Financial Industry Regulatory Authority’s (FINRA) BrokerCheck reports that FINRA has barred previously registered broker and investment advisor Jaime Michael Westenbarger from acting as a broker or otherwise associating with a broker-dealer firm. The barring follows two regulatory actions and several customer disputes against the broker, culminating in his being terminated.
Regulatory Actions Involving Westenbarger
In March 2020, the State of Michigan initiated a formal proceeding against Westenbarger. The state alleged that the broker had misstated a material fact related to the offer and sale of a security, according to BrokerCheck. The FINRA source further explains that Westenbarger told clients he would invest RM and SM funds in a corporate note. Instead, the broker applied the funds to his personal expenses. The matter resolved in June 2020, with a consent to cease and desist. In addition, civil and administrative penalties in the amount of $1,500 were ordered.
FINRA had previously initiated a formal proceeding against Westenbarger in October 2019. According to the allegations, the broker intentionally failed to fully comply with FINRA’s request for documents after FINRA began investigating his conduct. Acceptance, Waive & Consent served as the final resolution of this proceeding, with Westenbarger being permanently barred from acting as a broker or working with a broker-dealer firm.
Customer Disputes Against Westenbarger
BrokerCheck reports that in a pending customer dispute involving Westenbarger, the claimant has accused the broker of:
- Statutory conversion
- Common-law conversion
- Common-law fraud
- Breach of contract
- Breach of fiduciary duty
- Violations of FINRA Rule 3240
- Violations of the Michigan Uniform Securities Act
The claimant is pursuing recovery of $100,000 in damages.
In another pending arbitration, commenced around July 29, 2020, it is alleged that Westenbarger made unsuitable investment recommendations, misappropriated client funds, and over-concentrated clients’ portfolios in high-risk investments. The claimants allege damages of $500,000.
Finally, in yet another pending arbitration, Westenbarger is accused of fraud, conversion, breach of contract, negligence, breach of fiduciary rules, embezzlement from a vulnerable adult, violation of FINRA rule 3240, and violations of Michigan Uniform Securities Act.
In October 2019, customers of Westenbarger when he worked for Securities America, Inc., accused the broker of persuading them to buy a corporate note, then using the funds for his personal needs. The clients reportedly further allege that the broker talked them into replacing a variable annuity for no apparent reason and that he made an unsuitable and unauthorized purchase of a UIT. The allegations amount to a breach of contract, breach of fiduciary duty, and fraud and conversion, as well as violations of the Michigan Securities Act and FINR Conduct Rules. Westenbarger’s former clients alleged damages of $212,000, and the matter settled for $150,000.
Two additional disputes—one received in September 2019 and the other in January 2010—allege that Westenbarger made unsuitable investments in variable annuities. Both disputes settled for over $12,000.
Three Employment Separations
Westenbarger was discharged from Securities America, Inc. on August 14, 2019, for allegedly borrowing funds from clients. On October 12, 2006, the broker was discharged from OneAmerica Securities for allegedly forming a corporation without prior approval of the supervising principal and broker dealer compliance department. Westenbarger reported this separation as a voluntary resignation.
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