FINRA fined and suspended Ameriprise Financial, Inc. broker Douglas Frank Cmelik for allegedly improperly marking penny stock sales as unsolicited when, in fact, he solicited the purchases.
According to the investigation, Cmelik's misconduct took place between April 2010 and January 2011 while he was with Amerprise, during which Cmelik allegedly solicited sales of penny stocks within his client-base; 65 of his clients placed 133 orders to purchase a penny stock.
Because Amerprise Financial's policies prohibited registered representatives from soliciting purchases of penny stocks, Cmelik's alleged solicitations may also have violated firm policy. Cmelik has since left the firm.
FINRA found that by improperly marking the sales as unsolicited, Cmelik additionally caused Ameriprise's books and records to be inaccurate.
Penny stocks carry higher-than-average risks because they may be "easily manipulated by fraudsters," according to the SEC. Accordingly, federal securities law requires firms to apply a greater standard of due diligence, scrutiny and suitability, including the accurate reporting of penny stock transactions as solicited or unsolicited. As such, many firms, such as Ameriprise, prohibit brokers from soliciting sales of the risky penny stocks.
Misconduct regarding penny stock transactions historically has included not just issues of suitability and anti-money laundering deficiencies, but the
false recording of penny stock transactions as unsolicited as well.
If you have invested with Douglas Frank Cmelik, Ameriprise Financial or with a broker or firm whose improper solicitations or unsuitable recommendations of penny stock transactions have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.