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.

Cory Todd Schmelzer (Principal)
AWC/2007008935002

Schmelzer failed to fulfill his supervisory responsibilities over the activities of a registered representative under his supervision at his member firm. The registered representative recommended that his insurance business customers participate in a Stock to Cash program, offered by a third-party entity under which customers would pledge stock to obtain loans to purchase other products; and the representative’s customers, including clients of the firm, participated in the program at his recommendation, obtaining loans of more than $4.2 million in the aggregate.

Schmelzer failed to ensure that the registered representative promptly disclose his participation in the program to the firm, and failed to ensure that the registered representative promptly disclose to his firm his recommendations that his customers utilize the program, even after he learned that the representative had ignored his prior instruction to make such disclosure. As a result of Schmelzer’s supervisory deficiencies, the representative engaged in conduct that the firm deemed inappropriate and which potentially put the firm’s clients’ assets at risk.

Cory Todd Schmelzer (Principal): Fined $7,500; Suspended 15 business days in Principal capacity only

Tags: Supervision