WJB Capital Group Inc. (“WJB Capital”), a privately-held broker-dealer, stopped trading in its New York, Boston, Denver and San Francisco offices when it ceased operations in January 2012. Recently, WJB Capital, and two of its executives, settled allegations raised by the Financial Industry Regulatory Authority, Inc. (“FINRA”) that the firm traded securities without adequate capital and hid its financial problems for the two years prior to its collapse. FINRA alleged that WJB Capital, as well as its Chief Executive Officer, Craig Rothfield, and Chief Financial Officer, Gregory Maleski, misrepresented the firm’s balance sheet, net-capital calculations and other records. Brad Bennett, FINRA’S chief of enforcement stated, “Both WJB’s CEO and CFO hid the precarious financial condition of the firm, misstating the FOCUS reports and net-capital calculations by as much as $4.4 million per month over a two-year period . . . The firm’s supervision and accounting were seriously flawed.” Specifically, WJB Capital misclassified items as allowable for net-capital purposes, including $1.6 million in funds from providing “non-deal roadshows” and third-party research, and a $1.5 million loan the firm received from its clearing firm. Moreover, WJB Capital improperly treated approximately $10 million in compensation that was to be paid to 28 employees as “forgivable loans.” The FINRA settlement expelled WJB Capital from membership, barred Mr. Rothfield from the securities industry and barred Mr. Maleski from acting in a principal capacity. Lax & Neville LLP can effectively assist investors, on both a regional and national level, that may have suffered losses as a result of their financial advisor’s misrepresentations and/or disregard for their investment interests. Please contact our team of securities fraud attorneys for a consultation at (212) 696-1999.
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