Michael Scott Androulakis of New York New York is a stockbroker formerly registered with Legend Securities Inc. who has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by consenting to findings that he made unsuitable investment recommendations to customers concerning non-traditional exchange traded funds. Letter of Acceptance, Waiver and Consent, No. 2015047602803 (Mar. 20, 2018).
According to the AWC, Androulakis recommended leveraged exchange traded funds, which aimed to produce three times the performance of a benchmark index or three times the performance of the inverse of the benchmark index over a trading session. The AWC indicated that the firm and its stockbrokers were notified that the exchange traded fund performance could drastically differ from the stated benchmarks when the positions were held for extended periods, and as a result, the products were not meant for investors with plans to hold the positions for longer than a trading session.
Nevertheless, between October of 2014 and April of 2016, investment recommendations had been made by Androulakis to three of the firm’s customers concerning non-traditional exchange traded funds, wherein he advised customers to hold the investments for extended periods. Evidently, twenty-four non-traditional exchange traded fund transactions had been effected by Androulakis in customers’ accounts which led them to sustain an estimated $42,000.00 in losses.
In particular, the AWC revealed that Androulakis made recommendations to TB – a sixty-five year old customer who established an investment account with Legend Securities, Inc. Evidently, Androulakis recommended and ultimately placed eleven non-traditional exchange traded fund trades in TB’s investment account that were not suitable for TB. Apparently, $130,625.80 worth of TB’s funds had been allocated to the non-traditional exchange traded funds, where TB held those positions between ninety-one and one hundred twenty-six days. The AWC stated that TB sustained $31,173.66 in losses as a result.
Moreover, Androulakis made inappropriate non-traditional exchange traded fund recommendations to CW – a sixty-nine year old customer. The AWC stated that CW allocated $40,358.70 towards an investment in the non-traditional exchange traded funds as a result, where CW’s holding periods ranged from sixty-eight days to one hundred twenty-nine days. CW reportedly sustained $7,045.39 in losses. Further, Androulakis recommended non-traditional exchange traded funds for customer RG – a seventy-nine year old individual – where RG held non-traditional exchange traded fund positions from four hundred eighty-nine days to five hundred thirty-one days. RG evidently sustained a $3,905.86 loss on his $6,435.00 investment in those products.
The AWC revealed that Androulakis did not adequately comprehend the non-traditional exchange traded funds that he recommended to customers. Androulakis reportedly performed no due diligence with respect to those investments to gain a reasonable understanding of how they worked, and failed to take into account the risks of holding non-traditional exchange traded funds for an extended timeframe when they were meant to be traded on a short-term basis. Without such knowledge, Androulakis evidently lacked a foundation for concluding that non-traditional exchange traded funds were appropriate for any type of customer. FINRA found Androulakis’ unsuitable investment recommendations to be violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that Androulakis has been referenced in three customer initiated investment related disputes pertaining to accusations of his wrongdoing while associated with Legend Securities, Inc. Specifically, on February 12, 2015, a customer initiated investment related complaint that pertained to Androulakis’ conduct was settled for $20,000.00 in damages founded on allegations that Androulakis failed to apprise the customer about utilizing margin to effect over-the-counter equities transactions.
On November 17, 2015, another customer initiated investment related complaint regarding Androulakis’ activities was resolved for $50,000.00 in damages based upon accusations of poor performance relating to the customer’s equity investments. Subsequently, a customer initiated investment related arbitration claim regarding Androulakis’ activities was resolved for $50,000.00 in damages supported by allegations that Androulakis breached his fiduciary duties, misappropriated funds belonging to the customer, negligently handled the customer’s account, and churned the customer’s portfolio of equities and options. FINRA Arbitration No. 15-00484 (Aug. 12, 2016).
Androulakis’ registration with Legend Securities, Inc. was terminated on July 8, 2016. He became employed with Alexander Capital, L.P. on June 13, 2016. Since July 8, 2016, Androulakis has been associated with three different broker dealers, one of which has been expelled by securities regulators for violation of federal securities laws or is otherwise defunct. #cockroach
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