Following both an SEC action and a criminal action, Joshua B. Gladtke of New York, New York, a registered representative formerly with Arjent LLC, was permanently barred by Financial Industry Regulatory Authority (FINRA) after he failed to appear for on-the-record testimony in connection with an investigation into Gladtke’s private securities transactions. Letter of Acceptance, Waiver and Consent, No. 2015044211101 (Nov. 9, 2015).
According to the AWC, on August 6, 2015, FINRA sent a request, pursuant to Rule 8210, for Gladtke to provide on-the-record testimony in connection with FINRA’s investigation into Gladtke’s alleged participation in the offer and sale of multiple private placement securities. The AWC indicated that on August September 24, 2015, after FINRA had already granted Gladtke’s counsel an extension on complying with FINRA’s request, Gladtke’s counsel informed FINRA that Gladtke would not be appearing for the on-the-record testimony at any point. FINRA found Gladtke’s conduct to be in violation of Rules 8210 and 2010, leading to his permanent bar.
FINRA registered representatives like Gladtke 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 just and equitable principles of trade.
Selling away, also known as private securities transactions or undisclosed outside business activities, occurs when a stockbroker engages or participates in the sale of securities to investors outside of the formal approval of the securities firm with whom they are associated.
As a general matter, stockbrokers are only permitted to engage in the solicitation or sale of investments and investment related products approved by their firm. However, quite frequently, stockbrokers solicit, participate, or directly engage in the sale of typically unregistered securities or investments without the approval and outside of the auspices of their firm. These investments may take on many forms, and may include the recommendation of an outside money manager, or a hedge fund, which may sometimes turn out to be a Ponzi scheme. Sometimes these outside investments may include off-shore securities, insurance trusts, stocks or ownership interests in small businesses, startup ventures, corporate debentures, mortgage notes, private placements, promissory notes, oil & gas interests, real estate partnerships, pre-IPO shares, and a variety of other investments.
Public disclosure records via FINRA’s BrokerCheck reveal that Gladtke has been subject to four disclosure incidents. On May 19, 2015, a criminal indictment was filed in New York State Supreme Court, charging Gladtke (among others) with criminal offenses pertaining to a private placement offering of Pangaea Trading Partners, LLC, conducted between 2010 through 2012. Docket No. 01450-2015 (May 19, 2015).
The criminal indictment indicated that Pangaea Trading Partners, LLC’s vice president was Gladtke. The charges in the indictment included claims of diversion and misappropriation of the offering’s proceeds, mischaracterization of the use of investor funds, and misrepresentation and fraud in connection with the offering. The indictment claimed that the representations in the placement memorandum as to the use of investor funds were false and that substantial funds were diverted for personal expenses.
On May 20, 2015, the United States Securities and Exchange Commission announced fraud charges against Gladtke among others for incidents related to the New York criminal proceeding against him. Civil Action No. 15-CV-3877 (May 20, 2015). According to the SEC, Gladtke transferred the first $2,300,000 raised in the offering of the firm directly to his own bank accounts and used it for his own personal benefits. The SEC alleged that the Pangaea’s CEO had transferred funds to Gladtke, and sought to cover up their fraud by making misrepresentations to SEC examiners. Gladtke is charged with violating the antifraud and books and records provisions of the federal securities laws.
The Guiliano Law Group
Our practice 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 to 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.