Without admitting wrongdoing, Rappaport agreed to the punishment in a settlement with FINRA. But he then ignored the suspension and continued to actively manage WestPark, according to FINRA disciplinary records reviewed by Reuters.
His punishment for ignoring the 30-day suspension? Another 30-day suspension from FINRA and a $10,000 fine.
In 2016, West Park saw a hiring opportunity. The firm started taking on dozens of brokers from Newport Coast Securities - a firm that FINRA banned from the industry that year for excessive trading in client accounts to rack up fees and for recommending unsuitable investments. Newport appealed the expulsion.
By early 2017, WestPark had hired about 40 brokers from Newport Coast - including its former CEO, Richard Onesto.
WestPark and Rappaport declined to comment. Onesto did not respond to requests for comment.
Pump And Dump
Another firm Reuters identified in its analysis - Windsor Street Capital - has been fined 12 times by FINRA since 2000 but may now face much stiffer penalties from the SEC.
Fifty-eight percent of the firm’s 48 brokers had FINRA flags on their records, according to the Reuters analysis. Over the years, FINRA fines have cost the firm about $300,000, and Windsor has appealed two other fines totaling more than $1 million.
In January, the SEC brought administrative actions against Windsor Street Capital and its former anti-money laundering officer, John Telfer, for allegedly facilitating a $25 million pump-and-dump scheme - in which investors promote or “pump” the value of a dubious stock they own just before selling, or “dumping” it.
Windsor declined to comment to Reuters but denied any misconduct in an SEC filing.