[ by Howard Haykin ]

A small Boca Raton broker-dealer and its Registered Principal, agreed to settle FINRA charges that the firm posted a website that made numerous misleading and unsubstantiated claims or characterizations, and did not comply with SIPC rules. 

Backgrounds of Respondents.   B & T Securities, Inc. has been a FINRA­ regulated firm since 7/25/02.  The firm has 3 RRs, and its primary business is trading equity securities.  Brent Daryl Obergfell started out in the securities industry in July 1993, and was associated with several FINRA members before co-founding B&T Securities, Inc.  in  2002.  Oberrgfell holds the following licenses:  Series 7, Series 9/10 (General Securities Sales Supe), Series 24 (General Securities Principal), Series 63 (Uniform Securities  Agent), Series 55 (Equity Trader), and Series 79 (Investment Banker).  At all relevant  times and currently. Obergfell has served as the President of B & T Securities, Inc.

FINRA Findings and Allegations.   During a 7-year period, from July 2004 through July 2011, B&T posted a website that made one misleading claim, 4 unsubstantiated claims or characterizations, and failed to comply with SIPC requirements.  From at least 2009, when  trading  losses started  to mount  and  the trading  strategy employed by the Firm started changing in response to changed markets, 3 other statements posted on the website became misleading.  

Note:  For each of the following issues found by FINRA, the bold-lettered conclusion follows the finding.

Problem 1.  The following claim made on the site re: Firm's trading model:  "We think the proof is in our record: positive real retums over the last six years."  Website failed to provide a basis for that claim.

Problem 2.  That claim referred to the period from 1998 to 2004.   Trading  produced  losses  beginning  in 2009, not  positive returns.  The statement became misleading.

Problem 3.  The Firm described its "Investment Style and Practice," using phrases like "Short Term Trading" and "Loss/Profit Discipline."  Those descriptions included the following claims:

• In our world, almost every day  is a 'fresh  start'  in the market    We  usually begin and end each day entirely in cash-with the goal of making short term and intra-day profitable trades." (emphasis in original)
• Our trading model calls for the majority of our trades to be completed during any given trading day.

Yet, after sustaining losses in 2008 and 2009, B&T moved away from day trading, to a strategy that held positions longer term, with less frequent  trading in and out during a day, and less frequent days when an account held only cash at the end of the day.  Thus, those claims became misleading.

Problem 4.  Description the Firm's "Investment Style and Practice" also described how capital was preserved, making the claim:  "A quick look at market history shows that entire fortunes have been lost by not prudently managing losses - by allowing emotion to rule, rather than discipline," without providing any support for that claim.  Firm failed to provide a basis for the claim.

Problem 5.   Last page of website provided information answering the question, "What  is a Registered Investment Advisor ('RIA')?"  However, neither the Firm nor anyone associated with the Firm was registered as an investment advisor during the period the website was posted.   Accordingly, B&T was not in  a position to, and did not provide such services.  Including this statement was a violation because it was misleading.

Problem 6.   Logo on website's first  page and elsewhere used the terminology: "B&T Asset Management A Division of B&T Securities, Inc."   Misleading, because firm didn't mention that B&T Asset Management was another name under which  the Firm conducted its business.   

Problem 7.  Website claimed, "We're an innovative asset management firm with a unique market focus."   In fact, B&T was never an asset management firm.   Characterizing the Firm as an asset management flrm and claiming it had a unique market focus without providing a basis for those characterizations is a violation. 

Obergfell's Role.   As President, Obergfell was responsible for supervision at the firm and for establishing reasonably designed and enforced WSPs.  He was the designated principal for approving advertising, yet through Obergfell, the firm failed to establish WSPs pertaining to website advertising.  Firm further failed to properly supervise the website, which had numerous violations that endured for the entire 7-year period, while others became misleading while it was posted.

FINRA Sanctions.   Firm received $20K fine, of which $10K was jointly and severally shared with Obergfell, .  Firm had to discontinue any use of “B&T Asset Management,” and was ordered to submit for review to FINRA’s Department of Advertising Regulation any web sites made available to the public or any customer. Obergfell received a 5-day suspension from serving as a principal.

For further details, go to:   [FINRA Disciplinary Actions for January 2013] and [ FINRA AWC 2010021929901].