Arthur Espinoza, of Vero Beach, FL, a stockbroker with Freedom Investors Corporation, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in outside business activities, misrepresented documents to his firm, and failed to cooperate in a FINRA investigation into his misconduct. Letter of Acceptance, Waiver and Consent, No. 2016048881501 (June 17, 2016).
According to the AWC, in 2009, Espinoza created a company, Life Solutions Inc. Life Solutions was reportedly operated solely by Espinoza for the purchase and sale of securities, as well as coins and precious metals. Apparently, Espinoza was able to get ten senior investors to invest in Life Solutions, where they handed over in excess of $325,000.00 in the aggregate in return for interest payments of 5.25% on their principal. The AWC stated that the investment agreements were not documented.
The AWC stated that Espinoza subsequently could not account for the funds he received from the aforementioned investors. FINRA found that Life Solutions assets only consisted of several hundred dollars along with loans that were undocumented. These loans, according to the AWC, were not used by Espinoza for business purposes. Instead, the funds were used by Espinoza for personal living expenses, a car purchase, and golf club fees. Apparently, Espinoza indicated to FINRA that he was not capable of providing the aforementioned investors with their money back.
The AWC further stated that shortly after Espinoza created Life Solutions, he arranged for a brokerage account to be opened up in Life Solutions’ name with FBS, where Espinoza was listed as the agent and trader of such account. Espinoza, from July 2009 through September 2015, reportedly made eighty-four trades in securities in the brokerage account, which totaled $417,505.00. Most of the funds that investors provided him, according to FINRA, were placed into the FBS brokerage account, and ultimately deposited in other bank accounts where he arranged for personal loans to be taken out to address his personal expenses. According to the AWC, Espinoza falsely attested to FBS that he was not affiliated with a FINRA member firm at the time he opened up the FBS brokerage account. FINRA found that Espinoza’s false attestation in this regard was violative of FINRA Rule 2010.
The AWC additionally stated that in December 2013, a master brokerage account was opened up by Espinoza with IB, in the name of Life Solutions. Apparently, from January 2014 through November 2014, Espinoza arranged for sixteen subaccounts to be opened within the master brokerage account for sixteen clients, some of whom were clients of Freedom Investors Corporation. Espinoza reportedly utilized trading authority from such clients to effect an estimated $1,500,000.00 in securities transactions, where Espinoza raked in commissions of $15,195.00 in the process. Apparently, Espinoza falsely attested to IB that he was not affiliated with a FINRA member firm at the time he opened up the IB brokerage account. FINRA found that Espinoza’s false attestation in this regard was violative of FINRA Rule 2010.
FINRA found that Espinoza did not inform Freedom about any of the aforementioned activities associated with Life Solutions, including his management of assets on behalf of Freedom’s customers outside their auspices. FINRA found that Espinoza’s conduct in this regard was violative of FINRA Rule 3270, NASD Rule 3030, and FINRA Rule 2010. Further, FINRA found that Espinoza had violated NASD Rule 3050(c) and FINRA Rule 2010 by not providing Freedom with written notice regarding his outside brokerage accounts that he had trading authority over.
The AWC stated that Espinoza falsely responded to Freedom’s compliance questionnaires from 2010 through 2013 by stating that he had disclosed outside business activities. FINRA found that Espinoza’s false attestations in this regard was violative of FINRA Rule 2010.
Further, Espinoza reportedly failed to respond to several of FINRA’s requests in 2016 for information and documentation, per FINRA Rule 8210, when he was investigated regarding his misconduct. FINRA also noted that when Espinoza eventually did respond, he falsified information. FINRA found that Espinoza’s failure to respond and falsification of information in the FINRA investigation was violative of FINRA Rules 8210 and 2010. The aforementioned conduct led to Espinoza’s permanent bar.
Public disclosure records reveal that Espinoza has been subject to two customer disputes. On March 30, 1989, a customer was awarded $4,687.50 against Espinoza after alleging unauthorized transactions. On August 22, 1997, Espinoza settled a customer dispute for $500,000.00 after a customer alleged inappropriate investments were purchased.
Guiliano Law Group
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