In addition to the enforcement action that fined H&R Block Financial with a $200,000, FINRA also fined and suspended H&R Bock Financial broker Andrew MacGill for making unsuitable sales of RCNs to a retired couple. The couple will receive $75,000 in restitution for their investment loss.

While fining H&R Block for a failure which may well have led to multiple other investors incurring investment losses, FINRA also issued an Investor Alert titled, “Reverse Convertibles – Complex Investment Vehicles.” The goal of this alert is to educate investors on the risk associated with RCNs. Also, FINRA issued Regulatory Notice 10-09 as a reminder to broker/dealers of their obligations to clients when recommending and selling RCNs to their clients.

As stated by FINA Chairman and CEO Richard Ketchum, “Firms selling reverse convertibles [RCNs] or similar products must ensure that their brokers know the risks and costs associated with these products and perform adequate suitability analyses before recommending them to any customer. Fimrs must also have procedures in place to monitor customer accounts for potentially unsuitable concentration levels of these products.”

The enforcement action announced today by FINRA provides hope for other investors who were not properly advised by their brokers concerning RCNs and who have likewise suffered an investment loss, much like the retired couple referenced in the current action

FINRA Announces Enforcement Action Relating to Reverse Convertible Notes is a post from: Before You Invest Your Money

In addition, FINRA has barred Robert J. Cole, formerly a registered representative with Leonard & Co., for his role in the illegal sales.

In a related action, FINRA today issued Regulatory Notice 09-05, Unregistered Resales of Restricted Securities, to remind firms and brokers of their obligations to determine whether securities are eligible for public sale before participating in what may be illegal distributions. It also discusses the importance of recognizing “red flags” of possible illegal, unregistered distributions and reiterates firms’ obligations to conduct searching inquiries in certain circumstances to avoid participating in illegal distributions.

“This action, and the accompanying Regulatory Notice, demonstrate FINRA’s continuing commitment to ensuring that brokerage firms live up to their responsibilities as gatekeepers to the securities markets,” said Susan L. Merrill, Executive Vice President and Chief of Enforcement. “FINRA will aggressively pursue firms and individuals who ignore those responsibilities and participate in illegal sales of unregistered securities.”

FINRA found that Leonard & Co. and Cole participated in an illegal distribution of a penny stock, Shallbetter Industries, by selling over 2.2 million unregistered shares of the stock into the public markets from three related customer accounts. Cole, who handled the accounts, was aware that trading in the accounts was directed by a “control person” of Shallbetter. A control person is generally an individual who owns 10 percent or more of the stock of a company and can influence its policies and choice-making.

FINRA Fines Brokerage Firm for Sale of Unregistered Securities is a post from: Before You Invest Your Money

Gen See Capital and Gen Unlimited,One World Capital Group more Ponzi scheme surface is a post from: Before You Invest Your Money