FINRA Orders Broker to Repay $17M to Ex-Firm to Cover Settlement Payments

A Financial Industry Regulatory Authority arbitration panel recently ordered that troubled broker Mark Sam Kolta pay $17.7 million in damages plus interest – along with compensation for costs, disbursements and fees – to his former firm National Securities, a former broker-dealer based in Boca Raton, Fla.

As previously reported by The DI Wire, National Securities closed down in August 2022 after 75 years in business following news that FINRA ordered the firm to pay approximately $9 million to settle several alleged violations. The firm was acquired by B. Riley Wealth via a merger completed in 2021.

According to FINRA’s BrokerCheck database, Kolta has had 28 customer complaints since 2018, most involving unsuitable investment recommendations. Twenty-four have been settled for nearly $17 million in total, while two were denied and two more are awaiting resolution.

According to Michael Mullen, chief executive officer of B. Riley’s wealth business, most of Kolta’s settlements were paid by B. Riley. The arbitration award essentially reimburses the firm for its costs. Mullen also stated that he did not know if the money could be collected due to its size.

Similarly, Kolta was the subject of a separate FINRA investigation in which he allegedly made “unsuitable recommendations” to 16 clients to purchase more than $4.8 million in shares of American Realty Capital New York City REIT, which was then a non-traded real estate investment trust. FINRA alleged Kolta had not properly considered his clients’ net worth, income, investment objectives, and ages when recommending REITs. The agency also accused Kolta of falsifying documents and placing an unsuitably high percentage of some customers’ portfolios into REITs.

Kolta blamed the Nicholas Schorsch-owned company, which had its own run-ins with the SEC, for the losses.

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