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Bankruptcies Mar Disciplinary Records of Some CFPs

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More than 60,000 individuals hold the CFP designation, a mark of financial savvy, but some still have trouble managing their own money.

Six of 19 certificants who were identified today as being subject to recent disciplinary action by the Board of Standards were cited for their bankruptcy filings. Five had filed for bankruptcy on multiple occasions, with one certificant filing three times between 1998 and 2004. An individual’s disciplinary history and certification status with CFP Board can be examined at www.CFP.net/verify.

The board decided last spring to start identifying bankruptcy cases in the wake of sharp increases in their incidence. Here’s a rundown of all the certificants who were disciplined for bankruptcy and other causes, in descending order of consequence:

 

REVOCATIONS

CALIFORNIA

Michael R. Frager, La Jolla:

The CFP Board’s Disciplinary and Ethics Commission determined that Frager filed for Chapter 7 bankruptcy in 1995 and 2011.

FLORIDA

Thomas J. Gregory, Maitland:

This discipline followed CFP Board’s investigation of allegations that Gregory: 1) misrepresented that he completed a continuing education course when he allowed an individual to improperly assist him in the completion of the course; 2) was terminated by his broker-dealer for misrepresenting that he completed the CE course; 3) entered into a FINRA Letter of Acceptance Waiver and Consent wherein he consented to a one-month suspension from association with any FINRA member for a violations of NASD Rule 2110; and 4) failed to notify CFP Board of the change in contact information due to his termination. Gregory failed to file an answer to CFP Board’s complaint within 20 calendar days of the date of service.

Neal S. Smalbach, Palm Harbor:

This discipline followed CFP Board’s investigation of allegations that Smalbach: 1) made fraudulent misrepresentations and material omissions when selling preferred shares in a private placement; 2) caused client information forms and private placement subscription agreements to be falsely completed so that customers would appear to be experienced and accredited investors for whom the investments were suitable; 3) caused customers to make unsuitable investments in a private placement; 4) violated NASD and FINRA rules regarding maintenance of accurate books and records; and 5) impersonated a customer to effect the liquidation and transfer of a customer account, resulting in his termination by his employer.

MICHIGAN

Brett M. Plew, Kalamazoo:

This discipline followed CFP Board’s investigation of allegations that Plew: 1) failed to follow a client’s instructions to liquidate an account; 2) failed to supervise a subordinate with regard to the client’s request; 3) made a personal guarantee to recover the client’s losses in violation of NASD Rules 2330(e) and 2110; 4) was terminated by his employer; and 5) signed a FINRA Letter of Acceptance, Waiver and Consent wherein he consented to a $5,000 fine and suspension from association with any FINRA member in any capacity for a period of 20 business days. Plew failed to file an answer to CFP Board’s complaint within 20 calendar days of the date of service.

MINNESOTA

Bruce D. Workman, Hamel:

This discipline followed CFP Board’s investigation of allegations that Workman: 1) engaged in outside business activities for compensation and failed to provide prompt written notice to his member firm; 2) recommended that his clients purchase unsuitable private placements; and 3) failed to report his FINRA suspension within 10 days. Workman failed to file an answer to CFP Board’s complaint within 20 calendar days of the date of service.

NEW JERSEY

Rebecca A. Huntley, West Long Branch:

This discipline followed CFP Board’s investigation of allegations that Ms. Huntley: 1) demonstrated an inability to manage her personal finances by filing for Chapter 13 bankruptcy in 2009 and Chapter 7 bankruptcy in 2011; and 2) failed to submit a response to CFP Board’s Notice of Investigation.

TENNESSEE

Gala Gorman, Brentwood:

This discipline followed CFP Board’s investigation of allegations that Gorman filed for Chapter 7 bankruptcy in 2004 and Chapter 13 bankruptcy in 2009.

VIRGINIA

James A. Avery Jr., Mechanicsville:

This discipline followed the commission’s determination that Avery: 1) was the subject of a 2006 IRS Tax Lien; 2) was the subject of a 2004 Insurance License Suspension; 3) filed a 2004 Chapter 13 bankruptcy; 4) filed a 2002 Chapter 13 bankruptcy; 5) filed a 1998 Chapter 13 bankruptcy that was subsequently converted to Chapter 7 bankruptcy filing; 6) failed to notify CFP Board of a DUI conviction within the required 10 days; and 7) failed to file and answer to CFP Board’s Notice of Investigation.

 

SUSPENSIONS

CALIFORNIA

Fielder J. Mattox, Cardiff:

The commission determined that Mattox: 1) filed for Chapter 7 bankruptcy in 2010; 2) failed to ensure that all documents related to his clients were complete prior to obtaining the client’s signature, as required by firm policy; and 3) failed to ensure that his assistant processed client documents in accordance with firm policy.

FLORIDA

Michael Hanke, Lutz:

The commission determined that Hanke: 1) sent email correspondence from his personal email account to clients on two separate occasions in which he guaranteed their account against loss, in violation of NASD Conduct Rules; 2) entered into a FINRA Acceptance, Waiver and Consent wherein he consented to a $2,500 fine and a 10-day suspension; 3) was barred from applying for registration as a sales person for a period of two years by the State of Illinois; and 4) failed to disclose the FINRA suspension to CFP Board within 10 calendar days.

PENNSYLVANIA

Gary J. Siano, Downingtown:

The commission determined that Siano: 1) signed a client’s name on account documents without proper authorization, which resulted in termination by his employer; and 2) failed to disclose that he was a respondent in an NASD arbitration on two CFP Board renewal applications.

TEXAS

Brian W. Armstrong, Cleburne:

The commission determined that Armstrong: 1) sent anonymous letters to his former employer’s clients falsely identifying himself as a former compliance officer with his former employer’s broker-dealer; 2) denied, under oath, any involvement in writing the anonymous letters during deposition testimony, but later admitted that he answered falsely under oath and knew the answers were false when he provided the original testimony; and 3) violated the terms of a court order, resulting in a contempt of court order, three-day jail term and $500 fine.

INTERIM SUSPENSIONS

ALABAMA

Henry E. Walker, Jr., Helena:

CFP Board discovered that Walker entered into a Letter of Acceptance, Waiver and Consent with FINRA in April 2012 wherein he consented to a permanent bar from association with any FINRA member in any capacity.

UTAH

Gregory N. Peterson, Orem:

CFP Board initiated the interim suspension proceedings after the state of Utah charged Peterson with twenty-three felony counts and two misdemeanor counts in July for aggravated kidnapping, forcible sodomy, rape, sexual battery, and other charges. Peterson failed to respond to CFP Board’s Order to Show Cause within 20 calendar days of the date of service.

VIRGINIA

John R. Graves, Fredericksburg:

CFP Board discovered that Mr. Graves was convicted of 10 criminal counts of wire fraud, mail fraud, conspiracy to commit wire and mail fraud, Investment Advisor Act fraud, and false statements in the United States District Court for the Eastern District of Virginia, Richmond Division.

LETTERS OF ADMONITION

CALIFORNIA

David B. Hooks, Camarillo:

The commission determined that Hooks: 1) altered the date on a check writing form and represented it to his firm as an originally signed and dated document; and 2) had co-trustee clients sign a blank wire transfer form, in violation of firm policy, FINRA Rule 2010 and NASD Rule 3110(a).

OHIO

Paul T. McCormack, Beachwood:

The commission determined that McCormack signed a client’s initials on an annuity replacement notice on two occasions.

SOUTH CAROLINA

Emmet Martin, Greenville:

The commission determined that Martin: 1) failed to disclose outside business activities to his firm; 2) sold fixed-indexed annuities outside of his firm, in violation of firm policy and FINRA Rule 2010; and 3) allowed two employees under his supervision to sell fixed-indexed annuities outside of his firm.

TEXAS

Lee A. Przybyla, San Antonio:

The commission determined that Przybyla filed for Chapter 7 bankruptcy in 1995 and 2009, demonstrating an inability to manage her personal finances.

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