Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
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 2010
Stephen Nicholas Severio
AWC/2008015083301/December 2010

Severio solicited customers at his member firm to invest in a purported arbitrage investment which he stated would be held away from his firm. Severio told these clients that he would invest their funds and pay them the principal amount invested plus interest of 15 percent to 20 percent after six months. Each of the customers gave Severio a check personally made out to him in amounts ranging from $5,000 to $75,000 for a total of $685,653, with the intention that he invest the money in his arbitrage investment as he indicated.  However, Severio cashed the checks and converted the money for his own personal use.

Severio failed to respond to FINRAís requests for information and failed to appear for his on-the-record testimony.

Stephen Nicholas Severio : Barred
Tags:  Conversion     |    In: Cases of Note : FINRA
November 2010
Geraldine Ann Wert (Principal)
OS/2008015086401/November 2010
Wert converted approximately $18,610 from an expense account her supervisorsí owned to pay for personal expenses. Wert took approximately $12,000 in unauthorized personal loans from the expense account, which she repaid shortly after withdrawing the funds. She forged her supervisorsí signatures on customersí new account forms and advisory agreements without her supervisorsí authorization or knowledge. Wert failed to appear and provide testimony as FINRA required.
Geraldine Ann Wert (Principal): Barred
Tags:  Conversion    Expenses    Forgery     |    In: Cases of Note : FINRA
William Kevin Harrison
AWC/2008015740301/November 2010

Harrison transferred customer funds out of bank accounts linked to the firmís securities accounts into a single online account at another broker-dealer.

Harrison transferred funds that totaled at least $6.5 million belonging to multiple customers. Harrison established the online account in a relativeís name, but he had sole control over the online account and conducted significant options trading in the account, using the customersí funds and engaging in the trading without the affected customersí knowledge or consent. Harrison subsequently transferred some of the funds out of the online account to unknown destinations.

Harrison failed to respond to FINRA requests for information and failed to appear for a FINRA on-therecord interview.

William Kevin Harrison : Barred
Tags:  Options    Conversion     |    In: Cases of Note : FINRA
Bill Singer's Comment

How do you steal $6.5 million from numerous customers without attracting attention?  Wow, pretty impressive stuff -- too bad Harrison didn't use his powers for good.  Of course, in a fairly perverted sort of way, I'm wondering whether he made any money trading options with other people's money.

Gee -- what a great title for a book: How to trade options profitably with other people's money.

August 2010
Heidi Jo Baldridge
AWC/2009021005001/August 2010
An affiliated insurance company of Baldridge's member firm began an audit of her insurance files after receiving a customer complaint. The customer gave Baldridge a check as a payment for a premium for a new fire insurance policy and Baldridge admitted to auditors that she deposited the check into her personal checking account and used the money for her mortgage payment. As such, Baldridge converted the customer check for $1,340.  Baldridge repaid the insurance company $1,340 on the day of the audit.
Heidi Jo Baldridge : Barred
Tags:  Checks    Insurance    conversion     |    In: Cases of Note : FINRA
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