Securities Industry Commentator by Bill Singer Esq

May 15, 2019

FINRA's initiative is scheduled to be implemented in stages through 2022, and will purportedly focus on:
  • Efficiency - Centralized task management designed to help compliance professionals do their work faster and at lower cost;
  • Proactive Compliance - Actionable notifications for early warning of issues;
  • Simplified Experience - Customized and personalized user experience tailored to the role of the user;
  • Enhanced Interaction - Centralized workspace to facilitate interaction with FINRA staff;
  • Flexibility and Automation - Easier machine-to-machine integration with firm systems, plus enhanced access to FINRA compliance data;
  • Self Service - Access to online knowledge base and contextual support.
Bill Singer's Comment: Not to be too snarky here but, ummm, maybe as part of FINRA's three-year transformation, the self-regulatory-organization could come up with a more efficient, simplified, and flexible approach to shorter headlines for its many, many, many releases? If not, here's my prediction for a headline for a 2022 FINRA New Release :

In 2019 FINRA Launched An Initiative to Simplify Firms' Digital Experience with FINRA, Facilitating More Efficient and Effective Compliance Programs / FINRA 2019 Digital Experience Transformation Invited Firms to "Help Us Design the Future" of Compliance Reporting and Management / FINRA To Launch New Initiative in 2023 to Raise Its Titanic 2019 Digital-Experience Initiative, Which Sunk After Plowing Into FINRA Headquarters And Causing Millions of Dollars in Damage / FINRA To Seek Bids To "Help Us Remove 2019 Initiative That Crashed Into Our Building" /  FINRA CEO Cook Unavailable for Comment As He Is Overwhelmed With Bailing Water in His Office But Insists That "Our Regulatory Heart Will Go On" / "Wolf of Wall Street" Actor Leonardo DiCaprio to Star In FINRA Fund-Raising Video / FINRA Issues Urgent Request for Digital Sponges, Digital Mops, and Digital Buckets
Our publisher Bill Singer finds himself in the unusual and uncomfortable position of questioning a FINRA Arbitrator's expungement recommendation. As Bill makes clear, he may simply not have all the facts or he may misunderstand the arbitrator's rationale. Consequently, justice may well have been served in the recommendation of expungement. On the other hand, solely going by what's set forth in the FINRA Arbitration Decision, Bill isn't convinced and he raises a number of troubling questions. See what you think.

Prominent Industry Lawyer Martin P. Unger, Esq. Sends Letter to FINRA CEO Cook Seeking Revision of FINRA Policy On Associated Persons' BrokerCheck Disclosures (Letter from Wexler Burkhart Hirschberg & Unger LLP to FINRA / May 14, 2019)
Wexler Burkhart law partner Martin P. Unger, Esq
has asked FINRA CEO Robert Cook to consider revision to the self-regulatory-organization's disclosure policies pertaining to:

a good faith determination by the broker-dealer as to whether an associated person is involved in an alleged sales practice violation may be made by the broker-dealer and, if such determination is that a person was not involved in the alleged violation, that it not be required to be reported on that associated person's Form U4. In my view, while those associated persons involved in alleged sales practice violations will still be subject to disclosure reporting, persons who have been haphazardly named simply because their names appear on the broker-dealer's BrokerCheck, would not have a disclosure and thus would not suffer the harm and public notice attendant to disclosure.

Beyond Hollywood, Part II: AML Priorities and Best Practices (FINRA Unscripted Podcast)
In this second episode, Blake Snyder and Jason Foye of FINRA's AML Investigative Unit discuss current priorities and best practices when it comes to anti-money laundering regulation.
William Lamont Holder pled guilty in the United States District Court for the District of Maryland
on May 14, 2019 to a federal wire fraud charge for stealing between $550,000 and $1.5 million of wine from his clients, primarily private collectors and commercial establishments; and he has agreed to a sentence of 18 months in federal prison subject to the Court's approval. As set forth in part in the DOJ Release:

[H]older was the sole owner and operator of Safe Harbour Wine Storage, LLC ("Safe Harbour").  Through Safe Harbour, Holder stored and transported upscale wines for private collectors and commercial establishments.  In return for a monthly fee, Holder would arrange for the transportation of a customer's wine to Safe Harbour's storage facility in Glen Burnie, Maryland, where it would be inventoried and stored.  Holder did not possess a license to sell wine in the State of Maryland.  

From January 2013 through December 2017, Holder developed a scheme to obtain payments and wine from the customers of Safe Harbour for his own personal financial gain. Unbeknownst to his customers, he offered their wine for sale to wine retailers and brokers around the country, including in Napa, California, all the while continuing to collect the customers' monthly storage fees and accept additional wine for storage.

Holder represented to potential third-party buyers that he was the lawful owner of the wine that he was offering to sell.  By e-mail and facsimile, he sent them lists of bottles of wine stored in his warehouse with detailed descriptions of the winery, vintage, and asking price.  After the buyers selected the bottles they wanted to purchase, Holder boxed and shipped the wine, and sent his bank account information.  After inspecting the shipment of wine, the buyers would either wire the money directly into Holder's bank account or send a check.  Holder kept the proceeds from the sales and spent it on personal expenses.

Bill Singer's Comment: Before I became a lawyer, I was the third generation of my family in the wine and liquor business. Sometime in the early '70s, I came across a wonderful quote by the late oenophile Andre Simon in his "The Noble Grapes and Great Wines of France":

There is a great deal in common between us and our wines. Wines enjoy, just as we do, the gift of life, a loan rather than a gift since it is ours and theirs for a short time only; and all wines are, as we are, liable to sickness and doomed to death. Most wines are quite ordinary wines, as most of us are quite ordinary people. There are, unfortunately bad wines, as there are bad people, but not nearly so many as the publicity given to crimes leads one to believe.

U.S. Executive Sentenced to Prison for Role in Conspiracy to Violate Foreign Corrupt Practices Act (DOJ Release)
Frank James Lyon pled guilty to an Information in the United States District Court for the District of Hawaii charging him with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act and to commit federal program fraud. Lyon was sentenced to 30 months in federal prison. As set forth in part in the DOJ Release:

Between 2006 and 2016, Lyon and his co-conspirators paid bribes to foreign officials in the Federated States of Micronesia (FSM) and to Hawaii state officials in exchange for those officials' assisting Lyon's company in obtaining and retaining contracts valued at more than $10 million.  The bribes included, among other things, cash to FSM officials and Hawaii officials, and vehicles, gifts and entertainment for FSM officials.  

Essex County Man Admits Role in $2 Million Fraudulent Check Scheme Targeting Home-Improvement Stores (DOJ Release)
Lessie Dickerson pled guilty  to one count of an indictment filed in the United States District Court for the District of New Jersey charging him with conspiracy to commit wire fraud. As set forth in part in the DOJ Release:

[F]rom December 2013 and through February 2017, Dickerson and others conspired to obtain merchandise or store credit from home-improvement stores in the eastern United States, including New Jersey, by purchasing items with fraudulent checks. They entered home-improvement and other retail stores and gathered high-value items, like air conditioners or hardwood flooring. Dickerson and others then typically "purchased" the items either by a fraudulent check with a phony name but authentic account and routing numbers, or by pretending to be an authorized signatory on a store credit account that Dickerson and others had previously opened with a phony check.

During some of the transactions, Dickerson and others displayed fake driver's licenses that had been created by one of the conspirators, which either duplicated the phony name imprinted on the fraudulent check they presented for payment or matched the name of an authorized signatory on a store credit account that they had previously opened.