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NOTE: Stipulation of Facts and Consent to Penalty (SFC), 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. FINANCIAL
INDUSTRY REGULATORY AUTHORITY RRBDLAW.com
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Stephen G. Rittenberg AWC/2006006533901/April 2008 Rittenberg prepared and distributed unapproved sales literature at seminars for active and retired educators. The sales literature failed to disclose Rittenberg’s member firm, and a principal at his firm did not review the sales literature and evidence its review in writing. Some of the customer information questionnaires Rittenberg prepared for distribution at the seminars were misleading because they claimed that any information provided would be held confidential when that was not the case. Stephen G. Rittenberg: Fined $5,000; Suspended 30 days |
| Bill Singer's Comment: Without question, FINRA has put the industry on notice that it is watching out for potential abuses in the seminar arena. The regulator has been steadily increasing its docket over the past few years with examples of misconduct in that arena, and as Rittenberg demonstrates, there is no let up. The confidentiality issue in this case is intriguing because it is clearly an area ripe for abuse and we haven't seen many FINRA actions involving such misconduct. |
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Gregory Orlan Dartez and Jerry Glenn Griggs AWC/20060066266-01/20060066266-02/April 2008 Dartez and Griggs wrote and disseminated press releases touting the securities of an oil and gas company that were not fair and balanced, and failed to provide a sound basis for evaluating the facts regarding the securities. The press releases omitted material facts, including the company’s recent revenues, causing the press releases to be misleading. Gregory Orlan Dartez: Barred Jerry Glenn Griggs: Barred |
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The Robins Group LLC and Marcus Whitney Robins (Principal) AWC2005001863901/April 2008 The Firm permitted research analysts, including Robins, to execute
The Firm authorized stock transactions that NASD Rule 2711(g)(3) prohibited, purportedly based on an unanticipated change in the personal financial circumstances of the beneficial owner of the research analyst account, and failed to maintain written records regarding the transactions and the justification for permitting them for three years after the dates when the transactions were approved. The Firm, acting through Robin, published research reports another analyst had written regarding a company, but the report did not disclose that the company had compensated the analyst within the past 12months. The Firm published research reports regarding a company and failed to disclose that the company had compensated a business entity affiliated with the firm within the past 12 months. Robins published magazine articles, which a research analyst considered to be public appearances, and failed to disclose to the publisher that he or a member of his household had a financial interest in the securities of the companies, and the firm failed to maintain records of the articles sufficient to demonstrate Robins’ compliance with the applicable disclosure requirements of NASD Rule 2711(h) for three years after the articles were published. In addition, the Firm failed to adopt or implement written supervisory procedures reasonably designed to ensure that it and its employees comply with NASD Rule 2711. Moreover, the Firm published on its web site an inaccurate list of its registered persons, including its research analysts, and the companies covered by their research, because some of the persons had terminated their association with the firm. The Robins Group LLC: Censured; Fined $25,000 ($5,000 of which jt/sev with Robins) Marcus Whitney Robins (Principal): Fined $5,000 jt/sev with Firm; Fined $31,458.59 (includes $16,458,59 disgorgement of benefits); Suspended 20 business days in all capacities |
| Bill Singer's Comment: Note that FINRA sanctioned the firm because its website disclosed the ongoing employment of terminated individuals. |
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E. Magnus Oppenheim & Co. Inc. and E. Magnus
Oppenheim (Principal) AWC/2006004863601/February 2008 The Firm and Oppenheim
E. Magnus Oppenheim (Principal): Censured; Fined $10,000; Must have completed six hours of continuing education relating to compliance with NASD rules and federal securities laws regarding advertising and/or use of the internet in connection with offerings of securities within 90 days. |
| Bill Singer's Comment: This case should serve as a very critical warning -- federal and state securities laws generally do not distinguish between "sales" "offerings" and "solicitations.". If one is not permitted, the others typically fall within that proscription. As such, please review your website to make sure that you are not offering investments -- or directly/indirectly soliciting the same -- without having the requisite offering documents or a lawyer's opinion that you are exempted from same. |
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Thomas Group Capital and Thomas Borbone (Principal) AWC/2005000323701/February 2008 The Firm and Borbone failed to supervise the sale of hedge fund interests by registered representatives to public customers. There was no review or endorsement by a registered principal of transactions in hedge fund interests; and sales of hedge fund interests were not subjected to principal review for suitability of recommendations. The due diligence reviews of hedge fund offering documents prior to sales by representatives were inadequate. Thomas Group Capital: Censured; Fined $50,000; Prohibited from offering hedge fund interests or opening new hedge fund accounts for six months, and thereafter suspended from offering hedge fund interests or opening new hedge fund accounts until the firm has submitted revised written supervisory procedures to FINRA that satisfactorily address the supervision of hedge fund offerings. Required to pre-file all customer advertisements and sales literature relating to hedge funds with FINRA for six months, beginning with the first use of such sales communications following the suspension from offering hedge fund interest and opening new hedge fund accounts. Thomas Borbone (Principal): No fined in light of financial status; Suspended in Principal capacity for 3 months |
| Bill Singer's Comment: Another powerful sanction from FINRA. Here the firm is prohibited from offering hedgie interests or opening hedgie accounts for six months, and cannot renew such activities until it submits satisfactory written supervisory procedures. Moreovoer, after that suspension is completed, there is further six month obligation to pre-file related ads and literature. |
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Adam Galeon SFC/NYSE Hearing Board Decision: 07-162 February 13 2008 On May 24, 2005,Credit Suisse Research Analyst Galeon obtained certain information from the CEO of XYZ relating to XYZ’s expected updated earnings guidance. That was the day before the official public release of the company’s updated earnings guidance. Galeon selectively disseminated emails to 17 Firm clients and 31 Firm sales personnel, conveying the information the CEO had disclosed to him. All but one email contained an admonition to keep the information confidential. Subsequently, Credit Suisse and two clients of Credit Suisse who received the information in Galeon’s email traded in shares of XYZ, prior to the public release of such information. By selectively disseminating the information he obtained from the CEO, Galeon engaged in conduct inconsistent with just and equitable principles of trade in violation of NYSE Rule 476(a)(6).
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Stanford Group Company AWC/2005002203701/January 2008 In connection with the offers and sales of certificates of deposit (CDs) a bank affiliate issued, it distributed sales literature that did not comply with FINRA advertising rules, in that it failed to disclose that the affiliation between the firm and the bank could create a conflict of interest in connection with its offers and sales of the bank-issued CDs. The brochures failed to present fair and balanced treatment of the risks and potential benefits of a CD investment, failed to contain the name of the firm using the materials and contained misleading, unfair and unbalanced information. Stanford Group Company: Censured; Fined $10,000 |
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Pritchard Capital Partners, LLC AWC/2006003800501/January 2008 The Firm issued research reports, one of which failed to disclose adequately the valuation methods used to determine the price targets or to disclose risks that may impede achievement of the price targets for the profiled stocks. Most of the research reports failed to present required disclosures on the first page or to refer to which page the disclosures were found; and some of the research reports contained language that was conditional or indefinite in regard to certain required disclosure. The Firm distributed research reports to institutional customers that other member firms produced without including the current applicable disclosures as they pertained to the Firm. Pritchard Capital Partners, LLC : Censured; Fined $10,000 |
| Bill Singer's Comment: FINRA raises an interesting point here, and you should make a note. Today, many firms forward to customers reports prepared by other firms ("first generation reports"). If you are going to "repackage" such first generation reports, you cannot simply rely upon the disclosures contained in those reports. Make sure that you review first generation reports to ensure that any conflicts or disclosures your firm is obligated to include in its own research reports are now noted in the materials you are using from others. |
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Loeb Partners Corporation AWC/#2006003769501/January 2008 The Firm
Loeb Partners Corporation: Censured; Fined $25,000; Suspended 30 business days from conducting any research analyst activities (including, but not limited to, issuing research reports); Must have one of the firm 's officers certify in writing to FINRA that it has i) reviewed its written supervisory procedures regarding supervision relating to research analysts and research reports, and Trade Reporting and Compliance Engine (TRACE) reporting, and ii) established systems and procedures reasonably designed to achieve compliance with the laws, regulations and rules concerning those matters within 60 days. |
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