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NOTE: Offers of Settlement (OS) and Letters of Acceptance, Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions and to the entry of findings.

NASD Continuing Education Requirements

by Bill Singer bsinger@rrbdlaw.com

 

Enrico Mazzola (AWC/C10030092/December 2003)
Engaged in activities requiring registration while registration status was inactive due to his failure to complete Regulatory Element.

  • Fined $5,000; Suspended in all capacities 15 business days

Baldwin & Clarke Capital Markets, Inc. and John Joseph Clarke, Jr. (AWC/C11030037/December 2003)
While acting as placement agent for a private offering, firm failed to establish a proper escrow account at a bank.  Also, authorized the partial release of $280,000 to issuers when the $650,000 mini-contingency had not been reached. Further, because the expiration date had passed the escrowed funds should have been returned in investors.  
Additionally, permitted an individual to act as an RR when his registration was inactive per Regulatory Element requirements of Continuing Education requirement; and failed to have a written
needs analysis and written training plan to comply with the Firm Element.

  • Baldwin & Clarke Capital Markets, Inc. and John Joseph Clarke, Jr.
    Censured; Fined $15,000 (jt/several)

 

Steve Skytte (AWC/C02030059/November 2003)
Failed to establish and maintain a system to supervise RRs reasonably designed to comply with NASD rules.  He also failed to complete in a timely manner the Regulatory Element of CE.

  • Steve Skytte
    Fined $6,000; Suspended 20 business days all capacities

 

Quest Capital Strategies, Inc. (AWC/C02030058/November 2003)
Firm maintained registrations of reps who were not active in firm's IB or securities business or were not functioning as RRs, and allowed registered individuals to perform registered duties when their registrations were inactive due to failure to complete the Regulatory Element of CE.  Also had inadequate supervisory procedures.

  • Quest Capital Strategies, Inc.
    Censured; Fined $41,000

 

Banc One Securities Corporation (AWC/C8B030018/November 2003)
Firm permitted individuals to act as registered persons while registration was inactive due to failure to timely complete Regulatory Element of CE.  Firm received written customer complaints and fialed to timely file.  Firm used improper confidentiality clauses in settlements with public customers that prohibited or inhibited customers from disclosing the settlement terms and underlying facts to regulators.

  • Banc One Securities Corporation
    Fined $15,000

O'Brien & Shepard, Inc. Jeffrey Peter Flaster, and Michael Sutart Petrucelli (AWC/C9B030065/November 2003)
Firm acting through Flaster permitted a representative to act as a municipal securities representative prior to qualifying and registering.  Firm acting through Petrucelli permitted RRs to act in such capcity while their registration were inactive for failure to complete Regulatory Element of both NASD and MSRB CE.  Firm failed to establish and maintain adequate supervisory procedures.

  • O'Brien & Shepard, Inc. 
  • Jeffrey Peter Flaster, 
  • Michael Sutart Petrucelli
    Censured and Fined $25,000 joint and several

D.R. Mayo & Co., Inc. and Donald Richard Mayo (OS/C0`030005/November 2003)
Firm acting through Donald Mayo permitted individuals to perform duties as registered persons when they were deemed inactive for failure to comply with the Regulatory Element of CE.  Firm acting through May failed to establish and maintain adequate supervisory procedures, failed to promptly report to NASD customer complaints that were settle for more then $15,000., and failed to maintain adequate Net Capital (and failed to prepare and maintain monthly Net Capital computations).

  • D.R. Mayo & Co., Inc. and Donald Richard Mayo
    Censured, Fined $17,5000 joint/several

Harrison Douglas, Inc. and Douglas Wayne Schriner (OS/C31030028/November 2003) 
Registered Principal Schriner failed to timely disclose material facts on his U4.  Also filed false and misleading information on the U4 and did not complete the Regulatory Element of CE and became inactive, but firm allowed him to engage in registered activity.  Firm's supervisory procedures were inadequate for CE purposes.

  • Harrison Douglas, Inc.
    Censured; Fined $25,000 (jt./several)
  • Douglas Wayne Schriner
    Fined $25,000 (jt. several); Suspended 30 days in all capacities.

United Securities Alliance, Inc.
(AWC/C3A030032/Sept 2003)
Registered persons failed to timely take the Regulatory Element of CE and became inactive, but firm allowed them to engage in registered activity (and RRs generated transaction-based compensation).  Firm also allowed RRs not to participate in the Firm Element component.  Firm could only provide evidence that 157 of 1,130 RRs attended 2000 annual compliance meeting.  Firm failed to check the background of 17 new hires and failed to obtain Form u5 from five previous employers of new hires.  Also, firm failed to comply with Rule 3070 reporting obligations, failed to conduct annual inspections of offices of supervisory jurisdiction, and failed to register off-site locations with NASD.  Moreover, firm failed to promptly notify NASD of branch office changes of address.  Finally, firms supervisory system and written supervisory procedures were inadequate.

United Securities Alliance, Inc.
Censured; Fined $111,425

Clayton, Williams & Sherwood Investments
(AWC/C02030043/Sept 2003)
Firm permitted registered persons to act in registered capacities while NASD registrations were inactive due to failure to timely complete Regulatory Element of CE.

Clayton, Williams & Sherwood Investments
Censured; Fined $12,500

Primex
(AWC/C8A030049/August 2003
)
Firm permitted an individual to perform duties as a General Securities Principal while in non-compliance with CE Rule (and registration status inactive).  Firm, acting through an individual,  also failed to comply with its Membership Agreement because it failed to file a written notice and application to NASD at least 30 days prior to changing ownership.  Also failed to promptly notify NASD of intent to open a branch office.  Additionally, found to have non-compliant supervisory system over branches, in that the  NASD Electronic Signature and password was used by a person other than a registered principal.
Primex
Censured; Fined $10,000

ESA Securities and John J. Derrico,
(AWC/C9B030035/July 2003)

ESA, acting through Derrico, permitted 
-- two statutorily disqualified persons to be associated with and act on behalf of member;
-- one individual to act as a general securities representative, equity trader, and general securities principal without such registrations;
-- three individuals to act as registered persons when their registrations were inactive due to untimely completion of the Regulatory Element of NASD's Continuing Education Rule.
Additionally, ESA, acting through Derrico, conducted a securities business while failing to maintain minimum net capital.  
ESA Securities, Inc.
Censured; Fined $12,500 
John J. Derrico 
Fined $12,500; suspended  principal capacity 30 business days

Hanmi Securities, Inc. and Eul Hyung Choi (AWC/C02030023/July 2003)
Firm, acting through Registered Principal Choi, permitted a registered persons including Choi to act in a registered capacity when they had failed to complete the Regulatory Element of Continuing Education. 
Hanmi Securities, Inc. Eul Hyung Choi Censured; Fined $20,000(joint and several)

Banyan Securities, LLC and Bruce Edward Neff (AWC/C01030014/July 2003)
Firm, acting through Registered Principal Neff, permitted a registered persons to act in a registered capacity when they had failed to complete the Regulatory Element of Continuing Education. 

Banyan Securities, LLC Bruce Edward Neff Censured; Fined $15,000(joint and several)

APS Financial Corporation and John Gerard Lindquist (AWC/C06030008/July 2003)
Firm, acting through Registered Principal Lindquist, permitted a registered person to act in a registered capacity when individual had failed to complete the Regulatory Element of Continuing Education. 
APS Financial Corporation John Gerard Lindquist Censured; Fined $15,000(joint and several)

Recom Securities, Inc.
(
AWC/C04030030/JULY 2003)
Firm permitted RRs to act as registered persons, including receipt of compensation for securities transactions while registration was inactive due to untimely completion of Regulatory Element.  Also, firm's written supervisory procedures inadequate in Regulatory Element issues. 
Fined $27,500; required to update written supervisory procedures per NASD Membership and Registration Rule 1120(a)





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Fax at 720-559-2800
E-mail to bsinger@rrbdlaw.com

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