James Larkin Powers of Atlanta, Georgia, a stockbroker formerly registered with du Pasquier & Co., Inc., has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging, inter alia, that Powers converted customer funds. Department of Enforcement v. Powers, No. 2014041985401 (Nov. 15, 2016).
According to the Complaint, Power was provided with authorization by his firm to effect trades for customers. In this capacity, Powers apparently effected trades between the street and the firm’s account, then allocated trades to accounts of customers based upon the customers’ orders.
The Complaint stated that the trading authorization provided to Powers was abused by him. Particularly, Powers utilized the firm’s authorization in order to effect trades between the trading account of the firm and Powers’ personal account. Apparently, such transactions did not have any purpose; they were only effected by Powers in order to procure trading profits. Powers was alleged by FINRA to have engaged in a scheme to defraud his firm out of $339,133.00. As such, FINRA alleged that Powers’ conduct of effecting sham trades was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2010.
The Complaint further revealed that funds of customers were converted by Powers based upon Powers’ misuse of the trading accounts belonging to the firm. Particularly, subsequent to a trade having been effected by Powers for a customer, he provided the customer a price which was lower than the price for execution. Powers then reportedly entered trades which were fictitious in order to steal the remaining funds belonging to customers. FINRA alleged that Powers’ conduct in this regard, which resulted in $25,370.00 of customers’ funds being converted, was violative of FINRA Rule 2010.
The Complaint additionally stated that execution prices that Powers provided to customers were inaccurate, in that such prices were not consistent with the price which Powers obtained through the execution on the street side for the customer’s benefit. FINRA alleged that Powers’ misrepresentations in this regard were violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, as well as FINRA Rules 2010 and 2020.
The Complaint further revealed that Powers effected trades which were fictitious within the firm’s customers’ accounts. Particularly, Powers effected the trades in order to conceal the loss associated with shorting one thousand and five-hundred shares of Netflix, Inc. Powers reportedly effected several sell transactions regarding Netflix from the customers’ accounts to the accounts of the firm. FINRA alleged that Powers’ fake and unauthorized transactions were violative of FINRA Rule 2010. FINRA also alleged that Powers caused his firm’s records and books to be inaccurate, which was violative of FINRA Rules 2010 and 4511.
Since 1994, Powers has been associated with seven different broker dealers, one of which has been expelled by securities regulators for violation of federal securities laws or is otherwise defunct.
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