It's awards season in Hollywood, so the editorial staff at InvestmentNews thought it would be a good idea to hand out some prizes to those bad boy and girl brokers who have fascinated readers so with their rule-breaking performances that got the attention of securities regulators in 2016.
To that end, we have created the prestigious Golden Bull award. Not every adviser can be nominated for a Bully, just those registered reps who displayed a complete disconnect from the ethics of their profession in the course of impersonating a client or some such big shot. Attempts to cut corners on securities transactions or smear a colleague don't come easy.
There were half a dozen such impersonations by advisers cited in Financial Industry Regulatory Authority Inc. disciplinary actions in 2016, according to a scan of Finra's enforcement database. From these, I pulled three winners: brokers who showed a bizarre panache for disturbing behavior or simply a total breakdown in professional judgment.
Receiving the Baby Bull, our third-place winner is Robert Joseph Luchini, a broker who impersonated a dead client, according to a recent Finra settlement.
With the authorization of his client's widow, Mr. Luchini, impersonating the deceased, called his firm, “represented” that he was the client and requested the full redemption of the client's IRA account, according to the Finra settlement.
Mr. Luchini made that call nine days after his client died in December 2014. Last month, Finra suspended him for 30 business days and fined him $5,000. He impersonated two other clients, who also authorized the transactions, according to Finra.
The first runner up, and the winner of this year's Mama Bull, is Betty Lai Johnson. In September, Finra suspended Ms. Johnson for six months and fined her $5,000 for impersonating a client. She wanted to liquidate a 401(k) account at another broker-dealer and use the client's funds to purchase a variable annuity on the client's behalf, according to the Finra settlement.
The phone call was unauthorized, according to the Finra settlement; the client had earlier completed paperwork agreeing to the transaction but then got cold feet and called it off. Ms. Johnson, showing her acting chops, got on the phone to the broker-dealer where the 401(k) was sitting, made like Meryl Streep and the account was liquidated.
Once Ms. Johnson's performance came to light, the transaction was reversed, according to Finra.
Finally, in first place, and the winner of the Papa Bull, is Ahmed Gadelkareem, a broker who is currently appealing a Finra hearing panel decision last May to bar him from the industry for a plethora of industry violations. Mr. Gadelkareem scored points with the judges for the intensity of his impersonations as well as the roles he chose to portray in April 2014 at his old firm, Blackbook Capital, which is now shuttered.
Among those he impersonated was a police detective as well as a Finra investigator “to make baseless threats of adverse repercussions and consequences” against employees at Blackbook Capital, according to the Finra hearing panel decision.
Mr. Gadelkareem admitted he called an attorney who was hired after he was terminated, tried to intimidate the firm and falsely impersonated a New York City police detective, threatening to bring the attorney “to the station,'” according to Finra.
Mr. Gadelkareem apparently had a thing for law enforcement. He “repeatedly dispatched the New York City Police Department to Blackbook Capital's offices by making false reports of harassment and theft,” according to Finra. He also posed as a Finra investigator, the fictitious “Steven McMellon,” forwarding Blackbook Capital employees an email from Mr. McMellon that stated he was reaching out to an FBI agent.
“You are 100% right, (the Blackbook Capital broker) did a lot of fraudulent deals. I believe an order of arrest will be issued soon to get him down here,” the email stated, according to Finra.
To top it off, he used another Russian-sounding false name with a Bloomberg reporter and Blackbook Capital investors to spread bogus allegations about the firm.
In its decision, Finra noted that Mr. Gadelkareem had a history of bipolar disorder, according to a psychiatrist who testified in his defense. But Finra noted he also had a record of not taking medication necessary to treat his disorder and missing treatment appointments.
Mr. Luchini and Ms. Johnson are not currently registered with a broker-dealer. They could not be reached for comment. But neither admitted to or denied Finra's findings.
Mr. Gadelkareem, who worked at 19 firms in 17 years, also is currently not registered with a broker-dealer and could not be reached for comment. Hopping from firm to firm in short periods of time is widely considered a red flag in the securities industry.
What a bunch. Those are the winners of the 2017 Golden Bulls, but InvestmentNews is already hard at work searching for next year's winners. While the majority of advisers have exemplary professional ethics and put their clients first, there are plenty who unfortunately are ethically challenged, to say the least.