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.
June 2011
Francis Paul Anton II
AWC/2009018062601/June 2011

Anton effected fictitious trades in securitized Small Business Administration (SBA) loans, totaling $82,652,497, in order to reduce his member firmís SBA deskís inventory levels.

Anton effected the fictitious trades to purported institutional buy-side customers and by doing so, Anton could gradually sell the SBA securities and eventually comply with the firmís prescribed inventory level. The fictitious trades created the false impression that Anton had purportedly sold SBA securities to certain of the firmís institutional customers and that the firmís SBA desk had decreased overall inventory levels by a total of $75 million. Anton purportedly sold each of the fictitious SBA securities to other broker-dealers instead of institutional customers; and by entering the fictitious sales of the SBA securities at a price above the mark-to-market price, Anton created the false impression that he had avoided selling the SBA securities at a loss.

Anton manipulated forward the settlement dates for the trades to afford him additional time to try to sell the SBA securities. In 30- day forward settlement intervals, Anton cancelled and corrected trades in the same pool of SBA securities at the same transaction quantity, which triggered the creation of a ďcancel & correctĒ ticket. In addition, a firm employee discovered a discrepancy in the SBA securitiesí reporting position and reported the observation to the firmís management, which investigated and noted the repeated pattern of cancellation and corrections relating to the SBA security trades in 30-day intervals.

Although Anton neither colluded with any other firm employees to enter the fictitious trades nor did he personally benefit from the fictitious trading, he misrepresented to certain non-supervisory firm staff that he had mistakenly effected the trades and that he would correct the errors. Furthermore,when Antonís managers confronted him, he admitted that he effected false trades and manipulated the corresponding settlement dates.

Francis Paul Anton II : Fined $10,000; Suspended 6 months
Tags:  SBA    Trading     |    In: Cases of Note : FINRA
Bill Singer's Comment

These fictitious trades appeared to have occured at Morgan Keegan in 2008 and 2009, when Anton served as a Head Trader.

Both the source AWC and the monthly squib are very well drafted and present this somewhat complex fact pattern in an intelligible fashion. Kudos to FINRA staff for a commendable effort.

If I have one reservation, it would be to ask what exactly do you have to do these days to get Barred?  I"m not understanding the apparent severity of the misconduct and the relative light suspension and fine.

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