FINRA Fines Brokers for Woodbridge Promissory Notes

FINRA Fines Unlicensed Brokers for Woodbridge Promissory Notes

FINRA and one state agency have taken disciplinary action against two brokers and an adviser who sold Woodbridge promissory notes issued by Woodbridge and tied to the alleged Ponzi scheme. The actions have included fines, suspensions, and disbarment.

Regulatory Action Taken Against Brokers Secretly Selling Woodbridge Notes  

FINRA recently barred broker Christopher Wendel from the securities industry for selling  $343,5000 in Woodbridge promissory notes, collecting $10,000 in commissions. The former SA Stone Wealth Management broker did not tell his company that he was selling Woodbridge notes, nor did he receive firm approval. The notes were sold between April and August 2017.  

Another stockbroker, Peter Holler, registered with Securities Service Network, also was suspended for a similar action. Between September 2016 to August 2017, Holler sold close to $1.4 million of Woodbridge promissory notes to 19 people, without notifying his firm or getting its approval. According to the FINRA order, Holler received close to $50,000 in commissions. Nine customers also were customers of Securities Service Network.

In both FINRA actions, the former brokers neither admitted or denied the findings.

State Fines Unlicensed Brokers for Selling Woodbridge Promissory Notes

At the state level, the Pennsylvania Department of Banking and Securities fined John Harris, a state registered investment adviser, $100,000 for selling Woodbridge notes as an unregistered broker.

From October 2013 to November 2017, Harris sold Woodbridge notes and collected a commission, violating state rules because he was not a registered agent.

Woodbridge Ponzi Scheme Reached $1.2 Billion

The Woodbridge Ponzi scheme was exposed last December when the company and its founder Robert Shapiro, were charged by the Securities and Exchange Commission (SEC) with orchestrating a $1.2 billion Ponzi scheme that targeted 8,400 investors.

The scheme was based on short-term, one-year loans and mortgages, advertising that it issued loans to supposed third-party commercial property owners that paid Woodbridge 11% to 15% annual interest for short-term financing. According to the SEC, Woodbridge promised to pay investors 5% to 10% interest annually, when in fact, the interest paid to existing investors was paid with new investor money – a hallmark of a Ponzi scheme.

Unlicensed Brokers Sold Woodbridge Promissory Notes to Investors

To sell the notes to investors, Woodbridge used a network of unlicensed securities salesman, many of whom had prior misconduct records or had left the securities business, as well as licensed brokers who hid the sales of the notes from their firm.

Speak with a Securities Fraud Attorney Today

The securities fraud attorneys at Dimond Kaplan & Rothstein, P.A. (DKR) bring civil court cases and FINRA arbitration cases on behalf of investors who have suffered financial losses in Ponzi schemes around the nation.

If you are looking for a investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have extensive experience and will aggressively pursue claims to recover your investment losses.

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