Reid C. Andrew (“Reid Andrew”) a California-based financial advisor was faced with FINRA sanctions including suspension from working in the securities industry in all capacities for eighteen months and a fine of $5,000 for bringing study materials into his Series 66 Investment Advisor Exam. Shortly after his suspension, Reid voluntarily resigned from his employment with Park Avenue Securities.
Reid Andrew was registered with Park Avenue Securities, LLC (“Park Avenue Securities”). from August 2020 to February 2022 per his BrokerCheck report. Before joining Park Avenue Securities, Reid Andrew had not been registered with any other brokerage firm.
According to a February 2022 Financial Industry Regulatory Authority (“FINRA”) Letter of Acceptance, Waiver & Consent, during the course of Reid Andrew’s Series 66 Investment Adviser examination, Reid Andrew possessed his cellular telephone which contained study materials for the examination. Possession of study materials during a FINRA examination is a violation of FINRA’s Rules of Conduct for representative and principal examinations.
FINRA imposed sanctions on Reid Andrew due to his FINRA Rules of Conduct violation. The sanctions included a suspension from associating with any FINRA member in all capacities for eighteen months. Reid Andrew’s suspension is scheduled to being March 7, 2022 and will run through September 6, 2023. In addition to Reid Andrew’s suspension, FINRA imposed a $5,000 fine.
“AWC” is an abbreviation for Letter of Acceptance, Waiver, and Consent. Following a FINRA Department of Enforcement investigation, an AWC may be issued when the investigation identifies a potential securities violation by a member or associated person. The member or associated person can participate in the process and respond to the allegations to clear their name.
The letter describes the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed. A member or associated person will sign the AWC when they choose not to dispute the alleged violation(s). An AWC may also be issued when the member or associated person chooses not to respond or fails to respond to the allegations.
The Department of Enforcement may prepare and request that the member or associated person sign the AWC accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member’s or associated person’s right to a hearing before a Hearing Panel or, if applicable, an Extended Hearing Panel, and any right of appeal.
Walter Scott Hall (CRD# 3109886) was terminated from his employment with Coastal Equities, Inc. (“Coastal”) as of February 4, 2022 after admitting that he created a fictitious promissory note and forged a non-customer’s signature on that fictitious note. Walter Hall worked for Coastal from September 2020 through his February 2022 discharge.
Walter Hall has a history of terminations as a financial advisor. In June 2020, prior to working at Coastal, Walter Hall’s employment was terminated from NYLIFE Securities, LLC’s (“NYLife”) following an employment review. Walter Hall’s employment review raised numerous concerns regarding his questionable business practices. Some of these practices included service-related complaints related to various investment products including both fixed and variable annuities, Insurance, and a mutual fund.
Before Walter Hall’s fall from grace at NYLife, he had received multiple awards from including 2008 Agent of the year, 2009 Top Partner, and 2011 Partner of the Year according to his LinkedIn profile. Walter Hall worked with NYLife from April 2007 through his termination in July 2020.
While working at Coastal Equities, Walter Hall also worked as an independent insurance broker with his company H2W Integrated Wealth Management. He also worked as an Investment Advisor with Coastal Investment Advisory.
A stockbroker can also be called a broker, financial advisor or registered representative. The broker buys and sells securities for their customers and is regulated by FINRA and the SEC. They must make decisions as to what products are suitable to recommend to an investor based on several factors.
An investment advisor, not to be confused with a financial advisor, provides investment advice and may manage investment portfolios. The investment advisor is regulated by either the SEC or state securities regulators dependent on the value of the assets under his management.
According to FINRA BrokerCheck, in July 2019, FINRA initiated a Complaint against Norton. The Complaint alleged that Norton and his firm, Wilson-Davis, manipulated the market for a low-priced, thinly traded, OTC microcap security issued by a company.
FINRA alleged that the manipulative activity benefited numerous firm customers who collectively deposited and liquidated millions of shares of the company stock into the public markets at inflated prices. The manipulation began when Norton purchased 250 shares of the company stock at $5.00 per share into the firm’s proprietary account. This purchase artificially set the closing price of the company stock at $5.00 per share and helped release millions of shares of the company stock held by Norton’s customers from resale restrictions imposed on them by a Lock-Up/Leak-Out agreement between the customers and the issuer.
FINRA also stated that Norton used his role as a company market maker to coordinate trading in the company, coincident with a company stock promotion paid for by one of his customers, to help create the false appearance of active trading in the company stock at steadily increasing prices.
This manipulative activity allowed Norton’s customers to liquidate their company stock at artificially inflated prices, generating a total of approximately $10 million in net sales proceeds and over $400,000 in commissions for Norton and the firm.
On January 31, 2022, FINRA rendered a Hearing Panel decision in its case against Norton.
The findings stated that Norton bought 250 shares of the company for his member firm’s proprietary account at $5 per share, setting in motion the manipulation. A “Lock Up/Leak Out” agreement between the customers and the issuer was in place, limiting the percentages of shares the shareholder could sell during certain periods.
However, Norton was aware of an escape clause in the agreement that was triggered if the company reached certain market capitalization levels. By artificially setting the stock’s closing price at $5 for three consecutive trading days, the agreement’s escape clause was triggered, and the shares were released from the trading restrictions, allowing Norton’s customers to liquidate their company stock at artificially inflated prices.
As a result of the manipulative trading, firm customers sold around $13.2 million shares of the company, generating about $8.5 million in net trading proceeds. From the trading, Norton and the firm generated $400,600 in trading compensation. As compensation, Norton received around 60 percent of the revenue he generated from the trading.
The findings also stated that Norton coordinated trading among his customers to help further the appearance of active trading in the stock at stable or increasing prices. Norton entered orders for and executed both sides of the trades and used his firm’s proprietary trading account to execute manipulative trades.
Despite being aware of many red flags, Norton also failed to raise concerns about his customers engaging in a manipulative trading scheme to his firm. Norton knew that his customers had all acquired their shares on the same terms, price, and under nearly identical stock purchase agreements. Norton also knew that the shares were deposited at the firm at or about the same time. Yet Norton failed to raise these concerns with anyone at the firm, nor did he ask any of his customers about these similarities. Instead, Norton chose to rely merely on his customers’ representations on stock deposit forms that they were not acting in concert.
According to FINRA BrokerCheck, Norton has been in the securities industry for nearly 50 years and has been employed by 10 member firms. He first became associated with a member firm in 1973. Norton became a securities trader and market maker in the 1980s, and he has spent most of this career since then trading penny stocks.
From March 2003 through his termination, Norton was registered as a General Securities Representative and Equity Trader with FINRA through Wilson-Davis, a self-clearing broker-dealer.
In February 2022, Wilson-Davis & Co., Inc. discharged Norton for willfully engaging in manipulative activity, per his BrokerCheck report.
On February 9, 2022, LPL Financial terminated Lee Rycraft (“Rycraft”). FINRA’s BrokerCheck includes allegations stating that Lee Rycraft “[e]lectronically signed account documents on customer’s behalf.”
Registration and Employment History for Lee Harold Rycraft
According to FINRA BrokerCheck, Rycraft was previously registered with the following firms:
Rycraft is also registered as a registered investment advisory VisionPoint Advisory Group in Watertown, SD. He works as a senior financial consultant at the firm.
Visionpoint Advisory Group is an advisory firm that has its headquarters in Dallas, Texas. According to FINRA BrokerCheck, Ryland provides investment advisory services through VisionPoint Advisory Group, LLC in its Watertown, South Dakota location. Lee Rycraft joined the firm in 2018.
According to FINRA, brokerage firms are responsible for the supervision of all the activities of its financial advisors. FINRA rules require the supervision of financial advisor as well as compliance with the securities industry standards of care for the handling of customer accounts as reflected in brokerage firm compliance manuals. The brokerage firm compliance manuals provide written procedures designed to support compliance with security industry rules and regulations.
Brokerage firm computerized systems monitor the activities of financial advisors designed to supervise the specific activities related to the type of business conducted at the branch office. Branch office managers are the first line of defense to protect the investors from violations of FINRA rules and regulations. Brokerage firms and branch office manager are responsible for the supervision of financial advisor:
Former customers of Reid Andrew, Walter Hall, Craig David, or Rycraft Lee who have information relating to the manner in which these financial advisors handled customer accounts, are encouraged to contact Lawrence L. Klayman, Esq., at 888-997-9956, and download our Special Investor Report.
KlaymanToskes is a leading national securities law firm practicing exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $228 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
Lawrence L. Klayman, Esq.
888-997-9956
lklayman@klaymantoskes.com
www.klaymantoskes.com