Patrick McGrath III of Miami Florida a stockbroker formerly employed by Oppenheimer Co. Inc. has been fined $10,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he borrowed funds from a customer without permission. Letter of Acceptance Waiver and Consent No. 201303723890 (Apr. 21, 2015).
According to the AWC, McGrath borrowed $210,000.00 from a customer of Oppenheimer. McGrath’s borrowing arrangement was prohibited according to the firm’s supervisory procedures. McGrath was specifically disallowed from borrowing a customer’s funds unless the customer was a family member. McGrath disregarded Oppenheimer’s policies by borrowing customer DA’s money between January 2010 and May 2012.
The AWC indicated that McGrath and the customer executed a promissory note for purposes of McGrath borrowing up to $180,000 through two loans. DA was slated to receive eight percent interest each year for lending McGrath money. Another $30,000 was borrowed by McGrath in May 2012, which was evidenced through a promissory note providing for DA to receive eight percent interest. McGrath defaulted on the loans, and DA subsequently sued to recover the unpaid amounts.
The AWC stated that McGrath did not just enter into the loan arrangement – he also concealed his activities from the firm by arranging for proceeds and repayment to be handled at outside accounts. The AWC further revealed that McGrath made false statements to Oppenheimer when completing three compliance questionnaires issued by his firm; McGrath claimed that he never borrowed a customer’s funds.
FINRA found McGrath’s borrowing arrangement violative of National Association of Securities Dealers (NASD) Rule 2370 and FINRA Rules 2010 and 3240. FINRA also found McGrath’s false completion of the questionnaires to be violative of FINRA Rule 2010.
FINRA Public Disclosure reveals that McGrath has been identified in five customer initiated investment related disputes containing accusations of his bad conduct during the time that he was associated with Wells Fargo Clearing Services, LLC and Oppenheimer. Particularly, on July 27, 2009, a customer initiated investment related complaint regarding McGrath’s conduct was resolved for $25,113.95 in damages supported by allegations that McGrath falsely informed the customer about the fees pertaining to investments in mutual funds.
Thereafter, a customer initiated investment related arbitration claim concerning McGrath’s activities was settled for $200,000.00 in damages based upon accusations that McGrath falsely stated that the customers would not be charged a fee for mutual fund investments, and inappropriately advised them about making investments in equities. FINRA Arbitration No. 10-00438 (Dec. 1, 2011).
Subsequently, a customer initiated investment related complaint concerning McGrath’s conduct was resolved for $5,840.00 in damages founded on allegations that McGrath defaulted on a loan which had been made by a customer of the firm. Moreover, a customer filed an investment related civil action involving McGrath’s conduct where the customer sought unspecified damages supported by accusations that McGrath misappropriated the customer’s funds with the intention of stealing from the customer. Civil Action No. 15-022135-CA-22 (Dec. 29, 2017).
Oppenheimer terminated McGrath’s registration on January 10, 2014 based upon allegations that he failed to repay an Oppenheimer customer’s money. Between February 4, 2014 and August 23, 2017, McGrath was employed by Northeast Securities, Inc.
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