Miguel Ortiz, a registered representative with John Thomas Financial, was barred from association with any Financial Industry Regulatory Authority (FINRA) member in all capacities in a Hearing Panel Decision containing findings that Ortiz willfully defrauded customers in violation of Section 10(b) of the Securities Exchange Act of 1934, along with willfully failing to disclose a $4,983,606.23 judgment against him on his Uniform Application for Securities Industry Registration Form U4. Department of Enforcement v. Ortiz, No. 2014041319201 (Nov. 6, 2015).
According to the Decision, from April 13, 2012 – March 15, 2013, Ortiz defrauded customers MV and VE via making materially misleading and false statements and omitting material information concerning a joint brokerage account that Ortiz convinced the customers to fund with John Thomas Financial, Inc. (JTF). The Decision indicated that Ortiz had engaged in the misconduct in an effort to prevent MV and VE from noticing that their account had actually lost over eighty percent of an initial $210,000.00 investment.
The Decision further indicated that the aforementioned customers (who resided in Venezuela) trusted Ortiz with managing the JTF account since inception in 2011, at a time when Ortiz held himself out to investors as a provider of investment management services via his company, Brickstone Equities, LLC.
According to the Decision, Ortiz would send the customers fake account statements, misstating the value and overall make-up of the JTF account. Ortiz would indicate that the customers had owned assets which did not factually exist. The Decision further indicated that Ortiz would make a series of omissions and false statements via e-mail communication to the customers regarding Ortiz’s role in managing the JTF account as well as the performance of the JTF account. Consequently, according to the Decision, the customers were under the impression that the JTF account recovered losses from 2011 and was profitable. Overall, FINRA found that Ortiz’s conduct is in violation of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5, FINRA Rules 2010, 2010, and 1122.
Section 10(b) of the Exchange Act makes it unlawful “to use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.”
Four elements are necessary to show in finding a violation of Section 10(b) of the Exchange Act, Rule 10b-5: 1) misrepresentations and/or omissions were made; 2) misrepresentations and/or omissions were material; 3) representations and/or omissions were made with requisite intent (e.g. scienter), and 4) misrepresentations and/or omissions were made in connection with the purchase or sale of securities.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Guiliano Law Group
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