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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.
November 2011
Krittibas Ray
AWC/2010023781701/November 2011

Ray solicited prospective investors to purchase promissory notes as a vehicle to fund the start up of a hedge fund and to pay the ongoing operations of the fund; investors purchased more than $675,000 in promissory notes from Ray. Ray represented he could pay above-U.S. market interest rates based in part on the fact he could obtain these rates by investing the funds in a foreign bank; Ray failed to invest the proceeds of the notes with the foreign bank, used some of the proceeds for personal expenses and used proceeds from later sales to pay interest and repay principal amounts due on notes earlier purchasers held.

Ray made materially misleading statements and omissions of fact, including misrepresenting the use of proceeds from the sale of the promissory notes, misrepresenting how and where the proceeds were to be invested, and failing to disclose he was using the proceeds from the sale of promissory notes to pay interest and principal amounts due to earlier note holders. Ray participated in private securities transactions through the sale of promissory notes without providing written notice to his firm describing in detail the proposed transaction, his role therein and stating whether he received, or would receive compensation, and without obtaining his firmís approval.

Krittibas Ray : Barred
Tags:  Banks    Promissory Notes    Hedge Fund     |    In: Cases of Note : FINRA
Bill Singer's Comment
Nathaniel Aaron Finkin
AWC/2009020132901/November 2011
Finkin's customer submitted an application to the firm for a mortgage, term loan, and line of credit, and as part of the application process, the firm retained an outside law firm to engage in negotiations on the term of the loans with the customerís counsel. Finkin sent fabricated emails to various individuals involved in the negotiations, including the customerís counsel, and each of the emails instructed the recipients to contact Finkin with any questions or concerns; Finkin sent the emails from his personal email account in a way that made the messages appear to the recipient to be from a paralegal at the outside law firm, and not Finkin.
Finkin failed to comply with a FINRA request for a document.
Nathaniel Aaron Finkin: Barred
Tags:  Banks    Email    Impersonation    Mortgage     |    In: Cases of Note : FINRA
October 2011
Aaron Joseph Coculo
AWC/2011026065501/October 2011
Coculo converted funds from bank customer accounts while employed with his member firmís bank affiliate. Coculo ordered and intercepted automated teller machine (ATM) cards and withdrew funds from those accounts, which totaled approximately $5,500. Coculo improperly obtained ATM cards from relatives and effected unauthorized withdrawals totaling approximately $9,000; in total, Coculo misappropriated approximately $14,500 from the customer accounts without permission or authority from the customers or the bank. The transactions did not involve funds from an account held at a FINRA regulated entity.
Aaron Joseph Coculo : Barred
Tags:  Banks    ATM     |    In: Cases of Note : FINRA
Christopher P. Smith
AWC/2009019838802/October 2011

Smith misappropriated approximately $231,000 from bank customers by completing credit line advance request forms seeking withdrawals from customer accounts without the customersí knowledge or consent, withdrew the money in cash and used it to pay personal expenses or deposited it into his personal bank accounts. When some of the customers questioned the withdrawals, Smith reimbursed their accounts by making some unauthorized withdrawals from other customer accounts.

Smith pleaded guilty to misapplication of bank funds in the U.S. District Court for the Western District of Louisiana for stealing approximately $231,000 that was entrusted to the bankís care and control.

Christopher P. Smith: Barred
Tags:  Banks     |    In: Cases of Note : FINRA
Karl Henry Rodriguez (Supervisor)
AWC/2011026130701/October 2011

 Rodriguez converted and misappropriated $10,000 from the bank checking account of a customer of his member firm and the firmís bank affiliate.

While researching an investment for the customer, a bank employee discovered that Rodriguez had diverted a $10,000 check from the customerís bank checking account and made the check payable to a third party, who was also a bank customer and Rodriguezí close personal friend. The customer neither authorized Rodriguez to make the check payable to the third party nor divert the funds to the third partyís account at the bank. The third party made cash withdrawals totaling $10,000 from the bank account, and gave the money to Rodriguez, who used the funds for his personal benefit.

Ultimately, the bank re-deposited $10,000 into the customerís bank checking account, and as a result of the bankís inquiry, Rodriguez repaid approximately $5,000 to the bank.

Karl Henry Rodriguez (Supervisor): Barred
Tags:  Banks    Checks    Conversion     |    In: Cases of Note : FINRA
September 2011
Devin Raj Anand
2009017302001/September 2011

Anand converted customer funds by wiring funds totaling $51,289 from the customerís account to outside bank accounts of which Anand was associated; the customer did not authorize and had no knowledge of any of the wire transfers Anand made. Anand attempted to wire additional funds totaling $24,000 from the customerís account but Anandís member firm did not complete the wires.

Anand 18 Disciplinarmisappropriated funds from a non-customer (the individual was an employee of a business Anandís relatives owned) by creating a false account, borrowing $49,500 in funds from her 401(k) account without her knowledge or authorization, depositing the money into a bogus account he created in the noncustomerís name at his firm, and then wiring funds out of the account for his benefit. The individual did not authorize Anand to open an account, did not complete or sign any new account opening documents and, in furtherance of the scheme,

Anand created false documents related to the opening of the account which he submitted to his firm, thereby causing his firm to maintain inaccurate books and records. Anand failed to respond to FINRA requests for information and to appear and testify at an on-the-record interview.

Devin Raj Anand : Barred
Tags:  Banks     |    In: Cases of Note : FINRA
August 2011
David Lee Cheviron (Principal)
AWC/2010022831701/August 2011

Cheviron wrongfully converted a total of $75,331.08 from customers by withdrawing funds from a customerís bank account and then took the funds to another branch of the bank, where he deposited the funds into his own personal account.  Ultimately, he used the customerís funds to make home improvements to his personal residence.

Chevironís member firm compensated the customer for the funds wrongfully taken from her account; Cheviron has not reimbursed his firm.

Cheviron caused other customers to sign distribution requests to an insurance company with instructions to mail checks to Chevironís attention at several banks and his personal residence. Upon receipt, Cheviron deposited these funds into his personal bank accounts and used the funds for his personal benefit. In an effort to conceal that he was the beneficiary of the customersí funds, Cheviron created false account statements, which he provided to one of the customers.

David Lee Cheviron (Principal): Barred
Tags:  Banks    Checks    Insurance     |    In: Cases of Note : FINRA
July 2011
Casey W. Smith
AWC/2009018573101/July 2011

Smith improperly accepted $15,300 in cash gifts from a customer and her relative.

The customer and her relative gave Smith cash gifts when they visited their safe deposit boxes. Smith was given and accepted a cash gift during a visit to the customerís home. At the time Smith accepted the gifts, he was aware that the bankís code of conduct where he was employed prohibited employees from accepting gifts from customers.

This matter came to light when the customer offered cash to another bank employee after assisting her with her safe deposit box; the employee refused the gift and reported the matter to his supervisor. When Smithís supervisor questioned him, Smith admitted to accepting gifts from the customer, and his employment was terminated.

Casey W. Smith: Fined $15,000; Suspended 3 months
Tags:  Banks    Gifts     |    In: Cases of Note : FINRA
Bill Singer's Comment
I wonder what the going rate was for opening the safe deposit boxes -- after all, $15,300 isn't chicken feed. Then there's the other issue.  Why the hell would customers want the IRS to learn that they're keeping wads of cash (apparently) in their safe deposit boxes?  This one makes me cringe on so many levels.
Wendy Rice Stern
AWC/2009018870401/July 2011

Stern charged personal expenses on her corporate credit card totaling approximately $5,200. Stern made approximately $2,700 in payments to the bank affiliate of her member firm for the personal expense which she charged on her corporate credit card.

The bank notified Stern on several occasions about a number of aged items that were charged on the card for which no employee expense reports were submitted by Stern. Subsequently, the bank notified Stern that her card was two payments past due and it was being suspended.

Stern then admitted that she had made the personal purchases on her corporate credit card. Stern also made a $500 payment to the bank and thus reduced the outstanding amount owed due to her personal use of the corporate card to $1,984.

Sternís employment at her firm and the bank were terminated for improper use of the corporate credit card.

Wendy Rice Stern: Barred
Tags:  Banks    Credit Cards     |    In: Cases of Note : FINRA
Bill Singer's Comment
Frankly, this is a far too common scenario in the financial services community -- a form of "kiting" one's credit card purchases through mixed use of the card for business and personal expenses and than delaying reimbursement. Some companies permit the mixed use of the corporate card provided that the employee promptly notifies the employer of the personal purchases and undertakes prompt reimbursement.  The abuses of this "honor system" are legendary.
June 2011
Michael Douglas Larsen
2009018143701/June 2011

Larsen convinced an elderly bank customer to surrender annuities totaling approximately $355,000, which he deposited into the customerís bank checking account. Larsen debited the customerís bank checking account approximately $94,000 and purchased a bank check in that amount payable to an entity and opened an account at that entity for the customer; Larsen then executed an internal form with the entity that effectively changed the name on the account to an entity that Larsen owned and controlled, thereby misappropriating the customerís money, without the customerís authorization.

Larsen, took approximately $261,000 from the customerís bank checking account at his member firm kept $4,500 for his personal use, gave $1,250 to the customer and had a bank check issued for the remaining approximately $255,000 payable to the entity Larsen owned and controlled, and deposited the funds into a checking account at the bank in the entityís name.

Larsen used a debit card associated with the checking account in the name of his entity to make purchases for his personal benefit totaling approximately $72,000, which was funded by proceeds from the customerís bank checking account, without the customerís authorization.

When the customer reviewed his bank statements and noted that some of his money was not in the bank account, he made inquiries to the bank and the bank sued Larsen to recover funds that he had transferred out of the customerís bank account. The bank was able to recover approximately $183,000 from Larsen, which it used to repay the customer and paid the customer an additional $171,000 to make him whole.

Larsen failed to respond to FINRA requests for documents.

Michael Douglas Larsen : Barred
Tags:  Banks    Debit Card    Elderly     |    In: Cases of Note : FINRA
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