Securities Lawyers Blog
Financial Advisor Michael DeRosa (DeRosa) has been barred by the Financial Industry Regulatory Authority (FINRA) concerning allegations that he refused to provide testimony to the regulator concerning his involvement in Success Trade Securities, Inc.’s (Success Trade) sale of promissory notes (STI Notes).
As we previously reported, FINRA filed a complaint against Success Trade and its CEO and President Fuad Ahmed (Ahmed) accusing them of improperly selling $18 million worth promissory notes. The promissory notes were issued to 58 investors and were sold primarily to NFL or NBA sports athletes.
FINRA alleged that the STI Notes were part of ponzi scheme to raise capital and funds for Success Trade’s operations while purportedly offering investors 12-26% returns. FINRA alleged that investors were not made aware of the risks of investing in the STI Notes. Success Trade was financially insolvent and could only meet its ongoing expenses by selling more STI Notes and by continuing the scheme. The viability of the company was a crucial risks that need to be disclosed to investors. Success Trade and Ahmed also failed to register the STI Notes under Regulation D as required.
Others participants alleged to have been involved in the STI Note scheme include Jinesh Pravin Brahmbatt (Branhmbatt), President and CCO of Jade Private Wealth Management, Inc. (JPW), an investment advisor firm located in McLean, Virginia. Success Trade used JPW as its broker dealer for its advisory business. In addition, some of the staff at Success Trade were also employed by JPW and at least three of Success Trade’s registered representatives are also JPW employees and work out of the McLean branch.
DcRosa first became registered representative with Stratton Oakmont, Inc. in 1994. Martin Scorsese depicted Stratton Oakmont in the film The Wolf of Wall Street. Prosecutors found that Stratton Oakmont generated millions of dollars in illicit profits by aggressively selling penny stocks and manipulating their prices before being shut down by regulators in 1996. After Stratton Oakmont, DeRosa was registered with five other FINRA members until he joined M&T Securities, Inc. (M&T) from April 17, 2009, until he was permitted to resign on December 18, 2012.
On January 17, 2013, FINRA stated that it received a Form U5 from M&T reporting that DeRosa was permitted to resign for violating the firm’s e-mail policy. According to FINRA, DeRosa received c-mails at the firm concerning communications relating Success Trade’s promissory notes. On October 30, 2013, FINRA sent DeRosa a letter requesting that on-the-record testimony on November 15, 2013. FINRA’s staff sought DeRosa’s testimony about his involvement, if any, with Success Trade and the sale of the STI Notes.
In an e-mail dated November 14, 2013, DcRosa informed FINRA that he would not appear and provide on-the-record testimony. The attorneys at Gana Weinstein LLP are experienced in investigating claims of financial fraud. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.