Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Barry Garapedian (Garapedian), previously associated with Morgan Stanley, has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Garapedian recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on November 28, 2022.
Without admitting or denying the findings, Garapedian consented to the sanctions and to the entry of findings that he caused his member firm to maintain inaccurate books and records by falsifying the representative code for trades in the firm’s order entry system, causing the firm’s trade confirmations to show an inaccurate representative code. The findings stated that Garapedian and other registered representatives working from the same branch office entered into an agreement through which they agreed to service certain customer accounts, including executing trades for those accounts, under a joint representative code that they shared with the estate of a retired representative. The agreement set forth what percentages of the commissions the estate of the retired representative, Garapedian, and the other representatives earned on trades placed using the joint representative code. Although the firm’s system correctly prepopulated the trades with a joint representative code Garapedian shared with the estate of the retired representative, he directed a junior registered representative to enter transactions under different joint representative codes through which he received a higher percentage of commissions than what he was entitled to receive pursuant to the agreement. Garapedian also directed the junior registered representative to enter additional trades under different joint representative codes through which he received a lower percentage of commissions than what he was entitled to receive pursuant to the agreement. Garapedian mistakenly assumed that he had permission to change the representative codes in this manner to equalize commissions earned by him and the other registered representatives across accounts serviced by the branch office, including those covered by the joint production agreement. However, Garapedian had not verified that the estate of the retired representative agreed that he could change the representative code for the transactions at issue. As a result, Garapedian’s actions caused the firm’s trade confirmations to inaccurately reflect another joint representative code instead of the joint representative code that Garapedian shared with the estate of the retired representative. Garapedian’s actions resulted in his receiving higher commissions and the retired representative’s estate receiving less commissions from the trades than what each was entitled to receive pursuant to the agreement. The firm has since paid restitution of approximately $8,000 to the estate of the retired representative, which is the approximate amount of additional commissions Garapedian received as a result of changing the representative code on the trades.
