Anthony L. Semadeni, a former stockbroker with World Group Securities, has been barred from the financial industry for two years and ordered to pay up to $60,000 in restitution plus interest to customers for borrowing money from them and never fully paying it back.
Semadeni also lied to World Group about the loans he received from customers and failed to cooperate when his activities were investigated by the Financial Industry Regulatory Authority (FINRA), according to a default decision entered by FINRA’s Office of Hearing Officers on Feb. 21.
FINRA’s Department of Enforcement Complaint
The complaint, filed by FINRA’s Department of Enforcement in October 2011, alleged that Semadeni borrowed at least $85,000 from four of his customers from September 2007 through April 2009. FINRA began to investigate Semadeni’s conduct after it received a complaint from one of the customers from whom Semadeni had borrowed.
While borrowing from clients is permissible within certain narrow parameters, Semadeni borrowed the money without complying with Rule 2370 of the National Association of Securities Dealers (NASD) a FINRA predecessor.
The rule provides that a registered broker associated with a FINRA member firm may not borrow money from or lend money to any customer unless the firm has written procedures allowing such borrowing or lending. The rule also lays out other conditions that are not relevant in Semadeni’s case because he did not comply in any way with World Group’s written procedures, the default decision said.
Semadeni never fully repaid the loans he received from his customers. He also gave false answers on a World Group compliance questionnaire that requested information about loans from customers.
World Group Terminates Anthony L. Semadeni
In March 2010, World Group fired Semadeni for noncompliance. Since then, he has not been associated with any other FINRA-member firm, according to FINRA public disclosure records. Semadeni first registered with a FINRA member in May 1995 as an investment company and variable contracts products representative, becoming a principal in 2000, the default decision said. He joined World Group Securities in April 2002.
The default decision also notes that Semadeni violated FINRA and NASD rules when he failed to respond to requests for information and documents from FINRA staff. He later provided FINRA with false and misleading information and failed to appear in any capacity during disciplinary proceedings, resulting in the default judgment.
Semadeni is Barred & Forced to Pay
As a result of his misconduct, Semadeni was barred from associating with any FINRA-registered firm in any capacity and ordered to pay $16,000 in restitution to one customer identified in the complaint only as JW.
Semadeni was also ordered to pay $16,000 in restitution to the customer identified as RC. Both these customers are to receive interest on the unpaid balances, per guidelines in the U.S. Internal Revenue Code, until the restitution is paid in full.
The interest is to be calculated according to dates set out in the original loan agreements. The default decision called for JW to receive interest from May 2010, and for RC to receive interest from July 2010.
The default decision also calls for Semadeni to pay $30,000 in restitution plus 7.5 percent interest to a customer identified only as DW. Semadeni’s lack of cooperation left FINRA unable to determine how much of the loan is outstanding so the restitution may be reduced by any payments of interest or principal DW received from Semadeni as well as any restitution already paid as a result of arbitration or some other avenue. The interest is to be calculated from late March 2010 until the restitution is paid in full.
The Complaint Filed Against Semadeni
The first customer from whom Semadeni borrowed money, identified as only VR, filed the complaint that lend to FINRA’s investigation. In September 2007, Semadeni borrowed $10,000 from VR to pay for landscaping, the default decision said. He promised to pay $1,000 per month plus interest of $250 until the loan was fully repaid, but as of March 2009, Semadeni still owed $3,050. World Group paid the balance when it discovered the loan.
In December 2008, Semadeni borrowed $30,000 at 7.5 percent interest from DW. The terms called for the loan to be repaid in monthly installments of $1,000 for one year with the remaining balance to be paid in a single balloon payment in March 2010. Semadeni’s failure to cooperate with FINRA prevented a determination of the status of this loan, the default decision said.
In March 2009, Semadeni suggested that JW liquidate a variable annuity and lend him $20,000. Semadeni never informed JW that by liquidating her annuity she would incur an early withdrawal penalty of $2,125. She did as Semadeni suggested and loaned him the money, which he agreed to repay by making monthly interest payments of $1,000 beginning in April 2009, plus one $20,000 balloon payment. As of the date of the default decision, he had repaid only $4,000.
Finally, in April 2009, Semadeni borrowed $25,000 from RC and a friend of hers who was not a customer of World Group. Semadeni was supposed to make 12 interest payments of $1,000, and one balloon payment of $25,000 due in July 2010, but he repaid only $9,000 of the money as of the date of the default decision.
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