Equinox Securities, a FINRA registered broker-dealer since April 2008 headquartered in Redlands, CA, offers general securities to the public via 27 FINRA registered representatives. The Firm, along with President/CCO Stephen Michael Oliveira, and registered representative Chris Blaine Palkowitsh, were charged by FINRA Department of Enforcement in a Complaint containing allegations that Palkowitsh and Equinox excessively traded and churned customer accounts and made unsuitable recommendations in customers’ accounts, Oliveira and Equinox failed to provide adequate supervision of Palkowitsh, Palkowitsh failed to update his Form U4 to disclose tax liens, and Oliveira and Equinox failed establish adequate supervision procedures to prevent such unsuitable recommendations and also ensure Form U4 amendments were current. Dept. of Enforcement v. Equinox Securities, Inc. No. 2012031496501 (Filed July 28, 2015).
The Complaint
According to the Complaint, the Department of Enforcement found that Chris Palkowitsh, from November of 2008 through July of 2012, excessively traded and churned six of his customers’ accounts. The Complaint alleges that Palkowitsh would routinely charge his customers’ $75 in commission for each transaction executed, where he would repeatedly execute such transactions containing principal amounts in the $100-$300 range with the majority of transactions taking place within his customers’ IRAs. The Complaint further states that in each account, Palkowitsh executed several hundred to several thousand transactions that generated him massive commission payments, yet leaving his clients with cost/equity ratios in excess of 100% and aggregate losses of more than $800,000. Additionally, the Department of Enforcement alleges in the Complaint that Palkowitsh would transfer his clients’ remaining funds (after significant losses occurred) into concentrated risky positions.’
The Complaint goes on to state that Oliveira, an individual holding the title of Chief Compliance Officer and Palkowitsh’s Supervisor, was not only aware of the transactions and misconduct of Palkowitsh, but took no responsibility to put a stop to the harm being committed. The Complaint indicates that Palkowitsh, while working with Equinox, had three federal tax liens against him as a result of his failure to pay $300,000 in taxes. Palkowitsh, according to the Complaint, never disclosed such liens on his Form U4.
According to the Complaint, Palkowitsh and Equinox, as a result of the excessive trading and churning conduct, were charged with violating NASD Rules 2310 and 2110, IM-2310-2, FINRA Rules 2010 and 2020, Section 10b of the Securities Exchange Act of 1934 and Rule 10b-5, and NASD Rules 2110 and 2120. Also according to the Complaint, Palkowitsh and Equinox, as a result of making unsuitable recommendations for concentrating customers’ accounts into a single security, violated FINRA Rule 2010 and NASD Rule 2310. Further, Oliveira and Equinox, as a result of inadequate supervision of Palkowitsh for the aforementioned conduct, were charged with violating NASD Rules 2110, 3010, and FINRA Rule 2010.
The Complaint further indicates that Palkowitsh’s alleged failure in disclosing tax liens on U4 resulted in violation of FINRA By-laws – Article V, Section 2(c) as well as FINRA Rules 2010 and 1122. Finally, the Complaint charged Oliveira and Equinox with violating NASD Rules 2110, 3010, and FINRA Rule 2010 for the failure of establishing adequate supervisory procedures and systems for purposes of preventing and detecting recommendations deemed unsuitable and also ensuring timely amendments to Form U4.
The relief requested by the Department of Enforcement, according to the Complaint, include but is not limited to, findings of fact and law of the aforementioned violations, FINRA Rule 8310(a) sanctions be imposed, monetary sanctions, and that the named parties be subject to disgorgement of ill-gotten gains and/or restitution.
Public Disclosure Records
Aside from the aforementioned FINRA Complaint in which Palkowitsh and Oliveira are subject to, public disclosure records reveal that Palkowitsh has been subject to at least 2 customer disputes prior to joining Equinox. On October 24, 2002, Palkowitsh settled a dispute with a customer for $205,000.00 after allegations of trading losses. On January 22, 2007, Palkowitsh settled a customer dispute for $21,466.00 after allegations of unauthorized transactions and churning.
Guiliano Law Group
Investors suffering losses or damages caused by Palkowitsh, Oliveira, and Equinox in connection with the aforementioned conduct may be able to recover their investment losses. Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
