According to FINRA, Arthur Espinoza (CRD #1344849, Port Saint Lucie, Florida) submitted an AWC in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, Espinoza consented to the sanction and to the entry of findings that he engaged in an outside business activity without disclosing this activity to his member firm. The findings stated that Espinoza allegedly incorporated a company that he operated and obtained investors who collectively invested more than $325,000 with the company. In return for the investments, which were undocumented, Espinoza purportedly orally agreed to pay the investors an annual or semi-annual payment equaling 5.25 percent of their invested principal.
According to FINRA, Espinoza is allegedly unable to account for substantial amounts of the funds he raised from the investors, is not currently able to pay the principal back, and does not have any credible plans to do so. The findings also stated that Espinoza allegedly failed to disclose outside brokerage accounts he controlled at two third-party FINRA member firms. Espinoza purportedly opened an account at one third-party firm for the previously mentioned company that he incorporated. Espinoza deposited many of the funds he raised from investors into the account, and also traded securities in the account.
Espinoza also apparently opened a master brokerage account for the previously mentioned company at the other third-party firm and opened subaccounts under the company’s master account for individual customers, many of whom were also his customers at his firm. Espinoza allegedly had full trading authority in these subaccounts, used that authority to perform more than 40 securities transactions totaling approximately $1.5 million on behalf of the subaccount owners, and charged a total of $15,195 in commissions for performing those securities transactions.
Espinoza purportedly conducted this securities business through the third party firm instead of his firm in part to circumvent a wage garnishment in place at his firm related to a civil judgment a former business partner obtained against him. On the application paperwork Espinoza completed to open the company’s accounts with the two third-party firms, he allegedly falsely represented through omission that he was not affiliated with a FINRA member firm and falsely indicated that he was not registered as an employee of a securities brokerage firm. The findings also included Espinoza willfully failed to disclose on his Form U4 reportable tax liens that remain unsatisfied and the civil judgment obtained by a former business partner against him in connection with a dispute over their joint insurance-making business.
FINRA also found that Espinoza allegedly made misrepresentations on firm compliance questionnaires in which he falsely indicated and/or certified that he had disclosed to the firm all of his outside business activities, outside securities accounts, or on certain questionnaires, liens and judgments against him. FINRA also found that Espinoza failed to respond to several FINRA requests for documents and information, failed to provide timely responses to certain other requests outright, and provided false information in response to one request.
For FINRA’s full findings see FINRA Case #2016048881501.
According to FINRA BrokerCheck, Arthur Espinoza was registered with Freedom Investors Corp., Vero Beach, FL from 09/2005 – 12/2014.
The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For more information on the firm and it’s representation of investors, visit https://www.whitesecuritieslaw.com.
For a free consultation with a securities attorney, please call the firm at 1-888-637-5510.