Steven A. Larson, of Saint Louis, Missouri, a stockbroker with Oakbridge Financial Services, Inc., was charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that Larson made material omissions and false statements to clients concerning investments. Department of Enforcement v. Larson, No. 2014039174202 (May 11, 2016).
According to the Complaint, Larson misrepresented and omitted certain facts to investors concerning the safety and present values of church bonds. Apparently, the bonds were issued via religious establishments for purposes of property construction, and the bonds were secured through mortgages on properties expected to be built.
The Complaint stated that in May 2013, the vast majority of the aforementioned bonds were in default, restructuring, forebearance, or bankruptcy. Additionally, the majority of the issuers were behind on their mortgage payments. Larson, according to the Complaint, represented to the customers that such bonds, although in default, were still worth considerable value. Larson apparently claimed in certain circumstances that such bonds were actually worth substantially more than their original value.
The Complaint stated that Larson’s omissions of material facts as well as misrepresentations concerned pricing reports, a church bond update, and correspondence to customers concerning the issuers’ creditworthiness. Larson reportedly also misrepresented the value of church-bond holdings, as well as projections concerning future principal and interest payments on the customers’ church bonds.
FINRA alleged that Larson’s agenda was to confuse or mislead his customers regarding their investments’ value of the church bonds so as to avoid customer confrontation. Larson apparently acted to stop customers from liquating their positions in the bonds (and the firm).
According to the Complaint, by the time that Larson provided investors with a church bond update, he either knew or acted recklessly by not knowing of the aforementioned difficulties and risks associated with the church bonds and their issuers. FINRA alleged that Larson knew or was reckless in not knowing that he was making false and misleading statements to customers in this regard. As a result, FINRA claimed (in the first cause of action) that Larson’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, in addition to FINRA Rules 2020 and 2010.
FINRA also alleged Larson knew or acted recklessly in not having knowledge pertaining to material misrepresentations and/or omissions associated with cross trades. As a result, Larson’s customers were not informed that trades should have only been purchased or sold at substantial discounts from par value; or that prices that were recommended by Larson to purchase such bonds bore no legitimate relation to the bonds’ actual value. FINRA alleged that Larson’s conduct here was violative of Securities Exchange Act of 1934 Section 10(b), Rule 10b-5, in addition to FINRA Rules 2020 and 2010.
The Complaint further alleged that Larson acted willfully to withhold mention of certain aspects of the activities and basis of termination of a firm representative, RB, whom Larson was responsible for supervising. Apparently, FINRA requested that Larson provide information and documentation, per FINRA Rule 8210, pertaining to RB’s outside business activities. FINRA alleged that Larson’s withholding of certain aspects concerning RB’s activities was violative of FINRA Rules 8210 and 2010.
FINRA alleged that Larson had backdated and signed documents, and provided such to FINRA under the claim that they were genuine. FINRA alleged that Larson’s agenda was to convince FINRA that he acted properly with regard to his supervisory functions. FINRA alleged that Larson violated FINRA Rules 4511 and 2010 in this regard.
Public disclosure records reveal that Larson has been subject to three disclosure incidents. On May 13, 2016, the State of Missouri office of Secretary of State initiated an investigation into Larson’s conduct following FINRA’s Complaint on May 11, 2016. On May 13, 2016, Oakbridge Financial Services, Inc. terminated Larson in connection with such actions.
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