A constant comment heard by AdvisorCheck when contacting brokers is that all the information they wish to release is posted on FINRA’s site. The problem is, most consumers have little knowledge of how to attain this information and most brokers fail to make it available to the consumer right on the spot. Better yet, how many consumers actually will ask a broker if they’ve had disciplinary problems. The fact exist that many brokers are operating with ‘numerous’ issues and complaints on their FINRA reports yet consumers are left unaware. Below is a great story of how one broker had over 100 pages of problems but people didn’t know because they don’t know where to look and it’s never ‘offered to them.’ Worse yet, most brokers and consumers are not aware that the current FINRA system is based on ‘Self Reporting’ so how many issues like bankruptcies, liens, judgments and criminal/civil issues are not being reported?
http://registeredrep.com/news/gross_nailed_for_7million0915/
Sep 15, 2009 1:53 PM, By John Churchill
You may not remember our April 2008 cover story on Gary Gross, the Boca Raton, Florida, (where else?) broker with a 100-page, customer-complaint laden CRD. Gross apparently preyed on elderly people and a FINRA arbitration panel recently awarded $7 million to his victims, whom he defrauded.
The plaintiffs’ attorneys are calling the award one of the biggest FINRA awards ever against an individual broker.
Gross, an Orthodox Jew, used his temple and his faith to earn the trust of prospective clients, one of whom was a Holocaust survivor. His Form U-4, at more than 100 pages long, listed 35 customer complaints (33 of them settled) amassed at several firms over the previous 8 years and illustrated the problems regulators face taking bad brokers out of the industry. Among the SEC’s complaint filed against him in 2008: churning, misrepresentation and “fabricating customer account values,” among others. Registered Rep. detailed the story of how Gross and others like him with horrendous records are sometimes able to slip through the cracks for long periods of time in our April 2008 cover story, The Failure Chain.
The award, handed down on September 4, included $4 million in punitive damages against Gross, 56, based upon what the panel found to be “willful and wanton” conduct in “flagrant disregard” of the investors rights, according to Scott Silver, an attorney with Blum & Silver, one of the firms representing investors. The 61-page award said Gross created false and misleading statements while engaging in churning, unauthorized trading, unauthorized use of margin and many more violations that cost several investors their life savings.
