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January 08, 2020 at 02:52 PM
The Financial Industry Regulatory Authority was recently slapped with a lawsuit by a now-defunct broker-dealer and its former president, who both alleged the regulator was guilty of “biased, arbitrary and capricious actions,” as well as an “unfair and discriminatory regulatory enforcement scheme,” libel/defamation and negligence.
FINRA declined to comment Wednesday about the suit, which was filed Dec. 23 in U.S. District Court, District of New Jersey by BlackBook Capital and Franklin Ogele, a lawyer based in Newark, New Jersey who is also representing the plaintiffs and previously served as the firm’s president, according to a FINRA letter of acceptance, waiver and consent from 2014. He was also BlackBook CEO, according to his LinkedIn profile, and owns more than 75% of BlackBook, the suit says.
Without admitting or denying FINRA’s findings, Ogele had signed the FINRA AWC letter, agreeing to a censure and $50,000 fine for violating multiple FINRA rules by charging customers $60.50 on each purchase or sale transaction in addition to or instead of a designated commission charge. That charge was deemed “unreasonable” by FINRA, which also said the firm “mischaracterized” the charge, which was “effectively an undisclosed minimum commission,” according to the letter. BlackBook also agreed to implement various corrective actions, the letter showed.
In their suit, BlackBook and Ogele claimed $60 million for a real estate development project in South Carolina and $100 million for a hotel and condo development in the U.S. Virgin Islands were withdrawn by the “funding sources” after they conducted a search of Ogele online and saw FINRA’s claim that BlackBook was expelled for failure to pay the $50,000 fine. BlackBook was expelled from FINRA in June 2016, according to FINRA’s BrokerCheck website.
The plaintiffs claimed the information listed by FINRA was “blatantly false,” as well as “malicious, derogatory and has harmed and continues to harm Ogele’s reputation in the business community.” The plaintiffs claimed BlackBook was not expelled from FINRA but had actually voluntarily withdrawn its SEC broker-dealer registration and FINRA membership. At that time, BlackBook only owed $7,600, not $50,000, the plaintiffs also said.
