FINRA has announced that a hearing panel expelled John Thomas Financial and barred its Chief Executive Officer, Tommy Belesis, from the securities industry. They violations are in connection with the sale of America West Resources, Inc. common stock, including trading ahead of customers’ orders, recordkeeping violations, violating just and equitable principles of trade, and for providing false testimony. The panel ordered has ordered them to pay $1,047,288, plus interest, to customers. In addition, they have been suspended for two years and fined $100,000, and the Chief Compliance Officer Joseph Castellano is suspended for one year and fined $50,000, for harassing and intimidating registered representatives. The panel also found they intimidated and harassed representatives who resigned by filing false Forms U5 indicating that the firm had a reasonable basis for investigating these individuals for serious misconduct, when this was not the case. In addition, the decision noted that Belesis provided false testimony to FINRA.
According to the decision, “Belesis testified that he was ‘not familiar’ with the recordkeeping requirements, and claimed that he was unfamiliar even with the fundamental requirement that the firm preserve order tickets for three years.” The panel noted that it did not find Belesis’ claims of ignorance credible given the length and breadth of his experience in the securities industry, and inferred that “they either concealed or destroyed order tickets.”
The panel dismissed charges alleging fraud, best execution violations, failure to follow customer orders, making misrepresentations to customers and failure to supervise. The ruling resolves charges brought by FINRA’s Department of Enforcement from April 2013. The hearing panel’s decision becomes final after 45 days, unless the panel’s decision is appealed to FINRA’s National Adjudicatory Council (NAC), or is called for review by the NAC.