Richard Finger pleaded guilty in November to federal wire fraud charges in connection with the scheme, in which his customers — many of them friends and family members — lost as much as $7 million.
BY DREW DESILVER
A Bellevue stockbroker who already faces prison time for churning through millions of dollars of his customers’ money — and then forging account statements to hide his activity — has been barred from the securities industry.
Richard A. Finger Jr., 32, did not contest his punishment from the Financial Industry Regulatory Authority, the self-regulatory organization for securities firms.
In November, Finger pleaded guilty to federal wire fraud charges in connection with the scheme, in which his customers — many of them friends and family members — lost as much as $7 million. Most, though not all, of the fraudulent activity occurred when Finger was running his own firm, Black Diamond Securities of Kirkland.
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Finger is scheduled to be sentenced Feb. 17 by U.S. District Judge Ricardo Martinez. Though he faces up to 20 years in prison, prosecutors have agreed that they will ask for 6 1/2 years, according to the plea agreement. He also has been sued by the U.S. Securities and Exchange Commission.
According to the SEC complaint, after Finger set up Black Diamond in February 2011 he received about $4.9 million from 25 customers, many of whom had invested with him when he was at other local firms.
Although many of his customers specified that they wanted conservative investments, Finger instead “embarked on a high-frequency, high-risk options trading strategy that generated spectacular trading losses for his customers and huge commissions for himself,” the complaint states.
In fact, only about $500,000 was left in Black Diamond customers’ accounts when the SEC froze the firm’s assets last September. Finger’s frenzied trading — in which he sometimes bought and sold the same security several times a day — lost $1.9 million, while he reaped $2.1 million in commissions.
To cover up the losses and commissions, Finger sent his customers faked account statements. For instance, one elderly relative was told he had $796,234 in his account, when the actual balance was $62.
When Black Diamond’s clearing broker, which actually executed the trades, noticed the suspicious trading activity and asked whether the customers had approved them, Finger allegedly supplied forged letters saying they had.
Drew DeSilver: 206-464-3145 or firstname.lastname@example.org