The alleged killing of 17 Afghan villagers by Army Staff Sgt. Robert Bales, who had an undistinguished career in the securities industry before enlisting in 2001, has turned into a case of guilt by association for one brokerage executive, according to the exec's attorney.
Robert Cargin, ex-head of defunct Regis Securities Corp. and current president of Capital City Securities LLC, was mentioned in a story by the Associated Press last Wednesday under the headline “Massacre suspect's career in finance tinged with fraud.”
The story outlines Mr. Bales' career in the securities industry from July 1996 to December 2000, when he worked for a handful of small broker-dealers in and around Columbus, Ohio.
But the AP story also said that the five broker-dealers where Mr. Bales worked — a list including Diversified Capital Markets, notorious bucket shop Michael Patterson Inc. and banned penny stock dealer The Hamilton-Shea Group Inc. — “are related to Regis Securities Corp., which filed for bankruptcy protection in 2009.”
In a letter on Monday to the AP, however, Mr. Cargin's lawyer said no direct connections existed between any of the five firms and Regis Securities, which Mr. Cargin ran. Moreover, attorney Dennis Concilla stated that his client was never licensed or associated with Michael Patterson or two of the other firms mentioned in the story — and only briefly crossed paths with Mr. Bales at the other two brokerages.
Mr. Cargin did work with Mr. Bales at Diversified Capital, according to Mr. Concilla. The Hamilton-Shea Group eventually purchased that brokerage in 1996. In January 2001, NASD, now the
Financial Industry Regulatory Authority Inc., fined and expelled Hamilton-Shea due to penny stock transactions, according to the profile of the firm on BrokerCheck. Three principals of that firm eventually served jail time.
But Mr. Concilla noted in his letter that the employees and shareholders of Diversified — including Mr. Cargin — had already moved on to other firms before the firm was acquired by Hamilton-Shea — and before any allegations of wrongdoing had been leveled against the B-D.
In an interview, Mr. Concilla said that, in addition to Diversified Capital, Mr. Cargin also worked with Mr. Bales at Quantum Securities for a few months at the end of 2000.
"They crossed paths at these two firms,” Mr. Concilla said.
Jack Stokes, a spokesman for the Associated Press, said “the AP stands by its story."
A large part of the confusion may stem from the incomplete and gap-filled reporting of brokers' and firms' histories on the CRD, or central registration depository, Mr. Concilla said in an interview. Maintained by Finra, the CRD is the home for the employment and licensing histories of more than 6,800 broker-dealers and 660,000 individuals.
Broker-dealers can often possess a muddle of names.
According to BrokerCheck, Regis Securities Corp.'s CRD number is 103711. On BrokerCheck, that number is also associated with Quantum Securities Corp. and Quantum Acquisition Corp. Michael Patterson and The Hamilton-Shea Group are not associated with Regis Securities on BrokerCheck, however.
A Finra spokeswoman, Nancy Condon, had no comment.
Mr. Bales bounced around the industry during his brief career as a broker. From March 1998 to October 1999, he worked at Michael Patterson. NASD later expelled the firm due to excessive markups on municipal bonds.
Mr. Bales was also ordered by an NASD arbitration panel in 2003 to pay a claimant $637,000 in damages for churning and unauthorized trading, according to Finra records. Mr. Concilla noted that Mr. Bales had already been in the military for two years at the time of the award.
The attorney's letter to the AP stated that “investment clients of Mr. Cargin's current firm, the Columbus-based Capital City Securities, "have called demanding an explanation of the false statements and innuendo in the story.”
He added that this matter “shows how screwed up the CRD can be when” reporters and others open up BrokerCheck profiles.
