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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 Also see the Statutory Disqualification Index
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Xadimul R. Samba AWC/2006006643801/April 2008 Samba willfully failed to disclose material information on his Form U4 and failed to timely respond to FINRA requests for information. Xadimul R. Samba: Fined $10,000; Suspended 1 year |
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Christopher Shawn Kyle (Principal) AWC/2007008617101/April 2008 Kyle willfully failed to disclose material information on his Form U4. Christopher Shawn Kyle: Fined $5,000; Suspended 6 months |
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David Neil Frand AWC/2007008109101)/April 2008 Frand failed to disclose a material fact on his Form U4. David Neil Frand: Fined $5,000; Suspended 3 months |
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David Skaggs Curtis AWC/2006007438601/April 2008 Curtis failed to disclose material information on his Form U4. David Skaggs Curtis: Fined $2,500; Suspended 3 months |
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Mellon Daniel Bryant 2006006368001/April 2008 Bryant failed to respond to FINRA requests for information. The findings stated that Bryant willfully failed to disclose material information on his Form U4. Mellon Daniel Bryant : Barred |
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Alex Lee Bernal AWC/2007009433401/April 2008 Bernal failed to disclose material facts on an application for employment he submitted to his member firm. Alex Lee Bernal: Fined $5,000; Suspended 6 months |
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Gene Michael Askins OS/2007007607801/April 2008 Askins willfully failed to disclose material facts on his Uniform Application for Securities Industry License or Transfer (Form U4) and failed to respond to FINRA requests for information. Gene Michael Askins: Barred |
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Pershing LLC AWC/2007009522001/April 2008 The Firm employed persons who were statutorily disqualified because it failed to submit the fingerprints of temporary workers who were working for the firm for a background check to the Federal Bureau of Investigation (FBI), and failed to promptly notify the New York Stock Exchange (NYSE) of its association with persons subject to statutory disqualification. The Firm failed to establish, maintain and enforce written procedures, including a system of follow-up and review of its business activities, with respect to its hiring of temporary workers to achieve compliance with federal securities laws, NASD and NYSE Rules relating to association with statutorily disqualified individuals. Pershing LLC: Censured; Fined $95,000 |
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ING Financial Advisers, LLC AWC/2007007182602/April 2008 The Firm failed to timely file summary and statistical information for numerous public customer complaints that the firm received. The Firm’s supervisory system
ING Financial Advisers, LLC : Censured; Fined $15,000 |
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Michael J. Skrabis (Principal) AWC/#2006007020501/March 2008 Skrabis failed to disclose material information on his Form U4. Michael J. Skrabis: Fined $5,000; Suspended 6 months (credited with 2 months) |
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Bhupinder Singh Pannu AWC/20060067866-01/March 2008 Pannu failed to disclose material information on his Form U4. Bhupinder Singh Pannu: Fined $2,500 (in light of financial status); Suspended 3 months; Twenty percent of the fine must be paid either immediately upon Pannu’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. |
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Jose Martin Lugo AWC/2007009364201/March 2008 Lugo failed to disclose material information on his Form U4. Jose Martin Lugo: Fined $5,000; Suspended 6 months. |
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Vinh Gia Liu AWC/20070098640-01/March 2008 Liu failed to disclose material information on his Form U4. Vinh Gia Liu: Fined $5,000; Suspended 3 months |
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James Robert Kelly (Principal) OS/2006005457801/March 2008 Kelly failed to provide complete and timely responses to FINRA requests for information. He willfully failed to amend his Form U4 with material information, and filed an amendment to his Form U4 that included an optional comment regarding an AWC which constituted a public statement denying directly or indirectly an allegation in the AWC, and created the impression that the AWC was without factual basis, which was in violation of the terms of the AWC. James Robert Kelly: Fined $10,000; Suspended 8 months |
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Bill Singer's
Comment: I have long counseled clients against denying the allegations set
forth in a settlement document that is predicated upon the
defendant/respondent neither admitting nor denying the allegations.
I guess the one thing here that puzzles me is whether this is yet another
example of how regulators apply a double standard as between the "big
fish" and the "small fry."
On May 2, 2003, the New York Times reported (MORGAN STANLEY DRAWS S.E.C.'S IRE by Floyd Norris) that the Securities and Exchange Commission, the New York State Attorney General (Eliot Spitzer) and other states alleged that Morgan Stanley paid $2.7 million to other Wall Street firms so that they would provide research on companies whose initial public offerings were underwritten by Morgan. The day after the announcement of a $1.4 billion settlement of the research scandal involving leading Wall Street firms, (Morgan's contribution to that settlement was $125 million) then Morgan Stanley CEO Phillip J. Purcell had attended a investors conference where he appeared to dismiss the allegations by stating that
As Norris reported, then SEC Chairman William H. Donaldson wrote a letter to Purcell:
I have found absolutely no indication that either Morgan Stanely or Mr. Purcell were sanctioned in any manner by the apparently outraged SEC, states, or NASD (now FINRA). Clearly, at some point, regulators must regulate and enforce the sanctity of their settlements. I fully appreciate the principle upon which Chairman Donaldson rebuked Purcell. Nonetheless, whatever James Robert Kelly did, it could not have risen to the enormity of the public comments by Morgan's CEO. Kelly seems to have taken a shot at a lousy AWC on his U4. Perhaps not the smartest move in the world, but not exactly the stuff makes the headlines of the next day's news. Odd, isn't it--that the Kellys of Wall Street wind up getting suspended for much the same misconduct that the CEOs of major firms get nasty letters. I am oh so heartened that FINRA's predecessor (NASD) shared the SEC's concerns and was in communication with Morgan Stanley. Now, why couldn't FINRA have just communicated with Mr. Kelly rather than suspend him? And before you're so quick to answer -- why didn't Purcell get suspended for eight months or fined one cent? You give me an answer that fairly addresses both scenaria and then we can begin the debate. |
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Sheldon Anthony Goldberg AWC/2007007930401/March 2008 Goldber failed to timely amend his Form U4 to disclose material information. Sheldon Anthony Goldberg: Fined $5,000; Suspended 9 months |
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Timothy Joseph Clain AWC/2007008769101/March 2008 Clain willfully failed to disclose a material fact on his Form U4. Timothy Joseph Clain: Fined $5,000; Suspended 6 months |
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Gregory Steven Azulphart 2006005746701/March 2008 Azulphart failed to disclose material information on his Form U4. Gregory Steven Azulphart: Fined $5,000; Suspended 6 months |
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Berry-Shino Securities, Inc. OS/E3A20050037-02/March 2008 The Firm effected mutual fund transactions for public customers and charged transaction fees that were unreasonable and unfairly discriminatory. Some of these transactions involved the purchase of mutual funds with sales loads and that the firm 's imposition of charges in addition to the sales loads constituted the sale of mutual funds at prices other than the current public offering prices described in the funds' prospectuses. The Firm failed to report, or timely report, items that NASD Rule 3070(a) required to be reported, and failed to timely report customer grievances required to be reported pursuant to NASD Rule 3070(c). The Firm failed to file required amendments to Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5), and submitted amendments to Forms U4 and U5 late. The Firm transacted an options business in a branch office without a qualified on-site principal. The Firm voluntarily created a heightened supervision plan for a registered representative but failed to implement the plan. Berry-Shino Securities, Inc.: Censured; Fined $40,000; Ordered to pay $24,918.62 plus interest in restitution to public customers. |
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Bill Singer's
Comment: Okay, where to start? One, if you have a complicated
written document detailing all those mutual fund charges, maybe it's not
that great an idea to take on additional charges that aren't set forth in
that same document. Two, pay attention to those nasty 3070 and U4/U5
disclosures. Three, once again (second so far this month), if you
have a heightened supervision plan make sure to enforce it.
Finally, a little bit of nuance for all you compliance nerd. Rule 3070(c) actually states: (c) Each member shall report to the Association statistical and summary information regarding customer complaints in such detail as the Association shall specify by the 15th day of the month following the calendar quarter in which customer complaints are received by the member. For the purposes of this paragraph, "customer" includes any person other than a broker or dealer with whom the member has engaged, or has sought to engage, in securities activities, and "complaint" includes any written grievance by a customer involving the member or person associated with a member. So, what's with the red-lettered and highlighted language? Well, a lot of you haven't digested what it says. First, a customer is any person other than a broker or dealer. Okay, so that's like a lot of folks, including children and maybe even dogs that are dressed up on Halloween to look like Winston Churchill, Abe LIncoln, and so on. Not sure about the dogs part, but I'll check that out. Anyway, getting back to the serious stuff, so a customer is anyone whom the member has "engaged" (okay, so that's like an actual paying customer) and "sought to engage, in securities activities." That's a truly amazing bit of expansive language. If you seek to engage in securities activities with anyone, they are a customer; and if they "complain" about you, then you have a 3070 disclosure. So...if you get someone on the phone and they were in the shower and are annoyed about that, I guess if they file a complaint against you that it's now a 3070 item. Oh "no," you say! Complaining that you got them out of the shower and that they dripped water on the carpet is not reportable. The "customer" (the guy or gal in the buff who is dripping water on their floor) hasn't complained about a securities matter. Oh yeah, I says. Go look at the definition of "complaint": "any written grievance by a customer..." ANY...WRITTEN...GRIEVANCE. Of course, it would help if we knew what's a "grievance" and what's not a "grievance." |
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Phillip M. Sikich AWC/2006006193501/February 2008 Sikich failed to disclose material facts on his Form U4. Phillip M. Sikich: Fined $5,000; Suspended 30 days. |
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Thomas Vincent Di Benedetto AWC/2007007926801/February 2008 Benedetto failed to disclose a material fact on his Form U4. Thomas Vincent Di Benedetto: Fined $5,000; Suspended 60 days. |
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Todd William Cowle #2006004494201/February 2008 Cowle willfully failed to amend his Form U4 to disclose material information. Todd William Cowle: Fined $2,500; Suspended 5 business days. |
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Money Concepts Capital Corp AWC/#2006003704001/February 2008 The Firm failed to report customer-related matters disclosable under NASD Rule 3070 in a timely manner . The Firm failed to amend Forms U4 and U5 for registered representatives to report customer-related matters in a timely manner. Money Concepts Capital Corp: Censured; Fined $13,500 |
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Legend Merchant Group, Inc. AWC/20060036818-01/February 2008 The Firm effected material and ongoing changes in its business operations by adding a branch office and expanding the number of associated persons with direct customer contact without FINRA's prior approval. The Firm failed to timely report statistical and summary information regarding customer complaints; and failed to report the most egregious problem as alleged in customer complaints as FINRA required. Legend Merchant Group, Inc.: Censured; Fined $22,500; Required to file an application with FINRA, consistent with NASD Rule 1017 for approval of the material changes referenced in the AWC concerning changes to its Membership Agreement, and the firm must comply fully and timely with related FINRA requests for additional information and documents. |
| Bill Singer's Comment: As my readers know, I have long warned firms about materially changing the terms/limits of their Membership Agreements without prior notice and approval from FINRA -- hell, that's a "Developing Enforcement Trend" item at the top of this page! On the other hand, truly, I am mystified by FINRA's suggestion that there is some rule on its books that states it is a violation to fail "to report the most egregious problem as alleged in customer complaints." Frankly, regulation is far too serious an undertaking to be subject to such whim and whimsey as a self-regulator making things up as it goes along. Without question, NASD Conduct Rule 3070 sets forth numerous reporting obligations -- none of which I have any sincere dispute with. Nonetheless, I find NOTHING therein that obligates a member to report the "most egregious problem as alleged in customer complaints." If FINRA disagrees, I invite the regulator to communicate that dispute with me and I will publish the response. |
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H&R Block Financial Advisors, Inc. AWC/E8A2005010002/February 2008 The Firm failed to file Uniform Termination Notices for Securities Industry Registration (Forms U5) with FINRA in a timely manner. The Firm failed to establish and maintain a system to supervise the activities of each registered representative and associated person reasonably designed to achieve compliance with the requirements of Article V, Section 3 of FINRA's By-Laws to ensure timely filing of Forms U5. H&R Block Financial Advisors, Inc: Censured; Fined $150,000 |
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Michael Derek Weihrauch (Principal) AWC/#2006005917201/January 2008 Weihrauch failed to amend his Form U4 to disclose a material fact; and he failed to respond to FINRA requests for information. Michael Derek Weihrauch: Barred |
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Craig Edward Massey OS/#2007008374401/January 2008 Massey willfully failed to amend his Form U4 to disclose a material fact; and failed to respond to FINRA requests for information. Craig Edward Massey: Barred |
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Paul Edward Craycroft AWC/#2006006851801/January 2008 Craycroft willfully failed to disclose material information on his Form U4. Paul Edward Craycroft: Fined $5,000; Suspended 6 months |
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I-TRADEdirect.com Corp. AWC/#2006003853701/January 2008 The Firm
Also, the Firm received securities from customers and held the securities for short time periods in violation of its Membership Agreement, and opened a branch office but failed to promptly notify FINRA of such action. The firm received checks from customers, but failed to prepare and maintain a blotter showing the received and forwarded checks. Moreover, the Firm failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations related to handling and reporting customer complaints, implementing material changes to its business operations and changes to its membership Agreement. Furthermore, the Firm's compliance system was not kept current, and its written supervisory procedures failed to address, or adequately address, requirements to file customer complaints and grievances, obligations to amend Forms U5 for customer complaints after receiving termination information and requirements to submit requests for material changes in business operations. I-TRADEdirect.comCorp. : Censured; Fined $60,000; Ordered o disgorge $865.17, plus interest, to public customers. |
| Bill Singer's Comment: If you read between the lines here, you'll see that it's not so much a case of not doing things, as it is a case of not "timely" doing things. Frankly, this is just one of those cases that the firm's Compliance Dept. must be blamed for. It drives most of us compliance/regulatory professionals nuts when a firm gets charged for violations because someone forgot to prepare a required record or failed to file something on time. That type of miscue is sort of silly because the firm is disclosing the problems anyway (here disciplinary actions, customer complaints, customer funds, etc.) and not hiding the events. Ultimately, it's a dollar and a day late--which FINRA will simply take as a layup. |
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Hunter Scott Financial LLC and Peter Alex Gouzos
(Principal) AWC/#2006003702101/January 2008 Acting through Gouzos, the Firm
Hunter Scott Financial LLC and Peter Alex Gouzos (Principal): Censured; Fined $125,000 jt/sev. |
| Bill Singer's Comment: A classic kitchen-sink case for starting the New Year. Highlights a number of 2007's regulator hot buttons and likely signals an ongoing focus: customer complaint policies, timely U4 updates, external email policies, and preservation of email. |
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