SERVING CLIENTS NATIONWIDE

FINRA Fines Ascendiant Capital Markets of Irvine, CA for Failure to Supervise, Inadequate Handling of Customer Complaint

Ascendiant Capital Markets, LLC of Irvine, California agreed to a fine of $20,000 FINRA imposed due to multiple failures and deficiencies, including inadequate supervisory procedures, failure to update a broker-related form and a failure to timely report a written customer complaint.

FINRA OHO Disciplinary Proceeding 2010023220507

Investigators analyzed Ascendiant Capital's activities from July 2012 through July 2014, concluding that the firm failed to satisfy supervisory, disclosure and reporting responsibilities related to former brokers Sean Anthony Spearman and Kevin Robert Tufts.

The first Spearman case (12-04191) proved especially egregious, as a FINRA arbitration panel found he engaged in "acts of fraud and malice" in penny stock trading, and that he and Ascendiant Capital engaged in acts of fraud and malice in bad faith by trying to cover up the fraud by giving false testimony at FINRA hearings. FINRA ruled against Spearman and Ascendiant Capital jointly and ordered them to pay their claimant $437,603.25, plus interest, in compensatory damages, plus $10,000 in punitive damages, costs and attorneys' fees.

Another complaint against Spearman, who was barred from the securities industry as a result of the fraud findings, found that Spearman transacted exchange traded funds (ETFs) on a customer's behalf at a price that did not reflect the market price that Spearman personally sold out of his proprietary account, and that Spearman knew the customer received this less-than-market price.

The report states Spearman earned a $239,772 profit plus a commission of $18,327 at the customer's expense. At complaint's end, FINRA ordered disgorgement in the amount of $66,771.

Spearman also faces a pending dispute alleging that he failed to liquidate a customer's entire position with Dewmar International BMC (DEWM) by selling shares in the open market, as ordered by the complaining customer. The complaint charges that Spearman and Ascendiant were shorting a large position in DEWM, which posed a conflict of interest and, according to the complaint, was the reason Spearman refused to sell the shares. Alleged damages are $150,000.

FINRA also found Ascendiant Capital failed to supervise Tufts, since he failed to timely update his form U-4 related to liens and a 2013 bankruptcy filing with US federal court in Santa Ana.

Prior to joining Ascendiant Capital, both men were registered with BMA Securities, also of Irvine. Tufts separated from BMA after allegations and was permitted to resign in 2011 for failing to notify the firm that he had dually registered with another broker-dealer. BMA in turn closed its Irvine branch and Spearman joined Ascendiant shortly thereafter.

Ascendiant's BrokerCheck report states that the firm maintained industry arrangements, such as introduction/referral of clients and third-party maintenance of books and records with Los Angeles-based Wedbush Securities, Inc.

If you have invested with ex-Ascendiant Capital Markets brokers Sean Anthony Spearman, Kevin Robert Tufts, or with a broker or financial adviser whose willful and fraudulent misconduct, such as deliberately offering a less-than-fair transaction price or failure to buy or sell securities or other investments as ordered has 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.

Categories