Fraud is suspected when a broker provides inconsistent statements to cover up the transactions that weren’t authorized. For this reason, a JP Morgan Securities’ (JPMS) customer filed a complaint against JPMS. The allegations included breach of contract, dishonest practices, account discrepancies, breach of good faith and fair dealing, and misrepresentation.
The customer consulted with a top-rated attorney, Alex Rogers Esq. who hired a security industry expert to assist in the arbitration proceedings. After reviewing evidence, the expert submitted a detailed report stating her opinion.
By way of background, the expert hired in this case had “almost two decades of experience within the securities industry, exclusively in regulatory and compliance-related functions. She also obtained certification as a fraud examiner and anti-money laundering compliance specialist. From 2005 through 2012, the expert served as a FINRA Examiner, with extensive experience performing and leading a wide range of investigations. Since ending her tenure with FINRA, she has served as a Chief Compliance Officer, AML Officer, a compliance consultant, and an expert witness, specializing in FINRA rules, federal securities laws and SEC regulations. The experts also holds Series 7, 24 & 63 licenses.”
Below are the excerpts from the expert’s report. She wrote in part
“Based on the review of the documents and evidence produced, and from my analyses, education, experience, and training, it is my opinion that:
- JPMS documents are internally inconsistent and contradictory, resulting in inexplicable and unnecessary confusion for clients, such that the true nature of the activity is unverifiable, opaque and a violation of FINRA Rule 2210(d)(1) and Rule 2210(d)(1)(E).
- JPMS communications to the client constitute a failure to disclose material information accurately to the client, in violation of FIRNA Rule 2210(d)(1) and Rule 2210(d)(1)(E).
- JPMS failed to transfer all cost basis information simultaneously, which led to inaccurate reporting of capital gains.
- JPMS documents concerning account activity – by use of such terms as “acquired/sold” and “realized” short/long term gain/losses, and “proceeds” – reasonably lead a client to conclude that unauthorized trading activity occurred in the account, particularly because such documents contain no notation, footnote or asterisk to indicate anything to the contrary.”
