Richard Gomez of New York New York is a former Legend Securities Inc. stockbroker who is subject of a Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council Decision which contained findings that Gomez (1) made fraudulent misrepresentations to customers (2) recommended securities that were not suitable for customers and (3) sold investments away from Legend Securities Inc. In the Matter of Department of Enforcement v. Richard Gomez No. 2011030293503 (Mar. 28, 2018).

According to the Decision, Gomez engaged in private securities activities in U.S. Coal and Praetorian during the time he was associated with Legend Securities. Evidently, Gomez never notified Legend concerning the role he had in the securities transactions and he had not obtained approval from the firm in writing before engaging in those transactions. Evidently, Gomez admitted to soliciting as well as recommending and selling securities issued or offered by U.S. Coal and Praetorian to customers outside the firm’s auspices and confirmed that some of Legend’s customers were involved in those transactions.

The Decision stated that the securities that Gomez sold away from Legend stemmed from criminal and fraudulent activities. Gomez reportedly effected a total of $499,000.00 worth of U.S. Coal and Praetorian G entities investment transactions involving seven investors, where those investors sustained catastrophic losses. The National Adjudicatory Council found that Gomez prevented Legend from having any chance to authorize or disallow Gomez’s private securities transactions. Moreover, Gomez reportedly knew that his firm prevented him from selling away and took steps to conceal his improper conduct. Consequently, National Adjudicatory Council affirmed FINRA’s Hearing Panel’s findings of Gomez’s conduct having been violative of FINRA Rule 2010 and National Association of Securities Dealers (NASD) Rule 3040.

The Decision further stated that U.S. Coal and Praetorian was recommended by Gomez to customers even though Gomez lacked a reasonable and adequate foundation for concluding that the offerings of securities were suitable for customers. The Council noted that at the time that Praetorian’s securities had been recommended to customers, Gomez stated that Praetorian either possessed or could obtain shares of Zynga and Groupon prior to those companies’ initial public offerings. However, Gomez evidently possessed no knowledge that his representations were actually true and was not able to validate those claims. The Decision revealed that Gomez inappropriately depended on information provided by individuals that were involved with Praetorian – David Howard, Johhny R. Arnold, and John Mattera – to develop his assurances that the information he communicated to investors was true.

In addition, National Adjudicatory Council cited Gomez for having failed to conduct adequate due diligence regarding Praetorian. Particularly, Gomez failed to investigate information that would have alerted him to problematic information relating to Praetorian. For example, Gomez reportedly neglected to identify that the individuals involved in the promotion of Praetorian had committed past fraudulent or criminal activities. Evidently, Gomez was not able to adequately understand Praetorian or ensure that the company was legitimate before making investment recommendations to customers.

Moreover, National Adjudicatory Council stated that Gomez failed to adequately investigate U.S. Coal prior to making investment recommendations. For example, Gomez depended on information regarding the initial public offering of U.S. Coal having been planned for the near future – even though this conflicted with the company’s own confirmation that there were no plans for the company to pursue an initial public offering.

National Adjudicatory Council concluded that Gomez ultimately failed to investigate risks pertaining to the Praetorian and U.S. Coal investments in any meaningful fashion. Consequently, National Adjudicatory Council affirmed FINRA’s Hearing Panel’s findings of Gomez having recommended investments to customers without a suitable basis; conduct violative of FINRA Rule 2010 and NASD Rule 2310.

Moreover, National Adjudicatory Council concluded that Gomez made fraudulent misrepresentations to customers concerning Praetorian and U.S. Coal by falsely claiming that Praetorian and Praetorian G entities owned (or were capable of procuring) Zynga and Groupon pre-IPO shares; failing to investigate the Praetorian promotors and securities; and neglecting to follow up on red flags regarding Praetorian’s ownership or ability to procure pre-IPO shares. Additionally, the Decision stated that Gomez was reckless by stating that U.S. Coal intended to pursue an initial public offering; he failed to ascertain the validity of U.S. Coal’s initial public offering plans.

National Adjudicatory Council concluded that Gomez must have been cognizant of the risks he subjected investors to by way of failing to conduct the requisite due diligence on the securities he recommended. Consequently, his conduct was found by National Adjudicatory Council to be violative of Securities Act of 1934 Section 10(b), Securities and Exchange Commission (SEC) Rule 10b-5, as well as FINRA Rules 2010 and 2020.

FINRA Public Disclosure reveals that Gomez has been referenced in three customer initiated investment related disputes containing accusations of Gomez’s misconduct while employed with Legend Securities, Inc. and Avenir Financial Group. In particular, a customer filed an investment related arbitration claim involving Gomez’s conduct where the customer requested $110,000.00 in damages founded on allegations of suitability, churning, excessive commissions and unauthorized trading of the customer’s equity portfolio. FINRA Arbitration No. 16-00035 (Jan. 14, 2016).

Another customer filed an investment related arbitration claim regarding Gomez’s activities where the customer sought $100,001.00 in damages based upon accusations of breach of contract, breach of fiduciary duty, and the sale of fraudulent investments to customers. FINRA Arbitration No. 16-01396 (May 10, 2016). The customer additionally alleged that Legend Securities, Inc. negligently hired Gomez and failed to supervise his business activities. Subsequently, a customer was awarded $150,375.98 in damages according to an investment related arbitration claim involving Gomez’s improper conduct in which Legend Securities, Inc. was found liable on the customer’s claims of misrepresentation, negligence, breach of contract, violation of New York Consumer Protection Act, and fraud. FINRA Arbitration No. 15-01041 (May 25, 2016).

Since March 10, 2006, Gomez has been associated with sixteen different broker dealers, fourteen of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct. #cockroach

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