FINRA fined former Newport Coast Securities and JP Turner & Company (both branches in Palm Springs, CA) broker Leonard Allen Goldberg for using discretion without authorization in 300 unsuitable mutual fund and exchange traded fund ("ETF") transactions over a seven-year period at both firms, causing over $123,600 in customer losses while earning himself $77,900 to the customer's detriment, according to FINRA's summation.
FINRA OHO Settlement Order #2011026098504
The order states that Goldberg improperly used discretion without authorization "to facilitate a scheme, practice and course of business of effecting fraudulent and unsuitable short term switching of Class A mutual funds," and falsified or caused falsification of firm documents while intentionally or at least recklessly defrauding several customers who were not at all experienced with investing, and who did not desire such aggressive or frequent transactions.
FINRA wrote that the eldest client Goldberg schemed to defraud was 73 years old and the youngest was 59, with the bulk of his clients investing in order to plan for retirement and for similar long-term needs through IRAs and like investment accounts. The report states that Goldberg's repeated Class A mutual fund sales and purchases resulted in repeated fees and charges in what investigators deemed a "high-risk" and "short term trading" strategy that ultimately did not consider the suitability or low-risk preferences of the harmed customers.
Goldberg also allegedly attempted to cover up the fraud by instructing two of his sales assistants to put their own California home addresses on customer account documents instead of the customers, some of whom lived outside of the state.
Goldberg purportedly submitted new account forms on behalf of at least some customers with forged signatures and investment objective indications of "growth with high risk" and "speculative" when Goldberg knew or should have known that his customers did not want to take such risks their their accounts. Goldberg also allegedly caused entry of tens of falsified mutual fund switch forms, classifying solicited trades as unsolicited, fabricating customer reasons for effecting various trades, etc.
The investigation bluntly states that Goldberg engaged in the scheme to defraud by constant Class A mutual fund switching "in an effort to generate commissions for himself" and in willful violation of the Securities Exchange Act as well as FINRA/NASD rules.
According to the findings, J.P. Turner in 2010 terminated Goldberg's employment based on an internal review related to mutual fund switching activity in client accounts. Goldberg's BrokerCheck report indicates that four years later, his new firm, Newport Coast, also terminated Goldberg for "failure to follow the firm's policies and procedures."
Goldberg remains the target of several pending customer disputes alleging damages in excess of $145,000 over the time spent at Newport Coast and JP Turner. The BrokerCheck report indicates Goldberg's first settlement occurred in 1982, when he paid damages of $165,500 over allegations of churning and unsuitable and unauthorized trading.
If you have invested with Southern California broker Leonard Allen Goldberg or with any broker or financial adviser whose unsuitable or unauthorized trading in your accounts—including through the unauthorized use of discretion or engagement in high-risk short-term trades that conflict with more conservative investment objectives—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.