The Financial Industry Regulatory Authority has barred seven brokers accused of committing violations and repeatedly transferring from one brokerage firm to another from the securities industry. The brokers worked at the brokerage firm Global Arena Capital Corp. Also barred is the broker-dealer’s president, Barbara L. Desiderio. She is accused of letting the brokers engage in stockbroker fraud and deceiving the regulator.
The other brokers are David Awad, Alex Wildermuth, Peter Snetzko, James Torres, and Michael Tannen. Global Arena branch managers Kevin Hagan and Richard Bohak have been barred from serving in a principal role. Brokers Andrew Marzec and Niaz Elmazi were barred for not cooperating with the regulator’s probe.
According to FINRA, while at the firm, the brokers used sales pitches that were misleading, churned accounts, and committed other abusive acts. Seven of the brokers who were barred had been placed on heightened supervision by the self-regulatory organization when they exited HFP Capital Markets to go work at Global Arena. HFP Capital Markets has since been expelled from the industry by FINRA.
The SRO accused Global Arena of engaging in a boiler room-type scam that involved the use of high-pressure sales calls to sell securities, including junk bonds. Thousands of current and potential customers purportedly received cold calls daily. Senior brokers are said to have instructed junior brokers on making these calls, including using scripts that were misleading and issuing rebuttals designed to pressure customers into buying securities.
InvestmentNews said that the Global Arena branch involved typically added a 3.9% markdown or markup on every trade. Because of this buying and selling just one security would cause the customer to incur a 7.8% cost.
The habit of going from one problematic firm to another while engaging in securities violations is called cockroaching. Although the charges against each broker differ, all ten of them resolved the FINRA allegations without denying or admitting to the SRO’s findings.
FINRA canceled Global Arena’s membership this July when it did not pay some $50,000 in fees. The firm had withdrawn its registration the month before. Meantime, the firm disclosed to the Securities and Exchange Commission in March that it was contending with six arbitration cases. Five of the cases were for over $1.5 million. The firm argued that the claims’ merits were questionable.
FINRA Sanctions 10 Former Global Arena Representatives as a Result of FINRA Crackdown on Broker Migration, FINRA, September 15, 2015