FINRA barred former Morgan Stanley Smith Barney broker John Batista Bocchino for hiding $190 million in Venezuelan bond trades from the firm by directing the trades through several nominee accounts that Bocchino opened in the names of several prominent US financial institutions, unbeknownst to the firm. FINRA also sanctioned Bocchino for manufacturing documents with fake information in order to further conceal his customers' trading, and also suspended Bocchino's sales assistant at Morgan Stanley, Rafael Barela Jacinto, for related misconduct.
According to the findings, Morgan Stanley had and has restricted the trading of Venezuelan bonds due to regulatory and anti-money laundering risks. The investigation also states that Bocchino previously requested permission from Morgan Stanley to sell Venezuelan bonds, and that Morgan Stanley denied Bocchino's request.
Despite the Morgan Stanley's prohibition of Venezuelan bond trading, and despite the firm's denial of his request to sell the bonds, Bocchino allegedly continued trading in Venezuelan bonds, including energy bonds, on behalf of his customers and opened the nominee accounts in order to hide the violative trading activity from Morgan Stanley, wherein Bocchino effected hundreds of unauthorized trades.
Bocchino then purportedly created firm documents that contained false information, as did sales assistant Rafael Barela Jacinto, in order to further conceal the misconduct from Morgan Stanley and make it appear to the firm as if Bocchino was in compliance with the firm's policies and restrictions.
Bocchino's falsified documents purportedly included new account forms, trade tickets, order confirmations, customer account statements, firm blotters, and firm reports.
The report states that Bocchino's business included a significant dose of transactions in government and sovereign debt bonds issued by South American countries, including Venezuela.
FINRA found that in order to complete his transactions of the Venezuelan bonds—which were issued by the Venezuelan government or Petroleos de Venezuela, SA (PDVSA), which is a state-owned oil and natural gas company—Bocchino would dabble in currency conversion transactions from the Venezuelan bolivar to the USA dollar and arrange for a wire transfer of the proceeds to a third-party financial institution, all while concealing the trades from Morgan Stanley.
Bocchino's BrokerCheck report indicates that after being discharged by Morgan Stanley for "engaging in securities transactions for clients within accounts other than their own," Bocchino became associated with UBS Financial Services, Inc., whereupon UBS allowed him to resign following a September 2016 FINRA complaint alleging that Bocchino carried out a scheme to evade, circumvent, and thwart his member firm's policies and procedures regarding Venezuelan bond trading.
If you have invested with former Morgan Stanley broker John Batista Bocchino, his sales assistant Rafael Barela Jacinto, or with any broker or financial adviser whose trading activity in contravention of firm policies or restrictions meant to mitigate risk, or whose concoction of false and misleading documents such as account statements and trade tickets has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.
News Release: FINRA Bars Former Morgan Stanley Registered Representative for Using Nominee Accounts to Conceal $190 Million in Venezuelan Bond Trades (FINRA)