Uh-oh: Cold Call to Arkansas Securities Examiner Lands NY Broker in Hot Water

by Gwen Moritz  on Thursday, Aug. 29, 2013 9:17 am  

A young New York broker-dealer made an unfortunate cold call and ended up having his Arkansas registration revoked.

A consent order filed Wednesday by Arkansas Securities Commissioner Heath Abshure says Junmo Hong, now 22, was registered with the Arkansas Securities Department as an agent with John Thomas Financial when he made a cold call to an Arkansan on Sept. 12, 2012.

"Hong was not aware at the time of the call that [Arkansas Resident 1] was employed as a Senior Securities Examiner with the Department and that Hong had contacted AR1 on his office phone during business hours," according to the order, which Hong agreed to.

Hong was specifically pitching the purchase of stock in Document Securities System Inc., claiming that he had information about future contracts that would drive up the value of the stock from its then-current price of $4.70 a share.

During the same conversation, "Hong claimed to have had several prior phone conversations with AR1 that never actually took place," the order said. He claimed to have recommended several stocks to AR1 beginning in February 2006, all of which had escalated in value.

Since Hong was born in July 1991, he was "fourteen years of age at the time of the initial alleged conversation," the order noted.

In addition to lying about previous contacts with the securities examiner, Hong "failed to conduct a proper suitability analysis with AR1 prior to recommending the stock for purchase." And when the examiner told Hong that he had zero net worth, "Hong responded he would just mark his total net worth down as one million dollars."

The order also says that Securities Department staff found that Hong had made 23 unsolicited phone called to Arkansas residents whose names were on the national do-not-call list.

Hong's license in Arkansas was only in effect from June 2012 to June 2013, and he has agreed not to apply for registration in the state again for at least three years. If he applies for Arkansas registration after that, he'll have to be subject to "heightened supervision" by an employing firm for at least three years.

 

 

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