Richard Edward Bohack, a trading and operations principal with Global Arena Capital Corp., was permanently barred form associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity after consenting to findings that Bohack had failed to appropriately provide supervision of brokers at Global Arena’s sixth avenue branch firm, which included the failure to appropriately respond to numerous red flags of sales practice violations. Letter of Acceptance, Waiver, and Consent No. 2014043542409 (Sept. 14, 2015).
According to the AWC, from April 14, 2014 – June 5, 2015, Bohack was the supervisor and branch manger for Global Arena’s sixth avenue branch. During this time, Bohack reportedly failed to reasonably address significant red flags which had indicated that the firm’s registered representatives were engaging in various abuses of sales practices. FINRA alleged that these red flags were capable of being detected by someone in Bohack’s position even without any prior relevant supervisory experience at a brokerage firm.
The AWC indicated that Bohack had failed to respond or detect red flags that the firm’s brokers made misrepresentations, despite the fact that Bohack was responsible for observing the brokers’ communications with the firm’s actual and prospective customers. The AWC noted that the senior brokers of the branch commanded the junior brokers to engage in cold calling to prospective investors by using faulty sales scripts to lure investors into opening up accounts.
According to the AWC, Bohack did not appropriately respond to concerns, voiced through a customer complaint, that registered representatives were also misleading investors by promising extraordinary returns on junk bonds. Bohack also reportedly failed to stop or prevent the brokers from using devious methods to cold-call clients who refused to take calls from Global Arena.
The AWC noted that Bohack’s limited involvement in addressing misconduct still did not include addressing issues with the registered representatives committing wrongdoing, or involve Bohack taking action himself. Bohack even went as far as allowing an individual not authorized as a principal or officer of his firm to exercise supervision over personnel and operations (said individual was actually barred by FINRA on July 1, 2015, for violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5).
Although Bohack, according to the AWC, would report excessive trading from brokers to his supervisor (who happened to be the firm’s president by August 2014), he never took measures to ascertain whether such brokers’ recommendations to clients were actually suitable. Bohack also reportedly failed to address issues pertaining to unauthorized trading by brokers, to which he was knowledgeable and capable of preventing.
According to the AWC, Bohack had failed to supervise trading levels and commissions that were charged in the firm’s customer accounts. Specifically, Bohack and a junior supervisor were responsible for reviewing a trade blotter for excessive activity, but both principals failed in reviewing the system alerts. These supervisory failures, according to the AWC, caused thousands of potentially faulty and excessive trades to go without proper supervision and remedial action. Bohack was found by FINRA to be ignorant of his supervisory obligations, including when trading in a customer account might be deemed unsuitably excessive. Bohack reportedly acknowledged his failure to understand his supervisory role. FINRA found Bohack to have violated FINRA Rules 2010 and 3110.
FINRA, via NASD Rule 3010(a), requires that firms and supervisory personnel establish and maintain a supervisory system that is reasonably designed to achieve compliance with applicable securities laws and regulations. Additionally, Rule 3010(b) requires that firms establish, maintain and enforce written procedures to supervise their business and registered representatives that are reasonably designed to achieve compliance with applicable securities.
Securities brokerage firms have a duty to supervise their brokers and the sales practices of their brokers, and to review customer statements for, among other things, evidence of suitability, unauthorized trading, or excessive activity.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., 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 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.