David Jonathan Bolton of Bowling Green Kentucky is a stockbroker formerly registered with Signator Investors Inc. who is the subject of a Financial Industry Regulatory Authority (FINRA) Complaint alleging that Bolton executed unsuitable transactions in customer accounts and mismarked customer order tickets. Department of Enforcement v. David JC Bolton Disciplinary Proceeding No. 2016049775701 (Apr. 12, 2018).
According to the Complaint, between July of 2012 and June of 2015, Bolton executed short-term mutual fund trades in the investment accounts of customers AK and JK, where he effected sixty transactions short-term trades in Class A mutual funds in the customers’ accounts despite those trades not having been suitable for them. Apparently, the customers held positions in those mutual fund investments between ninety-two and two hundred seventy-four days. The Complaint stated that Bolton’s short-term trading scheme led AK and JK to pay $14,747.00 in undue sales charges.
FINRA alleged that the trades had been placed by Bolton despite him lacking any adequate foundation for concluding that those trades were appropriate based on the frequency in which those transactions were executed. The Complaint also stated that the class A shares of mutual funds that Bolton traded were meant to be held on a long-term basis rather than traded in the short-term. Moreover, Bolton’s trading activities failed to conform to AK’s and JK’s objectives for investing. Critically, Bolton was purportedly cognizant that class A shares were not meant to be traded on a short-term basis but persisted in the short-term trading of AK’s and JK’s holdings.
The Complaint further alleged that JK was inappropriately advised by Bolton to invest $731,265.00 in class A shares of forty-two mutual funds belonging to eleven separate families of funds since it caused JK to incur higher sales charges. That is, the recommendations were reportedly made by Bolton without factoring in the breakpoints that may have been available to JK by investing in fewer families of funds. FINRA alleged that JK incurred $10,000.00 in undue sales charges in that regard. FINRA Department of Enforcement alleged that Bolton’s conduct was violative of FINRA Rules 2010 and 2111.
Moreover, the Complaint stated that from July of 2012 to October of 2014, false information had been provided by Bolton to his firm with regard to the sales and purchases effected in the traditional individual retirement account owned by JK. Particularly, FINRA alleged that one-hundred four transactions placed in JK’s individual retirement account had been falsely marked as unsolicited when Bolton was knowledgeable about the transactions having been solicited.
The Complaint additionally alleged that from May of 2014 to October of 2014, false information was furnished to Signator by Bolton regarding all transactions placed in the account owned by AK. Apparently, twenty-six transactions had been marked as unsolicited despite Bolton’s knowledge that the transactions were solicited. Consequently, FINRA Department of Enforcement alleged that Bolton’s conduct was violative of FINRA Rules 2010 and 4511(a).
FINRA Public Disclosure reveals that Bolton has been identified in two customer initiated investment related disputes containing accusations of Bolton’s violative conduct while employed with Signator Investors Inc. and Thurston, Springer, Miller, Herd & Titak, Inc. Specifically, on March 30, 2017, a customer initiated investment related complaint pertaining to Bolton’s conduct was resolved for $71,750.61 in damages based upon allegations that inappropriate investment recommendations were made to the customer concerning mutual fund, insurance and variable annuity investments.
Thereafter, on April 1, 2016, a customer filed an investment related complaint regarding Bolton’s conduct, alleging that equities and class A shares of mutual funds were executed in the customer’s account that were not suitable for the customer, and the customer was charged commissions and sales loads that were excessive.
Bolton’s registration with Signator Investors, Inc. was terminated on November 20, 2014. Between November 10, 2014 and February 10, 2016, he was registered with Thurston, Springer, Miller, Herd & Titak, Inc.
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