FINRA Sanctions Capital Securities Stockbroker

Michael Rubel of Red Bank New Jersey a stockbroker formerly registered with Capital Securities Management has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that he made unsuitable unit investment trust transactions in customer accounts at Capital Securities Management. Letter of Acceptance Waiver and Consent No. 2017052215402 (Sept. 1, 2020).

According to the AWC, from June 12, 2015 to March 15, 2017, during the time that Rubel was associated with Capital Securities Management, he advised customers to roll over their unit investment trusts before they matured. Customers were advised in this manner on 276 occasions.

FINRA stated that customers’ unit investment trusts usually had two-year maturities but had been sold after customers possessed them for 244 days on average. In one case, in June of 2016, a customer who held a unit investment trust with a two-year maturity had been told by Rubel to sell that investment after holding it for only 204 days. The customer was then advised to buy another unit investment trust with a two-year maturity. 167 days later, the customer was advised by Rubel to sell that investment for another unit investment trust. This showed a pattern of Rubel’s early rollovers.

The AWC stated that at least 13 of the 276 early rollovers involved a liquidation of one unit investment trust for the purchase of another unit investment trust in the same series. Some of Rubel’s customers were steered towards prematurely liquidating unit investment trust positions only to purchase newer unit investment trusts that contained the same or similar objectives as the unit investment trusts that the customers prematurely liquidated.

Rubel continued this pattern of recommending that customers prematurely sell products that were meant to be held longer. FINRA also indicated that the stockbroker’s short-term trading of unit investment trusts was improper given the high costs associated with those investments. Rubel’s customers were forced to pay unreasonable sales charges by acting on his advice. The regulator determined that the stockbroker’s recommendations were not suitable given the costs and the frequency of the transactions. Rubel violated FINRA Rules 2010 and 2111 in this respect.