Larry Joseph Michaels, of Orange, California, a stockbroker registered with Crown Capital Securities LP, has been fined $10,000.00 and suspended for two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Michaels engaged in discretionary or unauthorized trading, which must be in writing and approved by the member, and outside business activities. Letter of Acceptance, Waiver, and Consent No. 2020069057401 (April 18, 2024).
FINRA’s regulatory action against Michaels arose from a Uniform Application for Securities Industry Registration or Transfer filed by Crown Capital in December 2020, which disclosed a customer complaint.
According to the AWC, from September 2020 to October 2020, Michaels executed 51 trades across 17 non-discretionary brokerage accounts belonging to 14 customers without prior communication on the trade dates.
FINRA determined that Michaels lacked written authorization to exercise discretion in these accounts. Furthermore, Crown Capital had not classified any of the 17 accounts as discretionary, in line with the firm’s written supervision procedures that prohibit discretionary trading in brokerage accounts. Therefore, Michaels violated FINRA Rules 3260(b) and 2010.
In addition, Michaels engaged in an undisclosed outside business activity. Upon his association with Crown Capital, Michaels had disclosed his ownership of a business which provides income tax preparation and accounting services.
This activity was initially approved by the securities broker dealer. However, since October 2018, Michaels expanded his services for the company beyond what was initially disclosed, assisting in managing and growing businesses for some customers who were also his brokerage customers. He also acted as an incorporator, filing articles of incorporation for other companies and making management decisions for at least one of these companies without proper notification to Crown Capital. Therefore, Michaels violated FINRA Rules 2010 and 3270.
Michaels is referenced in two customer initiated investment related disputes concerning his conduct while associated with securities broker dealers. FINRA Public Disclosure shows that a customer initiated investment related FINRA securities arbitration claim involving Michaels’s conduct was settled for $200,000.00 in damages based on allegations that Michaels failed to perform due diligence, engaged in fraud, made unsuitable investment recommendations, and breached his fiduciary duties in connection with the sale of private annuity trusts and mutual funds during the time that Michaels was associated with Crown Capital Securities LP. FINRA Arbitration No. 14-02612.
Michaels was also referenced in a customer initiated investment related complaint that was settled on December 16, 2020, for $24,300.00 in damages based upon allegations that Michaels did not inform the customer of redemptions of mutual fund positions, causing the customer to miss market gains.
Michaels has been associated with Crown Capital Securities LP in Orange, California since October 16, 2012. Michaels was also recently associated with Legacy Advisory Group Inc. in Santa Ana, California from December 8, 2023, to April 15, 2024.
