Regulatory action pending against president of Scottsdale Capital Advisors
D. Michael Cruz, president of Scottsdale Capital Advisors, is involved in a pending regulatory action by FINRA after his alleged involvement in the sale of more than 74 million unregistered shares between three microcap stocks.
Cruz has been registered with the firm since 2008, and FINRA is implicating him and Chief Compliance Officer Timothy DiBlasi in the case due to their alleged failure to enforce supervisory procedures that prevent fraud and illicit activity, according to the report.
Between December 2013 and June 2014, when the alleged trades were taking place, FINRA purports that Cruz had a supervisory responsibility to inquire about the circumstances surrounding the questionable sales. According to FINRA, there were several red flags that should have been caught had there been a meaningful analysis conducted by Cruz or DiBlasi. However, as Chief Compliance Officer, DiBlasi’s written supervisory procedures for the firm were subpar and inadequate for handling red flags when they arose, according to FINRA.
It is reported that Cruz did collect documents and information related to the sales, but did not conduct any reasonable inquiry or analysis into them, instead allegedly using the information to “paper the file,” or make it appear that he had been keeping track. FINRA rules require all brokerage firms to have a reasonable supervisory system and to not ignore red flags that may signal compliance failures.
Cruz, who has been in the securities industry for 14 years, has no prior disclosures, according to the FINRA website.
The microcap market is risky and FINRA routinely brings allegations against brokerage firms and financial advisors for the improper sale of penny stocks. If you have fallen victim to the misconduct of a stockbroker or any financial adviser, you may be able to recover your losses through securities arbitration.
The experienced securities attorneys at Silver Law Group can help you navigate this complex process and pursue your rights as an investor. Contact us today for a free consultation. We work on a contingent fee basis, which means you won’t pay legal fees unless we successfully litigate your case.