Statutory Disqualification Index
SEC and FINRA
CASES OF NOTE
SD02004
NOTE: Stipulations of Fact 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 & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

In the Matter of the Association of X as an Associated Person with the Sponsoring Firm 

MC-400:  May 2001  

Redacted Decision
SD Decision No. 02004

APPROVED without hearing upon the recommendation of the Department of Member Regulation in accordance with NASD Procedural Rule 9523

Filed Under: Felony, Tax Issues, Remote State, Approval w/o hearing
SD Event

1998 guilty plea for federal tax evasions arising from the deduction of previously reimbursed business expenses. Two yearsí probation, six monthsí home detention, and repayment of penalties and interest to IRS.

Sentence Expiration

2000 probation completed

Prior Industry Activity
N/A
Background
N/A
Sponsoring Firm

NASD member since 1967. Provides execution, clearing, and custody services on a fully disclosed basis. 38 OSJs and 51 branches. Employs 64 registered principals and 153 RRs.  AWC: $15,000 fine/Censure for written supervisor procedures, $7,500 fine/Censure for WSP, $6,000/Censure for reporting violations. LOCs. Firm does not employ any other SDs.

Proposed Activity

X to be employed in marketing department as a non-registered person promoting Firmís financial systems and servicesto BDs, banks, and RIAs. No dealings with investing public.  No supervisory capacity.  Will work out of home in State 1.

Proposed Supervisor

EVP in office in State 2. Has Series 7, 27, 4, 55, 65, and 24.  GSP 1985. No regulatory history.

Member Regulation Recommendation

Permitted

Considerations

X will be non-registered and not dealing with investing public.  Firmís disciplinary history does not go to issue of inadequate supervision.

UNDERTAKINGS 

1. Although X will not be in the same physical location as the supervisor, he will be subject to telephone meetings on a monthly basis.  These discussions will focus on meetings that have taken place between X and prospective clients.  X will also visit the home office, at least once, on an annual basis. 

2. X will not have any direct dealings with the investing public. 

3. X's outgoing correspondence and expenseswill be reviewed by the Proposed Supervisor.   

4. Based upon the nature of his conviction, the Sponsoring Firm will require X to provide a copy of his personal taxes to be reviewed by either the Firm's CFO or its auditors. 

5. For the duration of X's statutory disqualification, the Firm must obtain prior approval from Member Regulation if it wishes to change X's responsible supervisor from the Proposed Supervisor to another person.

Citations
N/A
 
Sections
Enforcement Actions
 
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