Roman Tyler Luckey of Irvine CA, a former registered principal with Newport Coast Securities, Inc., was fined $15,000 and suspended for practicing for 14 months by FINRA’s National Adjudicatory Council after consenting to FINRA sanctions and findings concerning Luckey’s failure to properly supervise his staff which led to his subordinates excessively trading and churning 24 customers’ accounts. FINRA Department of Enforcement v. Roman Tyler Luckey, No. 2012030564701 (Filed Aug. 14, 2015).
According to the Order Accepting Respondent
Roman Tyler Luckey’s Offer of Settlement, from September of 2008 through May of 2013, Newport Coast and 5 of the firm’s registered reps excessively churned and traded 24 of the firms’ customers’ accounts. FINRA alleged that this misconduct presented red flags which could have allowed harm to customers to be mitigated based on a myriad of aspects.
FINRA stated that red flags included the fact that cost/equity ratios were in excess of 100%, turnover rates often exceeded 100%, there was substantial back-and-forth trading, the firm’s customers’ accounts were routinely concentrated in one security and were highly margined, a considerable number of transactions contained per trade markups/commissions in excess of 3% (some exceeding 4%), there was a fraudulent mix of riskless agency and principal trading in a number of accounts (some instances causing markups that amounted to north of $1,000/trade), the ongoing trading of inverse/leveraged ETFs and ETNs, trades being incorrectly characterized as unsolicited when they were solicited, and where practically all customers’ accounts affected by the actions of the staff contained inordinate losses.
Roman Tyler Luckey Knowingly Failed To Take Measures
FINRA alleged that Roman Tyler Luckey supervised several of the staff engaging in the misconduct. Further, FINRA alleged that managers in the firm’s compliance unit knew what was occurring, yet no one (including Luckey) took any adequate measures to stop the misconduct. In fact, according to FINRA, several of the firms managers along with other supervisory staff (even the firm’s former president) profited through overrides associated with the churned accounts.
Prior to Luckey’s Offer of Settlement, FINRA charged Newport Coast and staff in a 9 count Complaint primarily based on the misconduct outlined above. Specifically, the Complaint charged the firm and several former reps with excessive churning and trading in customer accounts (1st and 2nd), the firm and several staff with engaging in unsuitable recommendations regarding inverse/leveraged exchange traded products to elderly/retired/unsophisticated customers (3rd), a staff member creating inaccuracies in the firm’s records by mischaracterized trades (as unsolicited v. solicited) (4th), a staff member falsifying/exaggerating account balances when conveying balances to a client (5th), the firm along with staff (including Luckey) with supervisory failures (6th), a staff member failing to disclose liens and update his form U4 (7th), staff members obstructing the FINRA disciplinary procedures by attempting to remedy customers based on customers’ refusing to cooperate in FINRA’s investigation (8th), and the firm with failing to properly establish a reasonable set of procedures and systems for supervision of sales associated with structured products (9th).
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esq., and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.