vFinance

FINRA Files Complaint Against Chris Fulco Over US Coal Corporation Transactions

March 15, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently filed a complaint against broker Chris Fulco (Fulco) concerning allegations that Fulco facilitated the sale of stock in US Coal Corporation, Inc. (US Coal), in numerous private securities transactions away from his firm, aslo known as “selling away” in the industry. FINRA alleged that Fulco received significant compensation for facilitating these transactions in the amount of $601,159. In addition, FINRA alleged that Fulco lied to FINRA about his involvement in these transactions by providing false sworn testimony that many of the wire transfers he received were not related to sales of US Coal shares but rather were payments for his role in transactions involving gold. Further, FINRA alleged that Fulco tried to encourage the primary seller of US Coal securities in the transactions, known by the initials “LF”, not to appear for his scheduled testimony or to testify falsely about the transactions in order to corroborate Fulco’s own false testimony. Finally, FINRA alleged that Fulco failed to timely disclose to FINRA a lien and civil judgment entered against him.

Fulco entered the securities industry in 1999. From June 2007 to June 2010, Fulco was registered with vFinance Investments, Inc. (vFinance). From July 2010 to February 2011, he was registered with Charles Morgan Securities, Inc. (Charles Morgan). Thereafter, from March 2011 to December 2011, he was registered with Caldwell International Securities, Inc. (Caldwell International). Finally, Fulco was registered with Chelsea Financial Services until November 8, 2013.

According to FINRA, in or around August 2009, LF engaged vFinance and another individual referred to as “PCA”, to help sell his shares in US Coal, a non-public company that produces coal in Appalachia. LF acquired US Coal shares through various entities in or around 2006 after helping found the company. In or around September 2009, FINRA alleged that vFinance approved Fulco facilitation of the sale of 300,000 shares of LF’s US Coal stock to a customer referred to by the initials “MM”, a vFinance customer.

FINRA Sanctions Financial Advisor Tory Duggins Over Unauthorized Discretionary Trading

February 19, 2015 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) recently sanctioned broker Tory Duggins (Duggins) concerning allegations that between November 2011 through May 2012, Duggins exercised discretionary power in two customer accounts by making 17 transactions without obtaining prior written authorization from the customers. Under NASD Conduct Rule 2510(b) Duggins was required to provide written authorization to his firm in order to engage in discretionary trading activity. In addition, FINRA alleged that Duggins made false statements on a member firm semi-annual compliance questionnaire concerning his exercise of time and price discretion in customer accounts.

Duggins entered the securities industry in July 2002. Since that time Duggins has been associated with a total of nine different brokerage firms. Most recently from October 2008 through December 2012 Duggins was associated with vFinance Investments, Inc. (vFinane). Thereafter, Duggins was associated with National Securities Corporation (National Securities) until January 2014. Currently, Duggins is associated with Avenir Financial Group.

In addition to FINRA’s claims, Duggins public disclosures reveal that Duggins has been subject to multiple tax liens totaling over $300,000. Often times such extensive debts influence brokers to engage in excessive trading and churning in order to generate commissions to pay down personal debts. Often times, authorized trading goes hand and hand with churning. In Duggins’ case, three customers have brought complaints against the broker alleging excessive trading designed to generate commissions for the broker.

vFinance Investments Inc. Settles Dispute Concerning Private Placements

August 26, 2013 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) has settled a dispute with vFinance investments, Inc. (vFinance) concerning several violations of the securities laws including selling private placements in violation of the securities laws, failure to supervise, failure to disclose that the firm had worked with a statutorily disqualified person, and failure to retain and review email communications.

vFinance has been a FINRA member since 1998 has approximately 8 branch offices and employs about 40 registered representatives. The recent settlement is not the first time vFinance has been investigated by regulators. According to CRD records, there have been a total of 16 SEC, state, and FINRA regulatory actions initiated against vFinance in the past ten years.

The recent FINRA allegations concern several alleged violations. First, FINRA alleged that vFinance violated Regulation M. Regulation M is intended to prevent manipulative practices in the course of a securities offering by persons with an interest in the outcome by preventing conduct that could artificially influence a security’s market. In this case, FINRA alleged that vFinance representatives solicited nearly $6 million from investors for the PERF Go-Green Holdings, Inc. (PGOG) private placement. During the offering period, vFinance placed the PGOG’s common stock on the firm’s restricted list in order to avoid any potential conflict. However, despite the PGOG being placed on the firm’s restricted list, 22 customers of two representatives have been accused of selling 255,300 shares of the common stock of PGOG when the issuer was on the firm’s restricted list.