Advisor fighting Finra banishment loses $17.7 million dispute with old firm

A broker who is already challenging the Financial Industry Regulatory Authority Inc.’s order last year to bar him from the industry had another setback this week when a Finra arbitration panel awarded one of his former firms $17.7 million in damages. 

The broker, Mark Sam Kolta, was barred from the securities industry last year after Finra alleged in a complaint that he made unsuitable recommendations to customers to purchase more than $4.8 million in shares of a nontraded real estate investment trust, allegedly causing $4.1 million in losses while generating  more than $290,000 in commissions, according to BrokerCheck.

Kolta in September appealed being barred by Finra to the National Adjudicatory Council, a committee that reviews such cases and decisions.

Meanwhile, National Securities Corp. sued Kolta in 2020, alleging breach of contract and unjust enrichment, which Kolta denied, according to the Finra arbitration award, which was released on Monday. The Finra panel gave no reasoning for deciding with National Securities, which requested $17.7 million in damages.

“There’s been approximately 30 expungement cases in my favor so National’s claims are meritless and factually impossible,” Kolta said in an interview on Friday. “I was not able to attend the hearing and requested for it to be moved on the basis of an appeal with Finra.”  

“A story about an advisor like this reminds me of Elvis Presley staggering around the stage in 1977,” said Andrew Stoltmann, an industry attorney. “With these challenges, the advisor’s career is likely dead but he doesn’t know it yet. A guy like this is likely to be buried by the regulators eventually.”

National Securities Corp. was acquired by B. Riley Financial three years ago.

Kolta was a registered broker with six firms from 2008 to 2021, according to his BrokerCheck report. He worked at National Securities from 2013 to 2017.

Kolta also has an unusually large number of disclosure items – 30 – on his BrokerCheck profile. Twenty-six of those are customer disputes that have been settled.

Two pending claims involving Kolta, one for $1.5 million in damages and the other $239,000, allege unsuitable sales of nontraded REITs, the same product that was the basis for Finra’s action against the advisor.

The larger of the two claims “overconcentration and unsuitable investment” in American Realty Capital New York City REIT Inc., one of the numerous nontraded REITs managed and sold by ARC, a private company controlled by the former nontraded REIT czar Nicholas Schorsch.

New York City REIT changed its name to American Strategic Investment Co. in 2023.