The alleged killing of 17 Afghan villagers by Army Staff Sgt. Robert Bales, who had an undistinguished career in the securities industry before enlisting in 2001, has turned into a case of guilt by association for one brokerage executive, according to the executive's attorney.
Robert Cargin, ex-head of de-funct Regis Securities Corp. and current president of Capital City Securities LLC, was mentioned in a story by the Associated Press on March 21 under the headline “Massacre suspect's career in finance tinged with fraud.”
The article outlines Mr. Bales' career in the securities industry from July 1996 to December 2000, when he worked for a handful of small broker-dealers in and around Columbus, Ohio.
But the story also said that the five broker-dealers where Mr. Bales worked — a list including Diversified Capital Markets, banned penny stock dealer The Hamilton Shea-Group Inc. and notorious bucket shop Michael Patterson Inc. — “are related to Regis Securities Corp., which filed for bankruptcy protection in 2009.”
BRIEFLY CROSSED PATHS
In a letter last Monday to the AP, however, Mr. Cargin's lawyer said that no direct connection existed between any of the five firms and Regis Securities, which Mr. Cargin ran.
Moreover, attorney Dennis Concilla said that his client was never licensed or associated with Michael Patterson or two of the other firms mentioned in the story — and only briefly crossed paths with Mr. Bales at the other two brokerage firms.
Mr. Cargin did work with Mr. Bales at Diversified Capital, according to Mr. Concilla.
The Hamilton-Shea Group eventually purchased that brokerage firm in 1996.
In January 2001, NASD, now the Financial Industry Regulatory Authority Inc., fined and expelled Hamilton-Shea due to penny stock transactions, according to the profile of the firm on BrokerCheck. Three principals of that firm eventually served jail time.
But Mr. Concilla wrote in his letter that the employees and shareholders of Diversified — including Mr. Cargin — had already moved on to other firms before the firm was acquired by Hamilton-Shea — and before any allegations of wrongdoing had been leveled against the broker-dealer.
In an interview, Mr. Concilla said that, in addition to Diversified Capital, Mr. Cargin also worked with Mr. Bales at Quantum Securities for a few months at the end of 2000.
“They crossed paths at these two firms,” Mr. Concilla said.
“The AP stands by its story,” said Jack Stokes, a spokesman for the Associated Press.
A large part of the confusion may stem from the incomplete and gap-filled reporting of brokers' and firms' histories on the central registration depository, Mr. Concilla said in an interview.
Maintained by Finra, the CRD is the home for the employment and licensing histories of more than 6,800 broker-dealers and 660,000 individuals.
Broker-dealers often possess a muddle of names.
According to BrokerCheck, Regis Securities Corp.'s CRD number is 103711. On BrokerCheck, that number is also associated with Quantum Securities Corp. and Quantum Acquisition Corp.
Michael Patterson and The Hamilton-Shea Group aren't associated with Regis Securities on BrokerCheck.
Finra spokeswoman Nancy Condon declined to comment.
Mr. Bales bounced around the industry during his brief career as a broker.
FIRM EXPELLED
From March 1998 to October 1999, he worked at Michael Patterson. NASD later expelled the firm due to excessive markups on municipal bonds.
An NASD arbitration panel also ordered Mr. Bales in 2003 to pay a claimant $637,000 in damages for churning and unauthorized trading, according to Finra records.
Mr. Bales had already been in the military for two years at the time of the award, Mr. Concilla said.
The attorney's letter to the AP stated that investment clients of Mr. Cargin's current firm, Columbus-based Capital City Securities, “have called demanding an explanation of the false statements and innuendo in the story.”
For reporters and others relying on BrokerCheck profiles, this matter “shows how screwed up the CRD can be,” Mr. Concilla wrote.
bkelly@investmentnews.com
