Over the past decade, FINRA has been active in regulating firms' and brokers' advertising communications with the public. For instance, FINRA Rules 2212 (use of rankings in retail communications), 2215 (communications with the public regarding securities futures), 2216 (collateralized mortgage obligations), IM-2210-2 (variable life insurance and variable annuities) are a few of many regulations FINRA has developed to govern firms' and financial professionals' use of retail communications, such as radio or television.
In recent years, FINRA has targeted cases of advertising misconduct, ordering hefty fines and other sanctions related to these cases in which retail advertisements and communications are disseminated to thousands of potential investors simultaneously.
In Southern California, Moe Ansari, who hosts "Market Wrap" on Financial News & Talk AM 1510 KSPA (Inland Empire and Orange County) and AM 1450 KFSD (San Diego), and firm Compak Asset Management was accused of churning, misrepresentation, failure to disclose risks, breach of fiduciary duty and failure to supervise. A July 12, 2002 arbitration panel rendered judgment in favor of the customer and ordered Ansari and a third party to pay the customer $57,527.91 for damages allegedly suffered due to the misconduct.
In 2001, Ansari and an account executive were accused of churning and settled with the complainant for $14,539.73.
In a 2001 complaint settled through litigation, a customer alleged Ansari fraudulently solicited commodity account investments by misrepresenting and omitting material facts, additionally alleging churning and unauthorized trade activity.
FINRA's stringent rules have proven too much for some radio advisers and analysts.
William Aubrey Morrow (aka "Aubrey Morrow") who hosts "Financial Advisors" on AM 600 KOGO—a show heard in Los Angeles, Orange County, Riverside, San Diego, Santa Barbara, Ventura and Tijuana, Mexico—himself appeared in 11 customer disputes until his termination from QA3 Financial Corp following allegations that Morrow attempted to effect a transaction for a product he "willingly knew" he was not licensed to sell.
Through his time registered with FINRA, Morrow received allegations of negligence, fraudulent misrepresentations and omissions, breach of fiduciary duty and unsuitable recommendations, resulting in two significant arbitration awards and several additional settled disputes against Morrow.
The first award, in regards to allegations fraudulent misrepresentations concerning promissory notes, resulted in a $206,875 award to the customer. The second case, consisting of allegations of misrepresentation and unsuitability related to direct investments, resulted in a $7,000 award.
The trend is not a SoCal exclusive.
In New York, David "Poppy" Lerner was suspended and firm David Lerner Associates ordered to pay $12 million in restitution in connection with misleading marketing and sales of Apple REITs, transactions FINRA claims Lerner's firm effected without first performing due diligence, instead using misleading and inaccurate statistics to drive sales.
Lerner, known as "Poppy" in New York-area radio commercials with the catch phrase "take a tip from Poppy," attempted to additionally solicit business through what FINRA deems was misleading advertising over the air.
In Texas, former broker Dan Levin hosts the radio program, "Investment Talk," even though his career as a broker in the investment industry is plagued by disputes, complaints and regulatory sanctions.
Levin most recently was suspended for five months, through November 16, 2013, and fined $30,000 for making "unwarranted and misleading statements and claims concerning investment products" on his radio show. On one of his shows, Levin allegedly discussed private placement securities offerings and life settlements, advertising them as alternative investments, even though such offerings were unregistered securities that could not—by FINRA rule—be sold through general solicitation while maintaining exempt status.
FINRA found that Levin nonetheless sold the offerings to customers he solicited via the radio, in contravention of FINRA rules and suspended him from the industry, fining him $30,000 for the misconduct.
The SEC separately fined Levin $25,000 as part of a cease-and-desist proceeding for improper advertisement, while prior customer disputes alleging improper investing were settled for $47,000, $11,607.62, $5,556.77, $50,000 and $8,5000.
After engaging in series of alleged misconduct resulting in a cumulative $150,000+ in fines and sanctions, Levin's firm Berthel Fisher and Company Financial Services, Inc. terminated Levin, discharging the radio host "due to new regulatory proceeding [misleading statements and claims resulting in a $30,000 fine] filed by FINRA."
Radio stations KLIF and WBAP broadcast Investment Talk, though as of yet have not disclosed Levin's disciplinary history to listeners.
If you have invested with or acted on the publicly communicated financial advice of Moe Ansari, William Aubrey Morrow, David Lerner, Dan Levin or any other radio or television host, broker or financial industry associate and this general solicitation has proven harmful to your investments and may be a violation of FINRA rules, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.