Glendale Securities (Sherman Oaks) Brokers Sanctioned in Penny Stock Misconduct

Attorney Advising Disclaimer

FINRA sanctioned Glendale Securities, Inc. and brokers George Alberto Castillo, Paul Eric Flesche, and Albert Raymond Laubenstein of the firm's Sherman Oaks, California branch, and Huanwei Huang of the firm's New York office for anti-money laundering (AML) failures relating to the liquidation of low-priced speculative penny stocks in customer accounts.

According to the findings, Glendale Securities improperly transacted the penny stocks Broke Out, Inc. (BRKO), NuGene International, Inc. (NUGN), and Vitaxel Group Limited (VXEL). The original complaint charged Glendale Securities with engaging in the unlawful resale of 482,377 shares of restricted securities into the public market.

In an Extended Hearing Panel Decision (OHO #2016049565901), FINRA found that Laubenstein (CRD #303462) and Fleshe (CRD #3277904) failed to reasonably supervise Huang (CRD #3268328), who allegedly shared nonpublic personal information about his customers with third parties, and that brokers failed to use the Glendale Securities e-mail system to communicate with others, including customers, instead using text messages, an unapproved platform.

The panel found that Enforcement failed to prove that Glendale Securities' President and head trader Castillo (CRD #1936486) engaged in fraudulent activities meant to manipulate a security and dismissed the charge. Enforcement initially alleged that stockbroker Castillo tried to artificially inflate the price of the NUGN penny stock with the goal of causing the microcap to close at $5.00 per share.

NUGN traded at about the dollar-per-share mark in 2015 and hovered in the 50-to-60 cent range in 2016 before nosediving to less than one-cent in late 2017.

The panel similarly dismissed Enforcement's charge that Glendale Securities, Flesche, and broker Jose Miguel Abadin (CRD #1273345) distributed unregistered or non-exempt NUGN securities.

However, the panel did find that the firm and brokers including Laubenstein and Flesche failed to adequately respond to red flags such as a 4.4 million-share deposit of NUGN by three corporate customers, even while one of the customers was actively engaged in promoting or marketing the NUGN personal care product.

If you have invested with Glendale Securities brokers George Alberto Castillo, Paul Eric Flesche, Albert Raymond Laubenstein, or Huanwei Huang, or with any stockbroker or financial adviser whose failure to protect your interests by responding to red flags failing to reasonably execute a supervisory system designed to ensure compliance with securities regulations to prevent price manipulation or other suspicious penny stock trading activity that has proven harmful to your investments, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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