FINRA Fines and Suspends Two Reps For Enabling Statutorily Disqualified Individual to Engage in Securities Business. FINRA Department of Enforcement, Complainant, vs Kim K. Kopacka and Beth A. DeBouvre, Respondents (Order Accepting Offer of Settlement).
admitted to receiving more than $109,000 in upfront payments from victims of the scam who were led to believe they had won cash or prizes in a lottery or sweepstakes. Some victims were told they had won as much as $82 million. Others were told they were in line to receive $5,000 a week for life. Mercedes Benz vehicles were among the valuable prizes some of the victims were told they had won.In each instance, victims were told their winnings would not be released to them without upfront payment of taxes or fees. According to court documents, information presented to the Court by the Government, and by victims and family members who made or provided impact statements to the Court, individuals sent payments to Whitfield ranging between $212 and $50,000. Some individuals reported sending multiple payments after being instructed to do so by the scammers.The majority of funds collected by Whitfield were transferred electronically to co-conspirators and others, most often to individuals in Jamaica.
[F]irst Global Credit failed to register these security-based swap transactions and transacted with investors who did not meet the discretionary investment thresholds required by the federal securities laws. It also finds that First Global Credit failed to transact its security-based swaps on a registered national exchange, and failed to properly register as a security-based swaps dealer. Without admitting or denying the findings in the SEC's order, First Global Credit consented to a cease-and-desist order and agreed to pay disgorgement of $31,687 and a penalty of $100,000. The SEC's order notes First Global Credit's remedial actions, including its repayment of trading losses incurred by U.S. investors. In a parallel action, the Commodity Futures Trading Commission (CFTC) announced a settlement with First Global Credit arising from similar conduct.
From at least 2002 through 2016, Respondents Kim K. Kopacka and Beth A. DeBouvre enabled Ms. Kopacka's husband, Timothy Kopacka ("Mr. Kopacka"), to associate with and conduct securities business through member firms and engage in activities requiring registration, despite the fact that he was barred from associating with member firms and therefore statutorily disqualified. During this period, Ms. Kopacka and DeBouvre allowed Mr. Kopacka to meet with new and existing firm customers and recommend the purchase and sales of securities to them, resulting in securities transactions of more than $40 million and commissions of more than $6 million. Ms. Kopacka and DeBouvre facilitated Mr. Kopacka's securities business and helped him circumvent his statutory disqualification by, among other things, falsifying the documents supporting the transactions he recommended, approving the transactions, and concealing his statutory disqualification.As a result of the foregoing and additional misconduct that continued through February 2017, Ms. Kopacka and DeBouvre violated NASD Rule 2110 (for conduct occurring before December 15, 2008) and FINRA Rule 2010 (for conduct occurring on or after December 15, 2008) by permitting and enabling a statutorily disqualified and barred person to conduct a securities business through member firms and otherwise engaging in an unethical course of conduct.Ms. Kopacka and DeBouvre also violated Article III, Section 3(b) of NASD's By-Laws (for conduct occurring before July 30, 2007); Article III, Section 3(b) of FINRA's By-Laws (for conduct occurring on or after July 30, 2007); NASD IM-8310-1 and Rule 2110 (for conduct occurring before December 15, 2008); and FINRA Rules 8311 and 2010 (for conduct occurring on or after December 15, 2008) by permitting and enabling a statutorily disqualified and barred person to associate with member firms.And Ms. Kopacka and DeBouvre violated NASD Rules 1031 and 2110 (for conduct before December 15, 2008) and FINRA Rule 2010 (for conduct on or after December 15, 2008) by permitting and enabling an unregistered person to solicit investments to firm customers and otherwise function in a registered capacity.
This matter involves three violations by Aurora Capital. First, from June 26, 2013 through September 2, 2015, the Firm failed to meet its obligations to evaluate and document various aspects of the outside business activity ("OBA") of one of its registered representatives ("RR 1"). Second from July 18, 2014 through August 31, 2018 (the "Email Violation Period"), the Firm failed to reasonably supervise electronic communications that its registered representatives sent and received. Third, from January 1, 2016 through December 31, 2018 (the "Inspection Violation Period"), the Firm failed to conduct inspections of any of its office.As a result, Aurora Capital violated NASD Rule 3010 and FINRA Rules 3270, 3110, and 2010 . . .
At various points between 2016 and 2018, Alexander Capital conducted a securities business while below its net capital requirement. Also during this time period, the Firm did not prepare accurate net capital computations, filed inaccurate Financial and Operational Combined Uniform Single ("FOCUS") reports, and maintained inaccurate books and records. As a result of the foregoing, Alexander Capital violated Sections I 5(c) and I7(a) of the Securities Exchange Act of 1934 ("Exchange Act"), Rules 15c3-1, I 7a-3, and I7a-5 promulgated thereunder, and FINRA Rules 4110(b)(1), 4511 and 2010. Additionally, in 2016, the Firm made a material change in its business operations by participating in firm commitment offerings without receiving approval from FINRA to do so in violation of NASD Rule 1017 and FINRA Rule 2010.During the time period of the violations discussed herein, Sullivan was the FINOP for the Firm. As FINOP, Sullivan was responsible for, among other things, calculating Alexander Capital's net capital and maintaining the accuracy of the Firm's general ledger, trial balance, and balance sheet. He was also responsible for the accuracy of the Firm's FOCUS reports. Sullivan violated FINRA Rule 2010 by causing Alexander Capital to violate Sections 15 and 17 of the Exchange Act. Additionally, by permitting the Firm to continue its securities business during the time period the Firm was below its net capital requirement and causing its books and records to be inaccurate, Sullivan violated FINRA Rules 41 I 0(b)(1), 4511 and 2010.