June 25, 2018
Olajide Abraham Eyitayo opened three banking accounts, which had a combined balance of under $5 as of April 25, 2016, on which date a Virginia-based trade association approved a payment of over $280,000 intended for a travel vendor, but the payment went to one of Eyitayo's accounts. The payment was in response to a "spoof" email impersonating that vendor that requested the payment information be changed to an account number belonging to Eyitayo. Over the next several months, Eyitayo's account received two more payments totaling over $1.1 million intended for the association's travel vendor which Eyitayo spent and laundered. After the victim association detected the fraud, Eyitayo told a variety of false and misleading stories to bank officials and law enforcement, and claimed that he worked in the lingerie business and falsely claimed that the first fraudulent deposit was for that business. Eyitayo pled guilty to wire fraud and was sentenced in the United States District Court for the Eastern District of Virginia to 32 months in prison.
Robert J. Escobio appeals from a FINRA decision denying an MC-400 membership
continuance application by Southern Trust Securities, Inc. ("STS"), a FINRA member, to remain a
FINRA member while continuing to employ Escobio notwithstanding his statutory disqualification.
FINRA denied the application because it found that the conduct underlying Escobio's statutory
disqualification was egregious, the statutory disqualification was recent, and STS had failed to satisfy
its burden of demonstrating that it was capable of providing stringent supervision over a statutorily
disqualified individual such as Escobio. We base our findings on an independent review of the
record, and we dismiss Escobio's appeal for the reasons set forth below.
Decades ago, Wall Street sold its soul when it embraced the so-called "financial superstore" model and integrated banking, mortgages, insurance, stocks, bonds, options, annuities, and futures under one leaky umbrella. The theory was that cross-selling would move the the old-fashioned brokerage firm onto a glitzy platform from which customers would be up-sold into a wide array of new and different financial products. In reality, that platform turned out to be little more than a plank from which many customers were prodded into walking to the end and then plummeting into the murky waters of financial ruin. Rather than protect consumers, Wall Street's regulators took on the role of cheerleaders and, at times, rigged the regulatory system so that it favored financial superstores over more local, smaller brokerage firms. The wise voices urging caution were marginalized as out-of-touch old-timers. Financial superstores may have taken control of Wall Street's Jurassic Park but they are little more than re-animated fossils of a bygone era. In the end, these financial dinosaurs cannot sustain themselves in the modern world.
The United States District Court for the Southern District of New York entered a final judgment against Stephen B. Pence, the former chairman and majority shareholder of General Employment Enterprises -- Pence was also former United States Attorney and Lieutenant Governor of Kentucky. The SEC had alleged that Pence misled the company's auditors and investors by concealing his knowledge regarding $2.3 million in missing company cash and several related-party transactions. Pence created the impression that he was acting independently as GEE's chairman, when he was in fact merely a figurehead working on behalf of convicted felon Wilbur Anthony Huff, transferred substantially all of the company's cash to a third party. Without admitting or denying the SEC's allegations, Pence consented to the entry of a judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-2 thereunder, ordering him to pay a $200,000 civil penalty, and permanently barring him from serving as an officer or director of a public company.