INVESTORS: Former Wynston Hill Capital broker Craig Jay Sherman was suspended for four months by FINRA following allegations that he failed to reasonably discharge supervisory responsibilities.
Craig Jay Sherman (CRD#:5670193) was registered as a broker with Wynston Hill Capital from 2017 until 2020. Previously, Sherman was registered as a broker with Aeon Capital in 2017.
Sherman has two disclosures on his BrokerCheck report. A customer dispute filed against Sherman in August 2019 was withdrawn.
November 2021 Regulatory Judgment
Initiated By: FINRA
Allegations: Without admitting or denying the findings, Sherman consented to the sanctions and to the entry of findings that he failed to reasonably discharge supervisory responsibilities specifically assigned to him by his member firm’s written supervisory procedures (WSPs), including to reasonably investigate potential churning or excessive trading by two of the firm’s registered representatives and to review representatives’ emails. The findings stated that Sherman did not identify that the two representatives were excessively trading customers’ accounts, ultimately charging those customers more than $300,000 in excess commissions and fees in less than six months. Moreover, Sherman failed to reasonably investigate red flags of excessive trading even when they were specifically presented to him. In failing to conduct any reviews of representatives’ emails, Sherman failed to discover red flags that the two representatives were recommending securities transactions in the accounts despite not being registered in the customers’ home states and that a third representative falsified the firm’s books and records to reflect that he was the customers’ registered representative of record when he was not the one making securities recommendations to them. Moreover, Sherman failed to investigate red flags that the two representatives were recommending securities transactions to customers located in states where they were not registered. Sherman knew that the two representatives had not been able to obtain registrations in many states after they joined the firm and that the third representative, who was only 20 years old, had virtually no experience as a registered representative, and was recruited to the firm by one of the two representatives, became registered in many of those same states shortly after the two representatives were unable to do so. Nonetheless, Sherman did not take any steps to investigate these red flags, such as reviewing the representatives’ emails or contacting the customers in question. A review of the representatives’ emails would have revealed that the two representatives, and not the third (the representative of record), were communicating with the customers, sent them new account forms, and asked the customers to deposit funds into their firm accounts. Had Sherman contacted the customers, he would have learned that the two representatives, and not the third, were making securities recommendations to the customers in question.
Resolution: Acceptance, Waiver & Consent (AWC)
Sanctions: Civil and Administrative Penalty(ies)/Fine(s)
Registration Capacities Affected: Any principal capacity
Duration: Four months
Start Date: 11/15/2021
End Date: 3/14/2022
Sanctions: 40 hours of continuing education concerning supervisory responsibilities
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