FINRA filed charges against five brokers associated with Newport Coast Securities Inc., alleging that from 2008 through 2013, the brokers churned the accounts of 24 customers, using margin and high-risk securities to generate large commissions while simultaneously causing $1 million in damages to the affected customers.
FINRA's complaint states that brokers Donald Bartelt, Antonio Costanzo, Andre LaBarbera, Douglas Leone and David Levy, under the management of former firm supervisors Marc Arena and Roman Luckey, misstated customers' net worth, investment objectives and experience on new account forms.
Present Newport Coast Securities CEO Donald Wojnowski acknowledged that the illicit conduct alleged in the FINRA complaint "predates our management team we have now" - Wojnowski joined Newport Coast in December 2012 - and that the firm has since "made significant investments in new [compliance] systems and people."
Formerly known as Grant Bettingen, Inc. and owned by Irvine, California-based Rubicon Financial, Inc., Newport Coast Securities Inc. has approximately 45 branch offices around the country and 122 registered representatives.
For instance, supervisor Luckey, who is no longer in the industry worked at Newport Coast's Irvine office, while Levy, Costanzo and LaBarbera, whose new firm is Titus Rockefeller, LLC, are based in New York and New Jersey. Leone is associated with Farmingdale, NY's Salomon Whitney LLC, while Bartelt remains the only broker still affiliated with Newport Coast, is based in Cave Creek, Arizona, and according to Wojnowski, does minimal business and will be retiring soon.
The complaint states that those charged with the churning misconduct have regulatory histories, which for LaBarbera, Levy, Costanzo and Luckey includes stints at Brookstreet Securities, Inc., which in 2007 suffered significant losses in the collateralized mortgage obligation market, leading to that firm's failure. Like the present Newport Coast churning case, Brookstreet's collapse experienced problems in its margin accounts, the number of accounts described as "too many" in an internal e-mail to brokers and employees.
If you have invested with brokers or a firm whose excessive trading activity or over-reliance on margin and high-risk securities, including suspected churning or other misconduct in brokerage or investment accounts, has proven harmful to your financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
News: Finra Files Churning Charges Against Five Brokers Associated With Newport Coast (Financial Advisor Magazine)