FINRA sanctioned Equinox Securities of Redlands, California, and barred brokers Stephen Michael Oliveira and Chris Blain Palkowitsh for misconduct related to Palkowitsh's excessive trading and churning in multiple customer accounts and IRAs, resulting in "substantial losses."
OHO Settlement Order #2012031496501
According to the findings, Palkowitsh pre-populated data in account applications for a group of unsophisticated investors, which exaggerated the customers' experience, knowledge, and financial condition, and mischaracterized their investment objectives as "speculation" and desired risk exposure as "speculative." This was purportedly true for all the accounts, regardless of the various customer's ages, experience levels, and financial situations—and even for customers who explicitly told Palkowitsh they were "risk averse" and wanted to invest "conservatively."
Other customers actually noticed and inquired about the inaccurate application, to which Palkowitsh allegedly replied, "it doesn't mean anything" and not to worry.
The report states that upon receipt of the applications, Palkowitsh sent Equinox's boilerplate "Active Trading Risk Disclosure" to each prospective customer, which stated, "you should not fund an actively traded account with retirement savings." Investigators believe the customers who opened IRAs for active trading did so on Palkowitsh's recommendation and did not grasp the situation, how much they paid, or why in the end they lost most of what they invested.
Investigators say that Palkowitsh then excessively traded and churned a total of eight customer accounts, including six IRAs, charging a $75 commission and $6 handling fee for each transaction and repeatedly executing transactions that had minimal principal amounts, resulting in "hundreds—and sometimes, thousands" of transactions in each account, racking up "huge" commissions and collective customer losses in excess of $800,000.
Investigators wrote that after these substantial losses, Palkowitsh placed the customers' equity at further risk by concentrating the accounts in Siruis XM Radio, Inc. (symbol SIRI), a low-priced security. In the end, Palkowitsh concentrated "nearly all" of the accounts in SIRI.
The report states that Oliveira, who served as Equinox President, Chief Compliance Officer, and Designated Supervisor, "was aware of the misconduct, but rejected any responsibility to intercede and stop the harm."
FINRA also charged Oliveira and Equinox with failing to implement an adequate supervisory system and associated procedures to detect unsuitable recommendations.
If you have invested with former Equinox Securities (Ontario/Redlands, CA) broker Chris Palkowitsh or with any broker of financial adviser whose misrepresentations, unsuitable recommendations, abusive or excessive trading, churning, or other inappropriate conduct has proven harmful to your investments or financial interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.