Securities Industry Commentator by Bill Singer Esq

February 8, 2019

Prison Staff Can't Find Prisoner's  SEC Electronic Files
In the Matter of Gary C. Snisky (Order Granting in Part Respondent's Motion for Discovery and Revising Briefing Schedule; Admin. Proc. Rulings Release No. 6442; Admin. Proc.File No. 3-17645 / February 6, 2019)
Try as I might, I can't even begin to explain this better than SEC ALJ Cameron Elliot did:

The Division of Enforcement produced its investigative file to Respondent Gary C. Snisky in 2016 in electronic format pursuant to Rule of Practice 230. Snisky asserts that prison staff can no longer locate the electronic copies. Snisky has moved for an order requiring the Division to produce its file again, but in paper this time. According to the Division, the file previously produced runs to 118,000 pages and would cost approximately $10,000 to print.

In light of this, Snisky's motion is GRANTED IN PART. The Division is ordered to produce its investigative file to Snisky on both a thumb drive and on CD or DVD by February 20, 2019. I also direct the Division to provide Snisky with a hard copy of the Commission's Rules of Practice, as he asserts that he has no internet access. Snisky states that he will keep the file "confidential and shall in no way disclose or discuss their contents to any person, except to counsel." If the Division intends to move for a protective order, it shall do so by February 20, 2019, as well. 

I further ORDER that Snisky's response to the Division's motion for summary disposition is due by March 20, 2019. The Division's reply is due April 1, 2019. No further extensions will be granted absent extraordinary circumstances. 

CTRL-ALT-DEL Stockbroker Career
In the Matter of Kitwana Thomas, Respondent  (FINRA AWC  2017053262901 / February 6, 2019)
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Kitwana Thomas, submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed on Thomas a Bar from association with any FINRA member firm in any capacity. As set forth in the AWC under the heading "Overview":

Fidelity sponsored a program by which it reimbursed its employees for personal computer equipment purchases. After obtaining the maximum reimbursement allotted to a Fidelity employee under the program, between August and November 2016, Thomas obtained additional reimbursement of $3,700 to which he was not entitled by utilizing the online login and password information for three other Fidelity employees. Thomas purchased computer equipment, submitted purchase receipts using the other employees' online accounts, and then cancelled the orders or returned the equipment. The employees then paid to Thomas a total of $3,700 of the reimbursements they received. 

By converting Firm funds, Thomas violated FINRA Rule 2010.  

Every So Often, Something Unusual Catches My Eye
Marva Melissa Monroe El, Claimant, v. Merrill Lynch, Pierce, Fenner & Smith Inc., Banc of America Securities LLC and Paul Michael Donofrio, Respondents (FINRA Arbitration Decision 18-02831 / Februarty 6, 2019)
In August 2018, public customer Claimant representing herself pro se filed a FINRA Arbitration Statement of Claim asserting:

breach of fiduciary duty; fraud; misrepresentation/non-disclosures; unauthorized trading; and unjust enrichment. The causes of action relate to Respondents' packaging of Claimant's mortgage into an investment that was sold on the stock market. Claimant alleges her mortgage was used to fraudulently construct financial instruments that were sold for profit on the stock market. As a result of this securitization and the sale of her mortgage, Claimant alleges Respondents are receiving and/or have received a financial benefit and she should receive a share of those profits. 

You don't see that everyday. Frankly, pretty clever! Claimant sought $40,000.00 in compensatory damages, $10,000 punitive/exemplary damages, and a declaratory judgment that Respondents committed fraud. Clever pleading or not, the sole FINRA Arbitrator denied Claimant's claims.
Wall Street is no longer a quaint road between a church, on one end, and a river, on the other. It is a metaphor for the entire capitalist world. And that world, which we all live in, is populated with minorities and women. Try as Wall Street has for generations to marginalize those two groups, the fact is now inescapable. The securities markets in the United States are in a battle with international markets. If we don't re-tool our industry to include more minorities and women in meaningful roles, we will inevitably lose out to more enlightened competitors. The NYSE may well become a luxury residential condominium. FINRA may well become an off-shore gambling site. I can think of nothing more disgusting than to know that you are capable of doing a job but are denied employment solely based upon conditions of your birth.
In a Complaint filed in the United States District Court for the Southern District of New York, the SEC charged Robert Alexander and purported online gaming company Kizzang LLC with violating the anti-fraud provisions of the Securities Act and Exchange Act, and the federal regulator seeks permanent injunctions, civil monetary penalties, and disgorgement of ill-gotten monetary gains plus interest. The Complaint alleges that Alexander: 
  • told investors that they would make a minimum of 10 times their investment, 
  • had personally invested millions of dollars in Kizzang,
  • had made a $50 million charitable donation, and 
  • had led the creation of a prominent video game. 
The Complaint alleges that after Alexander fraudulently raised about $9 million from over 50 investors in  Kizzang, that he stole at least $1.3 million, including spending more than $450,000 on gambling sprees. Further, Alexander allegedly used investor funds to finance his daily living and other personal expenses, including credit card bills, shopping and entertainment, and expenses for his daughter, including culinary school tuition and luxury car payments.In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Alexander. READ the SEC Complaint

Blind Faith, Fraud, and Millions of Dollars Lost  (2018 Enforcement Report,Texas State Securities Board / February 7, 2019)
For whatever reasons, the folks who author the content that comes from TSSB seem to be about the best in the biz -- their releases and reports tend to be well written and replete with adequate content and context. As set forth in the opening to the latest TSSB Report:

When it comes to investing, blind faith can be very expensive. 

In Dallas, Juan Miguel Lopez attracted millions of dollars in investment for his companies by touting his rise from a cash-strapped Mexican immigrant to a wealthy, influential businessman. 

Timothy Lloyd Booth was a pastor at a church in McKinney when he started selling investment contracts in a supposedly valuable internet advertising company. 

Gabriel Claudio Jr. operated a namesake financial services firm in Corpus Christi, promising "safe solutions for your money" to his clients in South Texas. All three men told a compelling story. 

All told, they absconded with tens of millions of dollars from investors. And all three are currently serving lengthy prison sentences, the result of criminal cases in which the State Securities Board assisted in securing convictions.