Paul Eric Taboada, of New York, New York, a stockbroker formerly registered with Blackwall Capital Markets, Inc., is the subject of a Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council Decision which affirmed Extended Hearing Panel sanctions imposed upon Taboada consisting, in part, of a permanent bar from associating with any FINRA member for misleading and misappropriating securities and funds from customers. In the Matter of Department of Enforcement v. Paul E. Taboada, No. 2012034719701 (July 24, 2017).
According to the Decision, Taboada misappropriated the securities and funds of the firm’s customers, which included those serviced by Taboada during the time he was with Charles Morgan Securities (May of 2016 to September of 2012) as well as Blackwall Capital Markets, Inc. (October of 2012 to May of 2014). As registered representative of both firms, he facilitated a total of thirty-seven customers’ purchases of CMS interests – securities which Charles Morgan was affiliated with and served as placement agent for.
Specifically, the Decision stated that Taboada failed to provide customers with shares of Facebook that the customers owned, and failed to provide investors within the first two series with a return of capital. Funds of the first two series of investors were apparently used by Taboada to pay future investors in a manner that violated the Offering Memorandum. The Decision stated that Taboada used funds in an inappropriate manner to boost sales commissions, causing a shortage in monies that were meant for Facebook share purchases.
The National Adjudicatory Counsel also stated that funds were misappropriated through Taboada’s imposition of a carried interest fee, which he assessed in a purported attempt to justify the excessive charges. Taboada’s conduct in this regard was found by FINRA to be violative of FINRA Rules 2010 and 2150.
Moreover, the Decision revealed that Taboada failed to disclose the commissions he charged to investors; the fourth and fifth series of investors were not informed by Taboada that Charles Morgan applied sales concessions in connection with their investments. Taboada also evidently provided customers with spreadsheets containing misleading and incorrect values. The Decision stated that information presented to customers did not address that capital surpluses would not be returned to investors but would rather be covering expenses of other series. Additionally, the commission addressed on the spreadsheet was purportedly inaccurate as it lacked reference to a commission on the fourth series. Consequently, Taboada’s conduct in this regard was found by FINRA to be violative of Rule 2010.
Even further, the Decision indicated that false information was furnished to FINRA by Taboada in the course of FINRA’s investigation into his wrongdoing. The Decision stated that Taboada failed to provide FINRA with an invoice that FINRA asked about, despite the invoice having been previously confirmed by Taboada as available. Taboada then apparently testified falsely as to the creation of the invoice. As a result, FINRA found Taboada’s conduct to be violative of FINRA Rule 2010 and 8210.
FINRA Public Disclosure reveals that Taboada has been fined $25,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he authored a research report that contained misleading, unwarranted, and exaggerated statements. Case No. CAF020022 (Dec. 16, 2002).
Moreover, on May 9, 2013, a customer was awarded $25,000.00 in damages according to an investment related arbitration claim involving Taboada’s misconduct, based upon allegations that Taboada made misrepresentations and omissions to the customer, breached his fiduciary obligations, and breached his contractual duties to the customer in regard to private placements held in the customer’s portfolio.
Since June 22, 1990, Taboada has been associated with eight different broker dealers, seven of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct. #cockroach
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