FINRA Suspends or Bars Dozens of Brokers Each Month
In an industry employing over 500,000 people, there are always going to be bad apples. Every profession has some including lawyers, accountants, and insurance agents. This post is about bad stockbrokers. For this month’s list, we culled the records from the Financial Industry Regulatory Authority (FINRA). Each month FINRA’s Department of Enforcement issues a monthly report. Our picks this month:
Salvatore Accardi
Salvadore Accardi was employed by Pruco Securities. Before being in the securities industry he worked in a restaurant. FINRA says Accardi was barred from the industry after being accused of forging clients signatures to life insurance applications. A customer also complained that Accardi failed to explain the tax consequences of an annuity investment. His employer paid $15,000 to settle those charges. Accardi consented to the order but admitted no wrongdoing. His days of selling investments are over for good.
Paul Arnold
Paul David Arnold was removed from the industry after being accused of stealing $173,000 from an elderly widower’s account. Arnold was ordered to pay restitution and damages but apparently has failed to do so. Because the action was brought under Florida law (Arnold was a broker in Clearwater), the victim was awarded treble damages. Prior to being terminated, Arnold worked for Raymond James & Associates. Prior to the theft complaint, Arnold had previously been accused of selling unsuitable investments. While everyone makes mistakes, we think Arnold’s behavior is pure fraud.
Brian Borakowski
Brian Borakowski was a broker with Berthel, Fisher & Company from 2009 through 2011. According to the FINRA BrokerCheck system, he ran up 11 disclosable events before being booted from the industry. FINRA says that he and another stockbroker, George Kardaras, defrauded investors in a limited liability company he had organized. Instead of investing the money as advertised, FINRA says the men engaged in a Ponzi scheme and used some of the funds for their own personal gain. The men apparently did not tell their employer about their outside activities, although they were marketing their promissory notes to firm clients. Judging from the long list of customer complaints, the losses suffered by investors were great. Fortunately for investors, the brokerage firm that employed the duo can often be held responsible.
Maurice Chelliah
Maurice Chelliah is a guy who bounced around quite a bit in the industry. During his stint as a registered representative (he is permanently barred now), Chelliah managed to rack up several complaints. We worry because his prior employers were small. Some small firms are not properly capitalized or insured and can’t sustain a judgment or claim that stem from rogue brokers. FINRA says that Chelliah most recently worked for Evolve Securities and First Midwest Securities. (Evolve, which traded under 2 dozen different names, closed its door in 2010 after being unable to pay a customer claim of just $65,000.)
According to FINRA, Chelliah recommended that an elderly investor liquidate a mutual fund to help meet her financial obligations. Instead of giving the woman the money, however, Chelliah took approximately $90,000 and spent it on himself. He was also accused of elder financial abuse involving other elderly customers, one of which lost their home after following Chelliah’s advice. No word if Maurice Chelliah was criminally prosecuted.
Joseph Giordano
Joseph Anthony Giordano was barred from the industry after continuing to sell debentures to clients despite his firm’s instructions not to do so and despite the fact that those investments were not suitable for investors. FINRA says that he lied to his firm and customers and continued to recommend the product even after learning the issuer was in financial trouble. According to the SEC, the debentures sold by Giordano were “Empire Debentures” and were unregistered securities.
Giordano worked at Capital Investment Group for almost a decade before leaving earlier this year. While a stockbroker, he racked up up 7 reportable events, a common theme among brokers who were finally banned from the industry.
While at Capital, it appears that Giordano was running or working with a side business, Harbor Investment Solutions. The Maryland Securities Division claimed Giordano was selling unregistered securities and operating as an unlicensed investment advisor.
Mahmood Khan
Mahmood Khan, a 13 year veteran of the securities industry, was suspended for 4 months. While the sanction from FINRA was relatively light, we have included him in this month’s “dirty dozen” list. FINRA’s BrokerCheck system reveals a whopping 8 disclosable events. Ultimately, his failure to disclose $8.4 million in tax liens is what caused the suspension. That and felony charges for not filing tax returns. (FINRA says the charges were later reduced to disorderly conduct level offenses.)
We worry about brokers with long histories of financial problems. When you are facing prison for not paying taxes and owe millions, the temptation to steal client funds or sell certain securities solely because they offer higher commissions is great.While Khan was not accused of these things, we worry and with good reason. MetLife says they discharged Khan last year in part for the tax problems and partly for borrowing money from a client.
Christopher Looney
Christopher John Looney was barred from the industry after FINRA accused him of making unsuitable and excessive trades for an elderly client. While the client lost almost their entire account, Looney’s trading generated $54,000 of commissions in just 4 months.
In 22 years as a stockbroker, Looney racked up a staggering 9 reportable events; with 7 occurring in the last decade. He also worked for 14 different firms during that time period, another red flag. His most recent employer, J.D. Nicholas & Associates (also known as A&F Financial Securities) has suffered its own past problems.
William Murphy
William James Murphy was also booted from the industry. He was also ordered to disgorge over $500,000 in ill-gotten commissions. FINRA says that Murphy made trades in customers’ accounts without authorization, made excessive trades (churning), and made unsuitable investment recommendations. Churning occurs when a stockbroker recommends trades solely for the purpose of earning commissions. Usually those trades result in losses to the clients.
Murphy is our pick for the “worst of the worst” award based on 24 public disclosures. That alone puts him in the bottom 1/4 of 1%. Unfortunately for Murphy’s investors, his former employer is also out of business. Their ticket was pulled by the SEC, FINRA and the State of Wisconsin.
Edward Scro
Edward Francis Scro joins the list of stockbrokers permanently barred from the industry. FINRA took action after learning that Scro had made unsuitable recommendations to elderly and unsophisticated customers. He also lied about his education. The result was elderly customers invested in thinly traded and risky real estate investments. Older investors who need money for retirement should steer clear of risky investments and those where there money may be tied up for many years.
During the last decade, Scro worked for 7 firms, some having their own problems. The serious charges occurred while Scro was employed by Alternative Wealth Strategies (now out of business) and later by Workman Securities (also out of business).
Others on the List
Charles Matisi
Charles Matisi was suspended for 10 days for making exaggerated claims about a pharmaceutical stock. He also failed to disclose a conflict of interest to potential investors; he owned 10,000 shares of the company.
William Schloth
William Edward Schloth was a securities principal at Ocean Cross Capital Markets. Now he is suspended for 6 months for failing to supervise brokers within the firm. As a principal, Schloth has the responsibility to police others and insure that customers are being properly advised.FINRA says he was asleep at the switch.
What are the takeaways from this post? First, always check out your broker before you invest. It takes just a few minutes on FINRA’s BrokerCheck system and its free. While checking out the broker, check out his or her employer too.
Next, if you lose money and don’t get immediate reimbursement, consider hiring an experienced investment fraud lawyer. We handle cases against bad brokers and their employers on a contingent fee basis meaning no fee unless we win.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries answered within 24 hours and are protected by the attorney – client privilege. Cases accepted in many jurisdictions.
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Tagged: investment fraud, stockbroker fraud, failure to supervise, churning, suitability, stockbroker fraud lawyer