Yosef Yehuda Fox (also known as Joseph J. Fox) of Chicago Illinois the Chief Executive Officer and Chief Compliance Officer employed by Ditto Trade Inc. has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on allegations that Fox failed to pay an Arbitration Award after having been found liable on the customer’s claims for negligence and omissions. FINRA Case No. 17-01628 (July 12, 2018).
FINRA Public Disclosure reveals that Fox was subject of a customer initiated investment related arbitration claim where the customer was awarded $125,000.00 in compensatory damages founded on Fox being found liable on the customer’s claims of Fox’s negligence in regard to the customer’s investment in Ditto Holdings; Fox’s failure to conduct accountings and audit financial documents; Fox’s failure to disclose investment related information to the customer at the time that the customer purchased the Ditto Holdings investments; and Fox’s conduct running afoul of Securities and Exchange Commission (SEC) and FINRA rules.
This is not the first time that Fox has been subject of a FINRA regulatory action concerning his alleged misconduct in the securities industry. Particularly, Fox has already been barred by FINRA supported by accusations that he failed to cooperate with FINRA’s request for Fox’s information. Case No. 2016048527201 (Aug. 22, 2016). Fox reportedly failed to cooperate with FINRA’s information request, which initially resulted in a suspension. However, after continuing to fail to cooperate with FINRA’s requests, Fox was automatically barred in all capacities on August 22, 2016. FINRA’s expulsion of Fox from the securities industry comes after Fox was barred by SEC for violating federal securities laws.
Specifically, Fox was fined $75,000.00 and barred by the Securities and Exchange Commission from registering as a broker or investment adviser or otherwise associating with any broker or investment adviser according to an Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Securities Exchange Act of 1934 Section 15(b) and Securities Act of 1933 Section 8A, Making Findings and imposing Remedial Sanctions and a Cease-and-Desist Order No. 3-16695 (Sept. 8, 2015).
According to the SEC Order, since February of 2013, Fox took steps to sell his shares of Ditto Holdings through the help of an individual involved with a newsletter. Apparently, Fox ascertained whether subscribers of a newsletter had any interest in buying Ditto Holdings shares. Apparently, the individual involved in the newsletter had been provided a stock purchase agreement to give to interested investors as well as the information on wiring Fox the funds for securities purchases.
Subsequently, the individual reportedly touted Ditto Holdings stock to some three hundred fifty subscribers of the newsletter. Evidently, some of the subscribers took notice of Ditto Holdings and pursued the purchase of the investments. Apparently, the individual furnished stock purchase agreements to customers and positioned Fox for any questions on the customer’ purchases. In sum, apparently $1,250,000.00 worth of shares in Ditto Holdings had been sold to about twenty-eight of the newsletter’s subscribers. The Order stated that none other than those subscribers had been sold the shares of Ditto Holdings. Subsequently, the individual was provided $124,000.00 from Fox for his efforts.
SEC found that Fox did not make any effort to ascertain the suitability of investors’ purchases of Ditto Holdings. Specifically, SEC indicated that Fox did not find out whether investors had any level of sophistication concerning the investments. Moreover, multiple purchasers were reportedly not accredited investors. The Order also revealed that financial statements and other documentation concerning the investments had not been provided to investors purchasing the common stock in Ditto Holdings. Further, SEC stated that the securities sold to the customer were neither registered with SEC nor exempt from SEC’s registration requirements. Consequently, SEC found Fox’s conduct violative of Securities Act of 1933 Section 5(c).
