John Thomas Financial was a boiler room operation that is no longer with us, in part because its founder, Tommy Belesis (pictured at right in a Money Never Sleeps cameo), was accused of fraud (and threatening to hit someone with this car) this past spring. When it was still around, JTF distributed pitchbooks filled with tips for cold calling potential investors and scripts to follow based on certain situations one might find him or herself in over the course of a conversation. Included were such gems as:
* “Give me just 1% of your trust and confidence and I will earn the other 99%.” (A “Power Phrase”)
* “If I am half right, we go out for a steak dinner on you…is that fair enough?” (Another “Power Phrase”)
* “This isn’t something I want you to do; this is something you need to do for yourself.” (Also “Power Phrase”To be deployed in the event someone says they have “three kids in college)
* Let’s face it, if you go home and tell your wife that you want to invest with a broker whom you don’t know very well, chances are you will be hit with a frying pan and spending the night on the couch. However, once she sees my brochure from the firm and a dossier that I send you in the FedEx package with a buy confirmation, what do you think she is going to say? Besides, it is a lot easier to beg for forgiveness than to ask for permission, right? (Re: “Let me speak to my wife)
* “The law of averages say that you have to sift through 100 brokers before you find the one that can make you money consistently. Well, I have got to tell you that the search has ended. Start out on 100 shares, and once you realize the value of our research and the level of dedication to our clients, you will never want to open another account again!” (A “Closer”)
Unfortunately, there was no section or pre-written lines in there re: what to say should you find yourself on a call with a securities regulator. Which meant Junmo Hong had to do it live.
A young New York broker-dealer made an unfortunate cold call and ended up having his Arkansas registration revoked. A consent order filed Wednesday by Arkansas Securities Commissioner Heath Abshure says Junmo Hong, now 22, was registered with the Arkansas Securities Department as an agent with John Thomas Financial when he made a cold call to an Arkansan on Sept. 12, 2012. “Hong was not aware at the time of the call that [Arkansas Resident 1] was employed as a Senior Securities Examiner with the Department and that Hong had contacted AR1 on this office phone during business hours,” according to the order, which Hong agreed to. Hong was specifically pitching the purchase of stock in Document Securities System Inc., claiming that he had information about future contracts that would drive up the value of the stock from its then-current price of $4.70 a share.
During the same conversation, “Hong claimed to have had several prior phone conversations with AR1 that never actually took place,” the order said. He claimed to have recommended several stocks to AR1 beginning in February 2006, all of which had escalated in value. Since Hong was born in July 1991, he was “fourteen years of age at the time of the initial alleged conversation,” the order noted. In addition to lying about previous contacts with the securities examiner, Hong “failed to conduct a proper suitability analysis with AR1 prior to recommending the stock for purchase.” And when the examiner told Hong that he had zero net worth, “Hong responded he would just mark his total net worth down as one million dollars.” The order also says that Securities Department staff found that Hong had made 23 unsolicited phone called to Arkansas residents whose names were on the national do-not-call list.
Cold Call to Arkansas Securities Examiner Lands NY Broker in Hot Water [John Thomas]
Registration revoked for securities cold caller [AP]