David Oscar Braeger of Milwaukee Wisconsin a stockbroker formerly employed by Newport Coast Securities Inc. is the subject of a Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council Decision which affirmed a FINRA Extended Hearing Panel Decision barring Braeger from associating with any member in any capacity based upon findings that (1) Braeger made misrepresentations and omissions to customers concerning investments he sold during the period in which he was employed by Newport Coast Securities and (2) Braeger converted and misused customer funds. In the Matter of Department of Enforcement v. David O. Braeger Decision No. 2015045456401 (Dec. 16, 2019).
Braeger was initially charged by FINRA Department of Enforcement in a Complaint alleging that he failed to invest TH and SE’s $30,000.00 in Rubicon according to the customers’ expectations. Without the customers’ consent, Braeger instead placed their assets in an account he controlled at Wells Fargo.
Braeger attempted to hide that he converted and misappropriated the customers’ funds. Specifically, over a period of years, omissions and misrepresentations had been made to the customers, both orally and in writing, in regard to the status and value of their investments so that the stockbroker could conceal that the customers’ assets were stolen.
Customers were falsely told that their assets were invested in Rubicon; that the issuer was operating and functioning properly (when in reality the company closed down and was liquidated); and that the customers’ funds were unable to be accessed due to a bankruptcy proceeding initiated by Rubicon’s clearing firm. Also, customers were provided with fake quarterly statements and Schedules K-1 which showed that their funds were invested in Rubicon.
FINRA Department of Enforcement stated that Braeger’s omissions and misrepresentations constituted a violation of FINRA Rule 2010; and that his conversion of the customers’ funds constituted violations of FINRA Rules 2010 and 2150 as well as National Association of Securities Dealers (NASD) Rule 2330. On December 27, 2017, FINRA’s Extended Hearing Panel found that the stockbroker committed those violative acts and barred him from the securities industry as a result. The National Adjudicatory Council affirmed.
