Richard Eastburn, of Cleveland, Ohio, a stockbroker formerly registered with UBS Financial Services Inc., has been fined $10,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity by consenting to findings that he made misrepresentations to customers about custody agreements. Letter of Acceptance, Waiver and Consent, No. 2015048024501 (Nov. 6, 2017).
According to the AWC, in December of 2010, a custody agreement was executed by Eastburn as part of a settlement involving firm customer CC and three non-firm customers, SHH, STH and GN. The AWC stated that the custody agreement called for Eastburn to be custodian of SHH’s, STH’s and GN’s stock certificates, where the firm and Eastburn would be required to maintain custody of those certificates until $293,000.00 had been paid by CC to SHH and $270,000.00 by CC to GN and STH. The Agreement indicated that CC would be provided the stock certificates from Eastburn only when payment was made.
The AWC revealed that Eastburn never informed UBS or obtained any type of approval from UBS before the custody agreement had been executed by Eastburn. Critically, Eastburn knew that he was not allowed to execute the agreement, but falsely represented to SHH, STH, GN and CC that the firm acquiesced to being custodian and would cooperate with the obligations and terms of the agreement.
The AWC stated that stock certificates were released to CC in November of 2013; however, CC never provided payment to SHH, GN and STH as required. The firm reportedly discovered the custody agreement in May of 2015, during which time SHH, GN, and STH lodged complaints against Eastburn for his breach of the agreements. FINRA found that Eastburn’s conduct was violative of FINRA Rule 2010.
FINRA Public Disclosure reveals that Eastburn has been identified in three customer initiated investment related disputes pertaining to accusations of his improper conduct during the time that he was registered with UBS Financial Services Inc. Specifically, on August 5, 2015, a customer filed an investment related written complaint concerning Eastburn’s activities, where the customer sought $293,000.00 in damages founded on allegations that Eastburn breached his custody agreement by allowing over-the-counter equity shares to be furnished to a customer who did not provide a required payment, where those shares were improperly sold to a third party as a result.
On September 13, 2016, a customer filed an investment related written complaint involving Eastburn’s conduct, in which the customer requested at least $5,000.00 in damages supported by allegations that the customer was misled about the risks pertaining to a speculative structured product investment, wherein the customer was misled into concluding that the risky product contained the same risk as a certificate of deposit.
Subsequently, a customer initiated investment related civil action involving Eastburn’s conduct had been brought in the Court of Common Pleas for Cuyahoga County, Ohio, which was settled for $35,000.00 in damages based upon allegations of Eastburn’s breach of the custody agreement. Civil Action No. CV 16-862556 (Jan. 9, 2017).
Eastburn was fired from UBS Financial Services Inc. on November 3, 2015, based upon accusations that he committed violations of the firm’s policies by participating in outside business activities which the firm never approved.
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