An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
2 Lies to FINRA Add Up to 1 Bar
June 4, 2018
With some folks, it just seems that their luck runs out. After a remarkable run beset with almost losing one's balance, almost falling down, almost getting hit by a falling something or other, almost not getting over an obstacle -- at some point, it ends short of the finish line. No prize. No trophy. Just another also-ran. In today's BrokeAndBroker.com Blog we look back on the career of one stockbroker who almost made it through the Wall Street obstacle course. Perhaps figuring he had several cat lives left, our contestant lied to FINRA and then lied to that regulator again. Not a smart idea the first time. Not a smart idea the second time.
Case In Point
The AWC asserts that Wendel entered the industry in 1989 and by September 2014 was registered with FINRA member firm SA Stone Wealth Management Inc. The AWC asserts that "Wendel does not have any formal disciplinary history with the Securities and
Exchange Commission, or any self-regulatory organization or any state securities
regulator."
Promissory Notes
The AWC alleges that during the relevant period between April and August 2017 while he was associated with SA Stone, Wendel solicited investors to purchase promissory
notes in Woodbridge Mortgage Investment Funds, a purported real-estate
investment fund. Ultimately, Wendel allegedly sold $343,500 in Woodbridge promissory
notes to four individuals for which he purportedly received over $10,000 in commissions.
The AWC alleges that Wendel did not provide notice to and did not obtain approval from SA Stone
prior to participating in what the AWC deemed to be private securities transactions ("PSTs") in violation of FINRA Rules 3280 and 2010.
False Statements
The AWC alleges that in violation of FINRA Rules 8210 and 2010, that in:
- January 2018, in response to a Rule 8210 request for information, Wendel provided a signed declaration falsely stating that his participation in the sale of a Woodbridge promissory note occurred after his association with SA Stone had ceased; and
- March 2018, during his on-the-record testimony ("OTR"), Wendel falsely testified about the alleged post-association note sale.
Discharge
Online FINRA BrokerCheck records as of June 4, 2018, disclose that S.A. Stone "discharged" Wendel on September 5, 2017 based upon allegations the he "violated firm policy regarding selling away."
FINRA Sanctions
In accordance with the terms of the AWC, FINRA imposed upon Wendel a Bar in all capacities from association with any FINRA member.
Bill Singer's Comment
There would seem to be at least two bedrock principles inherent in a registered person's interaction with any industry regulator. One, don't put anything in writing that's a lie. Two, don't say anything on the record that's a lie. A corollary to that second bedrock principle of regulatory interaction is that you should not testify falsely about any falsehood that you previously submitted in written form to a regulator and which also contains falsehoods.
As to further context against which to form an opinion about Wendel, consider the following:
Settled Complaints
Online BrokerCheck records for Wendel as of June 4, 2018, disclose under the heading "Customer Dispute - Settled" that:
- former employer WRP Investments received a FINRA Arbitration Complaint on February 1, 2013, seeking $150,000 in damages based upon allegation that:
CLIENT ALLEGES THAT WENDEL INVESTED A LARGE PORTION OF THE CLIENT'S ASSETS INTO REIT THAT ARE CONSIDERED ILLIQUID AND THAT WENDEL SOLD LOW COST MUTUALFUNDS [sic] TO PURCHASE HIGHER COST MUTUAL FUNDS. CLIENT ALLEGES THAT THESE INVESTMENTS WERE UNSUITABLE FOR HIM BASED ON HIS OBJECTIVES.WRP settled the matter on April 24, 2014, for $90,000 to which Wendel purportedly contributed the full amount.
- former employer American Express Financial Advisors received a customer complaint on:
July 3, 2003, seeking $49,107 in damages based upon allegation that:THE CLIENT'S ATTORNEY HAS WRITTEN CLAIMING LOSSES DUE TO UNSUITABLE INVESTMENTSAmerican Express settled the matter on November 7, 2002, for $200,000 to which Wendel purportedly did not contribute.April 26, 2000, seeking $130,936.88 in damages based upon allegation that:THE CLIENT ALLEGED I CONDUCTED UNAUTHORIZED TRADING, SIGNED OR OFFERED TO SIGN THE CLIENT'S SIGNATURE, CONVERT HER STOCK HOLDINGS FROM TYPE "A" TO TYPE "B" MUTUAL FUND SHARES TO HER DISADVANTAGE AND INVESTED IN ANNUITIES AGAINST HER WISHES DURING THE PERIOD OF FEBRUARY AND MARCH, THOUGH NOT IDENTIFIED BY THE CLIENT, DAMAGES ARE ESTIMATED TO EXCEED $5,000.
American Express settled the matter on November 150, 2000, for $130,936.88 to which Wendel purportedly contributed $8,350.00
Pending Complaints
Online BrokerCheck records for Wendel as of June 4, 2018, disclose under the heading "Customer Dispute - Pending" that S.A. Stone received a FINRA Arbitration Complaint on February 20, 2018, seeking $150,000 in damages based upon allegations of unsuitability and failure to supervise.
Closed Without Action Complaints
- former employer WRP Investments, Inc received a customer complaint dated May 12, 2009, seeking $73,000 in damages based upon allegations:
CLINET'S [sic] SON ALLEGES THAT THE TRANSACTION IN THE LINCOLN NATIONAL VA WAS UNSUITABLE FOR HIS FATHER
- former employer American Express Financial Advisors denied a customer complaint dated March 28, 2005, seeking $100,000 in damages based upon allegations:
THE CLIENT ALLEGES SHE WAS TOLD HER POLICY'S DEATH BENEFIT WOULD NEVER BE LESS THATN [sic] $250,000.00. SHE IS REQUESTING TO KNOW WHAT HER POLICY WILL BE WORTH UPON HER DEATH