The Financial Industry Regulatory Authority, or FINRA’s, disciplinary actions related to advertising violations continued to climb last year, rising from 45 in 2011 to 50 last year. However, fines from those cases dropped sharply, from $21.1 million in 2011 to $10.4 million in 2012 according to an article in onwallstreet.com.

Advertising violations generated the fourth-largest amount of fines for FINRA in 2012, which was the first year since 2009 that advertising was not ranked first. Suitability, due diligence, and research cases all brought in more fines during 2012. The total number of advertising enforcement actions that FINRA has reported has climbed from 8 in 2006 to 50 last year.

Two cases accounted for a combined $3.2 million in fines, about 30% of the total. FINRA ordered a firm to pay a $2.3 million fine and $12 million in restitution for the sales of a real estate investment trust (REITs) and collateralized mortgage obligations (CMOs).  The firm, the sole distributor of the REIT, used allegedly misleading advertisements in offerings to investors, many of whom were unsophisticated and elderly.  Although FINRA told the firm to stop using those slides, it continued to do so.

In another case, FINRA alleged that a firm made inaccurate representations about the firm’s services, rather than improper advertisements about a particular security. Even after FINRA notified the firm about these advertisements, the firm continued to use them. These alleged violations not only led to a $900,000 fine by FINRA, but the New York Stock Exchange, NASDAQ, BATS Exchange, and the Securities and Exchange Commission also ordered the payment of $5 million in additional fines and disgorgement.

In both of these cases, firms persisted in questionable actions after being put on notice by FINRA.

If you sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses, 888-760-6552.

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Christian Genitrini (CRD #3277581, Registered Representative, New York, New York)

submitted a Letter of Acceptance, Waiver and Consent in which he was fined $15,000,

suspended from association with any FINRA member in any capacity for two years, and

required to requalify by exam for Series 7 and Series 63 before becoming re-associated

with a member firm after the expiration of the suspension term. The fine shall be paid in

installments beginning 90 days after Genitrini’s reassociation with a FINRA member firm

following his suspension, or prior to the filing of any application or request for relief from

any statutory disqualification, whichever is earlier. Without admitting or denying the

findings, Genitrini consented to the described sanctions and to the entry of findings that

he advertised guaranteed returns on investments of up to 20 percent per year on a website

belonging to a company he wholly owned; Genitrini claimed that his company was a fullservice

investment firm and would, among other claims, provide high-yield investment

opportunities. The findings stated that the website declared that the company invested

nationwide and all industries were considered, but did not disclose the nature of the

investment product or the risks of investment. The findings also stated that Genitrini’s ads

appeared on other websites guaranteeing returns, and his company’s contemplated private

placement documents provided no assurance that by following its current investment

strategy, it would be successful or profitable; the subscription agreement also stated that

the investments the company carried might be volatile and present operational risks.

The findings also included that Genitrini’s Internet ads constituted communications with

the public; were not based on principles of fair dealing and good faith; were not fair and

balanced; did not disclose risks associated with the investment; guaranteed promising

returns that were exaggerated, unwarranted or misleading; and the predictions of

performance were also exaggerated or unwarranted.

FINRA found that Genitrini’s private offering of securities, which involved promissory

notes his company issued according to the private placement memorandum, was not

made pursuant to an effective registration statement filed with the SEC; the offering

was intended to be made pursuant to the exemption from registration in Section 4(2)

of Rule 506 of Regulation D of the Securities Act of 1933, which prohibits offers or sales

of securities by any form of general solicitation or general advertising. FINRA also found

that Genitrini’s use of the Internet and his company’s website violated Section 5 of the

Securities Act of 1933, and guaranteeing returns in the offer of securities over the Internet

violated Section 17(a)(1) of the Securities Act of 1933. In addition, FINRA determined

that Genitrini falsely described his work with his company on his member firm’s outside

business activity disclosure form and also failed to disclose that he maintained a website

for the company; Genitrini told his firm, in writing, that his business and website were for

tax-planning services.

The suspension is in effect from April 4, 2011, through April 3, 2013.

(FINRA Case #2010022859701)

If you feel you have been a victim of the alleged fraudulent schemes of Christian Genitrini, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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