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Apr 17

FINRA fines Scottsdale Capital Advisors $1.5 million

If you have followed penny stocks and pump and dumps for a few years then you know Scottsdale Capital Advisors (hereafter referred to as Scottsdale Capital). They are one of the few brokers left that have continued to allow the deposit and sale of shares in illiquid penny stocks. Larger brokers and discount brokers stopped allowing that over five years ago. When the big Biozoom (BIZM) pump happened back in 2013 many of the frozen accounts were at Scottsdale Capital.

On March 31st, FINRA fined Scottsdale Capital $1.5 million. Unfortunately I cannot find any public posting of that news so the prior link is to a Stockwatch article (full article only available to subscribers; see this copy if not a subscriber). In addition to the fine, John Hurry, owner of Scottsdale Capital, was permanently banned from working in the securities industry.

The full 111-page FINRA decision can be found on their website. Unfortunately FINRA prevents direct-linking so you need to go to http://disciplinaryactions.finra.org/Search/ and then enter “John Hurry” as the name. I have downloaded a copy of the decision in case they delete it.

Excerpt from the decision:

Hurry’s violation of his duty to observe high standards of commercial honor and just and equitable principles of trade was purposeful and egregious. These two qualities lead us to conclude that Hurry is a threat to investors and the integrity of the markets. Our concern is compounded by our credibility findings. We found that he repeatedly testified falsely, and that there was a pattern of doing so when he thought no contradictory evidence would come to light.

When misconduct is intentional, General Principle 1 provides that adjudicators should 572 assess sanctions that exceed the recommended range in the Guidelines. Principal Consideration 13 also focuses on whether a respondent’s misconduct is the result of an intentional act, recklessness, or negligence.573 When a violation is egregious, the Guidelines often suggest more severe sanctions. In egregious cases in connection with violations of Rule 2010 and Section 5, the specific Guidelines recommend that an individual be suspended for up to two years or barred.

Even though he has no disciplinary history, the devious nature of Hurry’s violation evidences disregard for regulatory requirements, an aggravating factor under General Principle 2 and Principal Consideration 10.574 We have no confidence that if he remained in the securities industry he would not again devise a way to evade the law and regulatory requirements. For this reason also, we believe Hurry is a threat to the investing public.

The decision also shows just how remunerative running Scottsdale Capital has been for Hurry — in 2014 he and his wife made “approximately $6.2 million in directors’ fees and $1.45 million in net income.”

 

Disclaimer. No position in any stocks mentioned and I have no relationship with anyone mentioned in this post. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

 

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