David Joseph Escarcega of Phoenix Arizona a stockbroker formerly employed by Center Street Securities Inc. is referenced in a customer initiated investment related arbitration claim which was resolved for $20,000.00 in damages supported by accusations that CNL Lifestyle Real Estate Investment Trust and other mutual fund trades executed in customers’ accounts failed to be suitable for them. Financial Industry Regulatory Authority (FINRA) Arbitration No. 18-01229 (Apr. 16, 2019).
FINRA Public Disclosure confirms that Escarcega is referenced in two more customer initiated investment related disputes containing allegations of his violative conduct when he was employed by Center Street Securities. In particular, a customer filed an investment related complaint concerning Escarcega’s activities where the customer sought $19,040.89 in damages based upon accusations that misleading statements had been made to the customer concerning the penalties of effecting a corporate debt transaction. The other customer filed an investment related complaint concerning Escarcega’s conduct in which the customer requested unspecified damages based upon allegations that Escarcega made bad investment recommendations concerning the liquidation of the customer’s fixed policies which led the customer to incur unwarranted liabilities.
Escarcega is also the subject of an Order issued by the Arizona Corporation Commission in which (1) Escarcega’s securities registration was revoked (2) Escarcega’s investment adviser application was revoked (3) Escarcega was fined $100,000.00 and (4) Escarcega was ordered to cease and desist violating Arizona securities laws based upon findings that Escarcega sold unsuitable debentures to customers. In the matter of David J. Escarcega Docket No. S-20956A-16-0090 (Dec. 5, 2016).
According to the Order, Escarcega sold debentures that had been issued through a life settlement company which bought life insurance policies, serviced them, and accumulated death benefits. The Order stated that special registration requirements to ensure suitability called for debentures investors to maintain certain net worth or income requirements. The customers who Escarcega solicited for the investments did not meet those income requirements. Escarcega’s recommendations were not suitable because of the customers’ income needs.
The Order also indicated that debentures were unsuitable for the investors who required liquidity prior to the dates that the debentures matured, and that these products were speculative and risky. Escarcega’s customers were only apprised of some of the risks, preventing them from knowing how risky the investments they purchased were. Escarcega misrepresented these risks to one or more investors – he conveyed that the products, inter alia: posed minimal risks; guaranteed income and interest; and could be liquidated at any time. The Order indicated that forty-seven investors purchased inappropriate debentures through Escarcega because the risks and illiquidity of those products were incompatible with the customers’ risk tolerances or income needs.
Escarcega has also been barred from associating with any FINRA member in any capacity according to a FINRA National Adjudicatory Council Decision affirming an Extended Hearing Panel Decision containing findings that Escarcega made omissions and representations concerning renewable secured debentures; conduct violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and Rule 2020. Case No. 2012034936005 (Aug. 22, 2017).
On April 5, 2016, Escarcega was discharged by Center Street Securities based upon allegations of his false or misleading statements relating to renewable debentures.
