Justia Badge
Super Lawyers badge
Avvo Rating badge
AV Preeminent badge


Much has been said about the Trump’s administration effect on the SEC’s regulatory activities. Now, hard data confirms what we all suspected: under Trump, the Securities Exchange Commission has brought fewer enforcement actions and reduced its financial sanctions.

A new study by a Georgetown University professor, covering fiscal year 2017, revealed that the SEC brought 612 cases and follow-on actions in 2017, which represents a substantial drop from 743 enforcement actions brought during fiscal year 2016.

In 2016, financial sanctions amounted to $4.08 billion, while in 2017 they reached $3.45 billion.


FINRA recently filed a complaint against a South Carolina-headquartered broker-dealer that allegedly charged exorbitant fees in connection with saltwater disposal well investments. The defendant, Sandlapper Securities, is a mid-size firm that employs about 60 brokers across its 13 locations.

According to FINRA, Sandlapper “participated in a fraudulent scheme and defrauded investors by selling investments in saltwater disposal wells at excessive, undisclosed markups through a middleman ‘development’ company owned and controlled by the firm, its CEO and a firm principal.” The fraudulent markups of as much as 270% “totaled over $8 million,” according to the complaint.

Sandlapper’s CEO, Trevor Gordon, who managed the fund, is also named in the complaint. FINRA alleges that he “used the development company to extract ill-gotten profits from retail investors who purchased interests in individual saltwater disposal wells outside the fund.”


A FINRA arbitration panel has just awarded James L. Springer Jr.; a Sarasota investment adviser, $3 million in damages, to be paid by his former employer, UBS. Springer, who managed  $350 million in client assets during his 12 years with the company, claims UBS defamed him in a desperate attempt to keep his clients after he decided to leave.

In 2014, the broker prepared to leave UBS for a lucrative position at Merrill Lynch. Two days before he was supposed to resign, UBS fired him and proceeded to make allegedly false statements to his former clients.

UBS claimed Springer was being fired because he had used a corporate credit card to make personal purchases. The dollar amount of the purchases was, however, insignificant, especially when considering that the broker’s work yielded multi-million dollar profits for the company.


At a recent Securities Enforcement Forum in Washington DC, Stephanie Avakian, co-director of the SEC’s Division of Enforcement, discussed the agency’s future priorities.

Avakian emphasized that the mission of the Enforcement Division, to protect investors, will remain unchanged, but she announced a slight shift in focus areas and resource allocation.

The Division of Enforcement official referred to retail investors as the “most vulnerable market participants,” and confirmed that the SEC will continue to focus on:


In a recent report, the Wall Street Journal said FINRA’s investments are underperforming. The self-regulatory organization boasts a $1 billion yearly budget, and it easily collects over $100 million per year through the imposition of fines.

According to WSJ journalists, throughout its existence, FINRA’s $1.6 billion investment portfolio has yielded $440 million less than what could have been obtained from a mix of balanced stocks and bonds.

After the industry’s recent questioning of how FINRA uses fine money, the new criticism appears as a new blow to its image at a time when it has been trying to show a willingness to reform in response to member feedback.


Aspiring brokers will no longer need a firm to sponsor them in order to take FINRA’s competency exams. The Securities and Exchange Commission has just approved FINRA Regulatory Notice  17-30, which will make this and other changes effective within a year.

According to FINRA, the rule change aims to:

  1. adopt consolidated FINRA registration rules;
  2. restructure the representative-level qualification examinations by creating a general knowledge examination called the Securities Industry Essentials (SIE) and transforming the representative-level examinations into specialized knowledge examinations; and
  3. amend the Continuing Education (CE) requirements.

Under the updated rule, all applicants to registered representative positions will have to pass a new general knowledge test, the SIE (Securities Industry Essentials).


The North American Securities Administrators Association (NASAA) has just released its yearly Enforcement Report. Although NASAA is an international association of all state, provincial and territorial securities regulators in the United States, Canada, and Mexico, the annual report is focused on US jurisdictions.

According to data included in the document, there were more enforcement actions against registered members than against non-registered individuals in 2016.

2,017 (or 46%) of the 4,341 investigations conducted by state regulators in the securities industry resulted in enforcement actions. Resulting fines amounted to $682 million, while $231 million were returned to investors. The combined total between fines and restitutions, surpassing $900 million, constitutes a 5-year high.


The SEC has accused two former Alexander Capital LP brokers, William Gennity and Rocco Roveccio of engaging in unlawful trading and deception that caused their customers to lose hundreds of thousands of dollars, while they earned a comparable amount in fees.

Gennity and Roveccio both worked at Alexander Capital from mid 2012 till October 2014.

They apparently have a long history of disciplinary action in the securities industry. In 2016, Gennity reached a settlement to resolve allegations of unauthorized trading and in 2014, he reached another settlement over churning and unsuitability. Roveccio has reached settlements over allegations of unauthorized trading and suitability in 2002, unauthorized trading in 2006, and a FINRA customer arbitration in 2013.


“Arbitrators have a unique, distinct role in ensuring that customer dispute information is expunged from the CRD system only when it has no meaningful investor protection or regulatory value.” FINRA (September, 2017)

In a new push for closer scrutiny over expungements, FINRA has just updated its Notice to Arbitrators and Parties on Expanded Expungement Guidance. In the revised document, FINRA zeroes in on expungement-only cases, specifically addressing the issue of customers who may be unaware of the existence of expungement claims.

The regulator’s document states that,


FINRA announced it has just fined C.L. King & Associates $750,000. According to the Regulatory Authority´s decision, the broker-dealer has negligently made “material misrepresentations and omissions to issuers in connection with the firm’s redemptions of debt securities on behalf of a hedge fund customer.”

This was allegedly done in connection with the hedge fund customer´s scheme to profit from the death of terminally ill individuals.

A FINRA hearing panel also found that the Albany-based broker dealer and its Anti-Money Laundering Compliance Officer failed to “implement a reasonable AML program and failed to adequately respond to red flags related to the liquidation of billions of shares of penny stocks indicative of potentially suspicious activity by two customers.”

Contact Information