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.
December 2011
Isaiah Solomon
AWC/2009020265401/December 2011
Solomon participated in the sale of securities outside his employment at his member firm and failed to give written notice to his firm of his intention to engage in the transactions and obtain the firmís authorization to engage in such activities.  

Solomon referred individuals, some of whom were his firmís clients, to an individual and an entity so the customers could invest with the entity. The entity initially claimed to offer foreign exchange trading opportunities, but later claimed to offer investments in a hedge fund that would engage in various trading strategies; the customers invested approximately $750,000 with the individual and entity, and Solomon also invested with the individual and entity. Solomon introduced the customers to the individual, typically during a conference call where the individual promised guaranteed returns of 12 percent per year for two years; Solomon recommended the investment to most of the customers and received $8,600 from the entity for his efforts. Solomon engaged in discussions with the individual and the entity about possible employment with the entity. 
Isaiah Solomon : Fiend $15,000 (includes $8,600 disgorgement of financial benefit from sales); Suspended 18 months
Tags:  FOREX    Hedge Fund     |    In: Cases of Note : FINRA
November 2011
Nathan Eugene Calhoun
AWC/2011026223401/November 2011

FINRA received investorsí complaints alleging that Calhoun had solicited them to invest in a foreign currency exchange trading (FOREX) program a foreign entity, which operated with Calhoun's assistance/ The digrunteled investors invested a total of $150,000 in the FOREX program. Ultimately, the entityís FOREX scheme was the subject of federal actions by both the SEC and the Commodity Futures Trading Commission (CFTC).

Calhoun solicited the investors to invest in the entity while he was employed as a registered representative with his member firm. alhounís participation in the private securities transactions was outside the regular course or scope of his employment with his firm; and he failed to provide prior written notice of his role in the transactions to his firm and did not receive the firmís written approval or acknowledgement concerning his participation in the private securities transactions. Finally, he failed to appear for a FINRA on-the-record interview.

Nathan Eugene Calhoun : Barred
Tags:  FOREX     |    In: Cases of Note : FINRA
Bill Singer's Comment
Yet another FOREX scam.
May 2011
Robin Bruce Davidson (Principal)
OS/2008016063601/May 2011

Davidson recommended and participated in securities transactions outside the scope of his employment with his member firm when he recommended that clients, nearly all of whom were firm customers, participate in a managed foreign currency exchange-trading program; these clients invested $2,682,518.19, for which he received $3,894.64 in compensation for the referrals.

Davidson did not provide prior written notice, or any notice at all, to the firm of his involvement with the transactions, nor was the firm aware of Davidsonís recommendations and referrals until two months after his resignation when a customer complained about her losses. The clients Davidson referred to the securities transactions lost more than $2.4 million of the approximately $2.68 million they had invested in the managed foreign currency exchange-trading program.

Davidson signed a customerís name to multiple account-related documents without her knowledge or consent.

Robin Bruce Davidson (Principal): Fined $10,000; Suspended 16 months
Tags:  FOREX    Signature     |    In: Cases of Note : FINRA
Bill Singer's Comment
Again, I must be getting quite ornery in my old age. This is the second case this month that the sanctions seem on the light side to me.  Davidson not only failed to disclose his outside FOREX activities but he managed to get his customers into a program that lost $2.4 million.  Lucky for him, I'm not doling out the dollars and months of suspensions.
April 2011
Sanjeev Jayant Shah
2009017788201/April 2011

Shah made unauthorized foreign currency trades in a customer bank account, resulting in margin calls being generated for the account and consequently the customerís other bank accounts were frozen, preventing the customer from transferring funds from those accounts. Shah made unauthorized money transfers from another customerís bank account to satisfy, in part, the margin calls for the first client and to be able to transfer funds at its request.

In order to effect the unauthorized fund transfers, Shah forged a signature and created falsified Letters of Authorization (LOAs) by cutting a bank directorís signature from an account opening document and pasting it on a fabricated LOA. Shah fabricated documents regarding another clientís obligation to meet capital calls and falsely created a memorandum representing that the capital calls had been met.

Shah falsely told the customerís beneficial owner that all outstanding calls had been met and to ignore notices he too was receiving. To make the memorandum appear authentic, Shah fabricated an internal email address for a fictitious employee and sent the memorandum to the beneficial owner to make him believe that the calls had been met.

Shah failed to respond to FINRA requests to provide on-the-record testimony and to provide a signed statement.

Sanjeev Jayant Shah : Barred
Tags:  FOREX    Forgery    LOA    Margin     |    In: Cases of Note : FINRA
Bill Singer's Comment
I gotta give this guy some kind of award. He sure tried to juggle as many balls in the air as possible.
March 2011
James Robert Riolo (Principal)
AWC/2010022499001/March 2011

Riolo referred customers of his member firm to entities controlled by his relative, who was purportedly engaging in trading off-exchange foreign currency (forex) contracts, but in fact was running a fraudulent scheme. The customers invested more than $3.3 million with one entity, and for referring these customers, Riolo received more than $960,000 from his relative. Both entities were fraudulent schemes and Rioloís relative was subsequently convicted and sentenced in court for his fraudulent activities.

Customers that Riolo referred lost a combined amount of over $120,000. In referring these customers to his cousin and receiving compensation, Riolo engaged in an outside business activity, but did not provide written notice or receive approval from his firm. Riolo falsely stated in signed monthly compliance questionnaires that he was not engaging in any outside business activity. In addition, Riolo failed to respond to FINRA requests for information and documents.

James Robert Riolo (Principal): Barred
Tags:  FOREX    Annual Compliance Certification     |    In: Cases of Note : FINRA
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