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.
Christopher Michael Minor AWC/2008012469101/February 2010
After his member firm instructed him not to trade options in his personal account at the firm, Minor opened an options account with another member firm. Minor failed to provide notice to his firm of his options account at another firm or disclose it on a compliance questionnaire that he submitted electronically. Minor failed to provide written notice to the other firm of his association with a member firm or disclose it on a new account form that he submitted electronically.
Christopher Michael Minor: No Fine inh light of financial status; Suspended 2 months
William Robert Young AWC/2008014271201/February 2010
Young maintained personal securities accounts at another broker-dealer without notifying his member firm in writing of the accounts. Also, Young failed to disclose to the executing broker-dealer that he was associated with a member firm. Young falsely stated on anannual compliance questionnaire that he had disclosed all outside brokerage accounts.
William Robert Young: Fined $5,000; Suspended 30 days
Rivera failed to disclose to his member firm an outside brokerage account that he opened after his firm expressly told him that he could not maintain outside brokerage accounts that he opened prior to his employment with the firm . Rivera forged a letter that purported to be from an employee of his firm, instructing the firm where he maintained an outside brokerage account to lift trading restrictions on his newly opened, undisclosed account.
Cutler Group L.P., an NYSE Arca Options trading permit holder, failed to
preserve certain electronic communications in the required format;
maintain a complete and accurate list of accounts in which its employees had a direct or indirect financial interest;
obtain, maintain and review monthly account statements for accounts in which its employees had a direct or indirect financial interest;
file a complete and accurate annual acknowledgment attestation with the exchange;
appropriately conduct background checks of its associated persons; and
establish, maintain, and/or enforce appropriate written policies and procedures for supervision and control, including a separate system of follow-up and review, with respect to certain of the foregoing areas.
The NYSE found the following violations:
Section 17(a)(1) of Exchange Act, and Rules 17a-4(b)(4) and 17a-4(f) thereunder, and NYSE Arca Options Rule 11.16(a) by failing to preserve business-related e-mail and instant messages in non-rewriteable, non-erasable format, and by failing to preserve business-related fax communications
NYSE Arca Options Rule 11.3—Commentary .03 by failing to maintain complete and accurate list of accounts in which employees had direct or indirect financial interest, and by failing to obtain, maintain and review monthly account statements for accounts in which employees had direct or indirect financial interest;
NYSE Arca Options Rule 11.3(a) by failing to establish, maintain, or enforce adequate written policies and procedures reasonably designed to prevent misuse of material, non-public information by employees;
Section 17(a)(1) of Exchange Act, and Rule 17a-3(a)(12) thereunder, and NYSE Arca Options Rule 11.16(a), by failing to appropriately conduct and document background checks of employees prior to employment, and by failing to properly retain and preserve manually signed Forms U-4;
NYSE Arca Options Rule 11.18 by failing to establish, maintain, and/or enforce appropriate written policies and procedures for supervision and control, including separate system of follow-up and review, in following areas:
(a) conducting and documenting background checks of employees prior to employment, including maintaining complete and accurate signed Forms U-4;
(b) retention in proper format and review of business-related e-mails, instant messages and faxes sent or received by employees; and
(c) prevention of misuse of material, non-public information by employees .
Iavecchia failed to inform his member firm of brokerage accounts, in which he had a financial interest, that were opened in his wife’s name at other firms. Rather than disclose the existence of those accounts, as he was required, Iavecchia falsely answered “not applicable” to questions pertaining to the outside brokerage accounts on his firm’s compliance questionnaires. Also, Iavecchia failed to inform the executing firms of his association with his member firm and made material misrepresentations on a new account document that he filled out for one of his wife’s outside accounts.
Richard John Iavecchia: Fined $3,500; Suspended 60 days
You might not think it would be a big deal for a registered person to handle the brokerage account of a family member -- but, then again, not a lot of Wall Street regulation is intuitive, and this is one of those issues that trips up many industry participants. In a recent case involving a former Schwab broker, he wound up on the wrong side o... Read On