BROWSE BY TOPIC
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
WWW: Broker Fleeces Retirees While Supervisors Were … Where?
[Photo: by DullHunk (Duncan Hull) / Flickr]
In December 2016, a FINRA Hearing Officer issued a default judgment against Christopher Ariola, a former registered rep with Bay Mutual Financial. Ariola was barred by FINRA from the industry and ordered to pay $157,000 in restitution and prejudgment interest for losses his elderly customers incurred on unsuitable recommendations investments.
The Hearing Officer also noted that Ariola had obtained access to a former customer’s retirement account at TD Ameritrade while he was still associated with Bay Mutual. Ariola traded in that outside account on the customer’s behalf – though he never told his employer, Bay Mutual, about this outside relationship, and he never told TD Ameritrade about his registered status with Bay Mutual.
ABOUT THE RESPONDENT. Christopher Ariola, who got his Series 7 license in 1997, worked at Dean Witter, Equity Trust Advisors, Prudential Securities, and Wachovia Securities before joining Bay Mutual Financial in 2004. He remained with Bay Mutual until 2012, when he joined Financial Telesis.
FINRA’S FINDINGS AGAINST ARIOLA. The investigation of Ariola started after FINRA received a Form U5 filed by Bay Mutual stating he (Ariola) had been permitted to resign when he was under an internal review initiated because “the Firm developed concerns that certain securities recommended for client accounts were not consistent with Firm guidelines."
Ariola made unsuitable recommendations to elderly retirees to invest a substantial portion of their limited retirement assets in certain high-risk gold and energy stocks. These recommendations were unsuitable given the customers’ financial circumstances, and investment objectives and low risk tolerances. The recommendations also caused the customers’ accounts to be unduly concentrated in gold and energy stocks. Ariola made similar unsuitable recommendations with respect to a former customer’s retirement account at TD Ameritrade that he controlled on the former customer’s behalf.
Ariola presumed these investments would throw off high yield dividends - and apparently preferred to look past the significant investment risks, given the fact that the some of these stocks were negatively impacted by corporate events or announcements shortly before Ariola made the recommendations.
- Customers 1 and 2 were married and had retired from their jobs as bus drivers in 2010. Ariola recommended that the couple each invest in 9 gold and energy stocks. Between them, they lost $93,000.
- Customer 3 – also a retired bus driver – was advised to buy 12 gold and energy stocks. This customer lost $45,000.
- Individual 4 - also a retired bus driver - was a former customer who opened the online brokerage account at TD Ameritrade. Over a 2-1/2 year period, Ariola executed 863 securities transactions in this account, which netted the customer about $5,000 in losses. The customer recouped his losses in a settlement with Bay Mutual.
This case was reported in FINRA Disciplinary Actions for March 2017.
For details on this case, go to … FINRA Disciplinary Actions Online, and refer to Case #2012034139101.