Merid Amde of Troy, Michigan, a stockbroker with Wunderlich Securities, was fined $20,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity per an Order Accepting Offer of Settlement containing findings that Amde engaged in unauthorized discretionary trading, mismarking order tickets as solicited, falsification of records, and making inaccurate valuations of consolidated reports. Department of Enforcement v. Amde, No. 2012033393401 (Feb. 18, 2016).
According to the Order, from September 2008 through May 2011, one hundred forty-five trades were effected in the accounts of a firm customer, KM. The customer apparently never contacted Amde in order to initiate any of the transactions. In every case, Amde apparently solicited the trades in the customer’s account. The Order stated that thirty-six trades were mismarked by Amde for the purchase of low-priced securities and unit investment trusts. Such investments, according to the Order, included a risky unit investment trust, First Trust India Growth Portfolio, which invested in offshore drilling and transportation services associated with petroleum and drybulk cargoes. Amde reportedly circumvented his firm’s supervision due to the mismarking of the customer’s orders as being unsolicited, when they were solicited.
The Order also stated that from November 27, 2009 through October 12, 2010, Amde reportedly engaged in the discretion in the accounts of KM, despite not having KM’s prior written approval nor the approval from his firm. Wunderlich reportedly prohibited representatives from engaging in discretion in customer accounts unless the representative had obtained the firm’s written approval and/or where the stockbroker was dually registered as an investment advisor. Amde, according to the Order, was not registered as an investment advisor with the firm, yet he effected sixty-three transactions in KM’s account.
According to the Order, Amde never spoke with the customer on the days that the transactions were executed. KM reportedly never provided Amde verbal or written permission for Amde to engage in the transactions. The Order additionally indicated that the KM accounts were not accepted as being discretionary by the firm. FINRA found that fifty-five of the trades executed by Amde were executed without KM’s discretion, and generated $9,611.00 in net commissions to Amde.
The Order further indicated that KM was provided with an analysis from Amde in March and November of 2010. The March report apparently falsely stated KM’s account value, where the account was quoted to the customer as $219,781.00 rather than the actual value of $202,920.46 based on the firm’s account statements. Amde reportedly sent KM another false report of KM’s account value, indicating to KM that the accounts values totaled $261,731.00 when the firm’s official report indicated KM’s account value as $202,336.96. FINRA stated that Amde’s reports were misleading, exaggerated, and false regarding KM’s investments, which in turn, prevented KM from being able to properly evaluate her investments.
FINRA found that Amde violated FINRA Rule 2010 and NASD Conduct Rule 3110 and 2110 for his mismarking of orders as unsolicited. Amde was also found to have violated NASD Rule 2510(b) as well as FINRA Rule 2010 for exercising discretionary power in KM’s account without obtaining KM’s prior written authorization and the firm not approving of the accounts as being discretionary. KM was finally found to have violated NASD Rule 3110, 2110, 2210(d), 2510(b), as well as FINRA Rule 2010, as a result of falsely stating KM’s account values and exaggerating returns.
Public disclosure records via FINRA’s BrokerCheck reveal that Amde has been subject to six disclosure incidents. On March 31, 2005, Amde settled a customer dispute for $23,000.00 after the customer alleged misrepresentation in connection with options contracts. On April 7, 2005, Raymond James & Associates, Inc. discharged Amde for engaging in unauthorized trading.
On May 6, 2005, Amde settled another customer dispute for $43,000.00 after the customer alleged churning, unauthorized trading, suitability violations, and excessive commissions charged. On August 5, 2011, Amde settled a customer dispute for $61,251.71 after the customer alleged unauthorized trading, suitability violations, excessive trading, unsolicited trade confirmations, and fraudulent and misleading statements. Wunderlich Securities permitted Amde to resign amid the aforementioned client’s allegations.
Guiliano Law Group
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