Scott Randall Martinson, of Staten Island, New York, a stockbroker formerly registered with First Standard Financial Company LLC, has been fined $5,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by findings that he failed to adequately supervise a stockbroker which resulted in unsuitable and excessive trading in a customer’s account. Letter of Acceptance, Waiver, and Consent No. 2020065035203 (December 22, 2021).
According to the AWC, from August of 2017 to May of 2018, Martinson was the branch manager and supervisor of First Standard Financial Company’s Melville office. Martinson was responsible for supervising stockbrokers at that location, and this included reviewing the daily trade blotter. FINRA states that Martinson was required to review customer accounts to ensure compliance with FINRA’s suitability rule.
In November of 2017, Martinson became responsible for supervising a stockbroker who was placed on heightened supervision. The AWC states that the stockbroker was disciplined for receiving customer complaints of sales practice violations. First Standard Financial Company’s written supervisory procedures called for the stockbroker’s trades to be reviewed by Martinson on a daily basis to see if the stockbroker potentially made unsuitable and excessive trades in customer accounts.
FINRA states that from August of 2017 to May of 2018, Martinson learned of concerns about the stockbroker’s unsuitable and excessive trading in three First Standard Financial Company accounts. Martinson learned through a trade blotter that many short-term trades were made in customers’ accounts, where some trades involved sales and purchases on the same day. FINRA states that the firm’s actively traded accounts list flagged accounts with high commissions and trades.
The regulator states that Martinson did not meaningfully respond to the red flags about this stockbroker. Martinson confronted the stockbroker but accepted their explanations. That stockbroker indicated that customers wanted their accounts aggressively traded and understood what that entailed. But when Martinson talked to the customers, he did not ask them about whether they wanted their accounts aggressively traded or whether trading was aligned to their investment objectives.
There were no more steps taken by Martinson to see if trades made by the stockbroker were suitable. He did not calculate cost-to-equity ratios or turnover rates. FINRA states that if those calculations were made, Martinson would have learned about customers’ accounts having cost-to-equity ratios exceeding 25 percent.
Martinson violated FINRA Rules 2010 and 3110 for failing to supervise at First Standard Financial Company.
Martinson has been identified in five customer initiated investment related disputes regarding allegations of his harmful activities when he was registered with securities broker dealers, including GunnAllen Financial and First Standard Financial Company. FINRA Public Disclosure shows that a customer initiated investment related complaint involving Martinson’s activities was resolved for $9,909.00 in damages founded on accusations of the customer’s instructions not being followed concerning a trading account at GunnAllen Financial.
Martinson is also referenced in a customer initiated investment related arbitration claim which was settled for $22,000.00 in damages based upon allegations of unsuitable options trades in the customer’s account by Martinson during the time that he was associated with GunnAllen Financial.
Another customer initiated investment related complaint concerning Martinson’s conduct was resolved for $4,500.00 in damages supported by accusations of the customer incurring account losses because of Martinson’s over-the-counter equities transactions at GunnAllen Financial.
Martinson is also identified in a customer initiated investment related written complaint which was settled for $17,500.00 founded on allegations that unsuitable over-the-counter equities trades were effected by Martinson when he was employed by GunnAllen Financial. According to the complaint, the customer’s account was excessively traded.
On April 15, 2021, another customer filed an investment related arbitration claim regarding Martinson’s conduct. The customer sought $5,000.00 in damages based upon accusations that Martinson failed to supervise their account, resulting in bad common and preferred stock trades at First Standard Financial Company.
Martinson’s registration with First Standard Financial Company was terminated on September 25, 2019. He was registered with SW Financial between September 23, 2019, and January 5, 2021, and registered with Arive Capital Markets between March 12, 2021, and June 30, 2021. Martinson has been registered with six different securities broker dealers that are defunct or expelled by regulators for violation of federal securities laws.
