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.
Without his member firm’s knowledge or permission, Conrod
used the firm's internal information, including some confidential and proprietary materials for a proposed hedge fund;
contacted potential investors, including some firm institutional investors, regarding possible interest in investing in the proposed hedge fund; and
used the firm’s name in the proposed hedge fund’s business plan in a manner which could be reasonably misinterpreted to indicate that the firm was aware of and/or approved of the proposed hedge fund.
The materials Conrod created and utilized in communications with the public for the proposed hedge fund were not approved by a registered firm principal prior to use, were not fair and balanced, and contained statements that were exaggerated and/or unwarranted and contained promises of specific results, and/or predictions or projections of investment performance. The email correspondence Conrod utilized with the public contained false and/or misleading statements or claims.
Douglas Franklin Conrod II: Fined $5,000; Suspended 3 months