Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2011
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.
January 2011 - View all for this month
David William Trende
2007008935010
2007008935010
Trende falsified Federal
Reserve forms with
respect to customers and caused his firm to maintain false books
and records by providing
false information on Purpose Statements and submitting them to the
firm.
A Stock-to-Cash program was designed to help customers
of insurance agents
fund purchases of fixed annuity and fixed life insurance products; however, loan documents and
federal regulations prohibited investment of the loan proceeds in
margin securities and from investing in variable
annuities. As part of the
Stock-to-Cash loan process, Trende was required to provide a
Purpose Statement setting
forth the intended use of proceeds, in order to ensure compliance
with Federal Reserve
Board regulations restricting the extension of margin credit.
Trende had general discussions
with the customers who agreed to borrow approximately $180,000
concerning the possible
uses of the loan proceeds, but no decisions were made about how to
use the funds until
after the proceeds were received so real estate was written on the
Purpose Statement as
the specific purpose of the loan.
The customers did not use
the proceeds for the stated purpose of purchasing real estate;
they used more than 50
percent of the proceeds of the Stock-to-Cash loan to purchase a
variable annuity from an
entity, with Trende as their broker, and used the remainder of the
proceeds to purchase an
equity-indexed annuity, again through Trende, and to pay some
debts.
The firm received
a commission from the annuity sales, and Trende received a payout
from the firm.
Another of Trende’s customers agreed
to borrow approximately
$100,000 through the Stock-to-Cash program. In connection with
this customer’s loan,
Trende completed a Purpose Statement for the customer’s signature,
which stated that
the credit was going to be used for real estate. When the customer
signed the Purpose
Statement, he had discussed several options for the use of the
proceeds with Trende, but
had not determined how he would ultimately use the loan proceeds
but did not use the
proceeds to purchase real estate. The customer signed an
application to purchase a variable
annuity, with Trende as the broker, with most of the proceeds from
the Stock-to-Cash loan;
the firm received a commission from the annuity sale, and Trende
received a payout from
the firm. FINRA found that both customers profited on their
investments in the securities
that they bought for participation in the Stock-to-Cash program
and posted as collateral
for their loans.
Trende was well aware that
his customers had not
decided how to use the money at the time the Purpose Statements
were signed. Trende’s
conduct was unethical and reflects negatively on his commitment to
compliance with the
securities industry’s regulatory requirements.
David William Trende : Fiend $10,000; Suspended 3 months.
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