Michael Joseph Cortes of Hauppauge, New York, was fined $15,000 and suspended for six-months from associating with any Financial Industry Regulatory Authority (FINRA) member firm in all capacities after consenting to findings that he engaged in unauthorized outside business activities; willfully failed to disclose tax warrants and a lien; and borrowed from funds in violation of his firm’s policies. Letter of Acceptance, Waiver and Consent, No. 2014042628801 (Jan. 20, 2016).
According to the AWC, from December 2012 to December 2014, a firm customer paid Cortes $14,000 in return for assisting with the customer’s financial matters resulting from her husband’s death. Cortes, according to the AWC, was registered with MetLife during the time he assisted the customer, yet never notified the firm regarding his activity.
The AWC noted that MetLife’s supervisory procedures called for registered representatives to notify the firm prior to partaking in any outside activities, regardless of whether compensation was provided. The firm’s policies prohibited such conduct until notifying the registered representative that they were approved to engage in the activity.
In 2012, 2013, and 2014, Cortes reportedly signed the firm’s annual certification statement, where he acknowledged the requirement of gaining management approval prior to engaging in outside business activities. Nonetheless, FINRA found that Cortes violated Rules 3270 and 2010 as a consequence of Cortes’ failure to provide MetLife with the prior written notice called for in order to engage in services outside his firm’s relationship.
The AWC additionally stated that Cortes received a $19,000 loan from a customer in December 2014. At this time, he was registered with MetLife. Cortes failed to notify or otherwise gain approval form the firm to borrow such funds. The AWC stated that borrowing funds and/or securities from a firm client was prohibited based on the firm’s policies. Cortes was found to have violated FINRA Rules 3240 and 2010 by borrowing the funds without MetLife’s knowledge or consent.
Public disclosure records via FINRA’s BrokerCheck indicate that Cortes has been subject to five disclosure incidents. On June 5, 2004, Cortes was subject to a tax judgment/lien. On October 13, 2004, Cortes settled a customer dispute for $36,000 after the client alleged unsuitable investment recommendations.
On March 27, 2006, Cortes was subject to a customer dispute (pending), where a customer is seeking damages of $250,000 after alleging that Cortes sold a private annuity to her and her husband, where they were funded via proceeds from existing annuities and cash, and where Cortes allegedly paid the policies each month until October 2004, at which point he filed for bankruptcy. On March 23, 2015, MetLife discharged Cortes amid allegations that he failed to follow the firm’s policies concerning disclosure of outside business activities and required Form U4 disclosures.
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