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.
Kopp engaged in an undisclosed outside business activity without providing prompt written notice to his member firm. Working with others, Kopp took steps to establish a business whose apparent purpose was to provide investment banking-related services to Chinese companies seeking access to United States capital markets.
David Smith Kopp : Fined $5,000; Suspended 20 business days
Despite knowledge of his member firm’s change in policy regarding the sale of equity indexed annuities that all business be sold and processed through the firm and representatives were only to sell specific annuities offered by firm-approved annuity companies, Schaefer sold annuities to customers, including firm customers, and did not sell or process the transactions through his firm and did not provide written notice to the firm of his intention to engage in outside business activities. The sales totaled approximately $1,856,597, and Schaefer was compensated approximately $93,163. Schaefer completed an annual questionnaire in which he falsely answered that he did not offer or sell equity indexed annuities to his clients.
Dwight John Schaefer: Fined $5,000; Suspended 4 months
Serrano entered into a formal “Advisor Agreement” with a financial public relations firm. The findings stated that the website issued press releases recommending specific securities to the public, with the releases implying that the recommendations were made by Serrano, whom they identified by name and CRD number as a registered person the website employed.
Serrano failed to provide written notice of this outside business activity to either of the member firms through which he was registered, and signed a disclosure document in which he specifically and falsely denied that he was engaging in any outside business activity. Serrano acknowledged in a letter to FINRA that he had failed to disclose his outside employment to his member firms and conceded in on-the-record testimony that he was obligated to disclose the outside activity to both firms.
Julio Enrique Serrano : Fined $26,000; Suspended 12 months
Kopp engaged in an undisclosed outside business activity without providing prompt written notice to her member firm. Working with others, Kopp took steps to establish a business whose apparent purpose was to provide investment banking-related services to Chinese companies seeking access to United States capital markets.
Li Kopp (Principal) aka Sabrina Kopp, Li Guo, and Sabrina Guo: Fined $7,500; Suspended 6 months
Beggs engaged in outside business activities, in that he acted on behalf of an insurance company not affiliated with his firm and engaged in sales to customers of indexed deferred annuities involving a total principal investment of $112,000, for which he was compensated approximately $10,080 in commissions. Beggs accepted compensation from the insurance company for the sales without giving his firm prompt written notice.
Mark William Beggs : Fined $5,000; Suspended 20 business days
Kearney engaged in an outside business activity and did not provide prompt written notice to his firm regarding his association with a limited liability company.
In regard to FINRA’s request for information, Kearney falsely stated to his supervisor and a firm compliance officer that he was not aware of the limited liability company and had no involvement or relationship with it. Kearney intentionally provided false information in a response to FINRA when he stated that he was not aware of the company until his supervisor brought it to his attention.
Gissendaner engaged in private securities transactions when he sold ULPs in various resort properties to investors. Gissendaner participated in a sale of a total of $172,989.23 worth of ULPs to investors and received approximately $15,380 in commissions from the sales. Prior to participating in these sales, Gissendaner failed to provide his member firm with written notice of the sales of ULP products, and failed to obtain the firm’s written approval. Gissendaner completed his firm’s Outside Business Activities/Private Securities Transactions form, and submitted his firm’s Annual Compliance Questionnaire and stated that he had no outside business activities or private securities transactions to report, and that he had not engaged in any private securities transactions while associated with the firm.
FINRA found that Gissendaner also falsely answered “No” when he was asked whether he accepted compensation from any person or entity that was not a firm-approved arrangement or that was not disclosed on his Outside Business Activities Questionnaire.
Randall Allen Gissendaner : Fined $20,500 (includes disgorgement of commissions); Suspended 5 months
Cataldo engaged in several outside business activities without providing prompt written notice to his member firm and failed to disclose these outside activities on his firm’s compliance questionnaires. He failed to completely respond to FINRA requests for information.
Moss participated in the sale of $50,000 worth of Universal Lease Programs (ULPs) without prior written notice about the sale to his member firm and his firm’s prior written approval. He earned approximately $6,000 in commissions from his sale of the ULP.
Moss participated in sales of
payphone programs totaling $65,000,
an automatic teller machine (ATM) program totaling $48,000 with an additional $2,400 for surety bonds
to members of the public and failed to provide his firm with written notice about the sales and never obtained the firm’s written approval.
Moss initialed and signed business activity statements in which he agreed that he was aware that his firm must be notified of all his business activities, even those that did not relate to the securities industry; these statements were incomplete and misleading because Moss failed to disclose his participation in the sales of the ULP, the payphone program and the ATM program.
Fitzwater participated in the sale of Universal Lease Programs (ULPs))without prior written notice to, and prior written approval from, his member firm, and received approximately $2,000 in commissions from the sale of ULPs. Fitzwater submitted an outside business activities disclosure form to his member firm that failed to report that he intended to engage in the sale of ULPs.
Keating participated in private securities transactions involving the offer and sale of interests in a company, outside the scope of his employment with his member firm. Keating sold interests in the company totaling approximately $17.6 million to investors and received compensation in the approximate amount of $1.7 million for his participation. Keating failed to provide his firm with prior written notice of his proposed participation in these transactions and failed to receive the firm’s prior written approval. At all times, the firm’s written procedures prohibited employees from engaging in private securities transactions.
Keating was employed by outside businesses where he held various positions, including officer and director with these outside businesses, while he was associated with his firm, and failed to provide the firm with prompt written notice of these outside business activities.
Gardner engaged in outside business activities by serving as the chief financial officer of a start-up company, and failed to provide prompt written notice to his member firm of any outside business activities and to obtain a designated firm principal’s prior permission before accepting any position as officer or director of another entity, contrary to his firm’s written policies and procedures. While serving as the start-up company’s chief financial officer, Gardner converted the entity’s funds for his personal use by writing fraudulent checks without the entity’s knowledge or permission. Gardner solicited and accepted $15,000 from an individual as an investment in the entity but converted the funds for his personal use.
Garrett participated in the sale of ULPs without prior written notice to, and prior written approval from, his member firm, and received approximately $4,000 in commissions from the sale of ULPs. Garrett submitted an outside business activities questionnaire to his member firm that contained statements that he had not engaged in outside business activities, which was false.
Roger Howard Garrett (Principal): Fined $9,000 (including commissions disgorgement); Suspended 4 months
Knight sold interests in ULPs to members of the public and failed to provide his member firm with prior written notice about the sales and failed to obtain the firm’s prior approval. Knight participated in the sales despite his member firm denying his request and received approximately $30,270 in commissions from the sales. Knight completed a firm questionnaire containing statements that he had not engaged in any outside business activities, which was false.
Munnelly served as an outside business’ Chief Operating Officer without disclosing his outside business activity to his member firm. The outside business was outside the scope of his relationship with his firm, and Munnelly failed to file a reporting form or otherwise disclose to his firm in writing that he was working for the outside business. Munnelly failed to respond to FINRA requests for information.
Hsu failed to provide prompt written notification to his member firm of outside securities accounts he held at other member firms. Hsu did not notify the executing firms of his association with his firm and falsely certified on forms to the firm that he had disclosed all of his outside brokerage accounts.
Andrew Ann Kow Hsu : Fined $5,000; Suspended 3 months
Hughes engaged in outside business activities without providing prompt written notice to his member firm. Hughes and his wife formed an entity for the purpose of holding rental property and, in a series of transactions, the entity loaned a total of $40,000 to a payday loan operation for which the entity received $8,000 in interest payments. Hughes was introduced to the loan program by firm customers, and the entity, acting through Hughes, assigned its loan to a firm customer and did so at an $8,000 discount.
Daniel Hope Hughes : Fined $5,000; Suspended 10 days
Carr opened accounts with his member firm for customers, without speaking with the customers in connection with opening their accounts or receiving the customers’ direct authorization to liquidate their accounts, but relied on directions received from third parties. Carr exercised discretion in the customers’ accounts when he executed transactions without his member firm’s written authorization or acceptance of the accounts as discretionary.
Carr engaged in outside business activity for compensation, outside the scope of his business activities with his firm, relating to opening the customers’ accounts through third-party intermediaries. Carr engaged in the outside business activity without providing prompt written notice to his member firm of the outside business arrangement and of the compensation he received from the arrangement.
Duane Alan Carr : Fined $10,000; Suspended 6 months
Linge participated in private securities transactions through the sales of securities totaling approximately $395,000 in the form of promissory notes issued by a company, to which he referred firm customers and received monetary compensation from the company’s affiliate for his referrals. Linge failed and neglected to give written notice to his firm of his intention to engage in such activities, and the firm never authorized Linge to engage in such activities.
Linge engaged in business activity outside the scope of his association with his firm for which he received monetary compensation, and failed to provide the firm with prompt written notice of this outside business activity. Linge received compensation totaling $15,600 as a result of the above-mentioned outside business activities and private securities transactions.
Stephen Dee Linge : No Fine in light of financial status; Suspended 2 years
Woznick engaged in an outside business activity without providing prompt written notice to his member firm. Woznick engaged in a private securities transaction by selling his personal shares of a company’s stock to a customer of his firm outside the scope of his employment with the firm, and failed to provide prior written notice of this private securities transaction to the firm.
Woznick failed to respond to FINRA requests for information.
Bear William Woznick : Fined $15,000; Suspended 2 years
Miller engaged in outside activities that involved his member firm’s customers without providing prompt written notice to his firm in the form the firm required. Miller solicited a customer to engage in a financial arrangement in which the customer pledged a variable life policy and variable annuity contract purchased through the firm as collateral for a loan. Acting through his outside business, Miller solicited another customer to loan funds to an outside entity for a construction project. Miller failed to advise the firm in writing in accord with the firm’s procedures that he was engaged in these outside business activities with the firm’s customers.
David Charles Miller : Fined $25,000; Suspended 6 months
Hafen participated in the sales of Universal Lease Programs (ULPs) to members of the public totaling $482,015.64 and failed to provide his member firm with written notice and obtain the firm’s written approval. Hafen received approximately $42,960 in commissions from ULP sales.Hafen submitted an outside business activities questionnaire to his firm that failed to report that he was selling ULPs for compensation.
Gregory Earl Hafen (Principal): Fined $48,000 including disgorgement of commissions; Suspended 7 months
Acting through its chief compliance officer (CCO), the firm:
failed to establish and implement an adequate AML program and related procedures; adequately identify, investigate and respond to red flags of suspicious activities;
timely file a Suspicious Activity Report (SAR); and
provide AML training for firm personnel for one year.
Acting through a registered representative, the firm
improperly facilitated the distribution of approximately 20 million shares of various unregistered securities;
operated an unregistered branch office, in violation of the restriction on business expansion contained in its membership agreement, and
engaged in improper telephone solicitations (from the unregistered office) by making materially false representations and omitting material facts in connection with the offer of securities and by using misleading telemarketing scripts that a registered principal had not approved.
Acting through the registered representative and CCO, the firm failed to perform adequate searching inquiries and take necessary steps to ensure that transactions did not involve distributions of unregistered and/or restricted securities.
Acting through a registered representative and firm principal, the firm sold securities to public investors using a private placement memorandum that omitted to disclose a convicted felon’s association with the issuer, a material fact to any reasonable investor.
Acting through various FINOPs, the firm
failed to maintain accurate financial books and records,
filed inaccurate FOCUS reports and
operated a securities business while under minimum net capital requirements.
Acting through the CCO and other compliance officers, the firm
failed to forward customer funds it received in connection with contingency offerings to an escrow agent by noon of the next business days after receipt of such fund;
adequately review and approve customer correspondence;
timely and accurately report customer complaints;
timely update Uniform Applications for Securities Industry Registration or Transfer (Forms U4) and Uniform Termination Notices for Securities Industry Registration (Forms U5);
comply with the Firm Element of the Continuing Education Requirement for a year;
conduct an annual compliance meeting; and
establish an adequate business continuity plan, which consequently led to the loss of access to certain customer records upon termination of its relationship with a particular clearing firm.
The firm had additional supervisory deficiencies, including that
its written supervisory procedures failed to establish adequate procedures for review of producing managers’ customer account activities,
it failed to have written supervisory procedures for identifying producing managers that should be subject to heightened supervision, and
failed to place certain producing managers on heightened supervision, in that, acting through various individuals, the firm failed to clearly assign each registered person to an appropriately registered representative and/or principal responsible for supervising that person’s activities, and designate principals with actual authority to carry out the supervisory responsibilities over the firm’s business.
Acting through a supervising principal, the firm failed to reasonably supervise registered representatives working out of the unregistered branch office.
Acting through firm officers, the firm failed to establish and maintain a supervisory system reasonably designed to supervise the sales activities of firm personnel conducted outside of its registered offices, and failed to establish and maintain a supervisory system for determining whether customer securities were properly registered or exempt from registration.
Acting through its CCO, the firm failed to implement adequate procedures to ensure that the firm did not telephone persons who stated they did not wish to receive calls and/or who registered on the national do-not-call registry, and failed to adequately update and maintain a do-not-call list.
Acting through various supervisors, the firm failed to perform heightened supervision over numerous individuals.
Brookville Capital Partners LLC fka New Castle Financial Services LLC : Brookville Capital Partners LLC fka New Castle Financial Services LLC : Censured; FIned $200,00; Required to retain an independent consultant to conduct a review of the adequacy of its policies, systems, procedures and training regarding AML rules and regulations; compliance with Section 5 of the Securities Act of 1933; and rules and regulations relating to private placements, financial requirements, customer complaints and supervision. In addition, the firm was required to have its associated persons complete 16 hours of AML continuing education training and to fully and promptly cooperate with FINRA in any and all investigations.
Murrell engaged in outside business activities without providing prompt written notice to his member firm. Murrell formed a partnership with a customer of a bank affiliated with his member firm to purchase, develop and sell private and commercial properties and make commercial loans secured by mortgages on realty, but failed to inform his firm. Murrell failed to disclose his outside business activities to his firm on an annual attestation form he completed on the same day he received in compensation from the partnership.
David Alan Murrell : Fined $10,000; Suspended 6 months
Manziano willfully failed to disclose a material fact on his Form U4. Manziano engaged in outside business activities without providing prompt written notice to his member firm and contrary to his firm’s written supervisory procedures requiring written approval or disapproval from a supervisory principal of any outside business activity requests.
Frank Gerallimo Manziano : Fined $15,000; Suspended 4 months
While employed at a member firm, Jewell consented was also employed by, and accepted compensation from, an outside business for providing consulting support and investment platform coordination for participants in “professional employer organization” plans. Jewell’s business activities were outside the scope of his relationship with his firm, and he did not provide prompt written notice to his firm of his activities. Jewell inaccurately certified on an annual firm compliance questionnaire that he was not involved in any outside business activities.
Kenneth Francis Jewell: Fined $5,000; Suspended 2 months
Wright engaged in a private securities transaction without prior written notice to, or prior written approval from, her member firm. The customer agreed to provide start-up capital for a corporation Wright founded, and the customer loaned the corporation $150,000 and received a promissory note evidencing the loan. Wright borrowed $30,000 from a firm customer contrary to her firm’s procedures, which specifically prohibited registered representatives from borrowing money from customers; Wright did not inform the firm of this loan, which was repaid. Wright engaged in an outside business activity without providing prompt written notice to her firm; Wright failed to disclose her position as president of the corporation and her activities with that company.
Kortman willfully failed to disclose material information on her Form U4. Kortman engaged in outside business activities without prompt written notice to her member firm.
Rebecca Ann Kortman: Fined $15,000; Suspended 7 months
As his firm’s Chief Compliance Officer, Bowers permitted an individual, the agent of the firm’s owner, to act as a firm principal without being registered to do so. Bowers failed to ensure the sufficiency of the firm’s written supervisory procedures and failed to enforce the firm’s requirement to document permission for outside business activities.
Richard Michael Bowers (Principal): Fined $5,000; Required to requalify in all principal capacities before resuming any principal activities; Suspended 2 months in Principal capacities only
Overdyke engaged in outside business activity and failed to give prompt written notice to his member firm. Overdyke received approximately $22,100 in compensation for selling equity indexed annuities through a life insurance company to public customers.
Edward William Overdyke : Fined $5,000; Suspended 3 months
Porrazzo engaged in an unreported outside business activity with a customer of his member firm, which his firm prohibited. Porrazzo failed to disclose his participation in a horse racing venture on his firm's questionnaires, which requested the disclosure of any outside business activities, because he knew the firm would not approve. Porrazzo used his personal email address to communicate with the customer about the outside business activity, contrary to the firm’s written policies and procedures that required it to monitor incoming and outgoing correspondence to detect violations of firm policies.
James Michael Porrazzo : Fined $15,000; suspended for consecutive terms of 4 months and 15 business days
Krusheski engaged in undisclosed outside business activities, received selling commissions from one of the outside activities, and failed to disclose his roles in the outside business activities to his member firm. Krusheski engaged in private securities transactions and received a commission without providing prior written notice to, or receiving written approval from, his firm. Krusheski was responsible for supervising employees in a firm Office of Supervisory Jurisdiction (OSJ) branch office and, although he knew that a registered representative in the office was engaging in outside business activities for compensation, he failed to ensure that the representative provided written notice to the firm of his activities.
Page participated in private securities transactions, without prior written notice to, and authorization from, his member firm. Page failed to provide his firm with prompt written notice of his outside business activity.
Polychronis engaged in outside business activities without giving prompt written notice of those activities to his member firm. Polychronis wrote annuity business away from his firm, including sales of fixed annuities and an equity-indexed annuity. When his firm questioned Polychronis on various occasions, he initially failed to disclose his outside activities and then later under-reported its scope by falsely claiming that it had been limited to a single transaction.
John Andrew Polychronis : Fined $5,000; Suspended 6 months
Boyer engaged in outside business activities by participating in the sale of equity-indexed annuities while registered with his member firm, and received approximately $7,622.25 in commissions as a result of the sales. Boyer failed to provide prompt written notice to the firm regarding the outside business activities and signed an attestation form acknowledging that he was required to submit sales of equity-indexed annuities to be processed by the firm.
Zachary participated in a private securities transaction by introducing her member firm’s client to an issuer offering a line of credit promissory note through an entity, received a $50,000 commission for the transaction, and failed to provide her firm with prior notice of her participation in the transaction. Zachary engaged in an outside business activity by establishing a separate entity to receive the sales commission for the private transaction, but failed to provide her firm with prompt written notice of her participation in this outside business activity.
Ellis engaged in outside business activities without providing prompt written notice to his member firm. Ellis managed customers’ accounts and effected trades in commodity futures contracts and commodity futures options through commodity trading firms and earned commissions from the firms. Ellis completed quarterly compliance questionnaires for his firm that inquired if he had engaged in an outside business activity while associated with the firm, and he answered “no” to this question, thereby knowingly providing false information to his firm, which caused its firm’s books and records to be inaccurate.
Ellis willfully failed to timely amend his Form U4 with material information.
Walter Allen Ellis (Principal): Fined $22,500; Suspended 1 year
Crocker engaged in outside business activities for compensation and failed to provide prompt written notice to his member firm, but eventually notified his supervisor of the transactions a number of years later. Crocker participated in referring a customer to another firm’s registered representative for the purpose of purchasing equity-indexed annuities and received compensation for the transactions.
David Bigelow Crocker : Censured; Fined $10,000 (includes $3,500 disgorgement); Susendped 20 business days
Groth sold equity-indexed annuities, with a face-value of $4,800,000, issued by carriers that were not approved by the firm for sales by its registered representatives, and earned approximately $524,142 in connection with the sales. This compensation was outside the scope of Groth’s relationship with the firm, and he accepted it without providing prompt written notice to the firm in a form the firm required. Groth completed firm documentation requesting information concerning any outside business activity and did not disclose that he was selling annuities issued by carriers that did not have selling agreements with the firm.
Jason Allen Groth: Fined $5,000; Suspended 90 days
Friemoth engaged in outside business activities, for compensation, and failed to give his member firm prompt written notice.Friemoth sold equity-indexed annuities on an insurance company’s behalf after his firm had discovered that he had sold an equity indexed annuity that was not on the firm’s approved list and after it had requested that he not proceed with any additional such sales.
Rob William Friemoth Jr.: Fined $5,000; Suspended 2 months
Prevett engaged in an outside business activity by selling EIAs to his member firm’s customers without giving prompt written notice of the sales to his firm. Prevett received approximately $77,700 in compensation for selling the EIAs.
Kenneth Ray Prevett Jr. : Fined $5,000; Suspended 3 months
Registered Supervisor Brown misused customer funds totaling $20,000, which he received from the customer to be invested in a real estate project, but instead deposited the funds in a bank checking account in the name of a business he owned and used the funds to pay personal expenses without the customer’s authorization. Brown electronically submitted an Outside Business Activities questionnaire to his member firm on which he informed the firm of his ownership of the business, but stated that the business was “cattle ranching” and that his duties did not involve raising capital or issuing debt. Brown failed to return the funds to the customer.
Engelhardt engaged in outside business activities by referring a customer to a relative who was a registered representative at another firm and who received compensation from the referral. The findings stated that Engelhardt failed to provide written notice of the outside business activities to her member firm.
Lily Korine Engelhardt (Principal): Fined $10,000; Suspended 20 business days
Snyder engaged in an undisclosed outside business activity as a limited liability company’s registered agent and manager. Snyder engaged in private securities transactions without prior written notice to, or written approval from his member firm by facilitating investments in working interests in oil and gas wells.
Richard Albert Snyder Jr. : Fined $10,000; Suspended 1 year
Schulze engaged in outside business activities, failed to inform his member firm of his intention to offer fixed annuities to customers and failed to provide written notice of the transactions to his firm after they were completed. Schulze’s firm required all registered representatives to submit an outside business activity disclosure form and receive supervisor’s written approval prior to engaging in any outside business activity.
Ronald Urban Schulze (Principal): Fined $10,000; Suspended 3 months
Delott engaged in improper seminar, training and sales activities in retirement planning workshops, fact finders meetings, annuity training and a breakout session at an insurance industry expo. Delott failed to disclose that he received commissions for the sale of EIAs and falsely created the appearance that people were signing up for a fact finders meeting by asking existing customers to come to the front room at the conclusion of a workshop.
Delott recommended and instructed attendees at annuity training sessions and an expo breakout session to make false, misleading, unwarranted or exaggerated statements in the sale of EIAs and other financial products; to omit material facts; to present information concerning EIAs that is not fair and balanced; and to use improper and high-pressure sales strategies. Delott made exaggerated, unwarranted and misleading statements, and statements that were not fair and balanced and did not provide a sound basis for the evaluation of facts during his workshops, fact finders meetings and annuity training classes.
In connection with his marketing of EIAs, securities and insurance and annuity training, Delott used materials that his member firm had not approved. FINRA found that Delott did not disclose his member firm’s name on invitations, or failed to disclose it in a prominent manner, and engaged in outside business activities without disclosing the activities to his firm or seeking its approval.
Steven Howard Delott: Fined $35,000; Suspended 6 months
William Robert Colston engaged in outside business activities in that he acted on behalf of insurance companies not affiliated with his member firm and engaged in sales of equity-indexed annuities (EIAs) to customers for compensation of approximately $111,000, and failed to provide prompt written notice to his member firm. Colston engaged in these transactions after his firm specifically instructed him that he was prohibited from selling EIAs, verified that he understood that his firm did not allow the sale of EIAs and agreed he would not sell them going forward.
William Robert Colston (Principal): Fined $10,000; Suspended 3 months in all capacities
Rhodes failed to give notice to his member firm as required by the firm and FINRA rules that he was engaged in an outside business activity and was being compensated by an individual for providing financial services. The individual contacted Rhodes for financial advice on several businesses the individual owned and on a number of issues and Rhodes met with his firm’s officers to develop a plan for working with the individual.
Rhodes firm’s officers told him that he had to qualify and become registered as an investment adviser representative (Series 65) before he could provide the services the individual requested and be compensated for those services. Rhodes was paid $25,000 per month from one of the individual’s businesses even though he was not registered as an investment adviser representative. The Firm learned about the compensation through other means.
Michael D. Rhodes : Fined $10,000; Suspended 30 days
Kleese participated in private securities transactions outside the scope of his employment with his member firm, for compensation, and failed to provide prior written notice to, or receive approval, from his firm. Also, Kleese engaged in outside business activity and failed to provide his firm with prompt written notice.
Morales participated in business activity outside the scope of his relationship with his member firm, and failed to provide prompt written notice to his firm. Morales failed to completely respond to FINRA requests for information and documents.
Gerald David Morales: Fined $12,500; Suspended 2 years
Gilbert engaged in an unapproved outside business activity selling mortgages with another company without notifying her member firm or requesting its approval. While employed at her member firm, Gilbert sold mortgage products and received $2,000 in compensation for one of them. The products were not sold to her firm’s customers and did not overlap with firm products.
Gilbert resigned from the firm when her supervisor discovered her outside business activity and inquired about it.
Mary Lynn Gilbert (Principal): No fine in light of financial status; Suspended 10 business days
Lounsbury accepted compensation from an outside business activity without providing written notice of such compensation to his firm, and completed and submitted questionnaires to his firm in which he falsely indicated that he was not receiving outside compensation without prior approval. Lounsbury thereafter disclosed to his manager that he had been receiving compensation as trustee for the customer’s trust and repaid the trust the entire amount he had received as payment, plus interest.
Douglas Milton Lounsbury: Fined $5,000; Suspended 4 months
Stanley engaged in outside business activities, for compensation, without providing written notice to his member firm . Stanley did not execute the transactions through his member firm ’s affiliated insurance company as the firm’s compliance procedures required.
James Scott Stanley: Fined $5,000; Suspended 6 months
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
