Inappropriate COVID-19 Relief Loans Led to FINRA Sanctions

COVID Relief Loans Involved Undisclosed Business Outside Their Brokerage Firms

According to InvestmentNews, ex-J.P. Morgan Securities broker Gloria Willis, former Merrill Lynch stockbroker Evelyn Batista, and ex-Wells Fargo financial advisor Kenric Sexton have either been barred or suspended from the securities industry.

These Financial Industry Regulatory Authority (FINRA) sanctions were imposed after the self-regulatory organization (SRO) found that all three of them either inappropriately or incorrectly applied for federal COVID-relief loan programs geared towards small businesses in the wake of the coronavirus pandemic.

FINRA has been investigating whether registered representatives took Paycheck Protection Program (PPP) loans and other aid, and if, when they did so, possible violations resulted.

Formerly Registered Brokers Accused of Making Misrepresentations When Applying For SBA Loans

According to Gloria Willis’ BrokerCheck, the former J.P. Morgan Securities registered representative was indefinitely barred on July 30 after she refused to appear and provide testimony related to her firing after six years with the brokerage firm.

Willis’s Form U5, which noted the termination of her employment, also revealed that she had been under review to assess whether she had valid grounds for getting a Small Business Administration (SBA) Grant. Other brokerage firms where Gloria Willis used to be registered include PNC Investments, Natcity Investments, Citigroup Global Markets, Citicorp Investment Services, Chase Investment Services, and Banc One Securities.

BrokerCheck notes that Evelyn Batista was let go by Merrill Lynch, Pierce, Fenner & Smith Inc. after less than a year with the firm (and the industry) for allegedly improperly applying for and getting an Economic Injury Disaster Loan (EIDL).

She was suspended by FINRA for seven months and, without denying or admitting to the allegations, consented to the entry of findings that she had made “reckless misrepresentations” in her application and agreement with the SBA for an economic injury disaster loan. This included, purportedly, misrepresenting that she owned a real estate management business that earned $35K but lost $15K in rental income during COVID. The SBA then provided her with a $17,500 loan.

FINRA, however, said that Battista never disclosed these outside business activities to Merrill Lynch, owned the business she claimed to, or for that matter, had the kind of business that would have been eligible for an SBA loan. The ex-Merrill Lynch broker has since paid back the loan with interest.

As for Kenric Lamont Sexton, who had been with Wells Fargo Clearing Services during his entire six years in the industry, he was fired by the broker-dealer in November 2020. The termination came in the wake of allegations that he made “negligent misrepresentations” in his application for an SBA loan even though he didn’t operate a business eligible for one nor had he reported business activities outside of his firm. Yet, because Sexton claimed that he ran a self-directed online trading account of which he was a sole proprietor, he was granted a $1K advance for an economic injury disaster loan. The SBA would later deny his loan. In addition to the FINRA suspension, Sexton was fined $2,500.

Seasoned Broker Misconduct Attorneys

Please contact Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) if you feel like your investment losses may be due to broker misconduct or negligence. We help investors throughout the US and those abroad who are clients of US-based firms to recover their losses caused by their financial advisor or their brokerage firm. Call us at (800) 259-9010 today.