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 firm’s 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 finder’s 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 firm’s
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.
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 company’s 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 company’s 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