The Financial Industry Regulatory Authority (FINRA) recently barred LPL Financial, LLC (LPL) broker Reniero Francisco (Francisco) concerning allegations that the broker failed to cooperate with FINRA’s investigation of Francisco’s involvement with Arista LLC, a registered Commodity Pool Operator (CPO) with its principal place of business in Newport Coast, California. An order was entered on December 3, 2013, requiring Francisco and other parties to pay more than $8.25 million in restitution for the losses of defrauded investors. FINRA requested information from Francisco and also scheduled him to testify but Francisco failed to respond to FINRA’s requests for information and documents and also failed to appear for testimony.
In December 2012, the U.S. Commodity Futures Trading Commission (CFTC) brought action against Arista and Arista’s principals, Abdul Sultan Walji (a/k/a Abdul Sultan Valji) of San Juan Capistrano, California, and Francisco alleging that they carried out a fraudulent scheme to misappropriate millions of investors’ money through commodity futures and options, making false statements to the CFTC, and filing false quarterly reports with the National Futures Association (NFA).
Shortly thereafter, Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York entered a consent judgment and permanent injunction order against Arista, Walji, and Francisco. The order requires the defendants to pay more than $8.25 million in restitution for the investor losses. In addition, the order imposed civil monetary penalties of $6.45 million on Walji, $5.925 million on Francisco, and $1.54 million on Arista. The order also permanently bans defendants from trading activity and prohibits them from violating provisions of the Commodity Exchange Act (CEA) and a CFTC regulation.
According to the order, the defendants admit to all of the order’s findings and allegations in the CFTC’s complaint. The order found that from February 2010, through January 2012, the Defendants collected funds from 39 investors and more than $9.5 million. Defendants allegedly paid themselves $4.125 million in fees and lost more than $4.8 million trading in futures and options.
In order to cover up their fraudulent activity, the defendants allegedly provided false quarterly statements to investors, violated the CEA’s registration requirements, and provided false reports to the NFA. The complaint also alleged that in September 2011, the defendants misrepresented account balances, asset values, and fee calculations in a letter sent in response to requests for information from the CFTC’s Division of Enforcement.
In addition, there are related criminal proceeding against Walji and Francisco where each pled guilty to conspiracy and fraud charges and were sentenced, respectively, to 151 months and 97 months of imprisonment.
Francisco first became registered with FINRA in 1988. From July 2002, to October 2010, Francisco was associated with LPL. By letter dated November 26, 2012, FINRA Rule 8210, requested that Francisco provide information addressing Form U5 amendment filings concerning various customer complaints involving investments in Arista. In a signed written statement received by FINRA on December 10, 2012, Francisco responded that, “[u]pon the advice given to me by my counsel, at this time I am unable to answer these questions due to the rights afforded me under the Fifth Amendment.” Thereafter, Francisco failed to properly respond and cooperate with FINRA’s investigation and was subsequently barred from the industry.
The attorneys at Gana LLP are experienced in representing investors to recover their financial losses concerning in cases of securities fraud. Our consultations are free of charge and the firm is only compensated if you recover.