Dutchess County fraudster Bradley C. Reifler has been barred from the financial industry, again, for refusing to answer questions about a $10 million transaction.
Last year, the U.S. Securities and Exchange Commission ordered the Financial Industry Regulatory Authority to reconsider its 2018 decision to bar Reifler from associating with any member of the independent, nongovernmental organization.
FINRA regulates securities brokers and dealers, so a ban in effect blocks an individual from participating in financial markets.
“Reifler’s misconduct was serious and his unwillingness to provide complete responses … about potential securities-related wrongdoing demonstrates his unfitness for association with any FINRA member firm,” according to the decision issued on Jan. 17 and published in the organization’s April report.
The bar is appropriate “to protect the investing public against individuals, like Reifler, who present a continuing threat to FINRA’s ability to detect and remediate industry misconduct.”
Reifler, 63, of Millbrook, was founder and the CEO of Forefront Capital Markets from 2010 to 2015. Now he is an inmate at the Federal Correctional Institution at Otisville, Orange County.
He pled guilty last year to defrauding North Carolina Mutual Life Insurance Co., the oldest black-owned insurance company in the United States, concerning $34 million the insurer entrusted with Forefront.
He was sentenced to five years in prison and ordered to pay back $20.3 million.
FINRA investigators were curious about a $10 million investment that a North Carolina Mutual affiliate made in a trust fund Reifler created. The size of the deal entitled the affiliate to a 50% reduction in the $300,000 commission, but the affiliate waived the reduction and paid the full commission.
North Carolina Mutual sued Reifler, claiming that it had not authorized the investment or waived the commission, according to the FINRA decision, and alleged that Reifler had diverted a large dividend to a bank account he controlled.
Reifler denied the claims.
FINRA ordered Reifler to testify at two interviews. The organization concluded in 2018 that he had failed to answer its questions, and it barred him from associating with any members.
Reifler appealed to the SEC.
Reifler did not dispute that he repeatedly refused to answer questions, according to the SEC, but he did answer some questions and had provided some written answers.
FINRA had provided only 104 pages from 302 pages of interview transcripts to support its ruling, the SEC noted.
The SEC ordered FINRA to review the entire transcripts, consider whether Reifler  had completely or partially failed to testify, and to apply more stringent sanctions guidelines in assessing his responses.
FINRA reaffirmed its previous decision.
FINRA does not have subpoena power, so its ability to compel members to testify and provide documents is its primary way to enforce regulations.
While Reifler did answer some questions, FINRA found, he had refused to answer the important questions.
The organization says it repeatedly warned him that he had to cooperate. Instead, he did not provide documents, denied knowledge of events, and disclaimed his role in the $10 million deal.
He repeatedly said he would not answer questions or discuss the transaction, according to FINRA, while claiming that the organization had no jurisdiction, the matter was in litigation and an attorney had advised him not to answer, FINRA had already decided he was guilty, and he intended to answer the questions later.
He refused to answer about 180 questions, FINRA states, in a “protracted act of defiance and a pattern of misconduct that we find to be aggravating.”
