John Amador Blakezuniga of Irvine, California, a stockbroker formerly registered with Vanguard Capital, has been fined $25,000.00 and suspended for twenty-two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made unsuitable investment recommendations to customers, falsified compliance documents, and entered into unauthorized borrowing arrangements with firm customers. Letter of Acceptance, Waiver and Consent, No. 2016048453601 (Apr. 3, 2017).
According to the AWC, between 2010 and 2014, a total of one-thousand, two-hundred and eighty non-traditional exchange traded fund transactions had been recommended by Blakezuniga in eighty-five of the firm’s customer investment accounts. The AWC stated that the non-traditional exchange traded fund prospectuses provided to customers stated that the investments were designed for short-term investment periods and the fund intended on investment results to be achieved in a one day period. Despite the warnings identified in the prospectuses, customers received recommendations from Blakezuniga to hold positions in the products anywhere from one month to several years. Consequently, FINRA found that Blakezuniga lacked an adequate basis to conclude that his recommendations to customers were suitable for them. Consequently, FINRA found Blakezuniga’s conduct to be violative of FINRA Rules 2111 and NASD Rule 2310.
The AWC additionally stated that Blakezuniga entered into borrowing arrangements with firm customers. Specifically, in February of 2007, a customer utilized a trust account to lend Blakezuniga $300,000.00. In June of 2013, another customer reportedly utilized a trust account to lend Blakezuniga $475,000.00. The borrowing arrangements were evidently prohibited by Vanguard Capital, and Blakezuniga failed to fully repay the principal which he owed to customers pursuant to the agreements. FINRA found Blakezuniga’s conduct in this regard to be violative of FINRA Rules 2010, 3240, and NASD Rules 2110 and 2370.
The AWC also revealed that Blakezuniga falsified his answer to the firm’s annual compliance questionnaire which had been administered to him in November of 2013, in which he stated that he had not borrowed customer funds. FINRA found that Blakezuniga violated FINRA Rule 2010, as he had factually borrowed funds from the firm’s clients.
This is not the first time that Blakezuniga has been sanctioned by a regulator for misconduct. Particularly, he was previously fined and suspended by FINRA based upon consenting to findings that he engaged in outside business activities which had not been disclosed to his firm. Letter of Acceptance, Waiver and Consent, No. 2010024761201 (Aug. 30, 2011). Specifically, Blakezuniga was initially approved for an outside business activity regarding an entity which he formed upon commencing employment with Vanguard Capital; however, the firm was only apprised of Blakezuniga’s involvement as a passive investor who did not participate in the management of the entity. Blakezuniga reportedly went on to become the chief executive officer and director of the entity without disclosing his change in circumstances to Vanguard Capital. Consequently, FINRA found Blakezuniga’s conduct to be violative of FINRA Rule 2010, as well as NASD Rules 2110 and 3030.
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