Why FINRA Enforcement is cracking down on “cockroach” brokers. The entire article can be viewed at the link below. The most recent case is that of 10 employees, including the president, of the now-defunct Global Arena Capital Corp out of New York City, left their former firm where they were accused of using misleading sales pitches, churning account and other violations. Before that, a group of seven brokers, who were being supervised, left HFP Capital Markets to join Global Arena. These cases are examples of “cockroaching,” a practice in which brokers stay in the securities industry by moving between risky or expelled firms while committing securities violations. See link below
Stoltmann Law Offices is investigating Jonah Engler, a former registered representative with HFP Capital Markets in New York, New York from February 2009 until October 2013. Engler is alleged to have sold $3 million worth of Senior Secured Zero Coupon Notes issued by Metals, Milling and Mining LLC in a private placement offering to 59 customers. A private placement a security sold to a relatively small number of select investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual funds, insurance companies and pension funds. The placement does not have to be registered with the Securities and Exchange Commission (SEC). In many cases, detailed financial information is not disclosed, and, many times, the average investor is only made aware of the placement after it has occurred. The sale of private placements is commonly referred to as “selling away,” which is when a broker sells a security that is not approved for sale by his member firm. Selling away is against Financial Industry Regulatory Authority (FINRA) rule.
Mr. Engler, along with four other representatives, Brett Ian Friedberg, Jonathan Michael Sheklow (a/k/a John James Carter), Joshua William Turney and Hector Perez (a/k/a A. Bruce Johnson) fraudulently sold the notes and misrepresented material facts about the offering. They promised investors returns of up to 100% in one year. The investors involved lost all of their money, save for three, who were paid with funds garnered by new investors. None of the brokers conducted an investigation into the validity and legitimacy of the notes, when they were duly obligated to do so. The notes were misrepresented because the company did not own collateral that they claimed to own. Ore concentrate used that was supposed to serve as collateral was almost worthless. The brokers also failed to do their due diligence in the company, and investing in the company, thereby not being able to relay this information to possible and actual investors. In addition, Mr. Engler allegedly was paid $272,000 from the proceeds of the sale of the private placement. This was a loan paid on a promissory note and was for the financial gain of Mr. Engler himself and not for the business plan of the sale.
Jonah Engler was registered with Gunnallen Fianancial, Inc., Spencer Clarke LLC, First Republic Group, Dawson James Securities, HFP Capital Markets and Global Arena Capital Corp. He has 15 customer disputes against him, one of which is currently pending. He is not licensed within the industry and FINRA permanently barred him from acting as a broker or otherwise associating with firms that sell securities to the public.
The Financial Industry Regulatory Authority (FINRA) barred former broker John Joseph Vaughan from the industry. In a disciplinary hearing against him, Vaughan was accused of failing to review the reasonableness of mark ups and mark downs charged on corporate bond transactions while he was employed at HFP Capital Markets. Vaughan also failed to appear for his on-the-record testimony before FINRA, therefore failing to provide sworn testimony related to the violations. HFP was accused of failing to adequately supervise its registered brokers. Because of this, HFP can be sued in the FINRA arbitration process, if you invested money with John Joseph Vaughan. Please call our Chicago-based securities law firm at 312-332-4200 to speak to an attorney. We can help you recover your financial losses.
Vaughan was registered with the following firms since 1986: Anchor National Financial Services, Inc., Vaughan and Company Securities, Inc., West America Securities Corp, Glenn Michael Financial Inc., Joseph Gunnar & Co., First Republic Group, The Concord Equity Group, ICICI Securities Inc., Charles Morgan Securities, and HFP Capital Markets in New York, New York until April 2013. He is not licensed within the industry.