Michael S. Bell, a Stockbroker with Westpark Capital, was suspended from association with all Financial Industry Regulatory Authority (FINRA) member firms after consenting to findings that he violated his firm’s written supervisory procedures in sending e-mails that were unbalanced, promissory, and misleading. Letter of Acceptance, Waiver, and Consent No. 2014041848801 (Apr. 30, 2015). Westpark Capital discharged Bell on June 27, 2014 for using the non-firm approved email to solicit business.
According to the AWC, from April, 2014 – June, 2014, Bell had sent roughly twenty e-mails on his personal email account that concerned his firm’s business. In addition to this being a violation for Rule 2010 in causing his firm’s to maintain inaccurate books and records, the e-mails directed at an individual MD concerning a private placement had content which FINRA found was unbalanced, promissory, misleading, and/or lacked a reasonable basis.
The AWC demonstrated several examples of communication which FINRA claimed was faulty, including remarks about how investments in IPOs would be profitable, how the prospective company for investment was doing extremely well, and trading predictions. According to FINRA’s rule 2210(d)(1), communications must be “fair and balanced” and provide a sound basis for evaluating facts concerning a particular security. FINRA’s rules require that the communications concerning statements and claims not be false, exaggerated, unwarranted, promissory, or misleading. FINRA found Bell’s conduct to be in violation of FINRA Rules 2210(d)(1)(A), 2210(d)(1)(B), 2210(d)(1)(F), and FINRA Rule 2010.
Public disclosure records via FINRA’s BrokerCheck reveal that Bell has been subject to fourteen disclosures. On March 20, 1995, Bell settled a customer dispute for $10,000.00 after a customer complained that there was unauthorized trading and excessive trading. Bell settled a claim on November 7, 2000, for $500,000.00 after a customer alleged misrepresentation and excessive, unsuitable, and over-concentrated trading in two stocks, as well as selling away.
On August 30, 2002, Bell settled a customer dispute with a client for $1,045,000.00 after claims of unauthorized and excessive trading, unauthorized use of margin and unsuitable recommendations. On November 6, 2002, a customer received an award against Bell for $435,823.00 after claiming breach of fiduciary duty, negligence, gross negligence, and suitability.
On January 1, 2005, records reveal that Capital Growth Financial, LLC, discharged Bell during allegations that Bell had caused unauthorized trades to be executed in customers’ accounts. On April 18, 2006, Bell was actually suspended by the NASD amid allegations that he failed to comply with an arbitration award or settlement agreement or satisfactorily respond to an NASD request to provide information concerning the status of compliance. After going through two financial compromises in March, 2011, Bell settled yet another customer dispute for $54,000.00 on June 21, 2011, where a client alleged misrepresentation concerning product sold to them.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
By definition, a broker is liable for making unauthorized trades without the customer’s prior authorization. Absent written discretion, it is a violation of Section 10(b) of the Exchange Act, and Rule 10b-5, as promulgated thereunder, to effect transactions in customer accounts without their prior authorization or consent.
Customers also have a duty to review securities purchase and sale confirmations and review their securities accounts. If a stockbroker has placed unauthorized transactions in a customer account, the customer under most circumstances has a duty to act, or a duty to complain, or else generally, the customer may be deemed to have ratified these transactions, with actual or imputed knowledge, by doing nothing. Under such circumstances, a customer’s damages may be limited to the time they knew or should have known about the unauthorized transactions.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
