Wedbush has tapped Phillip Fritz Frink, the former president of First Washington, to be vice president for investments in its Seattle office. But the hiring of Frink, 75, who has almost a half-century of financial services experience, comes as FINRA considers a case questioning his supervision of a former employee at First Washington.
Concerns stem from the case of Richard A. Finger Jr., who pleaded guilty in federal court in November 2011 to wire fraud. Finger was accused of defrauding clients at First Washington and his own firm, Black Diamond, by making unsuitable investments in high-risk options, taking undisclosed commissions and sending out fraudulent account statements to hide his activities. He is currently serving a four-year prison term at the Federal Correctional Institution in Sheridan, Ore. Soon after Fingers guilty plea, nearly $10 million in claims related to his conduct were filed with FINRA by at least two investors. Those claims name Frink, who was one of the supervisors at First Washington, and 11 others.
The offenses that led to Fingers criminal plea occurred at First Washington between 2008 and 2011, and Black Diamond, which Finger started in early 2011. (Black Diamond is defunct; Fingers attorney did not return a call requesting comment.)
Frink says about the claims filed with FINRA, I kind of got dragged into this thing. Frink says that because he is not registered to trade options, he did not oversee that part of Fingers trading activity. He also contended that when aggrieved investors file claims, they tend to name everybody you can find. The claim filed with FINRA that names Frink is the only complaint on his record in his 48 years in the financial services industry.
Frank Homsher, a lawyer for several of the investors who filed the FINRA complaint, says David D. Lewis, First Washingtons CEO and chief of compliance (also named in the claim), oversaw Fingers options trading. But, Homsher adds, Frink was the firms co-chief of compliance at the time and only part of the acts that resulted in Fingers guilty plea were tied directly to options trading. Lewis declined to comment beyond saying Frink was a prized member of the firm with a great reputation.
Fingers two prior employers, UBS PaineWebber and Morgan Stanley, paid out a combined $6 million in settlements over claims that Finger had made unsuitable investments, according to his BrokerCheck record. (UBS and Morgan Stanley declined a request for comment.) Frink says that although he was aware of these settlements, he believes Finger had a clean U-5 termination report from Morgan Stanley when he was hired by First Washington.
As for his move, Frink says he chose to join Wedbush because First Washington, a small independent broker-dealer with fewer than a dozen employees, was moving toward a RIA model and most of his work with clients is on the brokerage side. Im planning to continue serving my existing clients, and its been a great move so far, says Frink, a past president of the Seattle Traders Association, the Seattle Bond Club and the Seattle Financial Analyst Society.
Wedbush declined to comment beyond its official announcement of Frinks hiring, in which Wesley Long, head of private client services, says, We are pleased to welcome Fritz to the firm as we continue to grow our team of Wedbush Financial Advisors. His seasoned approach to investing and track record of success aligns with the high caliber of service we strive to provide our clients.