Articles Posted in FINRA Disciplinary Actions

FINRA Case #2016049383801

Adam Stuart Fritzsche (CRD #2821218, Canterbury, Connecticut) submitted an Accept, Wavier and Consent in which he was suspended from association with any FINRA member in any capacity for one year. In light of Fritzsche’s financial status, no monetary sanction has been imposed. Without admitting or denying the findings, Fritzsche consented to the sanction and to the entry of findings that he made unsuitable recommendations to customers that were inconsistent with the customers’ investment objectives and resulted in over- concentration of their liquid net worth in an alternative investment. The findings stated that, according to its registration statement, the investment was suitable only as a long-term investment for persons of adequate financial means who had no need for liquidity.

At the time of Fritzsche’s recommendations, all of the customers were retired and had conservative investment objectives. Fritzsche’s recommendations resulted in an undue concentration of the customers’ liquid net worth in a single, high-risk, illiquid investment.

(FINRA Case #2014041137501)

Kelly Clayton Althar (CRD #2666723, San Pablo, California) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Althar consented to the sanction and to the entry of findings that he made unsuitable recommendations and engaged in excessive trading in accounts held by an elderly customer.

The FINRA findings stated that Althar engaged in high-volume trading to generate commissions and over- concentrated the customer’s accounts in risky securities, despite the fact that the customer was close to retirement and only wanted low-risk investments. Althar’s trading decimated the customer’s accounts, which constituted the bulk of her net worth and retirement savings.

(FINRA Case #2016048760501)

Edward D. Jones & Co., L.P. (CRD #250, St. Louis, Missouri) submitted an Accept, Waiver and Consent in which the firm was censured and fined $125,000. Without admitting or denying the findings, the
firm consented to the sanctions and to the entry of findings that it overcharged interest
on margin loans totaling approximately $708,000 to the owners of customer accounts.

The FINRA findings stated that the overcharges occurred because the firm did not adequately supervise its system for determining the interest rates on those loans. The firm did not
test its automated system for grouping accounts for the assignment of interest rates on margin loans. Instead, the firm supervised interest on margin loans by reviewing a monthly report from one of its vendors, but that report incorporated the problem with the logic of the firm’s automated system.

Dawn Deshean Davenport (CRD #6280800) Chicago, Illinois
(February 13, 2017)

FINRA Case #2015047703701

Davenport voluntarily resigned while under internal review at J. P. Morgan Securities LLC on October 9, 2015 for performing external bank account transfers to her personal chase bank account without sufficient funds available

(FINRA Case #2015045020501)

James Rose (CRD #4842996, Asheville, North Carolina) was assessed a deferred fine of $25,000 and suspended from association with any FINRA member in any capacity for six months. The suspension is in effect from February 6, 2017, through August 5, 2017.

Without admitting or denying the findings, Rose consented to the sanctions and to the entry of findings that he engaged in six outside business activities without seeking approval from or disclosing these outside business activities to his member firm, United Advisors Service.

Without admitting or denying the findings, Falla consented to the sanction and to the findings that he failed to disclose the use of non-market foreign exchange (FX) rates in connection with a series of bond swap transactions in retail customer accounts. Effective February 9, 2017 Falla barred from association with any FINRA member in any capacity.

The findings stated that Falla’s member firm, operating through Falla, executed numerous retail customer transactions with inaccurate valuations when converted into U.S. dollars, which affected multiple customer accounts.

The findings also stated that the firm’s confirmations and account statements did not disclose to customers the use of a non-market FX rate or the excessive nature of the markups in connection with the bond swap transactions. Falla did not disclose that he used non-market FX rates away from the spot rate to value retail customer bond transactions, and did not disclose to retail customers its impact on the valuation of the bond swap transactions.

Fox Financial Management Corporation (Carrollton, Texas), Brian Andrew Murphy (CRD #4743164, Frisco, Texas) and James Edward Rooney Jr. (CRD #1857754, Carrollton, Texas). 

Fox Financial Management Corporation (Carrollton, Texas), firm was expelled from FINRA® membership and fined $100,000.

Brian Andrew Murphy (CCO)was fined $25,000, barred from association with any FINRA member in any principal or supervisory capacity, and suspended from association with any FINRA member in any capacity for three months effective March 6, 2017 through June 6, 2017.

Frank H. Black and his Firm Southeast Investments NC failed to comply with applicable securities laws by retaining business related emails and to establish, maintain and enforce, supervisory systems.

Southeast Investments N.C. which was established in 1997 and has close to 130 registered representatives, according to FINRA. Forty percent of the firm’s revenues are from sale of variable annuities; 40% from mutual funds; and most of the remaining 20% from real estate investment trusts, according to the FINRA panel.

September 2012, FINRA requested documentation records for Southeast Investments’ branch office inspections.  Mr. Black produced a three-page inspections calendar, listing 43 branch offices that he claimed he inspected between March 2010 and August 2012.

Compliance Officer Also Fined and Suspended

As one of the oldest and largest private banks in the United States, Brown Brothers Harriman should have known better. Formed as the result of a merger in 1931 between investment firms Brown Brothers & Co. and Harriman Brothers & Co., this assemblage united over a century of combined financial knowledge and experience. This resulted in creating an institution that has been around longer than many of today’s laws that govern it. With clients in the areas of investment banking, wealth management, commercial banking, investor services and more, it is critical that a company such as BBH maintain a fiduciary responsibly to hold itself to the highest standards of the financial industry.

Yet earlier this month, a FINRA investigation resulted in the assessment of an $8 million fine as a consequence of the poor anti-money laundering (AML) practices maintained by BBH, as well as other related violations. This is not the first time that BBH has been called on the carpet over such issues. In 2007, FINRA and the New York State Banking Department castigated BBH by imparting a formal order for the company to cultivate better internal operations, including the need to meet all AML regulatory requirements. Prior to the $8 million fine handed down to BBH, the highest AML-related fine ever levied was against Banc of America Investment Services in 2007, also for AML compliance offenses. Just as in that case, the BBH AML compliance failure pertains to penny stocks. In addition to this $8 million fine, Harold Crawford, the company’s former Global AML Compliance Officer, was also fined $25,000 and suspended from BBH for a month.

FINRA (Financial Industry Regulatory Authority) has taken disciplinary actions against the following individuals for violations of FINRA rules and federal securities laws, rules and regulations.


Olaf F. Gamlen (Palm Beach Gardens, Florida)
submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member for 10 business days. Olaf Gamlen consented to the described sanctions and to the entry of findings that he exercised discretion in a customer’s nondiscretionary advisory accounts. The findings stated that although the customer had given Olaf Gamlen oral authorization to use discretion in his accounts to effect securities transactions, Olaf Gamlen did not obtain the customer’s prior written authorization.

Paul Cragg Larsen (Naples, Florida) and Quentin Marius Silic (Naples, Florida) submitted a Letter of Acceptance, Waiver and Consent in which they were each barred from association with any FINRA member in any capacity. Paul Larsen and Quentin Silic consented to the described sanctions and to the entry of findings that they failed to respond to FINRA requests for information and documentation regarding possible undisclosed outside business activities and/or private securities transactions. The findings stated that through counsel, Paul Larsen and Quentin Silic advised FINRA that they would not provide the requested information and documentation.

Jordan Alan Linn (Hallandale, Florida) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $2,500 and suspended from association with any FINRA member for 30 days. Jordan Linn consented to the described sanctions and to the entry of findings that he failed to amend his Form U4 to disclose a material fact.
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