| NEWARK
- J.P. Turner & Company, L.L.C. (“J.P.
Turner”) has been ordered to cease
and desist from violations of the New Jersey
Uniform Securities Law and has paid $195,000
in civil monetary penalties, under the terms
of a consent order announced today by Attorney
General Stuart Rabner, Consumer Affairs
Acting Director Stephen B. Nolan and Bureau
of Securities Chief Franklin L. Widmann.
The
settlement resolves allegations that J.P.
Turner failed to supervise employees at
the Brooklyn, New York and Boca Raton, Florida
branch offices and failed to establish and/or
enforce procedures necessary to detect and
prevent the dishonest and unethical conduct
of those employees.
“It
is critically important that broker-dealers
conducting business in New Jersey establish
and enforce controls to prevent sales practice
abuses, such as those alleged here,”
said Attorney General Rabner. “Our
message to the industry is 'get your house
in order' or, as in this case, the state
will act to safeguard consumers and enforce
our laws.”
The bureau's investigation uncovered evidence
that from January 2001 to December 2003,
agents in the Brooklyn, New York and Boca
Raton, Florida branch offices of J.P. Turner
engaged in violations of federal and state
securities laws that went undetected by
the firm.
This included evidence that the agents:
- opened
accounts without client consent;
- conducted
unauthorized transactions in client accounts;
- overtraded
in client accounts;
- engaged
in trading that was unsuitable for certain
client account profiles; and
- misrepresented
and/or failed to disclose various risks
to clients in connection with the buying
and/or selling of securities.
Additionally, despite the existence of a
compliance manual that expressly prohibited
J.P. Turner agents from engaging in high
pressure sales tactics, a number of unapproved
sales scripts were discovered that contained
suggestions of guarantees of success, false
claims of analyst recommendations and other
suggestions for misleading clients. These
sales scripts were found throughout the
offices, including the desks of agents.
“We
expect that J.P. Turner will make substantive
changes to its oversight and management
processes to ensure appropriate employee
supervision," said Acting Director
Nolan. "The types of sales practices
uncovered here by the bureau are particularly
harmful to the investing public. It is unacceptable
that the company did not stop its employees
from engaging in these practices."
The bureau also concluded through its investigation
that J. Michaels & Company, Inc., a
Florida corporation (“J. Michaels”),
acted as a broker-dealer through its role
in the activities of the Brooklyn, New York
and Boca Raton, Florida branch offices.
The branch offices were owned and operated
by Giasamis “James” Sideris
(“Sideris”), President of J.
Michaels. J. Michaels was not registered
as a broker-dealer in New Jersey. The New
Jersey Uniform Securities Law prohibits
broker-dealers from conducting business
in New Jersey unless they are registered
with the bureau of securities.
“The
frontline of investor protection against
unscrupulous brokers-dealers is the registration
process,” said Bureau Chief Widmann.
“The bureau's determination that J.
Michaels acted as an unregistered broker-dealer
will serve as notice to firms that use the
independent broker-dealer model that entities
whose sole source of revenue is derived
from and are materially involved in the
securities business must register with the
bureau or face appropriate enforcement actions.”
Under
the terms of this consent order the Brooklyn,
New York and Deerfield Beach, Florida (formerly
Boca Raton, Florida) branch offices are
prohibited from soliciting any new accounts
from New Jersey residents for a period of
no less than two years.
In addition, J.P. Turner must retain an
independent consultant who will review and
suggest changes to the company's business
practices, procedures for branch office
supervision, suitability standards and monitoring
of agent sales activities. The company must
also maintain a compliance principal in
the New York Office, with regularly scheduled
on-site visits to the Florida Office, for
a period of no less than two years. J.P.
Turner will also continue to cooperate with
the bureau in any ongoing investigation
of the two branch offices and of any present
or former J.P. Turner employees.
J.P.
Turner entered into the consent order without
admitting or denying the bureau's findings.
J.P. Turner, with headquarters in Atlanta,
Georgia, has been registered as a broker-dealer
with the bureau since July 1997. It has
122 active branch offices nationwide, including
13 in New Jersey.
The
investigation was conducted for New Jersey
by Chief of Enforcement Richard Barry, Supervising
Investigator Michael McElgunn and Investigating
Attorney Peter C. Cole of the Bureau of
Securities.
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