Defunct Red Bank Broker-Dealer Defrauded Investors: AG

RED BANK, NJ - A now-defunct Red Bank-based broker-dealer, First Standard Financial Company, LLC, is being investigated by the New Jersey Bureau of Securities, who allege that First Standard’s agents defrauded customers as part of a trading scheme, Attorney General Gurbir S. Grewal announced Tuesday.

An investigation conducted by the Bureau of Securities found that the broker-dealer hired agents with histories of customer complaints and regulatory problems, including “excessive, unsuitable and unauthorized trading,” according to a news release from the Attorney General’s office. First Standard agents allegedly defrauded clients through “in-and-out training” of a single security over a short period of time in order to generate sale commissions at the expense of investors, which included “farmers, electricians, and truck drivers, often retired or nearing retirement, who had trusted the agents with their life savings.”

Earlier this month, First Standard agreed to relinquish its share of its liquid assets, totalling about $400,000, for restitution to investors. First Standard’s broker-dealer registration was revoked after it was revealed that First Standard was complicit in its agents’ unlawful conduct and took action against a number of the agents individually.

This week, the New Jersey Bureau of Securities revoked the registrations of two more agents who participated in the scheme, including the firm’s top agent. Freehold resident Andre P. Davis, who at one time generated nearly a quarter of the financial firm’s revenues, had his registration revoked and was ordered to pay a $1 million civil penalty. Frank Venturelli, of Brooklyn, similarly had his registration revoked and was ordered to pay $120,000 in civil penalties.

“New Jersey’s Bureau of Securities is committed to protecting investors,” said Attorney General Grewal. “When unscrupulous broker-dealers and their corrupt agents cheat customers out of their life savings, we will hold every last one of them accountable.”

Davis and Venturelli serve as the latest First Standard agents to have their registrations revoked in connection with questionable trading activities. The Bureau has also taken action against other First Standard agents for excessive, unsuitable trading activities.

Two agents from First Standard, Gabriel Block and Philip J. Sparacino, were ordered to pay a total $1,000,000 in civil penalties in 2019.

In February, the Bureau also denied and revoked the registration of former First Standard agent Jeffrey Broten, who was ordered to pay $100,000 in civil penalties.

“These agents, like many others on First Standard’s roster, took advantage of unsophisticated and novice investors, some of whom trusted them with their life savings and retirement,” said Christopher W. Gerold, Chief of the Bureau of Securities.

“This kind of predatory conduct will not be tolerated in New Jersey. With every new action, we demonstrate that we will not only target rogue firms, but also those individuals who are responsible for the actions of those rogue firms.”