The Financial Industry Regulatory Authority (FINRA) announced that a FINRA hearing panel expelled John Carris Investments, LLC (JCI). George Carris, the firm's CEO has been barred from the securities industry for fraud and suitability violations. The panel found that George Carris and JCI omitted material facts and used misleading statements to "recklessly" sell shares of stock and promissory notes issued by JCI's parent company by not disclosing it was in "poor financial condition."
The Securities and Exchange Commission (SEC) requires broker/dealers to report net capital and other operational problems within a certain time period. When a broker/dealer's net capital falls below a certain level, they are required to transmit notice to the SEC on the same day it occurs. According to the decision, JCI continued to sell notes to investors and used the proceeds to "cure JCI's net cap deficiencies," as well as pay for Carris' personal dry cleaning and purchases at liquor and clothing stores.
A JCI registered representative who recommended the stock and promissory notes, Andrey Tkatchenko, was fined $10,000 and suspended for two years for doing so without a reasonable basis. The FINRA panel also cited stock price manipulation as a reason for expelling and barring Carris and JCI. Through unfunded purchases of large blocks of Fibrocell stock, the panel found that Carris and JCI manipulated the stock's price by pre-arranging trading through matched limited orders. For his role in the price manipulation, Head Trader Jason Barter was fined $5,000, suspended for 18 months, and is required to re-qualify to enter the securities industry.
According to the FINRA press release, the panel also found that "JCI and Carris kept inaccurate books and records, failed to remit payroll taxes for employees, failed to implement its anti-money laundering policies and procedures and failed to establish and enforce a reasonably supervisory system."