Articles Tagged with Marc Arena

shutterstock_145368937This post picks up our prior article concerning our investigation of claims concerning churning and failure to supervise after The Financial Industry Regulatory Authority (FINRA) made allegations stating that from September 2008, through May 2013, Newport Coast Securities, Inc. (Newport Coast) and five of its registered representatives excessively traded and churned 24 customers’ accounts. The five brokers named in the complaint are Douglas Leone (Leone), Andre LaBarbera (LaBarbera), David Levy (Levy), Antonio Costanzo (Costanzo), and Donald Bartelt (Bartelt). In addition, FINRA alleged that the representatives’ supervisors, including Marc Arena (Arena) and Roman Tyler Luckey (Luckey) and the firm’s Compliance Department managers knew took no meaningful steps to curtail the misconduct.

Newport Coast was formerly known as Grant Bettingen, Inc., and has been a FINRA member since 1986. Newport Coast is a wholly owned subsidiary of Rubicon Financial, Inc. (Rubicon), and until March 2013, was based in Irvine, California. The firm is currently based in New York and has approximately 45 branch offices and 122 registered representatives.

Douglas A. Leone entered the securities industry in 1993. He associated with a dozen different firms before joining Newport Coast in October 2008. From October 2008 through March 2013, Leone was associated with Newport Coast. Leone worked from his home office but was part of a Long Island, New York branch of Newport Coast. Leone is currently associated with Salomon Whitney LLC.

shutterstock_156764942The law offices of Gana Weinstein LLP are investigating claims of churning and failure to supervise in wake of the allegations made by The Financial Industry Regulatory Authority (FINRA) concerning allegations that from September 2008, through May 2013, Newport Coast Securities, Inc. (Newport Coast) and five of its registered representatives excessively traded and churned 24 customers’ accounts. In addition, FINRA alleged that the representatives’ direct supervisors, including Marc Arena (Arena) and Roman Tyler Luckey (Luckey) and the firm’s Compliance Department managers knew what was transpiring but took no meaningful steps to curtail the misconduct. To the contrary, FINRA found that managers, a supervisor, and the firm’s former President profited through overrides on these churned accounts.

The five brokers named in the complaint are Douglas Leone (Leone), Andre LaBarbera (LaBarbera), David Levy (Levy), Antonio Costanzo (Costanzo), and Donald Bartelt (Bartelt). FINRA alleged that the misconduct by the brokers was so extreme and egregious in nature that it should have quickly drawn scrutiny and been stopped. FINRA alleged that the brokers’ trading caused numerous “red flags” of misconduct including: (i) cost-to-equity ratios often over 100%; (ii) turnover rates often over 100; (iii) extraordinary amounts of in-and-out trading; (iv) customer accounts were highly margined and often concentrated in one security; (v) large numbers of transactions where the total commission/markup per trade exceeded 3% or 4%; (vi) there was a deceptive mix of riskless principal and agency trading in numerous accounts with higher cost trades generally exceeding $1,000 per trade were executed on a riskless principal basis whereas lower cost trades, typically involving sales of the same securities, were executed on an agency basis; (vii) inverse and/or leveraged Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) remained in accounts for multiple trading sessions; (viii) solicited trades were inaccurately characterized as unsolicited; and (ix) nearly all of the customer accounts exhibited large losses.

FINRA also alleged that after FINRA Enforcement issued Wells Notices, Levy and Costanzo attempted to dissuade some of their customers from cooperating with FINRA’s investigation. In one instance, Costanzo offered to compensate a customer for his losses but conditioned his offer on the customer’s signing a letter stating that he would not testify at a hearing. In another instance, FINRA found that Levy traveled to Logan, Iowa, to tell a customer that he would not receive any restitution if the broker wound up barred but promised the customer that he would assist in the preparation of a claim against Newport Coast if the customer signed a letter informing FINRA that the customer would not participate in a disciplinary hearing.

Contact Information