(FINRA Case #2015044123501)
Scott Allen Sibley (CRD #1523981, Fort Lauderdale, Florida) submitted an AWC (Accept, Waiver & Consent) in which he was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Sibley consented to the sanction and to the entry of findings that he effected about 900 securities purchases and sales in a customer’s two accounts without the customer’s authorization, knowledge or consent.
The findings stated that of the 900 securities purchases and sales, 139 were equity options where Sibley sold uncovered put option contracts or closed put option contracts for the customer. In addition to effecting purchases and sales without written authorization, Sibley caused the customer to carry a margin debit balance without the customer’s authorization, knowledge or consent. The customer never authorized Sibley to purchase securities in his account that would result in a debit balance.
The findings also stated that Sibley’s recommendations to purchase, sell or exchange, and his recommended strategy to over-concentrate customers’ accounts in the basic materials sector securities (e.g., precious metals), were unsuitable with respect to at least 10 customers. The 10 customers were all seniors who relied on the money in their accounts to help fund their ongoing retirements. Sibley’s recommendations to over-concentrate the customers’ accounts between 25 percent and 62 percent (per customer household) in the basic materials sector (e.g., precious metals securities) were unsuitable in light of the customers’ investment experiences, risk tolerances, investment objectives, ages and financial situations.
In fact, Sibley recommended similar strategies to these customers regardless of their varying investment objectives and financial situations. Sibley also recommended that at least three of the 10 customers further concentrate their accounts in precious metals securities by selling uncovered put option contracts in the sector, in addition to certain precious metals equities the customers already owned.
In and around April 2013, the precious metals equities began to decrease in value, increasing the risk that the options would be assigned and the stocks put to the customers. Nevertheless, Sibley continued recommending that the customers sell additional uncovered put option contracts with expirations one or more years from the sale (LEAPS), which carried even greater risk.
In 2014, when Sibley was selling LEAP put option contracts in three customers’ accounts, their accounts had concentrations in precious metals of about 40 percent to 60 percent.
Sibley also failed to have a reasonable basis for believing, at the time of making the recommendation, that the three customers had such knowledge and experience in financial matters that they may reasonably be expected to be capable of evaluating the risks of the recommended transactions, and were financially able to bear the risks of the recommended positions in the option contracts.
The findings also included that in order to effect his recommended strategy for customers to concentrate their accounts in the basic materials sector, Sibley effected at least 1,000 discretionary transactions in 14 accounts belonging to 10 customers without written discretionary authority and without the accounts being accepted by his member firm as discretionary.
The firm’s written procedures prohibited discretionary brokerage accounts. The discretionary transactions Sibley effected included purchases and sales of various security types including, but not limited to, equities and options. None of the transactions were designated as discretionary in the firm’s systems.
FINRA found that Sibley entered at least 22 low-priced securities purchases as unsolicited when in fact they were solicited and/or effected using discretion without written authorization. By incorrectly entering the transactions as unsolicited, Sibley caused the firm to maintain inaccurate books and records. FINRA also found that Sibley willfully failed to amend his Form U4 to disclose a compromise with creditors.
Sibley worked for Raymond James & Associates Inc. in Ft Lauderdale from November 2017 until the time he was discharge in February 2015 due to allegations of unauthorized trading and improper use of time and price discretion. After that time Sibley worked form Moors & Cabot, Inc. in Boca Raton FL from March of 2015 until February of 2017. Between 1998 and 2017 Sibley had 17 Customer disputes filed against him at FINRA.
If you feel you have been misled by Scott Allen Sibley or any Broker and wish to discuss legal action, please contact Darren Blum at 1-877-786-2552 (1-877-STOCK LAW) www.stockattorneys.com for a free consultation.