The Financial Industry Regulatory Authority Inc. has suspended the wife of a broker who was barred from the securities industry 20 years ago, alleging that the wife, along with a second broker who worked as a supervisor, "enabled" the barred broker to continue doing securities transactions that resulted in the sales of $40 million in securities that generated more than $6 million of commissions from 2002 to 2016.
Almost $3 million of those commissions came from sales of nontraded REITs under the UDF brand, according to Finra.
The two suspended brokers, Kim Kopacka and Beth Debouvre, "facilitated" the securities business of Ms. Kopacka's husband, Timothy Kopacka, according to the Finra settlement, which was released last Thursday. Ms. Kopacka was suspended for two years and Ms. Debouvre for 15 months.
The two brokers "helped [Mr. Kopacka] circumvent his statutory disqualification by, among other things, falsifying documents supporting the transactions he recommended, approving the transactions and concealing" his having been barred from the industry, according to Finra.
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Mr. Kopacka, who was barred in 1998 by Finra's predecessor, NASD, ran his securities and insurance business in Michigan under the name Grosse Pointe Financial Inc., Finra said.
Ms. Kopacka, who became a licensed broker in 1999, worked as a front for her husband's securities business, according to the Finra settlement.
Mr. Kopacka worked in a back office at Grosse Pointe while Ms. Kopacka worked in the reception area. This arrangement "made it appear to Mr. Kopacka's customers that his securities business continued unchanged," according to the Finra settlement.
Mr. Kopacka was fined $340,000 and barred from the securities industry as a result of allegations he continued to meet with existing and new clients and recommended securities transactions, Finra said.
"Indeed, Mr. Kopacka continued conducting his securities business as though nothing had changed following the NASD bar," the settlement said.
Ms. Debouvre started working with the Kopackas in 2001 and became the supervisor and manager of the office.
An attorney for Ms. Kopacka and Ms. Debouvre, Gary Saretsky, declined to comment. They were also fined $10,000 each and agreed to the settlement without admitting or denying the allegations.
Mr. Kopacka could not be reached to comment.
For most of the 14 years in question, Ms. Kopacka and Ms. Debouvre were registered with IMS Securities Inc., a former wholesaler of nontraded real estate investment trusts under the UDF brand. Finra expelled IMS last year.
According to Finra, Mr. Kopacka was one of the founders of United Development Fund, or UDF, a residential real estate finance company. From 2004 to 2016, Ms. Kopacka and Ms. Debouvre generated close to $3 million in commission from sales of UDF funds and REITs, Finra said.
The FBI raided UDF's Texas offices in February 2016, and the Securities and Exchange Commission later charged certain UDF executives with misleading investors.