Anselmo Contreras, Jr. (Contreras) accepted a Letter of Acceptance, Waiver and Consent (“AWC”) pursuant to FINRA Rule 9216 of FINRA’s Code of Procedure to settle allegations he converted customer funds, borrowed customer funds, and used the funds for his own personal use. As a result, the Financial Industry Regulatory Authority (FINRA) barred Contreras from the financial industry for life.
Contreras (FINRA CRD No. 4095453) entered the financial industry in 2000 as a general securities representative. From 2013 to 2016, and during the relevant time period, Contreras worked for and was registered with Cambridge Investment Research, Inc. (“Cambridge:”). Cambridge permitted Contreras to resign due to failure to report a private securities transaction and settling a customer complaint. Contreras is no longer associated with any FINRA member; however, he remains subject to FINRA’s disciplinary powers.
FINRA’s Department of Enforcement investigated Contreras and alleged he engaged in multiple fraudulent schemes. First, in March 2016, he accepted a $10,000 check from a customer for a real estate venture. FINRA alleges Contreras deposited the check into his personal bank account, and then used the customer's money for his own personal use without the customer's knowledge or consent. Second, in April 2016, he borrowed $30,000 from two of his clients. It is unclear whether any of these investors’ funds were returned.
Based upon the foregoing misconduct, FINRA alleged Contreras violated FINRA Rules 2010, 2150(a) and 3240. For example, “[i]t is well established that conversion violates the ‘high standards of commercial honor and just and equitable principles of trade’ required by FINRA Rule 2010.’” Whereas, FINRA Rule 3240 prohibits registered persons from borrowing funds from their customers unless the borrowing arrangement meets one of the conditions specified under the rule (i.e. for a relative and disclosed).
Here, Contreras’ fraudulent act of stealing his customer’s funds and accepting private customer loans without prior authorization from his firm was not just and equitable in violation of FINRA Rule 2010.
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