Former Concorde Investment Services, LLC broker Richard Cody (CRD# 2794558) was barred by FINRA and sentenced to two years in prison for defrauding retired clients. Cody was registered with IFS Securities in Spring Lake, New Jersey from August to September 2016, when he was terminated regarding, “Selling away, forgery.” Previously, Cody was registered with Concorde Investment Services, LLC in Spring Lake, New Jersey from 2014 to 2016.
In March 2019, Cody was sentenced to two years in prison Thursday for deceiving former clients and lying to the Securities and Exchange Commission (SEC). Cody faces two years of supervised release after his prison term and was ordered to pay a $30,000 fine. In November 2018, Cody pled guilty to one count of violating the Investment Advisors Act of 1940 and two counts of making a false declaration in a court proceeding. Cody was barred by the SEC.
In March 2018, FINRA suspended Cody after he failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
In December 2017, the New Jersey Bureau of Securities revoked Cody’s registration regarding, “Cody is the subject of an order of a self-regulatory organization expelling him from a self-regulatory organization.”
In September 2017, Cody was convicted of Investment advisor fraud and making a false declaration under oath. That same month, Cody was barred by FINRA regarding allegations that he engaged in securities business while suspended and provided false and misleading information in response to FINRA’s requests for information and during on-the-record testimony. According to Cody’s BrokerCheck report, a former customer of Cody informed FINRA that Cody served as her broker in 2013, despite being suspended most of that year. During the course of the investigation, FINRA found that Cody, with his wife’s assistance, repeatedly violated the terms of his suspension by, among other things, communicating with customers, making securities recommendations to them, and placing trades on their behalf.
In December 2016, The SEC opened an investigation into Cody regarding, “Fraud, misrepresentation, and theft in relation to various investments made between 2004 and 2016.” Cody was charged with defrauding his retired clients. According to BrokerCheck, “The Commission has asked the court to consider whether to impose certain preliminary relief against Cody and the legal entity through which Cody holds out his investment adviser and brokerage services business, Boston Investment Partners, LLC, including an asset freeze. The SEC alleges that Cody, an investment adviser and broker representative, defrauded at least three of his clients for years by concealing the fact that their retirement accounts had suffered extensive losses and that the monthly payments they were receiving were exhausting their retirement savings. Cody concealed their substantial losses by making materially misleading statements, leading the clients to believe that their investments were maintaining steady value and that their monthly withdrawals were being financed by investment gains. All the while, Cody concealed the material fact that the clients’ account values were actually being rapidly depleted. By mid-2014, two of these clients’ accounts had essentially run out of funds. To prevent his clients from detecting his longstanding fraud, Cody continued his scheme by engaging in various deceptive acts aimed at concealing from the clients that their money was gone. These acts included: (1) making wire transfers of monthly deposits to his defrauded clients’ bank accounts from sources other than their own retirement accounts so that they would not know their retirement funds had run out; (2) responding to requests from a client for a withdrawal of retirement funds by falsely representing that the client’s funds had been invested in an annuity and then sending the client a fraudulent document to create the appearance that a well-known financial firm held an annuity for that client; and (3) sending clients fabricated tax forms which purported to show retirement account distributions and tax withholding in order to disguise the fact that the clients’ accounts were essentially empty. As recently as March 2016, Cody lied to a third client by telling a husband and wife that they had $1.28 million remaining in their investment accounts when, in fact, their retirement accounts held only approximately $162,560. Cody’s deceptions caused these clients to believe that their retirement savings were secure when, in fact, they were not. The sheer duration of Cody’s deception deprived these clients of any opportunity to take measures to decrease or to stop their losses or even to work longer to make up those losses. With their prime working years now well behind them, Cody’s deceptive scheme has irreparably damaged their financial security, causing immense anxiety and fear and creating the real possibility that they may suffer further dire consequences.”
In January 2008, the SEC opened an investigation into Cody alleging fraud, misrepresentation, and theft in relation to various investments made between 2004 and 2016. Cody was suspended for one year and sanctioned to civil and administrative penalties and fines of $27,500 and monetary penalty other than fines of $8,711.25. The complaint alleged that Cody engaged in “unsuitable and excessive trading in the accounts of customers, resulting in significant commission income for him and losses for his customers. He also sent a series of written statements to customers without prior approval of his member firm. These statements were false or misleading, in that, among other things, substantially overstated the true value of the customers’ accounts and/or listed securities positions that in fact did not exist. He also recommended to customers the purchase of a security, which was not suitable for the customers in light of their investment objectives, risk tolerance, age and income. Respondent willfully failed to update his form U4 to disclose settlement agreement he entered into with another member firm. He failed to amend his form U4 to disclose settlements with customers.”
Cody has been the subject of 24 customer complaints between 2005 and 2019, four of which were closed without action, according to his CRD report. Recent complaints are regarding:
- February 2020. “The arbitration names multiple respondents with a time frame from December 2001 – March 2010. The account of [REDACTED], [REDACTED]’s husband, was at Leerink and serviced by Richard Cody from December 2001 – May 2005. At Leerink, [REDACTED] alleges excessive trading and unsuitable recommendations, including de facto discretion. It is alleged that the value of the account decreased at least 33%from an initial value of $377,000 while maintained at Leerink.” The customer sought $150,000 in damages and the case was settled for $115,000.
- February 2019. “Petition to Vacate in Part and Confirm in Part FINRA Arbitration Award. Allegations include negligence and breach of fiduciary duty relating to investments made between 2010 to present.” The case is currently pending.
- November 2018. “Client is alleging misrepresentation and forgery relating to activities occurring in 2013 and 2014.” The customer sought $245,000 in damages and the case was settled for $2,500.
- September 2017. “Client is alleging fraud and unauthorized trading relating to activities occurring from 2013 to 2016.” The case was settled for $56,000.
- August 2017. “The client alleges fraud, deceit, and mismanagement of accounts.” The customer sought $5,000 in damages and the case was settled for $62,500.
- August 2017. “Clients are alleging mismanagement, fraud, deceit, and unauthorized trading in relation to investments made between 2011 and 2016.” The case was settled for $165,000.
- August 2017. “The client alleges unsuitable recommendations, fraud, misrepresentation and deceit.” The customer sought $5,000 in damages and the case was settled for $125,000.
- August 2017. “The client alleges fraud, deceit, and mismanagement of accounts.” The customer sought $5,000 in damages and the customer was awarded $286,096 in damages.
- March 2017. “Clients are alleging negligence, breach of fiduciary duty, suitability and churning, for activities occurring 2013 to 2016.” The case was settled for $75,000.
- March 2017. “Client is alleging misappropriation/forgery in relation to investment made in October of 2015.” The customer sought $25,000 in damages and the case was settled for $50,670.
- March 2017. “Client is alleging misappropriation and forgery in relation to investment made in December of 2015.” The customer sought $150,000 in damages and the case was settled for $12,500.
- January 2017. “Customer has stated that the investment purchased in October of 2015 was not authorized.” The case is currently pending.
- December 2016. “Client is alleging fraud, misrepresentation and negligence, in relation to investments made from 2012 to 2016.” The case sought $50,000 in damages and the case was settled for $56,818.
- December 2016. “Client is alleging fraud, misrepresentation and negligence, in relation to investments made from 2012 to 2016.” The case was settled for $190,000.
- November 2016. “Clients are alleging that forgery, fraud, and negligence in relation to investments made from 2011 to 2016.” The case was settled for $125,000.
- November 2016. “Failure to supervise in relation to unauthorized wire transfers in Pershing account. Activities occurred June 2016-October 2016.” The customer sought $545,000 in damages and the case was settled for $426,500.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Concorde Investment Services, LLC may be liable for investment or other losses suffered by Cody’s customers.
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