FINRA Expels Brokerage Firm and Its Employees for Draining $1 million From Elderly Investor
On December 29, 2010, the Financial Industry Regulatory Authority (FINRA) announced that it expelled APS Financial Corporation (APS), barred the firm’s former President, George Conwill, and the firm’s former broker, Peter Aman, for engaging in a scheme which overcharged an elderly investor by $1.2 million.
FINRA found that Aman charged mark-ups ranging from 4.15% to fraudulently excessive mark-ups up to 67% when executing forty-five transactions for APS customers. Forty-three of these excessive or fraudulent mark-ups were related to transactions involving a single elderly investor’s accounts. Aman overcharged this investor by over $1.2 million through undisclosed mark-ups, including $767,000 in fraudulently excessive mark-ups.
FINRA also barred Conwill and expelled APS for rule violations relating to trading in corporate high yield bonds, collateralized mortgage obligations and collateralized debt obligations. APS and Conwill were also cited for charging excessive mark-ups and supervision violations.
According to Thomas Gira, the Executive Vice President of FINRA’s Department of Market Regulation, “FINRA is committed to ensuring that firms charge their customers reasonable fees in connection with the purchase and sale of fixed income and other debt securities. There is no room in the securities industry for those who prey upon elderly investors.”
In total, APS overcharged customers on fifty-nine transactions. Conwill approved all fifty-three mark-ups over 5%, including forty-two of the forty-three excessive or fraudulent mark-ups for the elderly investor’s accounts.
FINRA also determined that APS did not establish or maintain an adequate supervisory system and also did not reasonably and properly supervise the firm and its registered representatives so that it would detect and prevent the mark-up violations. FINRA found that Conwill, as the president of APS, did not take reasonable steps to ensure that APS established and maintained an adequate supervisory system, and failed to reasonably and properly supervise the firm’s registered representatives.