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.
July 2011
Lauren Tricia Cyrus (Principal)
AWC/2009017399501/July 2011

Cyrus failed to supervise representatives at her member firm who made unsuitable recommendations to customers at their firm.

Cyrus was responsible for supervising the representatives but failed to take appropriate action to supervise the representatives that was reasonably designed to prevent their violations and achieve compliance with applicable rules. Cyrus failed to adequately review and follow up on the over-concentration of the customersí liquid assets in preferred stocks and the risks associated with those securities.

Lauren Tricia Cyrus (Principal): Fined $5,000; Suspended 1 month in Principal capacity only
Tags:  Supervision    Concentration     |    In: Cases of Note : FINRA
Bill Singer's Comment
In 2011, FINRA has really increased its failure to supervise docket -- perhaps more so than in any prior year that I can recall.  A common thread in these cases seems to be that FINRA is showing little (if any) tolerance these days for supervisors who have written policies and procedures pertaining to individuals requiring enhanced supervision, or for aspects of the firm's business involving suitability issues.  In this matter, Cyrus is charged with failing to "adequately" review over-concentration indicia.  It's not that there was no review whatsoever but, rather, the review was not deemed to reasonably address the circumstances.
Manuel Jose Leon Jr. (Principal)
AWC/2010024861802/July 2011

Leon recommended that a couple invest $167,000 in a private securities transaction without providing notice of his proposed role in the transaction to his member firms.

Leon formed a company through which he sought to operate an independent branch of a broker-dealer and did not have reasonable grounds to believe that the recommended investment in the company was suitable for the couple in light of their investment objectives, financial situation and needs; the recommended investment was too risky for the customers, who were a retired couple of limited means. The recommendation led to most of their investable assets being overconcentrated in the security.

Prior to its dissolution, the company made interest and principal payments totaling approximately $26,000 to the couple, who lost approximately $141,000 on their investment in the company.

Leon failed to respond completely to FINRA requests for information and documents.

Manuel Jose Leon Jr. (Principal): Barred
Tags:  Concentration     |    In: Cases of Note : FINRA
Bill Singer's Comment

Selling a retired couple an overconcentrated investment in your company that's intending to operate as an Indie Branch?  And the investors lose $141,000 of their $167,000 investment?

Soooo, how many things can you spot that's wrong with this picture: Take your time.

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+