In October of last year, FINRA regulators denied an appeal and upheld a decision on barred broker Gopi Krishna Vungarala (CRD#: 4856193). The FINRA decision affirms Vungarala made many false and misleading statements in his dealings. He also concealed more than $9 million in commissions.
A Native American tribe (the Tribe) employed Vungarala to manage its investment portfolio. Not only was he a registered representative of the Tribe, but he also worked as its treasury investment manager. His participated in investment related decisions for the Tribe, creating a clear conflict of interest for the broker.
False and Misleading Statements, Conflict of Interest
Vungarala used false and misleading statements to influence the Tribe. He persuaded them to invest in several real estate investment trusts and business development companies. He also led the tribe to believe he was not collecting commissions on the transactions. In reality, the broker received more than $9 million in commissions.
He also denied his employment arrangement created a conflict of interest. The broker collected commissions by pushing certain investments. This was a clear conflict of interest.
Finally, Vungarala did not let the Tribe know it was eligible for volume trade discounts. This would have saved the Tribe more than $3.3 million in their transactions. Vungarala benefited from this misconduct in a big way. By keeping the discounts a secret, earned himself $2.8 million more in commissions.
Tough Sanctions Imposed
The appeals panel upheld the original findings and will impose two bars related to his dealing with the Tribe. One for Vungarala‘s fraudulent collection of commissions. The second for the missed volume discounts. The broker is now required to give up $9,682,629 in ill-gotten gains, plus interest. Vungarala was a broker in the financial industry for 12 years. He remains barred from practicing as a broker or associating with a broker-dealer firm.
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