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Bart James Ellis, a registered representative with Ameriprise Financial Services, Inc., was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) firm in any capacity after FINRA’s Office of Hearing Officers rendered a Default Decision finding that Ellis had falsified customer account documents, exercised unauthorized discretion in a customer’s account, and failed to cooperate with FINRA’s investigation into his alleged misconduct. Department of Enforcement v. Ellis, No. 2012034573001 (Mar. 10, 2015).
According to the Decision, Ellis had exercised discretion in firm customer KC’s Ameriprise account without authorization. The Decision indicated that Ellis, from June, 2009 – August, 2012, consistently traded in KC’s account, despite never discussing such trades with her. Ellis was not given permission to exercise discretion in KC’s account in writing, according to the Decision. FINRA’s Hearing Officer found that Ellis violated NASD Rules 2510 and 2010 in this regard.
Additionally, the Decision indicated that Ellis had falsified customer documents. Specifically, upon learning that customer KC informed Ameriprise that Ellis was trading without prior discussion with her, Ellis had created log entries in KC’s account making it appear as though she had authorized Ellis to conduct the trades from March, 2010 – December, 2010. The Hearing Officer found Ellis had violated FINRA Rule 2010 in this regard.
Further, FINRA, in May, 2014, requested that Ellis provide testimony in connection with the investigation into Ellis’ misconduct, pursuant to Rule 8210. The Decision indicated that Ellis never responded or appeared for FINRA’s request. As such, the Hearing Officer found that Ellis violated Rule 8210 and 2010.
FINRA registered representatives like Ellis who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and equitable principles of trade.
Public disclosure records via FINRA’s BrokerCheck reveal that Ellis has been subject to nine disclosure incidents. On December 21, 2006, Ellis settled a customer dispute for $8,000.00 after facing allegations of excessive trading and improper discretion in account trading. On December 6, 2010, Ellis settled a customer dispute for $5,316.70 after the customer alleged unauthorized and excessive transactions. On January 28, 2013, a customer received an award/judgment against Ellis for $43,344.00 after the customer alleged unsuitable recommendations and churning.
Public disclosure records also reveal that Ellis has been subject to at least two civil judgments (one from September 16, 1997 for $5,468.87 and another on July 19, 2011 for $213,864.73). Ellis also reportedly filed for bankruptcy on April 5, 2012.
By definition, a broker is liable for making unauthorized trades without the customer’s prior authorization. Absent written discretion, it is a violation of Section 10(b) of the Exchange Act, and Rule 10b-5, as promulgated thereunder, to effect transactions in customer accounts without their prior authorization or consent.
Customers also have a duty to review securities purchase and sale confirmations and review their securities accounts. If a stockbroker has placed unauthorized transactions in a customer account, the customer under most circumstances has a duty to act, or a duty to complain, or else generally, the customer may be deemed to have ratified these transactions, with actual or imputed knowledge, by doing nothing. Under such circumstances, a customer’s damages may be limited to the time they knew or should have known about the unauthorized transactions.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.