The Financial Industry Regulatory Authority has sanctioned yet another former rep from Red Bank, New Jersey-based broker-dealer First Standard Financial, which is no longer operating as a FINRA-registered brokerage, according to the regulator.
This time, FINRA targeted Robert Frank Spiegel, who was registered with FINRA as a general securities representative through his association with First Standard from October 2014 through November 2018, according to the regulator.
Between October 2016 and December 2017, Spiegel “excessively … engaged in quantitatively unsuitable trading in the account of customer JM, a 70-year-old farmer,” according to a FINRA letter of acceptance, waiver and consent that Spiegel signed Jan. 8. FINRA accepted the letter Friday.
Without admitting or denying the findings, Spiegel agreed to be suspended from association with any FINRA member firm, in all capacities, for four months. He also agreed to a fine of $5,000 and to provide restitution in the amount of $18,047, plus interest, to the wronged client, identified only as “JM” by FINRA in the letter.
However, Spiegel is no longer registered as a broker, according to FINRA. Timothy Feil, a partner at the New York law firm Carmel, Milazzo & DiChiara, who represented him in the FINRA case, did not immediately respond to a request for comment Monday.
Spiegel “recommended all of the trading in JM’s account, including executing a significant number of trades using margin, and JM followed his recommendations,” according to FINRA. “As a result, Spiegel exercised de facto control over JM’s account,” the letter said, adding Spiegel’s trading of JM’s account “resulted in a high turnover rate and cost-to-equity ratio, as well as significant losses.”
FINRA singled out the fact that JM’s account “exhibited an annualized turnover rate of 34 and an annualized cost-to-equity ratio of 113%.” JM’s account incurred losses of $77,334 and the client paid $18,047 in commissions and fees, according to FINRA. Spiegel’s trading in JM’s account was “excessive and unsuitable given the customer’s investment profile,” FINRA said.
As a result, the rep violated FINRA Rules 2111 (regarding suitability of investment strategies and transactions) and 2010 (regarding standards of commercial honor and principles of trade), according to the letter.
Spiegel has six disclosures on his profile at FINRA’s BrokerCheck website, including two customer disputes over churning and unsuitable trading. In one, a client alleged churning and unsuitability from September 2013 through March 2015. The customer requested damages of $573,700, but settled for $231,000 Nov. 16, 2016. In the other dispute, which is pending, the client requested $90,200 in damages.
FINRA recently barred Michael Leahy, the same BD’s ex-compliance officer, from associating with any FINRA member firm in “all principal capacities” after significant supervisory failures at the firm. He signed a FINRA AWC letter Jan. 3.
Before that, FINRA barred ex-First Standard brokers Philip Joseph Sparacino and Gabriel Block from acting as brokers or associating with any BD firms.
On Oct. 31, 2019, the New Jersey Bureau of Securities issued a Summary Revocation Order against First Standard, revoking its registration in that state for, among other things, engaging in what the agency called a “fraudulent course of business that consisted of excessive, unsuitable, and frequently unauthorized short-term trading in customer accounts that generated commissions for First Standard and its agents at its customers’ expense.”
Although First Standard had “held itself out as a legitimate financial services firm,” the firm actually “served as a haven for greedy, dishonest agents who traded clients’ accounts like sharks in a feeding frenzy,” Christopher W. Gerold, chief of the state’s Bureau of Securities, said in a statement Nov. 4.
First Standard filed a Uniform Request for Withdrawal from Broker-Dealer Registration on or around Nov. 5, 2019. FINRA went on to cancel its license this month, according to the firm’s profile on FINRA’s BrokerCheck website.