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.
October 2011
Frank Porporino Jr.
AWC/2010022072601/October 2011

Porporino executed two unauthorized trades in a customerís account without the customerís prior knowledge, authorization or consent, which cost $474,000 and $444,000 respectively, resulted in approximately $37,000 in losses to the customer and netted Porporino approximately $16,200 in commissions.

Contrary to firm procedures that generally prohibited registered representatives from borrowing funds from customers unless they had the firmís presidentís prior written approval, Porporino borrowed $40,000 from a customer without disclosing the loan to his firm; he repaid the loan, including $8,000 in interest. The was unaware of and did not otherwise approve the loan.

Frank Porporino Jr. : Fined $5,000; Suspended 9 months; Ordered to pay $37,000 plus interest in restitution to a customer.
Tags:  Borrowing        Unauthorized Transaction    Discretion     |    In: Cases of Note : FINRA
Gordon Michael Budreau
AWC/2010021222101/October 2011

Budreau exercised time and price discretion beyond the day on which the customer granted such discretion and without the customersí written authorization. Although the firmís policies required all registered representatives to indicate in the order entry system when they use time and price discretion when ordering trades, Budreau failed to make that disclosure.

Budreauís firm discovered his improper exercise of time and price discretion and issued a formal Letter of Education to Budreau reminding him of the rules regarding time and price discretion and instructing him to read compliance memoranda addressing discretionary trading and the recording of orders; Budreau signed the Letter of Education acknowledging his understanding the documentís terms and certifying that he read the relevant policies. Soon after receiving the Letter of Education, Budreau again exercised time and price discretion by purchasing shares of a different security in several customer accounts.

Although Budreau discussed the possibility of purchasing the security with his customers before entering purchase orders into the firmís system, none of the actual purchases occurred on the days when he spoke to his customers, and some of the purchases occurred a week or two after the customers informed him they were willing to purchase the security.

Gordon Michael Budreau : Fined $5,000; suspended 10 business days
Tags:  Time And Price Discretion     |    In: Cases of Note : FINRA
Bill Singer's Comment
Bad enough that you get a Letter of Education and you sign it to indicate that you got the message; but to then go out and flaunt the very warning you got -- wow!
Jo Ann Marie Head
2009017530101/October 2011

Head conveyed false and exaggerated account values to customers verbally and with falsified documents; and borrowed $20,000 from a customer and has repaid only $1,000 to the customer, contrary to the firmís written procedures prohibiting representatives from borrowing from customers without branch manager or other supervisor approval and the written approval of the firmís compliance department. Head did not request or obtain permission from her firm to borrow money from the firmís customer.

Head settled and/or offered to settle a customer complaint without her firmís knowledge or authorization. Head sent an unapproved and materially false letter to a bank by preparing, signing and mailing a letter to a bank stating that a customerís assets totaled over $4 million in order to assist the customer in obtaining a mortgage loan; although the firmís procedures required that outgoing correspondence be reviewed and approved before mailing. Head neither sought nor obtained approval for the letter.

Head exercised discretion in customer accounts without written authorization; Head neither sought nor obtained authorization from customers or her firm to exercise discretion in their accounts.

Head mischaracterized solicited trades in customersí accounts as unsolicited, causing her firmís books and records to be inaccurate. In addition,

Head repeatedly sent emails and text messages to customers from her personal email accounts, which violated her firmís policies forbidding the use of personal email accounts and mandating that business-related electronic communications with customers occur within the firmís network.  Headís use of her personal email account prevented the firm from reviewing her email and text messages, and delayed the discovery of her misconduct in customersí accounts.

Head submitted false and evasive information to FINRA in response to a written request for information; and subsequentlyfailed to appear or otherwise respond to FINRA requests for testimony.

Jo Ann Marie Head: Barred; Ordered tp pay $19,000 restitution
Tags:  Borrowing    Discretion    Correspondence    Bank    Mortgage    Rule 8210     |    In: Cases of Note : FINRA
Bill Singer's Comment
Talk about a cascade effect of violations!
Markus Beat Pletscher
AWC/2009019969801/October 2011

Pletscher exercised discretion in customer accounts despite the fact that his member firmís WSPs strictly prohibited discretionary trading in customer accounts, and he was aware of this prohibition.

The firm required that its registered representatives place trade orders immediately after receiving the customerís authorization for trades, but at times Pletscher received oral authorization from customers to place trades in their accounts, yet he waited several weeks or months before placing the trades.

Pletscher requested to have variable annuity holdings for customers transferred into money market accounts without the customersí authorization.  The customers requested the unauthorized transactions be reversed, causing his firm to incur reversal fees of $8,863.37.

Pletscherís firm required its customers review and sign transaction related forms, but Pletscher instructed customers to provide transaction forms that contained only the customersí signatures, which Pletscher later completed and submitted to the firm for processing, despite his firm prohibiting him from accepting incomplete forms from customers. Pletscher knew that by allowing his customers to pre-sign blank forms, he failed to ensure that customers had properly reviewed and understood the agreements they had signed. In addition, Pletscher caused the firmís books and records to be false and misleading and to appear that the customers had agreed to the terms of each form on the date the forms were signed in blank.

Markus Beat Pletscher: Fined $15,000; Suspended 1 year
Tags:  Blank Forms    Annuities    Discretion     |    In: Cases of Note : FINRA
September 2011
Richard Harold Byerly
OS/2009017492201/September 2011

Byerly engaged in unsuitable, excessive trading in elderly customersí accounts.

The customers were retirees with conservative investment objectives living on fixed incomes who suffered collective losses of approximately $390,000 during the period of excessive trading. Byerly recommended and effected the transactions without having reasonable grounds for believing that such transactions were suitable for the customers in view of the size and frequency of the transactions, the transaction costs incurred, and in light of the customersí financial situations, investment objectives and needs. Byerly exercised discretion in these accounts as well as in other customersí accounts without the customersí written authorization or his member firmís written acceptance of the accounts as discretionary; his firm did not permit discretionary accounts.

Byerly continuously misrepresented to his firm on annual compliance questionnaires over a three-year period that he did not maintain any accounts in which he had exercised discretion. In response to a written FINRA request seeking information regarding a customer complaint, Byerly submitted a letter to FINRA in which he falsely misrepresented that he had received the customerís prior approval for all trades in the customerís account.

Richard Harold Byerly: No fine in light of financial statuts; Suspended 2 years; Ordered to pay $30,000 partial restitution to customers.
Tags:  Elderly    Discretion     |    In: Cases of Note : FINRA
Bill Singer's Comment
Am I missing something here?  Elderly accounts. Unauthorized discretion. Lying to the employer firm. Lying to FINRA.  And all of that doesn't get you barred?  Wow ... either there's more to this story than FINRA has presented or this Respondent had a truly amazing lawyer.
April 2011
Kevin Leslie Moyer (Principal)
AWC/2009020137301/April 2011

Moyer effected discretionary transactions in a customerís account without obtaining the customerís or his member firmís written authorization. The customer and her relative each had an account for which Moyer was the broker, and a company they owned together had an account for which Moyer was the broker as well. Moyer spoke regularly to the relative about transactions in all the accounts, but only received prior authorization for the transactions in the customerís account from her for a minimum of the transactions, and the customer had not given her relative trading authority over her account.

Moyerís firm had not permitted its registered representatives to exercise discretion in customer accounts during this time.

Kevin Leslie Moyer (Principal): Fined $5,000; Suspended 30 business days
Tags:  Discretion     |    In: Cases of Note : FINRA
January 2011
Peter Joseph Brandstaetter
AWC/2008014880601/January 2011

Brandstaetter created and distributed illustrations that promoted an options trading strategy to members of the public that contained numerous false, exaggerated, unwarranted or misleading claims and statements. Brandstaetter sent the illustrations to one of the customers, she had not completed an options trading agreement with Brandstaetterís member firm and she had not been furnished with an options disclosure document prior to (or contemporaneous with) the receipt of the illustrations. Brandstaetter did not seek or receive approval of the documents from his firmís options principal prior to the dissemination of the materials.

Brandstaetter exercised discretion in a customerís account without her written permission or the firmís approval, although he was aware that his firmís written supervisory procedures prohibit discretionary trading within customer accounts.

Peter Joseph Brandstaetter: Fined $20,000; Suspended 10 business days
Tags:  Discretion    Options     |    In: Cases of Note : FINRA
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