Scott Allen Sibley, of Fort Lauderdale, Florida, a stockbroker formerly registered with Raymond James & Associates, Inc., has been permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that Sibley, inter alia, made unsuitable investment recommendations to customers, traded in customer accounts without authorization, and falsified the records and books to his firm concerning his activities. Letter of Acceptance, Waiver and Consent, No. 2015044123501 (Apr. 27, 2017).
According to the AWC, from 2010 to 2015, unauthorized trades were effected by Sibley in customer KS’s two accounts held with the firm. Apparently, nine-hundred securities had been bought and sold in customer KS’s account despite Sibley lacking KS’s consent or knowledge about the transactions. Apparently, Sibley effected one-hundred and thirty-nine closed put contracts and uncovered put options contracts. The AWC also stated that a margin debit balance had been carried by KS despite KS never having provided authorization for securities to be purchased in a manner which could lead to a debit balance in KS’s account. FINRA found that Sibley’s conduct in this regard was violative of FINRA Rule 2010.
The AWC revealed that during the 2010 to 2015 time period, unsuitable recommendations had been made by Sibley to ten customers, which included KS. Sibley evidently encouraged customers to concentrate their holdings in precious metals. Apparently; however, these customers were elderly and depended on the income produced from their accounts to support their retirements. The AWC stated that pursuant to Sibley’s recommendations, twenty-five to sixty-two percent of the customers’ accounts were invested in precious metals. FINRA found that Sibley’s recommendations to over-concentrate customers’ holdings in this sector were unsuitable based upon the financial profile, age, objectives for investing, risk tolerance and experience which customers communicated to Sibley. Additionally, the AWC indicated that Sibley made recommendations uniformly even though customers’ financial status and objectives for investing differed.
Moreover, the AWC stated that in 2011, KS’s account was concentrated nearly fifty-seven percent in precious metals between his two accounts, which caused KS’s net worth and investment portfolio to be exposed to a substantial amount of market volatility. According to the AWC, from December 31, 2010, to December 31, 2014, during which time the Standard and Poor’s 500 Index rose nearly forty-percent, KS’s account value was cut in half.
Sibley also reportedly made unsuitable recommendations to customers concerning options, where at least three customers effected sales of uncovered put option contracts as a result. The AWC stated that even though the precious metals market showed signs of decreasing in value in April of 2013, customers still received recommendations from Sibley to sell risky put options contracts. Customers’ accounts were evidently concentrated up to sixty percent in precious metals based upon Sibley’s recommendations.
The AWC indicated that Sibley lacked an appropriate foundation to conclude that his customers were capable of comprehending the risks pertaining to the transactions recommended by him. Sibley was purportedly ignorant of the customers’ experience with investing, and lacked a reasonable basis for assuming that customers would be able to withstand the volatility associated with options investing. As a result, FINRA found that Sibley’s unsuitable recommendations constituted violations of FINRA Rules 2010, 2360, 2111, and NASD Rule 2310.
Furthermore, the AWC stated that at least one thousand trades were effected by Sibley in fourteen accounts despite lacking authority from customers to place the trades. The customers’ accounts were also not authorized by Raymond James & Associates as discretionary; the firm actually disallowed discretionary transactions by its staff. Consequently, FINRA found that Sibley’s conduct was violative of FINRA Rules 2010, 2360, and NASD Rule 2510.
Sibley was also cited for violating FINRA Rule 4511 for incorrectly marking low-priced securities transactions effected in customer accounts from September 18, 2012, and September 11, 2014. Specifically, twenty-two transactions had been reportedly effected by Sibley in the accounts of six customers, where Sibley claimed that the transactions had been solicited when they were not.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Sibley has been identified in seventeen customer initiated investment related disputes containing allegations of his wrongdoing while employed with Janney Montgomery Scott LLC, Raymond James & Associates, Inc., Solomon Smith Barney, Inc., and Prudential Securities, Inc. Specifically, from January 6, 2015, to November 3, 2015, ten customers pursued investment related disputes concerning Sibley’s conduct, wherein customers settled for a total of $907,000.00 in damages to resolve allegations against Sibley, which included negligently managing the customers’ investments, breaching his fiduciary and contractual duties, and violating Chapter 517 of Florida Statutes.
Subsequently, on May 31, 2016, a customer filed an investment related arbitration claim involving Sibley’s activities, in which the customer requested $675,000.00 in damages based upon allegations including violations of FINRA Rules 2111 and 2010, violation of Florida Statutes 415.111 and 517.301, breach of fiduciary duty, breach of contract, churning, unauthorized trading, omission of facts, unsuitable recommendations, and fraud. On January 10, 2017, another customer filed an investment related arbitration claim involving Sibley’s conduct, in which the customer requested $300,000.00 in damages based upon allegations that Sibley defrauded the customer in connection with equity purchases effected in the customer’s account.
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