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Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
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.
John Brian Busacca III
E072005017201

Registered Principal Busacca failed to reasonably supervise the firm's operations and failed to diligently address numerous problems at the firm, including, but not limited to, inaccurate box counts, accurate securities position records, violations of section 220.8 of Regulation T of the Federal Reserve Board, failing to maintain margin requirements, failing to report data pursuant to NASD Rule 3150 and problems with transfers of customers’ accounts. As the firm’s President,  Busacca permitted a non-registered person to act in a principal capacity as the firm’s chief compliance officer.

The FINRA Hearing Panel (OHO) suspended Busacca for six months in all principal capacities and fined him $25,000 for failing to reasonably supervise the operations of North American Clearing, Inc., f/k/a Advantage Trading Group, Inc. (hereinafler, “North American” or the “Firm”), in violation ofNASD Rules 3010 and 2110. The OHO Panel also fined Busacca $5,000 for permitting North American, as its president, to employ an unregistered chief compliance officer, in violation of NASD Rules 1022 and 2110. On appeal, FINRA's National Adjudicatory Council (NAC) sustained the OHO's findings and sanctions. 

This decision has been appealed to the SEC and the sanctions are not in effect pending consideration of the appeal.

John Brian Busacca III : Fined $30,000; Suspended 6 months in Principal Capacity only
Bill Singer's Comment

FINRA’s Department of Enforcement filed a 17-cause complaint against North American Clearing, Inc.  and Busacca on August 13, 2007. Busacca was charged in only two of the 17 causes of action, causes 13 and 17.

  • Cause 13 alleged that Busacca and North American failed to reasonably supervise the Firm’s operations system conversion and its operations activities to detect and prevent certain violations, during the period from April 2003 through February 2005, in violation of NASD Rules 3010 and 2110.
  • Cause 17 alleged that Busacca and North American employed and designated an unregistered principal as the Firm’s chief compliance officer from July 2004 until February 2005, in violation ofNASD Rules 1022(a) and 2110.

Busacca and North American filed answers denying Enforcement’s allegations.

In May 2008, the Securities and Exchange Commission (SEC) filed suit against North American and some of its managers (including Goble) seeking the appointment of a receiver for the Firm. A federal court subsequently appointed a receiver for North American, the receiver assumed control of the Firm, and the Firm went out of business. At the request of the Securities Investor Protection Corporation, the court later appointed a trustee to oversee North American’s liquidation pursuant to the Securities Investor Protection Act of 1970.

In this case, Enforcement reached a settlement of the complaint against North American with the receiver and trustee pursuant to which FINRA expelled North American from FINRA membership. Enforcement filed a motion to sever the allegations against North American from those against Busacca pursuant to NASD Rule 9214. The Hearing Officer granted Enforcement’s request to sever over Busacca’s objection.

The OHO Panel conducted a hearing with respect to the two counts of the complaint for which Busacca was charged on November 10, 2008. Enforcement called five witnesses: two FINRA staff members, Sandra Fan (North American’s former operations manager), Goble, and Busacca. Busacca testified on his own behalf.

The NAC sustained the OHO's findings and sanctions.

The NAC Decision: http://www.finra.org/web/groups/industry/@ip/@enf/@adj/documents/nacdecisions/p120606.pdf

The OHO Decision:
http://www.finra.org/web/groups/industry/@ip/@enf/@adj/documents/ohodecisions/p118160.pdf

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It's All Over Now: My 42-year Wall Street Journey by Bill Singer, Esq.
January 30, 2024
Before my second career as a lawyer, I was the third generation of my family in the wine and liquor industry. In 1981, I started law school; and in 1982, I was hired as a law student in Smith Barney, Harris & Upham's Legal Department. After I graduated law school, I was a regulatory lawyer with the American Stock Exchange and then with the NASD (now... Read On
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