Glenn Robert King, of Shrewsbury, New Jersey, a stockbroker formerly with Royal Alliance, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he fraudulently omitted and misrepresented material facts to investors, prompted excessive and unsuitable transactions, and committed unauthorized discretionary trading. Department of Enforcement v. King, No. 2015044444801 (June 9, 2016).
According to the Decision, from April 2008 through March 2011, while King was associated with Royal Alliance Associates, Inc., he made fraudulent omissions and misrepresentations to seven of Royal Alliance’s senior clients in connection with the sale of unit investment trusts (UITs). The Decision stated that King misrepresented to the customers that he would be using their funds to purchase safe, tax free and high yielding bonds and certificates of deposit; however, he omitted several key details regarding the products.
The Decision stated that customers purchased forty-four UITs from King, several of whom were informed by King that their money was being used to purchase bonds with a fixed return. Investors were reportedly informed that their money was not subject to risk, and principal was guaranteed upon maturity. The Decision indicated that the UITs purchased by King actually held options or stock in the portfolios, and that none of the UITS had principal guarantees associated with them.
Additionally, King reportedly did not inform the seven clients of Royal Alliance that the UITs may be illiquid, subject to market risk, and that they were not geared for active trading. King apparently told investors that that he would not be charging commissions, when King actually raked in commissions of $38,000.00.
FINRA found that King acted intentionally to deceive his investors, and further concealed his misrepresentations by not providing customers with the UIT prospectuses. FINRA’s Department of Enforcement found that King’s conduct, which resulted in customers suffering an estimated $17,000.00 in realized losses and $43,000.00 unrealized losses, was violative of Exchange Act Section 10(b), Rule 10b-5, RINA Rules 2010 and 2020, NASD Rules 2110 and 2120.
The Decision further indicated that from January 2013 – December 2014, while King was associated with Buckman, Buckman & Reid, he engaged in a pattern of short-term trading in long-term investment products in four of his firm’s customers’ accounts. Investors were apparently charged up to 4.5% in sales charges, and suffered additionally from up to 2% in sales charges associated with UITs and closed end fund purchases. FINRA found that King’s short term trading was unsuitable, especially considering the investment objectives and risk tolerance of the four individuals, three of which were retired.
FINRA found that King lacked a reasonable basis to conclude that his short term trading of the aforementioned investments were suitable for customers. FINRA additionally found that King’s trading was excessive and unsuitable, when considering that such accounts contained turnover rates up to 7.07 and cost/equity ratios up to 21.43%. His conduct resulted in an estimated $163,000.00 in losses to the firm’s customers. Yet, King reportedly raked in gross commissions of roughly $210,000.00 FINRA found that King’s conduct of quantitatively and qualitatively unsuitable trading was violative of FINRA Rules 2111 and 2010.
Finally, the Decision stated that from January 2013 through December 2014, King exercised discretion in the accounts of four of his firm’s customers who had not provided King with their written authority. King additionally did not have approval from his firm to engage in the discretionary trading. FINRA found that King’s conduct in this regard was violative of Rule 2510(b) and FINRA Rule 2010. The aforementioned violations led to King’s permanent bar.
Public disclosure records reveal that Glenn R. King has been subject to twenty-five disclosure incidents. On November 5, 2001, King settled a customer dispute for $34,371.85 after a client’s daughter alleged unauthorized, unsuitable, and excessive trading. On July 26, 2004, King settled a customer dispute for $2,800.00 after a client alleged transactions were unauthorized and misrepresented. From December 17 through December 20, 2004, King settled three additional customer disputes after clients’ alleged mutual fund sales charges were not disclosed.
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 King’s 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 customer’s account. On April 2, 2012, King settled a customer dispute for $6,500.00 after a customer alleged misrepresentation of certain UITs. On April 17, 2015, King settled a customer dispute for $21,760.00 amid allegations of poor performance. King became subject to yet another customer dispute (pending) from June 23, 2015, where a customer is requesting $200,000.00 after alleging unsuitable investment strategies involving REITs and UITs. Finally, on January 4, 2016, King became subject to a pending customer dispute in which a client is requesting $150,000.00 after alleging unsuitability and unauthorized trading. The Guiliano Law Group represents two of these individuals.
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