Brian Joseph Hagerman of New York New York the former president and chief compliance officer of Global Arena Capital Corp has been suspended on May 5, 2017 from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon allegations that he failed to inform FINRA about whether he complied with a FINRA Arbitration Award in FINRA Arbitration No. 16-00350 (Feb. 24, 2017) where he was ordered to pay $83,000.00 in compensatory damages to a customer for breaching his fiduciary duties and effecting unsuitable transactions in the customer’s account.
This is not the first time that Hagerman has been sanctioned by FINRA for failing to be forthcoming. FINRA Public Disclosure reveals that on November 29, 2016, Hagerman was suspended by FINRA for failing to comply with the terms of a FINRA Arbitration Award in FINRA Arbitration No. 16-00351 (July 19, 2016) in which he was ordered to pay $50,000.00 in compensatory damages to a customer based upon being found liable for placing transactions in a customer’s account that were not suitable for the customer.
Moreover, Hagerman has been fined $30,000.00 and suspended for two years by FINRA based on consenting to findings that Hagerman, inter alia, failed to supervise business operations of the firm and failed to supervise the private securities transactions executed by the firm’s stockbrokers. Letter of Acceptance Waiver and Consent No. 2013035245701 (Apr. 4, 2016).
According to the AWC, from January of 2011 to August of 2014, Hagerman inadequately supervised activities of the firm, where among other things, he allowed trades to be effected in customer accounts by the firm’s branch managers without Hagerman reviewing the branch manager’s activities. Evidently, transactions which had not been reviewed included those which the firm’s own systems identified as potentially demonstrative of excessive trading.
The AWC revealed that Hagerman also failed to perform adequate due diligence on restricted securities and physical certificates. Hagerman apparently never created or implemented an adequate supervision system to review and monitor restricted securities transactions and stock certificates, failed to conduct a review of customer account documentation, and neglected to review or follow up on alerts of irregular trading activity generated by the firm’s electronic systems. FINRA found that Hagerman’s supervisory failures were violative of National Association of Securities Dealers (NASD) Rule 3010 and FINRA Rule 2010.
The AWC additionally stated that Hagerman failed to supervise transactions which a stockbroker executed away from Global Arena Capital Corp. Particularly, from March of 2011 to October of 2012, the then existing chief executive officer of Global Arena Capital Corp, JM, effected $1,800,000.00 worth of convertible promissory notes sales which had been issued to sixteen investors by the parent company of Global Arena Capital corp. Evidently, some of the sixteen investors had included customers of Global Arena Capital Corp, and a portion of the proceeds of the sales had been provided to JM as compensation.
The AWC stated that Hagerman was knowledgeable about the promissory notes having been sold to investors by JM. Yet, the AWC stated that those sales had not been supervised by Hagerman and he failed to make sure that the firm’s records and books reflected the promissory notes transactions. Further, Hagerman reportedly failed to make sure JM requested that he engage in the private securities transactions and obtained the firm’s written authorization prior to effecting them. FINRA found that Hagerman’s supervisory failures concerning JM’s private securities transactions was violative of FINRA Rule 2010 and NASD Rules 3040 and 3010.
Hagerman’s registration with Global Arena Capital Corp was terminated on November 18, 2014. Since March 14, 1991, Hagerman has been associated with eleven different broker dealers, three of which have been expelled by securities regulators for violation of federal securities laws or are otherwise defunct.
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