Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2012
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 2012
Bruce Benjamin Katz
OS/2009018906501/January 2012
Katz borrowed a total of $82,000 from a customer without obtaining his member firmís prior written approval. The findings stated that Katz assured the customer that he would pay back her money. Katz has not repaid the principal or any interest on the loans. 

When Katz borrowed the money, the customer was 75 years old and retired. At the time Katz borrowed the money, his firmís WSPs did not allow the borrowing and lending of money between registered persons and firm customers unless the customer was the registered personís relative. Katz did not request or obtain the firmís permission to borrow money from the customer and was not related to the customer. Katz was aware of the firmís procedures and certified that he had received and read the firmís written policies and procedures regarding financial arrangements with clients. Katz did not disclose to his firm that he had obtained loans from the customer.Since the firmís procedures did not permit borrowing, Katz could not borrow money from the customer in compliance with NASD Rule 2370, and the loans were not in conformance with conditions set forth in NASD Rule 2370(a)(2)(A)-(E) for permissible loans. 
Bruce Benjamin Katz: No Fine in light of financial status; Suspended 18 months
Tags:  Borrowing     |    In: Cases of Note : FINRA
Daryl Eugene Allison (Principal)
AWC/2009017068502/January 2012
As his member firmís president and chief supervisory officer, Allison he failed to adequately supervise a registered representative because he did not ensure that the representative was registered with a state before the representative conducted business with clients in the state

Allison failed to adequately supervise another registered representative when he learned that her business had borrowed money from a customer. The firmís WSPs prohibit registered representatives from borrowing from customers. Allison did not properly follow up on this information; he did not ensure that the customer was repaid or examine the businessísbank statements to determine whether the representative had borrowed from additional customers. Even when Allison placed the representativeon heightened supervision, after learning of the loan from the customer, he did not begin conducting the quarterly audits the plan mandated until months later.
Daryl Eugene Allison (Principal): Fined $6,000; Suspended in Principal capacity only for 10 business days
Tags:  Supervision    WSPs    Borrowing    Unregistered RRs     |    In: Cases of Note : FINRA
David Vankuren Tolley
AWC/2010022046801/January 2012
Tolley borrowed $5,000 from an investor and customer of his member firm contrary to his firmís compliance manual that generally prohibited representatives from borrowing money from a customer unless the borrowing was made pursuant to an exception to the rule and written approval had been granted by the firmís compliance officer; Tolley failed to obtain permission. 

Tolley failed to timely amend his Form U4 to disclose a material fact.
David Vankuren Tolley: Fined $7,500; Suspended 4 months
Tags:  Borrowing     |    In: Cases of Note : FINRA
Eytan Nisim Naftali
AWC/2010024522201/January 2012
Naftali  improperly borrowed a total of $20,000 from two elderly customers at his member firm. The loans were interest-free and did not have any repayment terms. The firmís procedures generally prohibited borrowing money from customers, except in limited circumstances, and those procedures required registered representatives to obtain the firmís written approval before entering into such loans. Naftali did not seek or obtain the firmís approval before entering into the loans. Naftali has since repaid one of the customers in full, but still owes the other customer $8,500. 
Eytan Nisim Naftali : Fined $2,500; Suspended 45 days; Ordered to pay $8,500 plus interest in restitution to customer. FINRA took into account Naftali's suspension by his firm.
Tags:  Elderly    Borrowing     |    In: Cases of Note : FINRA
Joyce Ann Kauffmann (Principal)
AWC/2011027218201/January 2012
Kauffmann improperly borrowed $25,000, evidenced by a promissory note, from her customer at her member firm. The findings stated that when the borrowing occurred, the firm permitted representatives to borrow money from a customer under specified conditions subject to the representative obtaining their immediate supervisorís prior written approval. Kauffmann did not seek firm approval for the borrowing, did not obtain its prior written approval to borrow money from the customer and did not disclose to the firm that she had borrowed money from a customer. 

Kauffmann failed to provide FINRA with requested information and documents, and failed to appear to testify. 
Joyce Ann Kauffmann (Principal): Barred
Tags:  Borrowing     |    In: Cases of Note : FINRA
REDACTED
AWC/2009020797001/January 2012
This couple received checks totaling $55,180.29 from a customer to be applied to the  couple's mortgage and were intended as loans, without notifying their respective firms of the loans and without obtaining approval to receive the loans. The couple'sí firms had policies and procedures that generally prohibited lending arrangements between the firmsí representatives and customers, with certain exceptions. Those exceptions did not apply to the loans between the customer and the couple's. The firms required that a representative receive pre-approval for any lending arrangement between the representative and a customer of the firms. The couple's have not repaid the loans. 
X:  No fine in light of financial status; Suspended 3 months
Y: No fine in light of financial status; Suspended 3 months
Tags:  Borrowing    Mortgage     |    In: Cases of Note : FINRA
Toni Leynett Bowen
AWC/2009017068501/January 2012
While registered with her member firm, Bowenís company borrowed $25,000 from an individual who was not her firmís customer. Thereafter, the entire $25,000 due to the individual was rolled over into a new loan agreement, which was entered into after the individual became Bowenís customer at her firm. The firmís WSPs do not allow a registered representative to borrow from a customer. The findings also included that Bowenís company paid off the loan. 
Toni Leynett Bowen: No Fine in light of financial status; Suspended 10 business days
Tags:  Borrowing     |    In: Cases of Note : FINRA
Bill Singer's Comment
An interesting twist -- that trouble here is that the rolled-over loan occurred after the client became a customer of the RR.
Enforcement Actions
Tags
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+