May 12, 2021
On February 26, 2021, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement filed a complaint against former general securities representative Megurditch (Mike) Patatian for numerous violations of securities industry rules.
Patatian has been associated with three FINRA member firms within the past ten years. From March 2004 until April 2013, Patatian was associated with Cuso Financial Services, LP in Granada Hills, California. He was permitted to resign after allegations arose that he failed to follow firm policy regarding documentation of securities transactions. Then, from April 2013 to April 2020, Patatian was associated with Western International Securities, Inc. (Western) in Westlake Village, California.
According to the FINRA Complaint, Patatian made 81 recommendations to 59 customers to purchase non-traded real estate investment trusts (REITs) that he did not have a reasonable basis to believe would be suitable for any investor. Patatian allegedly did not conduct any due diligence to understand the basic features and risks associated with non-traded REITs. Further, six of Patatian’s customers had liquidity concerns, so his recommendation to purchase illiquid non-traded REIT was further unsuitable due to each customer’s investment profile. Finally, Patatian recommended that his customers surrender existing variable annuity policies, causing his customers to incur unnecessary taxes and surrender fees. Based on the foregoing, Patatian violated FINRA Rules 2111, 2330(b), and 2010.
FINRA also asserts that Patatian violated FINRA Rules 2010 and 4511 by impersonating a customer without their knowledge to obtain the contract value and surrender fee for the variable annuity and keeping inaccurate customer information on Western’s customer account and disclosure forms. FINRA alleges in the Complaint that Patatian overstated some customers’ net worth and their years of investment experience to evade state restrictions that the REITs could comprise only ten percent of the investor’s net worth.
FINRA Department of Enforcement is requesting relief to make findings of fact and conclusions of law that Patatian committed the violations alleged in the complaint and order that sanctions and fines be imposed.
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