Glen Robert King of Shrewsbury, NJ, a registered representative with Buckman, Buckman & Reid, Inc., was charged by the Department of Enforcement of Financial Industry Regulatory Authority (FINRA) in a Complaint alleging that King made fraudulent misrepresentations to customers, engaged in excessive and unsuitable trading, and exercised discretion in accounts of customers without written authority. Department of Enforcement v. King, No. 2015044444801 (Nov. 16, 2015).
According to the Complaint, from approximately April 2008 – March 2011, when King was associated with Royal Alliance Associates, Inc., King is alleged to have made fraudulent misrepresentations and omissions to seven Royal customers in connection with the sale of unit investment trusts (“UITs”). The Complaint stated that King had misrepresented to the customers that he would be using their funds to purchase safe, no-risk bonds, and without charging fees/commissions on the transactions.
The Complaint stated that King subsequently used the customers’ funds to purchase forty-four UITs, which resulted in an estimated $17,000 in realized losses to the customers, $43,000 in unrealized losses, and where an estimated $38,000 in commissions went to King. FINRA alleged that King had willfully violated Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5, and NASD Conduct Rules 2120, 2110, and FINRA Rules 2020 and 2010.
The Complaint further indicated that from January 2013 – December 2014, while King was associated with Buckman, Buckman & Reid, he had engaged in a pattern of short-term trading in long-term investment products in four of his firm’s customers’ accounts. FINRA alleged that King’s pattern of trading was excessive and unsuitable, and had resulted in an estimated $163,000 in losses to the firm’s customers. King reportedly raked in gross commissions of roughly $210,000. FINRA alleged that King’s conduct was violative of FINRA Rules 2111 and 2010.
Finally, the Complaint indicated that from January 2013 – December 2014, King had exercised discretion in the accounts of four of his firm’s customers without their written authority and with no approval from the firm. FINRA alleged that King’s conduct in this regard was violative of Rule 2510(b) and FINRA Rule 2010.
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.
Finally, FINRA Rule 2111 requires that associated persons have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. FINRA will generally find this rule to be violated, as is the case with Greenfield, when the individual does not have a basis to believe that the recommendation is suitable for at least some investors, that the recommendation is suitable for a particular customer considering the customer’s investment objectives and financial profile, and (for the accounts where the individual is exercising discretion) that a series of recommended transactions are not excessive and unsuitable even if each transaction alone would be deemed suitable.
Public disclosure records reveal that Glenn R. King has been subject to twenty-four disclosure incidents. On November 05, 2001, King settled a customer dispute for $34,371.85 after a client’s daughter alleged that there were trades made in her mother’s account that were unauthorized, unsuitable, and excessive. On July 26, 2004, King settled a customer dispute for $2,800.00 after a client alleged unauthorized and misrepresented transactions. From December 17 – 20, 2004, King settled three customer disputes for $4,318.20, $4,330.12, and $4,994.20 after clients’ alleged nondisclosure of mutual fund sales charges.
On March 1, 2011, King settled a customer dispute for $15,000.00 after a customer alleged that investments were unsuitable and high risk for his conservative risk tolerance. On June 1, 2011, Royal Alliance Associates, Inc. had permitted King to resign amid allegations of potential misrepresentation of UITs and CDs and failure to deliver prospectuses.
On November 16, 2011, King settled a customer dispute for $2,250.00 after a customer alleged unauthorized trading in the account. On April 2, 2012, King settled a customer dispute for $6,500.00 after a customer alleged misrepresentation of certain UITs. On July 16, 2014, King was subject to a bankruptcy proceeding. On October 27, 2014, King became subject to another bankruptcy proceeding (pending). On April 17, 2015, King settled a customer dispute for $21,760.00 after alleging poor performance. Finally, King became subject to a customer dispute (pending) from June 23, 2015, where a customer is requesting $200,000.00 after alleging unsuitable investment strategies involving REITs and UITs.
Guiliano Law Group
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