Richard Lyndon Brown of Farmingdale New York a stockbroker formerly registered with Arive Capital Markets has been charged by Securities and Exchange Commission (SEC) in a Complaint in which the regulator is seeking sanctions against Brown based upon allegations that the stockbroker engaged in a fraudulent bribery scheme violative of federal securities laws. Securities and Exchange Commission v. Richard Brown et al. Civil Action No. 19-cv5631 (E.D.N.Y. Oct. 4, 2019).
According to the Complaint, Brown was paid at least $20,000.00 in cash bribes in exchange for him advising customers to purchase the common stock of a securities technology company, NXTD. SEC alleged that $750,000.00 in NXTD had been recommended and purchased for customer accounts by Brown without the stockbroker informing customers about his receipt of cash bribes. SEC alleged that Brown’s conduct was violative of Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5.
This is not the first time that Brown has been subject of a regulatory action based upon accusations of the stockbroker’s bad business practices in the securities industry. Specifically, Brown has been suspended by Financial Industry Regulatory Authority (FINRA) from associating with any FINRA member in any capacity founded on allegations that the stockbroker neglected to comply with a customer initiated investment related arbitration award or settlement agreement or otherwise confirm his compliance with the regulator. Case No. 15-02488 (Apr. 3, 2017).
FINRA Public Disclosure reveals that Brown is the subject of six customer initiated investment related disputes pertaining to accusations of his wrongdoing when he was associated with securities broker dealers including Brookstone Securities, Chelsea Financial Services and Arive Capital Markets. Specifically, Brown is referenced in a customer initiated investment related arbitration claim which was resolved for $33,000.00 in damages supported by allegations that over the counter equities transactions failed to be suitable for the customer given the customer’s risk aversion or other needs; and trades were effected in excessive amounts by the stockbroker during the time that he was employed by Chelsea Financial Services. FINRA Arbitration No. 14-03845 (Feb. 9, 2016).
Another customer initiated investment related arbitration claim concerning Brown’s activities resulted in the customer being awarded $72,132.95 in compensatory damages based upon Brown and Brookstone Securities Inc. being found liable on the customer’s claims which included that while Brown was registered with the securities broker dealer, misrepresentations were made to the customer regarding the risks of investments; an investment related contract was breached; fiduciary duties had been breached; margin was inappropriately utilized by the stockbroker; transactions were unsuitable; the customer’s investment portfolio was churned; and the customer was defrauded by making investments through the stockbroker. FINRA Arbitration Award No. 15-02488 (Dec. 7, 2016).
Brown is also the subject of a customer initiated investment related arbitration claim in which the customer sought $77,570.21 in damages founded on accusations that common or preferred stocks Brown steered the customer towards when associated with Arive Capital Markets and Chelsea Financial were unsuitable for the customer in view of the customer’s risk tolerance, investment objectives or overall circumstances, and those transactions caused the customer to incur unwarranted losses. FINRA Arbitration No. 18-03499 (Nov. 14, 2018).
Brown’s registration with Arive Capital Markets has been terminated as of May 6, 2016.
