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.
November 2011
Kevin Francis Garvey (Principal)
OS/2009018183501/November 2011
Garvey, as the supervisor of his member firmís securities lending desk, permitted a non-registered individual associated with a non-registered finder firm to act in a capacity that required the non-registered individual and/or his firm to be registered as a broker dealer and caused his firm to pay the non-registered individual transaction-based compensation through the non-registered finder firm.

Garvey regularly caused his firm to permit an unregistered natural person to negotiate, solicit and enter into stock borrow and loan transactions, which are duties customarily performed by a registered securities lending representative. Garvey performed the duties of a securities lending supervisor without being properly registered. Garvey consented and/or caused the continuation of the practice of paying finders on transactions with certain counterparties in which the finder had provided no service, and permitted individual traders to subjectively determine the cut-in transactions on which a finder was to be paid and the amount of the finderís compensation on those transactions even though the finder had not provided service on the transactions.

Garvey caused his firm to create and preserve inaccurate books and records on the stock loan activity on the securities lending desk, in that the firmís automated records of the cut-in transactions were inaccurate, in that they reflected that certain finders had participated in stock loan transactions when, in fact, they had not performed any function. In addition, these false entries were transferred to its accounting records, which inaccurately indicated that payments were made to finders on the basis of services rendered when, in fact, no services had been rendered to justify the payments on the transactions indicated.
Kevin Francis Garvey (Principal): Fined $35,000; Suspended 30 days.
March 2011
Dahlman Rose & Company, LLC
AWC/2009016138801/March 2011
The Firm permitted a person registered solely as a general securities principal who had not passed the necessary qualification examination to approve research reports a firm research analyst prepared, which the firm issued. The firm published a research report regarding a company, which did not disclose that the firm had co-managed an initial public offering of securities for the company during the past 12 months. The firm began making a market in a companyís securities, and on the same day the firm published a research report concerning the same company that did not disclose that it was making a market in the companyís securities. The firm published research reports containing disclosures NASD Rule 2711(h) required that were not presented on or referred to on the front page of such reports.
Dahlman Rose & Company, LLC : Censured; Fined $17,500
Bill Singer's Comment
Two of the more fundamental items on the "research" checklist for compliance departments. One, reports must disclose recent co-managed/managed IPOs.  Two, among the most basic of conflicts is issuing research on a company that your firm makes a market in.  Oops.
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