New Jersey securities regulators have revoked the broker-dealer registration of First Standard Financial Company and froze its assets over findings that the firm took in more than $28.7 million due to unauthorized, unsuitable and excessive trading.
The firm, headquartered in Red Bank, N.J., "routinely hired agents with a history of customer complaints and regulatory problems," the state's Bureau of Securities said in a release. The firm and its brokers then "defrauded the firm's clients through unsuitable and frequently unauthorized in-and-out trading in bonds and other securities for which active trading is unsuitable."
The bureau also found that the firm's sales commissions were so high that accounts would have had to generate extraordinary returns simply to break even.
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The bureau asked the court to assess civil monetary penalties against First Standard and to require the firm to pay restitution to clients and disgorge all profits or funds it gained through violating the law.
In May, state regulators revoked the registration of former First Standard broker Gabriel Block and assessed him $750,000 in civil penalties for engaging in unsuitable, high-cost, fraudulent trading strategies that generated at least $1.6 million in commissions and fees for himself and his associated broker-dealers at the expense of his clients.
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