Craig David Dima, of Ronkonkoma, New York, a stockbroker formerly registered with K.C. Ward Financial, has been fined and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon an Office of Hearing Officers’ Order Accepting Offer of Settlement containing findings that Dima effected unauthorized trades in a customer’s account, made fraudulent misrepresentations and unsuitable investment recommendations to the customer, and charged the customer with excessive mark-ups and mark-downs. Department of Enforcement v. Craig David Dima, No. 2015046440701 (Feb. 27, 2017)
According to the Order, between June of 2010 to August of 2015, at which point Dima was associated with K.C. Ward Financial, he effected an estimated forty-one unauthorized sales of Colgate stock in the account of a seventy-two year old firm customer, RS. The Order stated that RS’s individual account was opened and serviced by Dima in 2009, during which time RS communicated objectives of investing in capital appreciation with a moderate level of risk. Apparently, RS’s individual retirement account, which initially held 7,543 Colgate stock shares, was the largest account which Dima serviced and the source of nearly eighty percent of the commission which Dima generated.
The Order stated that from June of 2010 to August of 2015, Dima repetitively sold and repurchased nearly all of RS’s Colgate stock, which included eleven round trips. In one case which the Order identified, 5,000 Colgate shares had been sold at approximately $103.00 per share on October 31, 2012, followed by the December 2012 repurchase of 5,000 shares, in which prices per share ranged from $106.87 to $111.91. Evidently, RS sustained a loss of $18,561.00 in the round trip; however, Dima accumulated $28,300.00 in compensation due to his applied mark-downs and mark-ups in the transactions.
The Order stated that eighty-two trades had been effected by Dima, involving an estimated $15,000,000.00, in which mark-downs and mark-ups had been calculated and determined by Dima in every case. According to the Order, each round trip transaction led RS to pay an estimated six percent between mark-downs and mark-ups, and the eighty-two transactions carried an estimated three percent in mark-downs and mark-ups on average. Ultimately, Dima accumulated mark-downs and mark-ups totaling an estimated $372,000.00 – all in reference to the sale and purchase of stock issued by Colgate.
The Order additionally stated that a $49.00 ticket charge was assessed to RS based upon each trade, which led RS to pay $4,000.00 more in connection with the transactions. Moreover, RS was reportedly unable to collect dividends totaling an estimated $127,000.00 based upon the short-term trading strategy implemented by Dima; RS would have been entitled to the dividends had his shares not been traded. The Order also revealed that three unauthorized round trip transactions had been effected by Dima, in which RS sustained $72,000.00 in losses. According to the Order, RS’s portfolio would have been worth $329,000.00 more than it was worth on November 2015 had Dima not effected transactions in RS’s individual retirement account.
Further, from 2010 to 2015, Dima was apparently instructed by RS not to sell the customer’s holdings of Colgate, as RS felt that Colgate was a worthy investment which provided a consistent source of dividend income. Notwithstanding, and unbeknownst to RS, forty-one transactions were effected by Dima which consisted of the sale of Colgate stock. Dima reportedly concealed his activities in RS’s account by fraudulently omitting and misrepresenting the basis for effecting the transactions. Particularly, Dima blamed the trades on a computer glitch or a clearing firm’s human error; he never indicated to RS that he was behind the unauthorized trades. Further, RS was purportedly told by Dima that commissions and fees pertaining to the sales of Colgate stock would be reimbursed, and that RS would receive dividend payments which RS was deprived of; however, no reimbursement was provided to RS as promised.
Based on the foregoing, FINRA found Dima’s conduct to be violative of FINRA Rules 2010, 2020, 2111, 2310, 2121, as well as NASD Conduct Rule 2440 and IM-2440-01, which led to his permanent bar.
FINRA Public Disclosure reveals that Dima has been named in five customer initiated investment related disputes containing allegations of his misconduct while employed with Joseph Charles & Associates, First Montauk Securities Corp., KC Ward Financial, and Sterling Financial Investment Group, Inc. Particularly, on September 20, 1999, a customer filed an investment related written complaint involving Dima’s conduct, in which the customer requested $16,000.00 in damages based upon allegations that Dima effected unauthorized Dell and CustomTracks stock transactions In the customer’s account.
On January 20, 2001, a customer filed an investment related written complaint regarding Dima’s activities based upon allegations that Dima effected trades in Navidec and Vitech stock in the customer’s account without authorization, and did not abide by the customer’s instructions pertaining to margin calls. Further, on August 9, 2002, a customer was awarded $4,999.00 in damages according to an investment related arbitration claim involving Dima’s misconduct, based upon allegations that Dima placed the customers in a margin account without authorization.
Subsequently, on May 3, 2005, a customer initiated investment related arbitration claim regarding Dima’s activities was resolved for $14,999.00 in damages based upon allegations that Dima effected transactions in the customer’s investment account which were neither authorized nor suitable. Moreover, on September 13, 2016, a customer initiated investment related arbitration claim involving Dima’s conduct was settled for $30,000.00 in damages based upon allegations that Dima implemented unsuitable investment strategies involving options and over-the-counter equity transactions.
Since May 6, 1994, Dima has been associated with eighteen different broker dealers, seventeen of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct. #cockroach
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