James S. Fleming III, of Worcester, Massachusetts, a stockbroker formerly registered with Investors Capital Corp., has been fined $10,000.00 and suspended for four months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he effected unsuitable transactions in the customer’s account. Letter of Acceptance, Waiver and Consent, No. 2013035035902 (Aug. 1, 2017).
According to the AWC, from June of 2010 to December of 2014, Fleming traded unit investment trusts in the accounts of two customers on a repetitive and short-term basis. The AWC stated that these fixed investments terminated on particular dates in the future and were available via one public offering, making the investments inappropriate for trading on a short-term basis. The AWC additionally stated that unit investment trust trading on a short-term basis was not proper given the fees that customers often incur on an upfront basis.
Apparently, recommendations of unit investment trust trades were made by Fleming to customers despite the products not having been held by customers through maturity. The AWC stated that the products had at least two-year maturities; however, trades were recommended in one hundred and seventy-seven circumstances prematurely. Evidently, customers only held the unit investment trusts for an average of ninety-six days and incurred high sales fees in connection with the unit investment trust purchases.
The AWC further detailed that customers were told to use the funds from a unit investment trust sale and buy another similar unit investment trust, leading the customers to pay additional costs to invest. FINRA found that Fleming’s recommendations were unsuitable in that regard. Collectively, FINRA found that Fleming’s conduct was violative of FINRA Rules 2111 and NASD Rule 2310.
FINRA Public Disclosure reveals that Fleming has been identified in four customer initiated investment related disputes containing allegations of his wrongdoing while he was associated with Investors Capital Corp. Specifically, on April 20, 1998, a customer initiated investment related written complaint involving Fleming’s conduct was settled for $52,155.00 in damages based upon allegations that Fleming made investment recommendations that caused the customer to suffer undue tax liabilities.
Moreover, on June 4, 2013, a customer filed an investment related written complaint regarding Fleming’s activities, in which the customer requested $6,000.00 in damages based upon allegations that Fleming failed to execute upon the customer’s instructions concerning equity trades. Subsequently, on October 22, 2013, a customer filed an investment related written complaint regarding Fleming’s activities, where the customer requested $50,000.00 in damages based upon allegations that Fleming made unsuitable investment recommendations to the customer and churned the customer’s account. Then, on September 15, 2016, a customer filed an investment related arbitration claim involving Fleming’s conduct, in which the customer requested $65,000.00 in damages founded upon allegations that Fleming effected unsuitable unit investment trust transactions in the customer’s account.
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