Publicly available records published by the Financial Industry Regulatory Authority (FINRA) and accessed on August 3, 2018 indicate that Pennsylvania-based brokerage firm Mid Atlantic Capital Corporation has received several regulatory sanctions. Fitapelli Kurta is interested in speaking to investors who have complaints regarding Mid Atlantic Capital Corporation (CRD# 10674).
Established in Pennsylvania in 1981, Mid Atlantic Capital Corporation is headquartered in Pittsburgh, Pennsylvania and registered with 53 US states and territories. It is registered with the Securities and Exchange Commission, FINRA and one other self-regulatory organization. According to the firm’s BrokerCheck report, it has received six regulatory sanctions and one customer complaint that evolved into arbitration.
In 2017, for instance, FINRA sanctioned Mid Atlantic Capital Corporation in connection to allegations it failed to properly supervise private securities transactions performed by two representatives. According to FINRA’s findings, the individuals in question informed the firm about their participation in a hedge fund through which they participated in securities transactions and received compensation. While Mid-Atlantic Capital Corporation was not compensated for the transactions, it was still required to supervise the transactions and document them in its official books and records, however, it failed to do so, according to FINRA’s findings. According to a letter of Acceptance, Waiver and Consent signed by the firm, the brokers participated in the transactions from September 2017 until January 2013. The firm allegedly failed to recognize that their activities constituted private securities transactions, as opposed to an outside business activity, which is why, according to FINRA, it did not record their transactions. The firm was censured and issued a fine of $100,000.
In 2011 FINRA sanctioned the firm following allegations it “used its special reserve bank accounts as operating accounts when they should have been used for the exclusive benefit of customers.” According to a letter of Acceptance, Waiver and Consent signed by the firm, these activities began in October 1998 and continued until July 2010. Over that time, the firm had two “distinct lines of business,” according to FINRA: one was a mutual fund clearing business for “assets of employee benefit plans,” in which the firm self-cleared, and the other was a retail brokerage business in which the firm acted as an introducing broker-dealer. The firm took mutual fund commissions, 12b-1 fees, and dealer service fees in its self-clearing business, which it deposited into reserve bank accounts and distributed to “employee benefit plans, third party administrators, trust companies, or the introducing broker, based on the introducing broker’s instructions.” In the course of these activities, “mutual fund companies would sometimes commingle in a single net payment commissions and fees related to the firm’s retail business with those related to its mutual fund clearing services,” according to FINRA, and it took these payments into its reserve bank accounts, “effectively using the reserve accounts as operating accounts,” contra FINRA and other securities industry rules. Specifically, FINRA found, the firm’s use of reserve bank accounts as operating accounts comprised “between approximately 6,000 and 7,000 wire transfers and checks into and out of the account on a monthly basis.” The firm was censured and issued a fine of $30,000 in connection with these findings.
In 2015 a customer alleged Mid-Atlantic Capital Corporation breached its fiduciary duty, committed fraud, misrepresented and omitted material facts, recommended unsuitable investments, breached contract, failed in its supervisory duties, and acted negligently. According to an arbitration award issued by FINRA, the complaint conserved investments in Sonoma Ridge Partners and KBS real estate investment trusts, as well as securities in Contango Oil and Gas Inc., iShares Silver, and Market Vectors Gold Miners. The complaint resulted in an award to the customer of $922,466.
In 2006 the Florida Office of Financial Regulation sanctioned the firm following allegation it failed to register four locations which it designated as branch offices and from which it conducted securities transactions. The firm was issued a fine of $2,000 and agreed to comply with relevant statutes in the future.
In 2005 the National Association of Securities Dealers sanctioned the firm in connection to allegations it failed to timely report transactions in TRACE-eligible securities, per NASD rules. The firm was issued a fine of $2,500.
In 2004 the NASD sanctioned the firm following allegations it failed to report OATS-reportable order events and that its supervisory system “did not provide for supervision reasonably designed to achieve compliance” with relevant laws and regulations governing OATS rules. The firm was censured, issued a fine of $10,000, and ordered to revise its written supervisory procedures (WSPs) regarding OATS.
In 1993 the NASD sanctioned the firm following allegations it had “outstanding satisfactory subordination agreement principal amounts” exceeding 70% of its debt-equity total for more than 90 days, and that it violated SEC rules by failing to notify the SEC within two business days of “advance to parent exceeding limitation by 19,000.” The firm was censured and issued a fine of $5,000.
Mid-Atlantic Capital Corporation representatives who have received customer complaints include David Boydell, whose BrokerCheck report lists two settled complaints and two pending customer complaints.
In 2017 a customer alleged David Boydell, while employed at Mid Atlantic Capital Corporation, committed fraud, breached his fiduciary duty, negligently failed in his supervisory duties, and acted negligently in connection to the sale of a private placement. The complaint settled in January 2018 for $45,000.
In 2015 a customer alleged David Boydell, while employed at Mid Atlantic Capital Corporation, recommended unsuitable investments and failed in his supervisory duties. The complaint, from which he was dismissed, settled in June 2018 for $285,000.
In June 2018 a customer alleged David Boydell, while employed at Mid Atlantic Capital Corporation, breached implied warranty, breached his fiduciary duty, misrepresented material facts and employed deceptive trade practices in connection to an approved outside business activity. The customer is seeking unspecified damages in the pending complaint.
Investors have also filed complaints against former Colorado-based Mid Atlantic Capital Corporation broker James Lunford, who is currently not registered with the firm. According to his BrokerCheck report, he has received six customer complaints, including the above-mentioned complaint that resulted in an award of $922,466. Another complaint in which he was not a named party settled for $250,000; a third, in which he was not a named party, settled for $162,426.
If you or someone you know has a complaint regarding Mid Atlantic Capital Corporation, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup lost funds. Fitapelli Kurta accepts every case on contingency: we only get paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.