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Author Archives: David Weintraub

Former Securities America Representative Sanctioned for Not Disclosing Outside Businesses

FINRA sanctioned a former Securities America representative, Frank A. Gutta, for failing to disclose that he owned and operated a Florida corporation, Business Investors, Inc. (BII).  Mr. Gutta participated in numerous private securities transactions without notice or approval from Securities America, his employer at the time.

FINRA’s investigation found that during the period from September 2003 through at least January 2008 he operated Business Investors, Inc., without any notice to SAI.  He offered and sold BII promissory notes to 19 individuals, nine of which were SAI customers, for proceeds of approximately $2.9 million.  The proceeds were used to finance the creation and/or operation of various small businesses, including gas stations and a dollar store.  The BII promissory notes were not sponsored or approved by SAI.   Additionally, Mr. Gutta recommended BII Promissory notes to at least one of his SAI customer without having a reasonable basis to believe that the investment was suitable for her.

FINRA imposed a two-year suspension from association with any FINRA member in any capacity upon Mr. Gutta.  Since Mr. Gutta was granted a discharge in bankruptcy on June 11, 2010, no monetary sanctioned was placed.

Securities Law Update – August 2009

Items discussed in this newsletter:

  • Trust Not Required to Arbitrate Against Merrill Lynch
  • AIG Name Change
  • Auction Rate Securities Class Action
  • Selling Away Cases – Insurer’s Duty to Defend
  • Punitive Damages Unavailable as a Matter of Law for a Pension Plan’s ERISA §409 Claims
  • Punitive Damages Unavailable as a Matter of Law for a Pension Plan’s ERISA §409 Claims

The Polygraph Examination – A Valuable Arbitration Tool – The Florida Bar Journal

Securities Arbitration – once a concept foreign to most attorneys, is now a reality for many individuals whose retirement nest eggs have been decimated within the past year. For better or worse, most individual and institutional investors who do business with firms that are members of the Financial Industry Regulatory Authority (hereafter “FINRA”), are required to resolve disputes through a FINRA administered arbitration process. For most Nebraska residents, this means that their dispute will be resolved through an arbitration proceeding that will occur in Omaha. Residents of western Nebraska may be required to travel to Cheyenne,Wyoming for their hearings.

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