electronically transferred specific amounts earmarked for employer-sponsored plan participants to her personal checking and savings accounts. Pitts then created fictitious accounting entries in the auto-reconciliation tool used by the affiliate to cancel out the  funds moved to her personal accounts. As a result, the affiliate unwittingly funded the participants’ plans with its own money. Pitts knew that the funds did not belong to her and she made each of the transfers without the affiliate’s knowledge or consent. After admitting her misconduct to the affiliate and her firm, Pitts repaid the affiliate the full amount she had converted. (FINRA Case #2019063532801)

 

Wessam Baiz (CRD #6501692, Toledo, Ohio)

October 25, 2019 – An AWC was issued in which Baiz was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Baiz consented to the sanction and to the entry of findings that he refused to provide information and documents requested by FINRA. The findings stated that Baiz’s member firm terminated his association and indicated on his Form U5 that he failed to meet the terms and expectations of a heightened supervision plan he was placed on by the firm for failure to disclose an outside business activity. (FINRA Case #2018059632301)

 

Stuart Blake Nichols (CRD #4932310, Birmingham, Alabama)

October 25, 2019 – An AWC was issued in which Nichols was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Nichols consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation of him for possible excessive trading in customer accounts at his member firm. (FINRA Case #2018060875701)

 

Oscar Nunez (CRD #6014411, North Bergen, New Jersey)

October 25. 2019 – An Office of Hearing Officers (OHO) decision became final in which Nunez was barred from association with any FINRA member in all capacities and ordered to pay $7,800, plus interest, in restitution to customers. The sanctions were based on findings that Nunez misused and converted an elderly customer’s funds. The findings stated that Nunez told the customer that she had to make an upfront payment of $5,000 to cover anticipated commissions for new accounts she opened at Nunez’ member firm.

The customer gave Nunez a check for that amount, made out to him personally. Nunez deposited the check into his personal checking account, which was overdrawn, and within a few days withdrew $2,800 in cash from the checking account and transferred $1,000 to his personal savings account, which had just $10 in it. No trading took place in the customer’s account during this time. Later, Nunez asked the customer for another payment—this time for $2,000. Nunez told the customer that the payment was supposed to cover commissions on her accounts for the next year. The customer gave Nunez a personal check for $2,000, which he deposited into his savings account. Nunez’s savings account was overdrawn and the checking account held less than $20. Within a few days, Nunez transferred $500 to   his checking account, wrote a check to himself for $500 and withdrew $1,000 in cash. The customer incurred no commissions because no trading occurred in her accounts at the firm. The firm was unaware that Nunez had asked the customer to pay for commissions   in advance; therefore, it never approved such payments. Had the customer incurred commissions, they would have been payable to the firm, not to Nunez. When the firm later learned of the customer’s $2,000 payment to Nunez, it ordered him to reimburse  her, which he did. The firm did not know about the customer’s first payment for $5,000; therefore, it did not instruct Nunez to return the money. To date, Nunez has not repaid the customer the $5,000. The findings also stated that Nunez asked for and received a $4,000 loan from another customer. Nunez did not sign a loan agreement and no written terms exist regarding the loan. At the time of the filing of FINRA’s Complaint, Nunez had repaid the customer just $1,200. Nunez never told the firm that he had borrowed money from   the customer. In fact, Nunez told the firm’s chief compliance officer (CCO) that he had not received money from any other customer besides the $2,000 from the elderly customer, which the firm already knew about. That same day, Nunez signed a firm attestation falsely stating that he had not taken any other money, or accepted any gifts exceeding $100, from any other customers while at the firm. The findings also included that Nunez falsely told FINRA that he did not take additional funds from customers when it sent him a request for documents and information regarding whether he had received any funds from firm customers, other than the $2,000 previously disclosed to the firm. As a result, FINRA could not adequately investigate Nunez’s activities. (FINRA Case #2017055553002)

 

Jefferey William Dyra (CRD #6785909, Orland Park, Illinois)

October 29, 2019 – An AWC was issued in which Dyra was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Dyra consented to the sanction and to the entry of findings that he refused to produce documents and information requested by FINRA during the course of an investigation into whether he had misappropriated funds from a customer of an affiliate of his member firm or otherwise engaged in any misconduct that violated federal securities laws or regulations or FINRA rules. (FINRA Case #2019063228001)

 

Ronald James Knight aka Ramone Knight (CRD #5265446, Perry Hall, Maryland)

October 29, 2019 – An AWC was issued in which Knight was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Knight consented to the sanction and to the entry of findings that he converted funds from his member firm. The findings stated that Knight falsified expense reports and submitted  them to his firm in order to obtain reimbursement totaling approximately $3,900 to which he was not entitled. Out of these reimbursement requests, approximately $1,100 related  to expenses, such as dinners and drinks, that Knight had not personally incurred because someone other than him paid for those expenses. The remaining expenses were personal expenses, which Knight mischaracterized as business expenses in expense reports he submitted to the firm. (FINRA Case #2017056047701)

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