Bruce Meyers of New York New York a broker formerly registered with Meyers Associates L.P. (now known as Windsor Street Capital L.P.) has been fined $20,000.00, barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity, and suspended from associating with any FINRA member for six months according to a FINRA Office of Hearing Officers Order Accepting Offer of Settlement containing findings that (1) Meyers failed to supervise Meyers Associates brokers to ensure that their activities were compliant with securities regulations and laws and (2) Meyers failed to disclose outside business activities to the firm. Department of Enforcement v. Bruce Meyers Disciplinary Proceeding No. 2016048912703 (Jan. 31, 2019).
According to the Order, between January of 2013 and March of 2016, two fraudulent schemes had been executed at Winsor Street Capital L.P. Specifically, the fraud had been committed by the firm’s brokers, and made possible through the lack of the firm’s actions to both comply with securities regulations and laws to protect investors. Evidently, principals were permitted by the firm to allow its brokers to commit fraud in regard to the firm’s accounts. Apparently, the brokers abused the firm’s riskless principal, average price and bond inventory accounts so that they could generate illicit gains at customers’ expense.
The Order stated that Edwin Rodriguez, a Windsor Street entry clerk, and Arthur Tacopino, a Windsor Street operations department employee, both utilized the firm’s accounts in a fraudulent fashion to direct profitable trades to Tacopino and other brokers of the firm, while allocating the unprofitable trades to the customers of the firm. The AWC also stated that Windsor Street Capital and Rodriguez utilized the accounts to fraudulently charge $318,109.16 in markdowns and markups to customers. Evidently, the actions of the firm, Rodriguez and Tacopino led customers to sustain at least $905,000.00 in losses.
The Order revealed that in the first of the fraudulent schemes that was effected, trades executed each day had been allocated by Tacopino to his own account as well as other Windsor Street accounts. However, customers’ accounts were the recipient of the unprofitable trades. Evidently, Rodriguez and another clerk had been instructed to buy securities using the firm’s account before determining the account that would be the recipient of the trade. Apparently, trades were allocated to accounts after they discovered how the securities had fared.
The Order stated that when there was an increase in the price of the security, Rodriguez and AK were instructed to sell the security on that same day and then direct profits to Tacopino’s account or accounts of other firm employees including AK and JR. Apparently, unprofitable trades had been either left in the firm’s account or allocated to a customer. Consequently, in ninety-eight percent of the trades Tacopino fraudulently effected, he generated profits. This led Tacopino to generate an estimated eighty-two percent annual return and illicit profits totaling $417,369.00. Customers; however, sustained $515,000.00 in losses through the fraudulent allocations.
Apparently, the second scheme consisted of the firm charging customers hidden markdowns and markups on trades placed in their accounts. Apparently, most of the nine-hundred sixty two trades contained undisclosed, excessive charges. Particularly, one hundred ninety nine of the equity trades contained overall charges that exceeded the firm’s cost by five percent. Apparently, the fraudulent scheme enabled the firm to generate $318,109.16 in secretive profits; $104,047.93 coming from the undisclosed markups alone.
Evidently, the schemes harming investors went on for years given the failure of Meyers and Windsor Street to establish and implement supervision systems and procedures with a view towards preventing fraudulent trading activities and undisclosed, excessive markdowns and markups from being executed in customer accounts. Consequently, FINRA found that Meyers’ conduct was violative of FINRA Rules 2010, 3110(a), 3110(b), and National Association of Securities Dealers (NASD) Rules 3010(a) and 3010(b).
Moreover, FINRA found that between April of 2015 and May of 2016, Meyers engaged in an outside business activity that was not made known to the firm. Specifically, Meyers was involved in a mergers and acquisitions consulting business, Arcis. Apparently, Meyers was provided compensation by Arcis in return for his business and advisory services. Meyers reportedly disregarded his responsibility to provide Winsor Street with written notification before engaging in activities with Arcis. Consequently, FINRA found Meyers’ conduct violative of FINRA Rules 2010 and 3270.
FINRA Public Disclosure reveals that Meyers has been identified in nine customer initiated investment related disputes containing accusations of his misconduct while employed with Meyers Associates, L.P. Particularly, a customer initiated investment related arbitration claim involving Meyers’ activities was resolved for $150,000.00 in damages based upon allegations that over-the-counter equities trades were effected in the customer’s account on an excessive basis. National Association of Securities Dealers (NASD) Arbitration No. 07-00272 (Mar. 3, 2008).
Thereafter, a customer initiated investment related arbitration claim involving Meyers’ conduct was settled for $30,000.00 in damages supported by accusations including failure to supervise, misrepresentation, excessive trading, fraud, suitability, breach of contract, negligence, violation of Minnesota Securities Law, and breach of fiduciary duty in regard to the speculative and inappropriate transactions that were executed in the customer’s account. FINRA Arbitration No. 09-02420 (Oct. 5, 2010). Another customer initiated investment related arbitration claim concerning Meyers’ activities was resolved for $8,500.00 in damages founded on allegations that unsuitable investment recommendations had been made to the customer concerning penny stocks. FINRA Arbitration No. 14-01723 (Mar. 1, 2015).
Then, a customer filed an investment related arbitration claim regarding Meyers’ conduct in which the customer requested $125,424.00 in damages based upon accusations that misrepresentations had been made to the customer in addition to unsuitable recommendations concerning the customer’s investments in over-the-counter equities. FINRA Arbitration No. 15-01147 (May 26, 2015). Another customer filed an investment related arbitration claim involving Meyers’ activities where the customer sought $545,000.00 in damages supported by allegations of unsuitability with regard to the customer’s private placement investment transactions. FINRA Arbitration No. 16-00454 (Apr. 7, 2016).
Furthermore, a customer filed an investment related arbitration claim concerning Meyers’ conduct in which the customer requested $383,000.00 in damages founded on accusations that transactions were effected in the customer’s account that were neither suitable nor authorized by the customer; and the customer’s over-the-counter equities portfolio was churned between February of 2016 and November of 2016. FINRA Arbitration No. 17-00884 (Apr. 18, 2017).
Meyers’ registration with Meyers Associates has been terminated as of June 8, 2016. FINRA expelled Meyers Associates on May 29, 2018.
