Securities Industry Commentator by Bill Singer Esq

January 16, 2020

FINRA Fines and Suspends LPL Rep Over Family's Real Estate Project. In the Matter of Jason C. LaBelle, Respondent (FINRA AWC)

JP Morgan admits to 'terrible customer experience' in response to discrimination allegations (
As noted in part in the CNBC article:

J.P. Morgan Chase admitted to failures brought to light in a New York Times article last month and said it had taken a series of steps to learn from the episode.

In letters to congressmen and senators who requested information from the bank about allegations in the article, the bank acknowledged several shortcomings. The article detailed racial discrimination experienced by a black J.P. Morgan employee and customer at branches in the Phoenix, Arizona area.

Bill Singer's Comment: Will FINRA finally acknowledge that discrimination and harassment is far too prevalent in the industry? Perhaps the self-regulatory-organization will finally enforce its Rule 2010: Standards of Commercial Honor and Principles of Trade: "A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade." Would FINRA ever take such meaningful action against one of its Big Boys? Over racism? Over sexism? Yeah, dream on. Just in case there's any doubt about the festering nature of this disgrace, read this 14-year-old article:

Why Is The NYSE And NASD Soft On Racism And Sexism? ( Blog /  March 9, 2006) :

Please, show me the cases those regulators brought in the past 50 years in which member firms were charged with permitting racial or sexual discrimination/harassment. And what's the message? The regulators unwittingly encourage intolerant behavior by not deeming these practices to be conduct that offends basic notions of "high principles" and "honor." Do the SROs see such conduct as nothing more than an indiscretion? 

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. NASD 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.
Trevor Wesley Gabler, 29, pled guilty in the United States District Court for the District of Arizona to one count of mail fraud and was sentenced to 54 months in prison. After pleading guilty, the following Defendants were sentenced to the prison terms noted: Brandon Trevor Ball: 60 months; Jackie Nikiel Whitley: 30 months; Brian Lee Gibson: 15 months; and Gordon Lynn Hardy: time-served sentence of approximately one year. The Defendants were ordered to pay $4,116,625 in restitution to 113 victims; and forfeited $78,953 in U.S. currency found during a search Ball's residence. As alleged in part in the DOJ Release:

Gabler and Ball managed the telemarketing scheme, which operated from 2015 to 2018 out of several office park locations in Phoenix and Tempe.  They communicated via telephone with elderly consumers, first from a front room, where employees used false names to obtain basic customer information, and then from a back room, where telemarketers also used false names and promised a sham business opportunity in exchange for more than $10,000 per victim.  The opportunities promised to the victims were never fulfilled.                     

Entrepreneur And Pharmaceutical Company Executive Convicted At Trial For Role In International Insider Trading Scheme (DOJ Release)
After a one-week trial in the United States District Court for the Southern District of New York, Telemaque Lavidas was convicted of one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud and securities fraud, three counts of substantive securities fraud under Title 15, one count of substantive wire fraud, and one count of substantive securities fraud under Title 18. As alleged in part in the DOJ Release:

Athanase Lavidas, the father of TELEMAQUE LAVIDAS, was a prominent Greek businessman and was a member of the board of directors of Ariad Pharmaceuticals, Inc. ("Ariad"), a pharmaceutical company headquartered in Cambridge, Massachusetts, that developed and marketed a leukemia medication named Iclusig.  In violation of his duties of confidentiality to Ariad, Athanase Lavidas provided TELEMAQUE LAVIDAS with tips about three major corporate developments at Ariad.  On each of those occasions, TELEMAQUE LAVIDAS provided that inside information to his best friend Georgios Nikas ("Nikas") so that Nikas could make timely, profitable trades ahead of Ariad's public announcements.

The first tip was in October 2013, when Athanase Lavidas learned that the U.S. Food and Drug Administration ("FDA") was concerned about potential adverse health issues for patients from Iclusig.  Athanase Lavidas contacted TELEMAQUE LAVIDAS to pass this secret information, and TELEMAQUE LAVIDAS passed that tip to Nikas, who had previously amassed a large long position in Ariad securities.  After receiving the inside information from TELEMAQUE LAVIDAS, Nikas sold his Ariad securities and took a substantial short position.  When Ariad publicly announced the patient safety issues, its stock declined by over 65% and Nikas made over $3.2 million in profits and avoided almost $800,000 in losses.  Ariad discontinued sales of Iclusig later in October.

The second tip was in November and December 2013, when Athanase Lavidas learned that Ariad and the FDA were making significant progress toward returning Iclusig to the market.  Athanase Lavidas passed this secret information to TELEMAQUE LAVIDAS, who in turn passed the tips to Nikas.  Nikas bought Ariad securities based on these tips, and when Ariad publicly announced at the end of December that Iclusig was returning to the market, its stock rose and Nikas made over $1.3 million in profits.

The third tip was in July and August 2015, when Ariad received an unsolicited takeover offer from another pharmaceutical company.  Again, Athanase Lavidas learned of the offer in his capacity as a board member, and informed TELEMAQUE LAVIDAS, who in turn passed the tip to Nikas.  Nikas again bought Ariad securities based on this tip, and when a news article was published in late August reporting on the takeover offer, Ariad's stock rose and Nikas made over $2 million in profits.

Nikas also passed the tips he received from TELEMAQUE LAVIDAS to a series of stock traders.  In total, Nikas and the traders he tipped earned over $15 million in profits from the inside information that TELEMAQUE LAVIDAS provided.
Guest blogger Aegis Frumento has logged in an impressive number of hours on Microsoft's Flight Simulator. After he got a pilot's license, Aegis realized that flying a desk-top simulator and flying for real are not the same. Nonetheless, Aegis got to try out one of the Air Force's real full-motion, full cockpit, flight simulator of the massive C5 Galaxy cargo plane -- it is a matter of immense pride that Aegis actually managed not to crash the thing in executing a virtual nighttime landing. With those credentials, Aegis attempts the difficult maneuver of trying to explain the debacle of Boeing's 737MAX.

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, Jason C. LaBelle submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed upon Jason C. LaBelle a $5,000 fine,and a three-month suspension from associating with any FINRA member in any and all capacities. As set forth in part in the  AWC:

From February 2016 through May 2017, LaBelle participated in activities relating to a real estate development project, outside the scope of his relationship with the Firm, without providing prior written notice to LPL. In particular, LaBelle performed work as an independent contractor on behalf of a corporation that had purchased a 13-acre lot in order to develop 19 custom homes on the lot. That corporation, which was formed by LaBelle's mother, was financed with money provided by one of LaBelle's brokerage customers. Among other activities, LaBelle met with real estate agents to discuss marketing the sale of the homes and he exchanged emails with the real estate agents discussing the status of the property's development. 

LaBelle did not provide any prior notice to LPL of his intention to participate in an outside business activity. To the contrary, LaBelle falsely confirmed that he had fully disclosed his outside business activities on two annual compliance questionnaires submitted to LPL. 

As a result of the foregoing, LaBelle violated FINRA Rules 3270 and 2010.