In August 2011, Blakezuniga entered into an AWC (No. 2010024761201) in which he agreed to a 30-business day suspension and a $5,000 fine for failing to disclose an outside business activity.In March 2011, Blakezuniga was the subject of a consent order (S-11-0228- 110Rl) by the Arkansas Securities Commissioner in which he was fined $3,500 for failing to update his outside business activity notification form to disclose his position as Chief Executive Officer of a company.
Vanguard Capital's procedures prohibited Blakezuniga from borrowing money from any customer. In violation of the firm's procedures, Blakezuniga borrowed (i) $300,000 in February 2007 from a trust established by a firm customer and (ii) $475,000 in June 2013 from a separate trust established by another firm customer. Blakezuniga has not repaid the full principal amount owed for either of these loans.
FINRA deemed Blakezuniga's ETF recommendations to constitute violations of NASD Rule 2310 (prior to July 9, 2012) and FINRA Rules 2111 and 2010 (after July 9, 2012).SIDE BAR: As set forth in the 'Executive Summary" of FINRA Regulatory Notice 09-31 (June 2009): Non-Traditional ETFs: FINRA Reminds Firms of Sales Practice Obligations Relating to Leveraged and Inverse Exchange-Traded Funds:Exchange-traded funds (ETFs) that offer leverage or that are designed to perform inversely to the index or benchmark they track-or both-are growing in number and popularity. While such products may be useful in some sophisticated trading strategies, they are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, inverse and leveraged ETFs that are reset daily typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.This Notice reminds firms of their sales practice obligations in connection with leveraged and inverse ETFs. In particular, recommendations to customers must be suitable and based on a full understanding of the terms and features of the product recommended; sales materials related to leveraged and inverse ETFs must be fair and accurate; and firms must have adequate supervisory procedures in place to ensure that these obligations are met. . .
(a) Permissible Lending Arrangements; Conditions No person associated with a member in any registered capacity may borrow money from or lend money to any customer of such person unless:
Vanguard Capital's procedures prohibited Blakezuniga from borrowing money from any customer. In violation of the firm's procedures . . .
FINRA Rule 2010: Standards of Commercial Honor and Principles of TradeA member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.