Michael Donnelly, of Lecanto, Florida, a stockbroker formerly associated with Coastal Equities, Inc., was named in a pending customer initiated investment related arbitration claim on July 1, 2016, in which the customer has requested $53,183.00 in damages based upon allegations against Donnelly of misappropriating the customer’s assets that the customer provided him for investment opportunities.
Donnelly is also subject to three additional pending customer initiated investment related arbitration claims lodged against him between October 8, 2015, and June 20, 2016, in which customers alleged that Donnelly misappropriated the customers’ investments. Coastal Equities, Inc. terminated Donnelly on September 2, 2014, based upon allegations that funds from customers were misappropriated by Donnelly.
FINRA’s Public Disclosure reveals that on October 14, 2014, Donnelly was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he obstructed a FINRA investigation into allegations that Donnelly converted customer funds. Letter of Acceptance, Waiver and Consent, No. 2014042487201 (Oct. 14, 2014). Donnelly was found by FINRA to have violated FINRA Rules 2010 and 8210 as a result of his failure to cooperate in the investigation.
Subsequently, the United States Securities and Exchange Commission (SEC) issued an Order permanently barring Donnelly from working as an investment adviser or broker. SEC Admin Release 34-7705/IA Release 4327 (Feb. 4, 2016). Prior to this point, the SEC obtained a judgment against Donnelly, in which Donnelly was enjoined from committing violations of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a), as well as Advisers Act Sections 206(1) and 206(2). Securities and Exchange Commission v. Michael Donnelly, Civil Action Number 2:15-CV-05673 (E.D. Pa. Jan. 20, 2016).
Prior to the SEC actions, Donnelly reportedly pled guilty to securities fraud, in which he was found to have violated 15 U.S.C. § 78j(b). United States v. Michael Donnelly, Crim No. 2:15-cr-00501 (E.D. Pa. Dec. 22, 2015). Apparently, Donnelly, in his capacity of president of Coastal Investment Advisors, concocted a fraudulent scheme that involved taking possession of an estimated $2,000,000.00 from customers. Donnelly reportedly received elderly customers’ funds by giving them the impression that their funds would be used for investments in certificates of deposit or other securities. According to the SEC Complaint lodged against Donnelly, he utilized the customers’ funds to pay for rent, membership fees associated with a golf club, and tuition for his children.
Since 1992, Donnelly has been associated with ten different broker dealers, two of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct.
Guiliano Law Group
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