James S. Polese of Boston Massachusetts a stockbroker formerly registered with Morgan Stanley has been barred by Securities and Exchange Commission (SEC) from being a stockbroker or investment advisor or otherwise associating with securities broker dealers or investment advisories according to an Order founded on findings of Polese pleading guilty to fraud. In the Matter of James S. Polese Administrative Proceeding File No. 3-18945 (Dec. 20, 2018).
The SEC noted that Polese pleaded guilty to, inter alia, one count of investment adviser fraud which was violative of 18 U.S.C. Sections 80(b)-6 and 10b-17; and eight counts of bank fraud which was violative of 18 U.S.C. Section 1344. United States V. James Polese Crim. Information No. 1:18-cr-10028 (D. Mass. Apr. 26, 2018).
The Compliant that SEC filed preceding Polese’s guilty plea contained allegations of him and another individual misappropriating customers’ retirement savings for Polese’s own use; and Polese utilizing funds from a customer’s account to pay his expenses. SEC alleged that an elderly client’s $450,000.00 in assets were misappropriated, with at least $250,000.00 directed to Polese’s own bank account. The stockbroker also withdrew $93,000.00 from the customer’s account to pay, among other things, his kid’s college tuition.
In addition, fiduciary duties were breached by Polese through him, inter alia: utilizing a customer’s funds as collateral to get a company which Polese invested in to be financed; and Polese placing investors’ funds in assets which the stockbroker maintained a financial interest. SEC also indicated that Polese egregiously overcharged one or more customers for advisory services. SEC alleged that Polese’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5 and Investment Advisors Act Section 206.
Financial Industry Regulatory Authority (FINRA) Public Disclosure confirms that Polese has been barred by FINRA in all capacities based upon allegations of his failure to provide the regulator with information requested of him. Case No. 2017055058101 (Dec. 4, 2017). Polese was initially issued a Suspension from Association letter on September 25, 2017. At that time, he was warned by FINRA that his failure to request termination of his suspension by December 3, 2017 could result in a permanent bar. Polese failed to cooperate with the regulator by the deadline.
FINRA Public Disclosure reveals that Polese has been identified in four customer initiated investment related disputes containing accusations of his violative conduct while employed with securities broker dealers including Morgan Stanley. Specifically, a customer initiated investment related complaint concerning Polese’s conduct was settled for $33,260.00 in damages on August 9, 2017 based upon allegations that unfounded statements had been made by the stockbroker concerning the fees charged to the customer for an in-house money manager account.
Another customer initiated investment related complaint regarding Polese’s activities was resolved for $22,222.22 in damages on September 14, 2018 supported by accusations that unauthorized stock transactions were executed in the customer’s account. Polese is also the subject of a customer initiated investment related arbitration claim which was settled for $20,000.00 in damages founded on allegations that Polese misappropriated the customer’s assets when he was associated with Morgan Stanley. FINRA Arbitration No. 17-02954 (Mar. 12, 2019).
Also, Polese is referenced in a customer initiated investment related arbitration claim where the customer requested unspecified damages based upon accusations that false or misleading statements had been made by the stockbroker; trades were effected in excessive amounts; fiduciary obligations were violated; and the customer’s assets were converted. FINRA Arbitration No. 18-04346 (Dec. 27, 2018).
Polese’s registration with Morgan Stanley has been terminated as of July 26, 2017.
